alix: mark zuckerberg says he is proud of the company is still of active users -- daily active users continue to grow. deutsche bank abandons wall street. the new ceo says he is trying to sell job cuts, efficiency and decisiveness. draghi's tightrope walk. ending bond purchases this year. david: i'm david westin with alix steel. we have a busy morning. alix: 69 companies on the s&p reporting. we get half of the s&p by the end of the day. really good read on where earnings are. david: general motors is .eporting $1.43 a share they also are reported $36.1 billion in revenue compared to an estimate of $34.7 billion for the quarter.

they say they have been profitable across all segments. some hint to cash flow because they were retooling for their big pickups which does affect the cash flow. we will be talking with chuck stevens in about an hour. alix: ups out with earnings as well. revenue really crushing it. $17.1 billion above estimates. their full-year adjusted earnings on the high-end is 7.37. the estimate was for 7.24. solid quarter top and bottom line. downtock unsurprisingly .1%. : there has been real pressure on margins because of

cost. alix: they do reaffirm their full readjusted earnings forecast. very busy earnings day and very busy ecb deck. get on the trying to front foot here. the swedish krona is the central bank story in europe. if mario draghi is more dovish than we think can we be talking the 10 year yield sitting right at 3%. is it enough to bring in unhedged foreign buyers? be and iran story. president macron feeling very confident that president trump will continue to not move the waivers on sanctions. : president trump

gave a news conference and said i think i know where it's going. alix: he said he is doing it for domestic reasons. we are joined by michael and by lisa abramowicz. way too back all the late afternoon with facebook. >> facebook reported. david: there is a lot of expectations and fear about mr. zuckerberg's testimony. it looks like mr. zuckerberg should testify more often. they finally get something to talk about that makes them happy. the business is doing great. the business came in very strong. businessthis strange -- they don't make anything. their whole business is based on linux. -- likes. young people say they are not as interested but it seems to be holding in their right now. the millennials still using it.

these numbers are staggering. we were looking at would it affect people's use of facebook. are 1.4 5age users billion people every single day. it is stunning that 1/5 of planet earth logs into facebook occasionally. noted was the pace of people who log in on a daily basis has slowed. there does seem to be some sort of engagement concern. a 49% increase in revenue is stunning. the increase in users is stunning especially with some of the catastrophic language people are talking about earlier this is the end of facebook given more regulatory scrutiny. we really haven't seen the effects of the european privacy laws which are going into effect. they haven't laid out the details of how that is going to affect the platform.

several black clouds are on the regulatory front. >> they haven't really started monetizing instagram and whatsapp. users but allook of the other products they are beginning to monetize. that stock is up over 6%. great chart talking about what's happened to equities when they report earnings. they are up about .5% before the open. from open to the close they are actually down and for the full day there down .3%. you are not getting really rewarded for beats and not isses.g punished for m >> we have seen time and again people saying with twitter, huge beat and warning this momentum is not going to continue.

fromame thing that we saw caterpillar. it's the same story again and again and shareholders are responding to the future. david: we will hear from the ecb. nobody expects them to make a change of policy. the question is how fast are they going to taper. this is a survey we put in a table. the consensus is they will taper it down. a month ago 46% of those economists thought they would announce what they're doing in june. now it is getting put off to july. >> we are going to get gdp numbers this week from europe and it is not supposed to be good. the question is how bad is the first quarter. responding asot they said it would. does draghi want to move earlier or later? probably a little bit later because they don't want the impact on the euro right now.

