the issues its monetary policy statement for the five minutes from right now with new forecast for growth and president draghi expected to stay the course. the devil is in the details as president trump is to details on the tariffs initiative, conflicted. ensuring your health. cigna is buying express scripts as health care integration picks up speed. welcome to bloomberg daybreak. i am david westin. welcome lisa. alix steel is out today. lisa: we hope you are all hanging in there on the east coast. let's get you caught up with the market action ahead of the u.s. open. you can see a little bit of a mixed teacher, the dax down about a quarter of a percent. as to be futures picking up into the green. the euro weakening against the dollar head of the ecb announcement in about 45 minutes. two-year yields up just a touch. david. 7:45, we are going to

the ecb rate decision. at 8:30 a.m., we'll hear mario draghi's news conference here. at 8:30 a.m., will get the jobless claims. president trump will be meeting with members of congress and videogame executives and what are they going to talk about? guns. lisa: it is time for the bloomberg first take. three stories we're watching, the ecb, all about trade and sickness big deal -- and cigna's big deal. , i want toael mckee put of a chart of inflation. where it is, where it has been. where the ecb projection is going. but to what extent is that the story today? 2% goal, they fell back again.

michael: it is difficult for mario draghi to justify getting out of qe or at least changing the date, because the inflation numbers keep going down. 1.2% for the last month. in december, it was 1.4%. he's got three problems. one is the stronger euro. that pushes down other prices. they've got italy's political deadline which suggests there is not good to be any additional growth coming out of italy to help boost inflation. he's got donald trump and a trade war. nobody knows what that is going to do. markets are looking to find out whether they are going to let it in. or string it out through december. he probably does not want to say at this point so we make it a waffle on his part. as he said, we still have some slack but we don't know how much so we are going to keep watching. lisa: this uncertainty and we saw it from yesterday, atlanta fed president coming out and

saying the prospect of a trade war might even slow the fed's half the rate hikes. this is give conviction to go ahead with mergers and acquisitions to list ideals if rates are going to stay lower for longer? >> i think they are watching it. the counterpoint is there's been so much m&a activity in so much take m&a activity. we are seeing cigna buying express scripts today. there still appetite out there. if this is a deal that people are thinking about, now is the time to do it. david: mike i want to go back to -- jamie dimon was interviewed. he said there really expanding. he thinks tax cuts are causing companies to be more aggressive in things like m&a. michael: we are you for that to show up in the data. you are not seeing a huge amount of this point but we are not seeing business orders rise

significantly. last month they have been down. that that come? --does that come to mark does that come? lisa: the backdrop is the that ison for the order going to be signed by president trump signaling the start of some kind of crackdown on trade, particularly steel tariffs. this comes after getting a surprisingly that number for the u.s. in respect to the trade deficit. the trade deficit in the u.s. widened in january to the biggest since 2008. this is the big question. there is legitimacy to president trump's issues with the protectionism we are seeing from other countries, namely china. going forward, what are we looking forward to get a sense of how far the u.s. is willing to go to escalate? michael: all these reports of

who is going to be exempted from the steel and aluminum tariffs. if you argue that you are putting these tariffs on for national security reasons, it is hard to tie a nafta deal. if you're arguing that you are excluding canada and mexico for national security reasons, that it undercuts your nafta argument. lisa: why is it important for the u.s. to convince people that this for national security issues? 02 reasons. president is trying to justify it for this country. than itcost more jobs saves. it undercuts the u.s. and other countries efforts to the world trade organization because if you argue that this is national security that some of the country can argue that whatever it wants to protect his for national security. it opens the door to it all flood of protectionism if people want to go that direction and undercuts the whole process of international trade.

david: are we seeing the show up with respect to the u.s.? we are afraid of the possible effect of tariffs? brook: we are seeing a lot of pushback from president trump so party. a lot of pushback from world leaders. companies are waiting to see. oneas interesting, eaten is of the few industry companies to put an exact number. applied onriffs are all grades of steel and aluminum which is unlikely. there is no way for companies to get accurate data. there may be some hesitancy on the cross-border deal but i don't know if you're going to see a full-blown stop until we know. michael: the george w. bush tariffs that we talked about 2002 that didn't cost or job than is saved. the exempted canada and mexico.

it is no help to do that in terms of the u.s. gdp and jobs outlook. david: let's go to the street. is this big deal of work cigna has announced it is going to be buying express scripts -- express scripts. it has been rumored and it is a big consolidation. brooke: this is the latest in a series of deals. you have cvs buying aetna. part of this is in response to this amazon like threat where they have signaled their looking to disrupt the health care industry and help push down costs. the other part is to health care companies have been struggling with these costs. how do they get these down? lisa: in premarket trading, express scripts shares of little more than 20%. that is a lot but it is not the 30% when you that it baked into the price tag that is put on

this. is it some skepticism by the markets that violators are going to -- that regulators. brooke: the only president has been cbs's deal and that is not been regulated. we don't know -- in europe where they take a broader view of the market -- how are they going to look at this consolidation. bitcoin anthem tried to buy cigna and the deal did not go through. who is express scripts biggest client? anthem and anthem just cut their ties with express scripts so they were left out of all of this in their losing their client. david: that is why they are up 20% in premarket because they had to do something. express scripts were facing ready ugly numbers. states are trying to track down just crackdown on

with a seat as overcharging as a pharmacy benefit managers. david: there are big rebates to come back. michael: the law is you're not allowed to tell people that you can buy your drugs for less. lisa: so many questions. we are going to be looking at how much debt they plan to incur. sullivan and michael mckee, thank you both very much. coming up next, megan greene, manulife chief economist. the lead al-falih, this is bloomberg. ♪

teleco this is bloomberg daybreak. broadcom hostile takeover bid for qualcomm is likely to face a longer review by u.s. regulators. an extended look with the deals risks. the treasury department ordered a 70 day delay of the qualcomm investor but experts say the review may not be done then a could take up to 75 days. james smucker is considering a sale of elsberry and his other -- sale of elsberry and its others brands. it also includes robin hood flour. it could fetch as much a million dollars. in the u.k., john lewis says higher costs will sweep the profit this year. the retailer reported a 22% drop for earnings.

john lewis also cut employees annual bonuses to 5%. that is your bloomberg business flash. david: and a half hour we are going to get the ecb's monetary policy statement. inflation remains low the target of 2%. it went up 2% and in quebec down. it is went to creep its way back up. we welcome megan greene. she is joining us from edinburgh. thank you for being with us and we just put up a chart. inputt the most important for mario draghi in the monetary policy committee? megan: so in theory, it is supposed to be. inflation they need under 2%. that is well below that target. their forecast that they put out in december suggests is to go to

around .7% in 2020. in 2020. 1.7% you can expect inflation to be low. other things they are looking at is economic growth. that puts it into financial stability which falls under this -- falls under their purview. confidence of business sentiment but the recovery seems to be sustained. they are looking at financial conditions. big input is currency so the euro has depreciated relative to the us dollar by about 1% this year. compared to 4% last year. the ecb is not comfortable with a much further appreciation because that is competitiveness and could clamp down on experts outside of the eurozone. they will be watching for that. we succumb do you expect there to be in the explicit talk of currency -- lisa: do you expect there to be any explicit talk of currency because they want to

euro to depreciate a little? megan: i don't think there's any way that mario draghi would lead into those waters, jiggly after crabbing donein so. such a backers are a part of his mandates. there will be questions during the press conference. the most you will hear from the ecb in terms of their statement is maybe they will back off of this easing bias to try and prep the markets for potential exit from qe in september instead of going ahead and extending it. there is a chance they could change the wording around. rate hikes, they have said after the end qe, they will keep rates low for longer. they will not want to signal too many easing's out of concern for the currency and financial conditions. david: i wonder if there's a connection between trade and you

will get asked about trade war's. the strength of the euro on the other hand. i will put up a chart. it basically shows the ecb rates which have stay down there. the yellow line is the fed rates. normally you would expect the euro-dollar cross. you would expect for the dollar to strengthen as the fed increases. on the other hand, if you look at the growth, it is almost all comes from exports. doesn't that feed tray problem? .egan: that is absolutely right there's a lot of things that goes into currencies. one of them is where policy divergence is. the u.s. dollar should be appreciating. there's a slow of funds issue with the withdrawal of monetary easing. fewer funds are flowing into the u.s., and that could put some downward pressure on the u.s. dollar. , theyre are trade war's

say the difference between the wars in trade wars is that in the latter the guns are pointing internally. that sums it up. if there are a whole bunch of tariffs that the u.s. and eurozone impose on one another, it hurts everyone. that could be a drag on growth which could cause the ecb to move any slower than they are currently projecting. that is not going to be addressed in this meeting. francine: -- lisa: as people look at the prospect of trade wars and allowing inflation to pick up. possibility's easy for 40% equity correction. do you agree? megan: in one go? i think either way, i don't agree. to see that we would need to see a light cycle surge in inflation and i am not buying that. we can agree that we are in the late stage of the cycle, i think it will last a lot longer than

other economists will. for all the inflationary forces that we do have in the u.s. economy, there's a whole bunch of disinflation everyone's. some are shared with the rest of the developed world. the fact that we keep consuming services incident goods and those really low weights sectors. we are adding jobs at the bottom end of the pay scale. they keep the pressure off of the -- in the u.s., where it to huge positive supply shocks. in the form of the tax bill and deregulation. we have had one negative side demand-side shock. if you look at a simple demand supply curve, that would put downward pressure on inflation. butall is not for inflation we will see a very moderate acceleration of inflation but it is not going to cause a massive correction. david: megan greene, staying with us. it is a beautiful day over and then borrow, looks like.

disney and viacom hold annual meetings today. we will beach joined by marci ryvicker -- we will be joined by marci ryvicker. ♪

david: disney and viacom hold their annual meetings today against the backdrop of some big deals for both companies disney is trying to buy a good part of 21st century fox and viacom negotiating with cb a's from which it came. we're joined by marci ryvicker who specializes in media security. she is on the phone. thank you for joining us. let's start with the disney deal. we got disney versus comcast going for a good part of what he for century fox with skype being in the center. bob iger has made some big deal. marci: i don't necessarily view this right now as an auction. i truly believe disney is

looking at the majority of 21st century fox assets. i don't know that comcast is as interested in the domestic cable networks. i think comcast interest lies in sky. they clearly made that known last tuesday when they came out with a surprise announcement. past, ist least in the that going to change? can they get it with a majority of the sky owners? comcast is going to go directly to sky shareholders. i don't believe that fox is going to so there 39% stake to comcast and comcast is when the 61%. we have not heard from fox yet. there wouldn't for comcast to submit a formal bid. looks like there will have to come by the end of april. at that point, fox may up instead. -- may up its bed.

i would expect that fox would come in after having conversations with disney. it has to be fox the does respond. lisa: i want to take a step back and talk about the importance for disney and fox assets, both the actual content as well as sky here at which is more important? i want to show a chart from your snowden home. it is something that caught our attention was the enterprise value of netflix is quickly catching up to that of disney. the underscores challenges that disney faces when dealing with acquiring assets. they want to find out how you monetize that in the same way that netflix does. doesn't that suggest that the 21st century fox assets apart from sky to be more bible to disney jets could be more valuable to disney. -- could be more valuable to disney.

bob iger is 100% invested in content and his app. hulu andly making direct to consumer product which is where a lot of the fox content could go. important. see sky we wrote a note yesterday. it has more strategic importance and more game changing for comcast than it is for disney. i would expect that of comcast were to win, disney would launch that 39% stake in sky. what would be interesting is if his knee and comcast negotiate some sort of swap between hulu or disney gains 100% control of hulu. david: let's assume you're right and comcast does gain control. explain me the strategic importance in the sense. the director home viewer, that business is not -- it is the

over the top part of it that seems to be the growth. in sky growing very fast? marci: sky is going fast and over-the-top but more important is the international part of it. aboute been very clear the hold that comcast has on international diversification. that helps them on the distribution side and it helps them on the content side internationally. it is already an established product. some investments said they are doing this because they want hulu but will isn't as established as sky is. hulu is not international. i can see why comcast will begin pulling $41 billion to go after an asset just to make it gameplay for hulu. david: i really appreciate it, marci. marci ryvicker, thank you so much for being with us.

going to be quite a drama playing out. lisa: i cannot get over it. we were talking about the one hand, netflix looks like a figment of people's imagination. thateople are rewarding while disney has been penalized for not having that big dream. david: if you are bob iger you're looking at those multiples over netflix and you are jealous. lisa: that is like content is going to be the key driver. global viceg up, chair of public policy. we are going to talk to her about public leaders and how they view president trump's tariffs. live from new york, this is bloomberg. ♪ mom, dad, can we talk?

sure. what's up, son? i can't be your it guy anymore. what? you guys have xfinity. you can do this. what's a good wifi password, mom? you still have to visit us. i will. no. make that the password: "you_stillóhave_toóvisit_us." that's a good one.

seems a bit long, but okay... set a memorable wifi password with xfinity my account. one more way comcast is working to fit into your life, not the other way around. lisa: this is "bloomberg daybreak." i am lisa abramowicz. stocks, the europe 600 up.

paris almost .5%. nasdaq futures in the green. 10 yield in the u.s. is unchanged. germany yields picking up just a little bit. the italian 10-year declining as ofple ride off the risk political dissolution there. now we want to find out what is going on outside the business world. president trump will probably exempt some nations when he formally imposes tariffs on steel and aluminum. mexico and canada would be excluded at first, but they lose the exemption if they cannot agree to an updated nafta treaty. a person familiar says the tariffs order likely will not be signed today, to give more time to prepare legal documents. wall street getting shut out in the senate's latest rewrite of

the bill to ease financial regulation. foreign banks will not and if it from legislation intended to help regional lenders. citigroup another big thanks will not get a reprieve from a post crisis capital requirement. according to analysts and south korea, sanctions that heard north korea pose economy by itsting exports have giant foreign currency reserves, which could limit their ability to pay for essential imports. this is "bloomberg daybreak." global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. david: a week ago now, president trump said he would be moving to help steel and aluminum producers by imposing tariffs on imports. we have not seen the order. theyr ross yesterday said will try to make them surgical,