companies already reporting problems with earnings because of the euro. if they start about -- talking about tapering earlier the euro goes up. they don'ts assume change the policy and mario draghi tells us for an hour we are thinking about it. >> he will have to respond to hard questions about has the eurozone peaked. what does he make of the ball in business confidence in germany. -- is thise make temporary, is this transient or are we going to see a acceleration. >> the interesting thing about draghi's situation is if the eurozone really were slowing, what is he going to do? interest rates are negative. they have the problem the fed has but even worse of running out of tools. they want to be able to taper. they want to be able to get out

of this for the future. >> a lot of people think the ecb has been doing it stealth tapering. if he came out and said we are going to actually breathe accelerates. a message to all of the lawmakers that could engage in fiscal policy. we only have a little bit more time before we run out of ammunition completely. some would argue they already have. they could signal that. i'm guessing they are not going to. alix: what was not at all boring was of course deutsche bank. the cfo talking about how they are rescaling ambitions and changing their fundamental business. >> there isn't that significant a shift in terms of strategy for the company. we aim to be a corporate led global investment bank based in europe with global reach. of ours a rescaling ambitions particularly internationally. and if you like a discipline in

terms of the focus of making sure that our activities in the u.s. and to some degree in asia aligned with that european court. alix: which basically means we're just going to cater to wealthy and corporate clients. >> that is the swiss model. alix: how many years too late daca >> it is difficult for them. relation the latest in -- iteration. i thought much more fascinating today was barclays. barclays all of a sudden thinks they can still compete with wall street. they're ramping up risk on a lot of banks are pulling back. david: he was very careful in his interview with bloomberg saying we did not increase our risk, we are shifting our risk. we are betting to be the one european investment bank that is truly global. >> here's the irony. if a bank tries to the risk but still cater to corporate clients they cannot balance out some of

the risk they incur by catering to those corporate clients as easily. this is the argument for taking on more risk in other parts. invest in things or use their own money to facilitate corporate bond trading. they need that book of risk to offset other parts of their business. there is a question with deutsche bank. this feels like a shift in strategy despite what the guest was saying. is a significant shift. it is saying our ambitions are materially reduced in the united states. deal and raises questions of how effectively they can cater to the european clients if they knock cannot -- cannot provide them the same type of -- it also raises questions about their capital position. is there footprint just too big to support and whether leverage ratios go up too much? alix: michael mckee and lisa abramowicz, thank you.

david: earnings just a few moments ago. of7. earnings per share 3.86. business isect? going forward just fine. how much of that is going to be equity and how much is going to be cash. the headline here is earnings coming in at $.96 a share. they increased their full-year production guidance. however their second-quarter production estimate comes in light. it feels like potentially the back half of the year will be loaded with more production. that is something analysts are worried about when it comes to oil companies is how much will production improved sequentially versus are we going to see big lumpiness.

missing production first quarter and then a big jump in production. they do say their capital guidance is unchanged. co sticking with that story. is out with an $.93 -- fiscal year adjustment, they are reaffirming their earnings guidance. another beat. alix: apparently their smokable product shipment going for the first quarter fell by about 4.1% and the smoke left was down .1%. smokeless products are actually doing better. david: people don't want to smoke as much. alix: coming up, slowing momentum in europe. the euro edging higher after the head of the ecb's latest policy

decision. that's in 30 minutes time. more on that next. this is bloomberg. ♪

>> this is bloomberg daybreak. i'm taylor riggs. fiat chrysler reported earnings that missed the lowest estimates.

revenue at the italian-american automaker also came up short. the company managed to cut its net industrial debt by more than 45%. first-quarter results are typically the weakest of the year for u.s. automakers. earnings shrank as the world's largest automaker just might hire car sales. volkswagen's first-quarter profit missed estimates. stressed that the overhaul now taking place will strengthen vw's ability to adapt to change in the auto industry. pepsico's beverage unit is still struggling but the snacks division is making up for that. the maker of pepsi posted first-quarter earnings that beat estimates. health-conscious customers who have moved away from soda haven't given up chips. pepsico has rolled out better for you versions of its biggest snack brands. that's your bloomberg business flash. david: we hear from the ecb in just over half an hour. investors are looking not only

at that decision but also what president mario draghi has to say in his news conference that will come after that decision. what he has to say about prospects for the european economy given some indications of softening. the consensus among economists is that we will not see a change in the today -- change in policy today. only 36% of economists now saying they expect the announcement in june as opposed to 46% last month. joining us is david owen. what does it say about the underlining economy? where should the european economy be pointing the ecb? concerned -- as conservative as other commentators about the slowdowns. there has been this growing disconnect between the surveys and the hard data and cost estimates are reporting gdp growth to the eurozone closer to 1% a quarter.