as he put it. we are welcoming now someone whose job it is to talk to ceo's around the world about the challenges and opportunities they face. she served in the treasury department under president clinton. she has been named 10 times to 100 most powerful women. 10 times. welcome. >> international women's day. david: it is that. you talk to ceo's. how concerned are they? >> very concerned about the trade war that could be set off. it follows on the heel of the u.s. tax reform. what is not seen is the u.s. tax reform to try to get investment in the united states kicks off a tax war of sorts around the world as every country looks at how to adjust to keep their country competitive. when you combine the tax work with what could be a trade war, that is a really combustible

combination. about a race to the bottom as everybody competes. david: the president and his this progress, jiving capital investment, bringing money back to this country. how would the trade tariffs cut against that? >> they can undermine the good that was done for business with u.s. tax reform. the tariffs could be a counter production. it is very interesting that the president, in a proposal for tariffs this week, actually, it was to fill in a campaign promise, but the tariffs would actually hurt u.s. workers. the steel and aluminum users, there would be a net job loss. so when that sense, it is not fulfilling a campaign promise. lisa: i have to wonder, as you talk to corporate executives, what is their confidence like in light of some of these new

proposals? people have been saying that a more stable backdrop will allow companies to make that investment in their business, to extra workers. are they getting the confidence? >> business needs certainty. uncertainty paralyzes people. we are going to see a little bit of that. but business needs certainty. the lesson learned from this week is that we cannot count on a disciplined process to produce results. it is going to be chaotic. there is not a disciplined process. and that can create uncertainty in the business world. david: perhaps intentionally so. president seems to like decision-making through conflict and through fits and starts. ceo's areask whether concerned about the trade deficit. we have a chart that illustrates how it is growing. at some point, do ceo's get

concerned and say that there is a problem, and what is their solution? >> there is legitimate perspective on the problem, that is slow, methodical, a process, so there is a legitimate concern to jumpstart and take the process into their own hands based on national security. i think what ceo's are more concerned about is the technology disruption that is occurring. it is not global trade that is taking jobs. it is technology disruption that will take 5.1 million jobs by 2020 here that is just due to technology. businesses are wrestling with that. lisa: so are they investing more on training people and increasing salaries if they can get people in and actually innovate? >> absolutely. at ey, we are doing a badges program where we are having our

employees take badges in in data visualization and ai, and they can reach train and get a badge that is portable, that they can take with them. that is the future of work. david: you mentioned international women's day. i want to connect that with what we were just talking about with technology. we have a challenge in various parts of american business with andn, particularly women more senior positions. there is something of a gender gap when it comes to silicon valley and computer programming and tech people. is that going to make things worse? if we have more and more tech people and they tend to be men, that will go the other way. >> we know the technology disruption that will come will disproportionately affect women, so it is all the more important that we train and read train and have the badge type programs to future,men in the investments in stem, because of the disproportionate impact on

women. david: it is required in england to disclose pay gaps based on gender. disclose our pay gap. what is interesting is there is a distinction between the pay gap and equal pay for equal work. when you disclose a pay gap, and we have one in the u.k., we just disclosed it. the finance sector as a big pay gap come up a part of that is due to we do not have enough women in leadership, so they are in lower-level positions. so when you put the numbers out, there is a pay gap. we focus on equitable pay for equal work. we feel much better there. ith is a prominent -- as a prominent woman at a big company, what do you think the obstacle is? -- k i think the entire >> i think the entire #metoo

movement is showing we have an imbalance of power. and issuess of race of class. until we deal with that, i do not know if we will get progress. how do we tackle that? >> leadership. what are we doing in response to #metoo? checking hr policies. sports are making sure we have say fort places, the ability to speak up culture. where is the leadership from our government and from our private sector to say we have got to change this culture? when you have power imbalances, there is always going to be structural impediments created. those keep women from achieving. we are making great progress. i am very hopeful that this power in balance we're facing starts with real leadership. government has to use its voice. the private sector has to act hear it and you need

transparency to hold people accountable. right now, the government is not using its voice. debatingwhen we are stormy daniels today, you would say we are sending all the wrong messages around whether we have got real leadership on this issue when it comes to power a balance. thed: and it is about people, whether it is to the marketplace, the boardroom, or the government. it on guns, didn't they, and businesses reacted. government is being forced more and more to react, and we saw it on guns. where is the outcry with respect to the gender issue? a moment, but it has not turned into a movement. and leadership can help turn it into a movement. lisa: definitely a very complicated issue. that it is power, but it is also childcare. >> sure. alisa: so there are a lot of issues here. having the backdrop of what is

going on currently -- >> it gets into the detail. to your point, we have women with flexible mobility, so you need women to have international assignments, just like men, to get those experiences here at 40% of our mobile workforce around the world are women, compared to 14% on average. that will help women. we need more of that. h,vid: thank you very muc beth brooke-marciniak. president trump tweeted out that we are looking for to a three: 30 meeting today at the white house to protect the steel and aluminum industries was showing great cooperation towards those that are real friends and treat as fairly on both trade and the military. i love this, that may indicate that maybe we will get that order. and then he says that we are going to protect them, but maybe we will tailor it some. he is good. coming up, moments away from the

ecb's latest policy decision. frankfurt next for the announcement. live from new york, this is bloomberg. ♪

lisa>> this is "bloomberg daybr" coming up, katie kock from goldman sachs. david: about two and half minutes away from the ecb policy announcement. joining us from new york is kathy jones from carl schwab. megan greene is still with us from manulife.

do you expect, if anything, coming out of the ecb? asked not expecting any big surprises because they're walking a difficult line between growth being robust and inflation still too low. i do not think draghi will indicate exit from the qe program suddenly. i think he will try to drag it out a little bit. david: to continue on that point with you, kathy, how is -- how important is it for them to give guidance? >> i think they have given a fair amount of forward guidance. they have said they may exit in september for further purchases. i think that is as much as they would like to do. what are markets expecting with guidance going forward of when the ecb could taper? gottene have already some inkling of how the ecb is thinking about on purchases over

the past couple of months, and the markets have adjusted off the back of that. the ecb has suggested it might be more hawkish than it originally thought. we can expect some change in how they talk about when it will stop, but that is about all. lisa: thank you so much, megan greene. we should be getting some headlines now. it is 7:45, the moment when we should get the breaking news. here they are. david: leave the main financing rate unchanged at 0%. leave the deposit stability rate unchanged, -.4%. margin lending facility unchanged, .25%. quantitative easing until the end of september or beyond, if needed. euro bears its decline after the announcement. that is what we have right now, not a big surprise. lisa: and not a huge reaction with markets. digest it.ying to

the ecb is saying quantitative easing will run until the inflation pass has adjusted. david: now over to frank for an matt miller -- and now over to frankfurt and matt miller. i hope he has his ecb had on. matt: it is getting warmer, so i got to ditch the ecb hat. for some reason, a lot of the producers have issue with men wearing hats. anday, it is really calm, the ecb and mario draghi have been great at not roiling markets. they wanted to try and be patient and persistent now with concerns about trade wars, concerns about tariffs. that means they are not likely to turn more hawkish here at money markets have started to bet that they will be a little less hawkish, pushing back expectation for 10 basis point increase in the deposit rate in the second quarter of 2019, from previous expectations of an increase in march. you are unlikely to see much of a change in draghi's language

today. he will be asked about arabs and the possibility of a trade war at the press conference and about 45 minutes and as he will be asked about tariffs and the possibility of a trade war at the press conference in about 45 minutes. increased renewal of the stock rates here. so there is still very involved. he will say that is supporting growth in the economy. alisa: thank you so much, bloomberg's matt miller. i want to bring details. the ecb did change its language with respect and the asset purchase program, saying they will reinvest after that buying ends. they will reinvest for as long as necessary, and these are investments will help deliver appropriate stands. this seems to be somewhat dovish, frankly, saying, look, we plan on being in this market and providing a buy in force for

a long time. david: it does feel dovish. i want to go back to megan greene. we're looking at the euro-dollar cross, and the euro looks like it strengthens on this news. it wouldknow why strengthen against the dollar? >> honestly, i do not think it is that dovish. ecbody did not expect the and the best in -- anybody that did not expect it has not been watching a addition not be a surprise. the september deadline for potentially any qe is based entirely on the timing of the italian election spirit we still do not know what the outcome will be. planned this so that they could have a real conversation in june about when they will be finishing up qe. i still think that conversation will happen in june. insofar as the markets of not really cared about italy at all, i think that paves the way for them to end their purchases in

september. lisa: to the point, the ecb did drop its pledge to increase the asset purchase program in terms duration, ifr necessary, basically saying they might be paving the path for some kind of withdrawal of stimulus could what do you make of this, kathy? >> i think all the central banks would like to exit their qe programs. japan and europe alike to, but they have a fundamental problem of inflation not picking up. euro has picked up quite a bit. it has been higher. and you throw in the political uncertainty or this economic uncertainty involving trade, and it is hard for them to move forward very aggressively at this stage. david: megan, beyond the euro-dollar cross, we have the german 10-year, and the yields went up four basis points actually. markets are mildly hawkish, if anything. say thisand i would

could be viewed as good news that they are going to end qe, because it means the recovery is a sustained. but looking further down the line, this is quite scary. once the ecb finishes qe, i do not think there is any way they're ramping it up again, especially if they have a german at the helm. so at the next downturn, central banks usually cut rates by 500 basis points in the face of a recession, but there is no room to do that. the second course of action is qe, but i do not think the ecb will be able to do that either. that is something to watch out for further down the line. lisa: cathie, why isn't there more of a selloff in the german the european bond markets in general? >> they seem to be really angered these days. -- they seem to be really anchored these days. the inflation is just not picking up. that someat they see

of the hands are tied for the central bankers. david: on megan's what about uncertainty, we have never been in the situation where we have two central banks tightening at the same time. the fed rolls out their balance sheet, and now the ecb is at least thinking about maybe doing it. terms ofe have seen in the increasing volatility lately, that is what we will see going forward. qe suppressed volatility. i think we will see a lot more going forward. lisa: i want to get your thoughts about the ecb dropping its pledge to increase the size of quantitative easing, if necessary. is this significant to you? >> i think so. every word is parsed. showing wethey are are getting towards the end of the road here. every pot i am sorry, i was clutching at straws. first of all, did we ever think that they would be increasing qe

right now? and if they needed to increase it, they would do it anyway, wouldn't they? yeah, that is right. realistically, the debate was whether they would end qe in september or december. it does not make a huge difference either way. pretty the ecb is desperate to normalize policies so that they have room to cut the next time we have a downturn. this is kind of a step closer towards that, but we are still a ways off before they start hiking rates. when they do, i think it will have to go even more slowly than we have seen from the fed in the u.s. david: we're going to welcome back our colleague michael mckee. you see the charts, and i think the markets are saying this is sort of hawkish. mike: it is sort of hawkish. what the ecb is doing is unusual, sending this as part of the statement. i think the idea is there has been a lot of question about the division between hawks and doves

on the ecb. by putting it in the statement, that is from everybody, the asernment and counsel, opposed to mario draghi and his news conference in getting his opinion. ecb ise saying that the united on this and they will readjust their guidance going forward. we may get that from draghi, but they are saying the time of buying more and always looking to buy more is over. lisa: does this mean that the ecb does not care about the strengthening euro for now? mike: no, they do care about it. what happens with inflation drives what the ecb does, but what it does signal is that their forecast is for growth and inflation to be strong enough to justify probably ending in september, although they say they're still open to going on, and they will keep rates low for quite some time. they're going to keep reinvesting. the euro zone economy is not out of the woods, but it will be

different. it is maybe a turning point announcement. david: mike makes a good point. rathern the statement than some place else. in the past, mario draghi got in trouble for sort of talking and had to dial it back. it is in the statement. is this really more a matter of where the underlying monetary policy is going? so mike has it right. i think the fact that it is baked into the statement suggests that the hawks on the governing council have won. for months now, pretty even split in this debate. so this sort of suggests that one side came out on top, and we can assume they will be driving monetary policy going forward. it is not clear who will be the head. it seems fair the germans would have a certain position. finn,ld be a dutchman,

estonian. but they come from the same economic orthodox, which is a bit more hawkish than mario draghi. alisa: i know people have been watching the gap in yields, the u.s. versus germany. if you look at the bloomberg, you see the gap between 2-year yields in the u.s., how much more they are paying versus german prunes -- bunds. is the inflection point where this gap collapses as the ecb gets more aggressive? >> it has been remarkable how weak the dollar has been relative to the euro given this gap. the markets have departed in a way that is very unusual. we may be at the point now where this gap is going to narrow, at least a little bit. : so you say it is in the statement, making no bones

about it. mike: he could come out more dovish and say that we are going to keep asset purchases, re-investments, going for a while, and we are not changing on a dime here. it is not a huge switch to a hawkish position. but we are sort of changing the guidance going forward, that one era is ending and another is beginning. it will not be an immediate change. things are going to move a little bit. if he had said that in the news conference without this, people might have taken it as very dovish. david: so subtle. thank you so much to megan, kati e, and mike. coming up, the main event, mario draghi and his news conference. this is bloomberg. ♪ mom you called?

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to the park is, dropping its pledge to increase the size of qe. the euro and bund yields both rise. and conflicting signals about how broad or narrow the president's decision on aluminum and steel will be. and express scripts and health care. welcome to "bloomberg daybreak." i am david westin right here with lisa abramowicz. alix steel is off today and we got news out of the ecb. lisa: and they are taking a more hawkish stance. look at the reaction so far across the board. the stoxx in europe still holding onto gains. german 2-year yields have increased more than they were before it. the euro is unchanged against the dollar. as a be futures holding their gains, moving around a bit him as people react to the somewhat hawkish stance of the ecb. david: ok, an update on the

headlights outside the business world. kailey: president trump will probably exempt submissions when he imposes tariffs on steel and aluminum. mexico and canada would be excluded at first, that they lose the exemption if they cannot agree to an updated nafta treaty. have and the eve yo -- eu warned ever tell you should did the president will have a meeting this afternoon at the white house. wall street is getting shut out in the u.s. senate's latest rewrite of a ball to the financial regulation. last minute changes have specified that foreign banks will not benefit from legislation intended to help regional lenders. citigroup another big banks will from postreprieve crisis capital requirements. in china, president xi jingping says the common's party's proposed changes to the constitution reflect the will of the people. one of the changes repeals the ban on the president survey for more than triple terms, the only formal barrier to xi staying in

office past 2023. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. david: thanks so much. we are now about 20 eight minutes away from the ecb president draghi's news conference, and we hope to get new details with the bank by the economic process and future plans for tapering. tapering his are ready the gun -- tapering has already begun. far, you can see from the orange line that the private sector has more than stepped up to fill the difference in terms of lending. from karniol-tambour is bridgewater associates, head of investment research. welcome to bloomberg. good to have you here, karen. you heard with the ecb did. they drop this language, they are not going to go back and increase qe if needed.

does that make you more nervous about the private sector's willingness to step and? >> look, the way that the ecb has been so successful in recent years is by being able to print money to offset what was a massive private sector deleveraging and contraction. the ecb has been looking carefully to see at what point does the private sector get willing to step back in and offset that with its own activity? banks are feeling much healthier than before. the ecb is wisely saying maybe we can slowly start taking the foot off the gas. the amount of slowing they have done through college weight of easing has been more than offset -- through quantitative easing has been more than offset across countries and industries. it seems pretty wise to keep looking to see how the private sector is responding, and i think the ecb will keep providing the stimulation, as necessary, and taking the fed

off the gas. lisa: karen, a lot of people associate bridgewater with the short bet against europe, articulately italian companies and banks. do you think that the public impression of bridgewater's position is accurate? and should other investors be short europe? that thei would say public perception of our batets is extremely misleading. the reason is that we take views on a whole range of markets and implement those three huge range of instruments. anything that is disclosed is actually a very small subset of those instruments and markets where we have disclosure requirements. understandably, it is a very thin slice the does not really represent the holistic set of positions. it is often just one side of trade. he gives a misleading picture of what our views really are.

think that european assets are said to underperform as the ecb embarks on some head of tapering potentially later this year? >> it depends which assets. if you start with the bonds in europe, it is sensible from our perspective the bond yields will keep seeing some degree of rise. because of this dynamic where the stronger the growth is, the more sensible for the ecb to allow some tightening to flow through. there is really no tightening that is priced in. so it is sensible for those assets to keep underperforming as the economy picks up. lisa: which bond yields are most vulnerable? >> probably bund yields. in germany, that bond market has been squeezed most tightly by the ecb's massive buying. is the least there supply relative to what the buying has been like a that is sort of the benchmark of what is expected for monetary policy. very little tightening is priced in.

david: how does currency figure into your projections? we are putting up charts that up, butd yields going also the euro continuing to climb. at what point is the strength of the euro become a headwind against growth in europe? >> i think it works just as you are saying, which is that the euro, it is a relevant position, something about how europe is theg, for example, against dollar, how europe is faring against the united states. in recent months, as european growth has accelerated and become more entrenched, the markets have caught up. the euro has strengthened versus the dollar. more that happens, the more there is a little bit of tightening, and that is in addition to anything the ecb is doing, so formal tightening. looking forward, we do not expect that persist. european growth is strong, and u.s. growth is strong. looking ahead, and the u.s., you have all this fiscal stimulus

coming and a lot of reasons to think that the u.s. growth will keep accelerating. to tighten is more significant in the u.s., so we would not expect that euro-american action to continue. lisa: there is this sort of synchronized tightening, both at the ecb remiss qe later this year and of course the fed raising rates. what does that mean for emerging markets? that has been one of the law's popular areas to invest in, despite the tightening cycle we are in. -- that has been one of the most popular areas to invest in. >> i would say emerging markets are still relatively early in where they are in their cycle. you still have a lot less money going into emerging markets than what it looks like when you're in a boom. emerging markets went from being very reliant on foreign capital coming in to being much less reliant on foreign money coming in today. investors are just starting to pick up their interest in higher yields and the better

environment there. from an economic perspective, they are very far from hitting capacity restraints. we think emerging markets is still very attractive and not that reliant on money coming in from abroad. itid: put government into and look forward to perhaps tariffs coming in as early as this afternoon. to what extent my that change some of the dynamics, whether it is versus europe were versus emerging markets. >> look, let's go back to how the golden trade system works. it is extremely enhancing to productivity and job creation in that it allows countries to really produce what they are best at. anything that fundamentally pulls back that system, changes the way the system works, is going to be bad for productivity and job growth. any fundamental change in the global order is significant. what we do not know yet is to

what extent the kind of things are being contemplated today might lead to that, the immediate effect will not lead to that. david: president trump's position, as i understand, i will not say we will might get hurt a lot but others will get hurt a lot worse, because when you're running a trade deficit, it is the people that export you that will get hurt here it is that right? >> the immediate things being discussed are not the issue. they are small and contained. that is all what happens. what is important is, does this spiral become more of a global trade war with lots of and fed mentally changing the global trade system? sayingust when you were we are at the early stages, which developing nations do you think are most promising at this point? >> i would say, separate from literally where they are in the cycle, the place where investors are looking the least and should be looking a lot more is really to china. already somets are

of the largest and most liquid in the world. they just i'm not really been accessible to foreign investors, and that is changing rapidly. the leadership has committed to making those markets accessible to foreigners. diversification is one of the most important things. there are not very many large liquid economies that have independent central banks, independent credit systems. that is starting to happen in china, a very important investment that investors are not paying enough attention to. david: something there is a discount with chinese assets because it is a state-run economy. so you do not know what the state might do. is that wrong? >> i would say you do not necessarily have to have a specific view -- that is one factor of many factors here at when you look at any kind of investment, you have to look at a range of factors. china, no different than any other. in terms of being a market economy, as we study economies

around the world and look at the relationships, what drives growth and inflation and the credit cycle, china has the same relationships that can be understood in all countries around the world. they are well-reflected in china. david: this is terrific. thank you to karen karniol-tambour of bridgewater. from goldmanoch from goldmane koch sachs asset management. live from new york, this is bloomberg. ♪

julie this is "bloomberg : daybreak." i have your business flash. the hostile bid from qualcomm is likely to face a review.

the treasury department ordered a 30 have a day delay of the qualcomm investor vote to the board. but the review may not be done then, and it could take up to 75 days. saleucker's considering a on a certain brands. they are weighing options for the unit, which includes robin hood flour and martha white baking mixes. it could fetch as much as $700 million. a blockbuster deal and the pharmacy benefits industry. cigna has agreed to buy express scripts in a deal the represents a 31% premium to the company's closing price yesterday. they negotiate prices for drugmakers for insurers and employers. that is your bloomberg business flash. david: the effect of rising rates and inflation has been weighing on investors. a grim outlook today from daniel

pinto. he says we could be adding to those concerns. listen -- >> normally in the cycle, probably the market still has some way to go for the next year or two. 20% to 40%, be depending on the valuation of the time. the most important thing for someone like us is to be prepared. david: we welcome now katie koch, fundamental equity head of client portfolio manager at goldman sachs. welcome back and you heard mr. pinto saying they have a ways to go, but in a couple years, it could between percent to 40%. >> maybe. a lot of things could happen. david: does it sound right to you? >> that is not our base case they start our analysis. we track earnings a lot. news, thatme great we have had one of the strongest earnings seasons that we have had in a long time.

global earnings, very robust, double-digit earnings growth in all regions around the world, which is terrific. major regions all surprising on the upside. it is coming from almost all sectors. topline growth and good positive earnings growth. we are excited on that. on regional highlights, 90% of u.s. comedies are reporting an fourth-quarter earnings is up about 14%. a sighting for us because we have been optimistic about international markets for a while europe and japan both of 16% in the first quarter year over year. earnings are saying that equity markets can stay on this project three. lisa: the head of the atlanta fed said yesterday that stock gains have not been commensurate with profit growth. >> yeah, first of all, we had a lot of gains. december, here in david, you are challenging me about equity markets and that they could remain elevated, and i said we need to see the earnings come through to justify

evaluations. markets went up a lot in advance and people worried about a selloff. but the earnings suggest that we can stabilize. david: i did not mean to challenge you. that far, does it present challenges going forward? it gets harder and harder. >> it does. the big question is, is this as good as against? the answer is that will be tougher. the comps are getting harder. we need to continue to see robust global growth and we have neverwho have said i have sinned operating environment this good. on the one hand, that is good. but it makes you a little nervous or do will have to monitor it. lisa: perhaps you are not seeing histential 40% drop, but point was that as inflation picks up and as central banks globally start to move away from

their accommodation, what is the downside case, the downside risk to stocks? what is the number you put on it? >> first of all, i think central banks are obviously moving slowly towards tightening, so when it comes to the ecb, i think it is a little bit more dovish than what people were saying earlier. the fed, we kind of know where it is going to go, and we think it will be a slow pace and a low base. i do not think there will be a lot of disruption with monetary policy. i think equity markets can handle what the markets are predicting some of which is three rate hikes for this year to it we think it is more likely to be four. we think equity markets can actually perform to that. so over the next year, i do not see a lot of vulnerability on it. but i want to emphasize that we continue to see more upside and more opportunity in the u.s., first of all, and the smaller cap part of the market, and we see a lot more opportunity outside of the u.s. a david: how much of this is the

government? there is the tax cut. how much is optimism over the tax cuts? jamie dimon said this morning that we are going to investors. on the other hand, how much are we worried about trade? >> everyone was excited about the tax cuts, now they are set about the trade. they offset each other a little bit. big picture, i want to go back to the small caps. this is a beneficiary of both policies. from a tax cut perspective, you get the average effective tax rate of u.s. smaller cap companies was 32%, and it is going down to the low 20's here ort will bring it in line slightly below u.s. large-cap tax rates, so they are a big winner. some would argue a little is priced in, but now we have to look at the second derivative the defendant tax cuts. withare people going to do this money? income and cash is going appeared we think there will be a m&a, and small caps are a beneficiary of that. on tariffs, they will be protected.

if the tariff situation goes to an hour global trade war, they're much more domestic-focused. you been advising clients to increase their allocations to small-cap shares? >> we are encouraging them to increase the allocation to smoke in shares. a lot of u.s. clients already have that balance, about 75% in large cap, 25% and small-cap. put another them to 5% to 10% into small-cap. european clients are mostly in the u.s. large-cap markets. they want to get access to benefits from the tax policy, so there throwing into small caps, too. david: you spend time in india, and we now see people like alibaba and amazon duking it out over india. should people be investing in india, and how would they do it? >> first of all, very positive on emerging markets in general, one of our favorite vices to invest in the world across equity and debt. india is actually our favorite

country from an equity perspective. the way people can get access to it is through buying in emerging markets equity funds. having been on the ground there, which of 20 clients there a couple weeks ago, and the big takeaway is that india is where china was in 2000. the growth trajectory looks pretty incredible for this country, and things will be hitting between 7.5% or 8% of growth. if they do that of the next 10 years, they are going to double gdp or capital, which is exceptional for the consumer story. david: so is the upside in india greater than china? >> and our view, yes. tohave a lot of exposure china, an interesting market. but for us, and yet is the number one place to be invested for equity investment. david: katie koch from goldman sachs, great to have you with a spirit we are moments way from mario draghi's news conference, which we will bring live to you right here on bloomberg. ♪

than eight minutes away from mario draghi's news conference. matt miller is over in frankfurt . you heard about the change in the language about whether they would increase qe. we had our colleague mike mckee say that might allow mario draghi to be more dovish in the news conference. is that right? matt: it will be interesting to see how draghi reacts here he will try and downplay the hawkish aspect, the hawkish reading of that change. that he really scraps the easing guidance,the forward which i think was a little bit of a surprise third markets reacted by buying the euro against the dollar. so not a huge move, bringing it back to unchanged from losses earlier. definitely a move that you can see if you graph bloomberg economics predicted this would happen this morning, so our economists figured that was how it was going to go. none of the other language was

changed, and that is important here at i will be waiting to see are for ecb's forecasts growth and for inflation. we are expecting those tuesday similar to last time. and then see how draghi deals with questions that will certainly be put to him about trade wars, the possible it trade wars, and tariffs. lisa: matt, i want to follow-up row quick. this was expected with respect to them amending some of their qe language. do you think markets are overreacting in thinking this is hawkish? matt: well, like i said, it is on a massive move, only a move of about .3 euro cents. but if you did expect this, maybe if you were prepared and read the bloomberg column this morning, you went along the euro and saw a little bit of a rally. blog also called for a slight rally.

but it is not a huge move, so it will be more interesting to see their forecasts. david: i know you need to get into the meeting. we turned back to katie koch from goldman sachs. you said you thought people were overreacting to the hawkishness. >> the end game here is that rates could go to 10 or 15 basis points by the first quarter of 2019. i described that as incremental. i think everything they are saying is very incremental, to kind of gently get us to the place. was not really surprised by the language. to me, it was mostly expected in pretty balanced. lisa: you were saying that you think u.s. stocks can handle three or even four rate hikes in the u.s. what about european equities? long way to goa until rates are problem for european equities, and a lot of other things can happen that

would be bad for europe, particularly global growth. i would be more worried about the trade war impact on european equities. i do not see rates is a real problem. ofid: trump is sort identified it, the strengthening economy is so much german by exports. there is such a trade surplus. is that sustainable? >> they are much more dependent on exports in other parts of the world. they do need to rebalance that with some domestic strength. in places like ireland and spain , you're starting to see some resurgence of domestic demand. hopefully that will offset if there are weakness in export markets. but if we get into a global trade war, it is deflationary, bad for everyone. risk assets would selloff, and europe would be included in that. lisa: for a second, we were worried about italy and the election. it did not go particularly well. they will not have a government

for months. >> that is not very new for italy. lisa: but no one cares evidently and markets are just pulling back. should they care? >> simply, about 50% of the electorate voted for candidates that are not backers of the single currency. so that would be bad. then you have the ecb that is very powerful, and i think the markets are telling us they believe we are going to get out of this in an orderly way, and that is more important than the italian elections. david: we are waiting for mario draghi's news conference, which is scheduled to start in just under two minutes from now. what about the euro being a headwind potentially? mario draghi and others have been concerned about how strong the euro has gotten against the dollar. >> last year, there was a big rally in the euro versus the dollar. conditions are tightening, and that should cause them to be a bit more dovish. bigger picture with currency, i came from those of the currency

should be driven by interest-rate differentials, and that is not what was all last year. lift we may see the euro off of zero, it is difficult to make the prediction on the currency. david: we are now seeing mario draghi take to the platform. they usually do if you photos and then he will go and sit down. sorry to cut you off. lisa: you were making a point we have been observing, the strange moment where benchmark rates in the u.s. have been rising and the dollar has been weakening. the euro has been gaining. how do you explain that? david: one word. [laughs. >> confusing. david: president mario draghi of the european central bank coming to us from frankfurt. mr. draghi: ladies and gentlemen, the vice president and i are very pleased to welcome you to our press conference. we will now report on the outcome of today's meeting of the governing council.

based on our regular economic and monetary analysis, we decided to keep the key ecb interest rates unchanged. we continue to expect them to remain at their present levels for an extended period of time and will past the horizon of our net asset purchases. no standard monetary policy measures, we confirm that our net asset purchases at the current monthly pace of 30 billion euros are intended to run until the end of september 2018 or beyond, if necessary. in any case, until the governing council sees a sustained adjustment in the path of inflation consistent with its inflation aim.

the euro system will continue to reinvest the principal payments -- the principle payments from maturing securities purchased for an extended period of time after the end of its net asset purchases. and in any case, for as long as necessary. this will contribute both to favorable liquidity conditions and to an appropriate monetary policy stance. incoming information, including concerns projections, the strong and broad-based growth momentum in the euro area economy, which is projected to expand in the near term at a somewhat faster pace than previously expected. this outlook for growth confirms our confidence that inflation will converge towards our inflation aim of below the close

to 2% on the medium-term. at the same time, measures of underlying inflation remain subdued and have yet to show convincing signs of a sustained upward trend. in this context, the governing council will continue to monitor developments in the exchange rate and financial conditions with regard to their possible implications for the inflation outlook. overall, an ample degree of monetary stimulus remains necessary for underlying inflation pressures to continue to build up and support headline inflation developments over the medium-term. supporttinued monetary is provided by the net asset

purchases, by the sizable stock of the acquired assets, and the forthcoming reinvestments and by a forward guidance on interest rates. let me now explain our assessment in greater detail. i will start with economic analysis. percent increased by by zeroon quarter -- point 60% quarter on quarter in 2014, after increasing 0.7% in the third quarter. the latest economic data and results indicate continued strong and broad-based growth momentum. measuresary policy which have facilitated the deleveraging process continue to underpin domestic demand. private consumption is supported

by raising employment, which is also benefiting from past labor market reforms and by growing household wealth. business investment continues to strengthen on the back of their he favorable financing conditions, rising corporate profitability, and solid demand. housing investments have improved further over recent quarters. in addition, the broad-based global expansion is providing an impetus to euro area exports. this assessment is broadly reflected in the march 2018 ecb staff macroeconomic projections for the euro area. annualrojections for see real gdp increasing by 2.4 2019,t in 2018, 1.9% in

and 1.7% in 2020. compared with the december 2017 europe system staff macroeconomic projections, the outlook for real gdp growth has been revised up for 2018 and remains unchanged for 2019 and 2020. the risks and the euro area growth alex are assessed as the riskslanced -- around the euro area growth outlook are assessed as broadly balance. there could be stronger growth in the near term. on the other hand, downside risks continue to relate primarily to global factors, including raising protectionism and developments in foreign exchange and other financial markets. euro staffo

estimates, euro area annual hicb inflation increased to 1.2% in february from 1.3% in january. this reflected mainly negative and fx in -- affects in processed price inflation. the basis of on current futures price for oil, annual rates of headline inflation are likely to hover around 1.5% for the remainder of this year. measures of underlying inflation remain subdued overall. looking forward, they are expected to rise gradually over the medium-term, supported by our monetary policy measures. the continuing economic expansion, the corresponding absorption of economic slack,

and rising wage growth. this assessment is also broadly reflected in the march 2018 ecb staff macroeconomic projections for the euro area, which for see inual hicb inflation at 1.4% in8, 1.4% in 2019, 1.7% 2020. compared with the december 2017 --ff like run the government macroeconomic projections, the outlook for headline hicb inflation has been revised down slightly for 2019 and remains unchanged for 2018 and 2020. turning to the monetary analysis, broad money continues

to expand at a robust pace, with an annual rate of growth of 4.6% unchanged this year, from the previous month, reflecting the impact of the ecb's monetary policy measures and the low opportunity cost of holding the most lengthy the posits. -- deposit spirit accordingly, the narrow monetary aggregate remained the main contributor of money growth, continuing to expand at a solid annual rate. recovery in the growth of loans to the private sector observed since the beginning of 2014 is progressing. the annual growth rate to financial reparations strengthened to 3.4% in january .fter 3.1% in december 2017

while the annual growth rate of loans to households remained unchanged, at 2.9%. the pass-through of the monetary policy measures put in place since june 2014 continues to theificantly support conditions for confirms -- four firms and households, access to financing for small and medium-sized enterprises, and credit flows across the euro area. a crosschecked of the outcome of economic analysis with signals coming from the monetary analysis confirmed the need for an ample degree of monetary accommodation to secure a sustained return of inflation rates towards levels that are below but close to 2% over the medium-term. in order to reap the full benefits from our monetary policy measures, other policy

areas must contribute sizable he to raising the longer-term growth potential and reducing vulnerabilities. structuralntation of reforms in euro area countries needs to be substantially stepped up to increase resilience, reduce structural unemployment, and boost euro area productivity and growth potential. against the background of overall limited implementation of the 2017 country-specific recommendations, as communicated by the european commission yesterday, greater reform effort is necessary in the euro area countries. regarding fiscal policies, increasingly solid and broad-based expansion calls for rebuilding fiscal buffers. this is particularly important in country were loan debt

remains high. will benefit from intensifying efforts towards achieving a more growth-from the composition of public finances friendlye growth- composition of public finances. a transparent implementation of the growth pact and the macro economic procedure over time across countries remains essential to increase the resilience of the euro area economy. deepening economic and monetary union remains a priority. the council urges specific and decisive steps to complete the banking union and the capital markets union. questions.ready for >> mr. president, thank you. i am from bloomberg. yout question, i noticed

have changed somewhat your monetary policy statement, dropping the commitment to increase the size of quantitative easing if necessary. could you explain the reasons for that, especially against the backdrop of trade war talks we have been hearing and somewhat slowing down of survey indicators for the recovery? second question on latvia, the affairs surrounding a councilmember. do you see the fact that areian authorities blocking a governing council member from attending governing council meetings as an infringement? if not, why not? and would you say the authorities have not been fully cooperating with the ecb on this affair? thank you very much. mr. draghi: thank you. first of all, the first question , let me just read to you the

sentence we have removed. by the way, it was a sentence introduced in 2016 when we cut our monthly purchases from 80 to 60. thinking about that, you can figure out how different the situation was at that time. this says if the outlook becomes less favorable or a financial conditions become inconsistent with further progress courts sustained inflation, we stand ready to increase the asset purchase program potential size and/or duration. so what we did was to remove the explicit reference to the likelihood of an increase in the pace of purchases in the near future. and we should not forget that we otherapped -- kept the reference to such a possibility.

when it says euro system will continue to invest the principal and this will continue for an extended period of time, for as long as necessary. read this decision -- by the way, the decision was unanimous. that is what it is, it is a backward-looking decision without signals or implications for either our expectations or a reaction function. he key ecbxpect t interest rate to remain at their present level for an extended period of time and well past the horizon of our net asset purchases. it also has not changed our reaction function. our net asset purchase at the

current monthly pace of 30 billion euro is intended to run until the end of december 2018 or beyond. until the governing council sees a sustained adjustment consistent with the inflation aim. so that is what the decision is, and that is what it is. it was unanimous, as i said. elaborate on your second question about latvia. latvia, we do not have enough information. we are sendingay a letter to the european court and the governing council has decided unanimously thesk for clarification by court of justice of the european union with her individual

security measures imposed on the governor of latvia's by the latvia anticorruption authority on february 19, 2018, relieving him from office, and the measures comply with union law. 14.2 article of the statute. forre asking the ecj clarification on the present situation. thank you. >> you mentioned that the pledge to, the removal of the pledge to increase quantitative easing was tonimous, but in the run-up the unanimous decision, did any policymaker call for a more radical change, perhaps dropping a link between the inflation or taking out the option to extend

the duration of it? second question on trade, good u.s. administration's plant tariffs -- planned tariffs slow down inflation? mr. draghi: thank you. first question, as i said, it was a unanimous decision. there was not much discussion inut other possible changes monetary policy for our future, for the coming months. i can give you a summary of the discussion. it was a fairly usual blend of confidence, of persistence, and patience. the confidence because the latest incoming data reduced the variance of the path of inflation converging to our

inflation aim. but also persistence and patience, and of course you have different views. someare more confident, less confident, so they stress the persistence and patience. there was a somewhat repeated reference to the uncertainty outwarding potential path, and the reason for that is that, first of all, we discussed several times about how complex the measures of unemployment are. also, there is a fact that strong growth may produce stronger potential output growth, as well. pastu look at the structural reforms, the increase in labor supply, increase in participation rates, increase in productivity, basically all of this increased the uncertainty

about the potential of the growth path, therefore about the size of the slack in the economy. so the policy will continue to be reactive, basically. that is some parts of our discussion. another part was devoted to assessing the progress about thattion where we said headline inflation will hover around 1.5% for the remaining part of the year, but the underlying inflation measures remain subdued. so even though we have strong growth, we still have subdued inflation. our mandate is in terms of price stability. so victory cannot be declared yet. discussed -- we you asked about monetary policy,

-- thecally discussed exchange was about emphasizing all the pillars of our monetary policy. we have the flows of net purchases. we have the stock that is accumulating. the events -- the reinvestment policy for an expended -- extended amount of time. and the forward guidance of interest rate bonds. they were all important. thank you. i am sorry, you also asked about trade. i think maybe a question was going to be asked by some of you . the immediate impact of the trade measures, a static estimate, it is not going to be big. the was strikes me is that

whatever convictions one has about trade, in the voting council on this line, we are the disputeat should be discussed and resolved in a multilateral framework. unilateral decisions are dangerous. certain worry a or concern about the state of international relations. because if you put tariffs against what are your allies, one wonders who the enemies are. so i think these are two general considerations that are quite relevant. impact ofng the final these measures, many factors come into play. first of all, is there going to

be retaliation or not? is, what is going to be the response of the exchange rate? so far, we have seen that whenever there was a threat of putting tariffs towards another country, it was the dollar that would appreciate, but things can we different each time. the third and most important is the, say, i all would not call them yet trade wars, but the trade exchanges like we have seen, and that is the effect on confidence. and the effect on confidence is very difficult to assess, estimate, forecast. but if it is a negative effect on confidence, that is going to be negative on both inflation and output.

about the state pensions and what is going on in italy. what is the view of the ecb? mr. draghi: well, we are not discussed it today really. we were so focused on our decision on monetary policy. generallyints, speaking, the fiscal sustainability is of utmost concern in countries which have high debt. >> thank you. question, you have dropped the easing or qe, so does that also mean that you would argue that the risk to the euro inflation outlook have to come broadly balanced to growth

or would you say the risks are tilted to the downside? the second one is very different. you are ecb president for more than six years now and a member of the governing council for even longer. president?a good ecb what are the most important skills? thank you. mr. draghi: thank you. well, the second question is easy to answer. i let others judge. it is not up to me. always,irst, we were and it goes back in tradition, not to discuss risks about inflation. we discuss risks about growth. thatoint here is basically we see headline inflation driven often by energy prices, food prices, and other components that are more volatile. then we look at underlying

inflation to judge the robustness of the convergence. these measures of underlying inflation, some of them actually picked up a little, but others are still subdued in general. so the picture is not much different from last time. in this sense, i have said before, the decision which it today obviously uses incoming information, but it has reduced the variance. otherwise, it is really backward-looking, no new signal. >> mr. draghi, two questions. speech givenecent by a colleague, there were two remarks, for us at the eurozone was less at risk for a taper

tantrum than the u.s. mr. draghi: i am sorry, i missed the words? >> less risk of a taper tantrum than the u.s. when it comes time to drop a close to qe. the second thing to be that in bund markets, the flow of qe no longer matters. it is a lot more about the stock. i would be interested in hearing your views on these two points that were made. the second question is on the latvian issue and how it pertains to the division of labor between the european central bank and the national central bank. you said the european parliament hearing gave permission to grant emergency loans, that was better aligned with the european central bank then as it is at present with the national central bank.

was there a discussion of that today or is that planned? are there other areas on which you think the powers should lie with the european central bank rather than national central banks or with national authorities? mr. draghi: let me answer first the second question. certainlyience we had is giving some lessons we should reflect on. first of all, what is the role of the ecb in this so far? the ecb has cooperated, has informed, and has requested. and this is what the ecb does everywhere in these situations, anti-money laundering, national authorities. as you said, as you heard many is not competent

in money laundering and does not have investigative power. but having said that, the situation, the current situation as far as anti-money laundering is concerned is not satisfactory. what you would like to see our two things, more cooperation between national authorities on money-laundering, more exchange of information, more coordination. it is a spectrum and can go from having a regular and frequent, formalized exchange, forum. or even go up to a centralized authority for that. a second aspect is the cooperation between national authorities and supervisors, both national supervisors and the ssm. that is key because the money laundering activities, as far as

banks are concerned, have legaled, unavoidably, consequences. therefore, they create reputational and legal liabilities. therefore, the supervisor is going to be called in to react to these risks or prevent them from happening. it is so important, the cooperation between the authorities and the supervisor. about thet thing is emergency liquidity assistance. i have expressed in european parliament a view that i share with many voting councilmembers and many board members, but it is not something that can be implemented immediately. by the way, we had this

experience where the conclusion cannot be other than ela should be centralized. they should be basically given through a process were the governing council anticipates -- in the end decides. this is not possible legally now. systemn evolution of the at the present time i judge unsatisfactory and needs to be changed. ow, going back to your first --stion, i don't think >> [indiscernible] ok.et me try -- .t makes a big difference the first time