are seeingowdown we in the pmi's if you break that apart you can see that delivery times have lengthened to almost the highest in the history of the pmi itself and labor shortages are developing. you can see this consistently in the survey. remember the first quarter had really bad weather in large parts of europe. we are quite optimistic. today there's going to be no change of policy. mario draghi will keep his foot to the petal and the key decision about tapering will be delayed until probably the july meeting. which is when they will have a much better idea of what happens in the second quarter. alix: mario draghi has already said he thinks the growth cycle may have peaked. what does the market price in from that sentence? >> the market is much more concerned about the rolling over and then some of the surveys.

the euro zone economy is still fairly robust. yesterdaythat we made is there has been a huge structural change in the european economy with a lot of new company formation. particularly in countries like france which the official data may not be capturing at the moment. and moreover in labor market dynamics unemployment growth has been amongst older cohorts particularly female liberal -- labor age over 50. we're not as pessimistic as some of our peers. at the moment it plays into mario draghi being very dovish today. they can think about tapering later. july is probably the key meeting where they will actually communicate that to the public. david: how much of european growth is within the eurozone

and how much is dependent upon exports? and therefore how sensitive is it to the euro? >> we had the world trade data published by cpb in the netherlands yesterday which still shows -- in the world trade cycle into february. the eurozone is much more open as a block than the u.s. economy. dynamics of the level of exchange rate matter more for the u.s. fed. at consumer looking spending and investment driving the eurozone recovery. jeffriesvid owen of will be staying with us. we will be britain to the ecb policy decision live on bloomberg at 7:45 eastern time. 45 minutes later we will be hearing from president mario draghi at his news conference. coming up, a tale of two banks. deutsche bank scaling back its u.s. investment.

barclays says it's gaining momentum. what this could mean for the european economy. this is bloomberg. ♪

david: it is a tale of two banks. deutsche bank and barclays both reported earnings overnight and the executives have very different things to say. >> there is a free scaling of our ambitions particularly internationally and if you like a discipline in terms of the focus. >> one of the most profitable quarters we have had in corporate and investment bank and we are pleased with the results. david: we are joined by david owen of jeffries. i don't want to ask about specific banks but i am really interested in what this might mean in terms of corporate lending and capital raising. the investment bank really goes in the capital markets. what is going on in europe right now in terms of financing companies?

>> the larger companies increasingly making use of the capital markets. obviously interest rates are incredibly low. interest rates are sort of driving that form of lending. in terms of smes and households basically the borrowing rates are being driven by the banking sector. seen back lending picking up in certain countries, particularly france and the ecb release date bank lending survey which showed credit conditions easing. so the trend is actually quite positive at the moment. illustrate what you were talking about, the white line is euro bank lending. almost 2% and the blue line is the european bank stock price. obviously we know has been struggling to really pick up steam. if the economic data in terms of the soft data continues to be weaker and roll over to you expect bank lending to hold up? day wehe end of the

expect the banks as they ease credit conditions to actually be pushing loans forward. particularly trying to change the mix of their balance sheet. in certain countries the asset size of these balance sheets comprised an awful lot of sovereign paper. the ecb willr time hoping these banks hold fewer bonds and replace those bonds on the asset side with more bank lending. in france the trend is still actually very positive in terms of the momentum of bank lending. that is picking up some momentum. you are absolutely right, the eurozone rolls over and obviously bank lending will follow. at the moment the trend in bank lending is positive. there is a big split between the large companies raising money through the capital markets and enterprises borrowing much more from the banking sectors. alix: fair distinction. that brings us to the spread

between two-year u.s. treasury's. it is now 300 basis point difference. was the expectation for that? i think over time you will get to a situation obviously where generally the bund yield will start rising. for the moment obviously there is more pressure on the u.s. treasury curve to reprice. at the end of the day as we continue to highlight the ecb is actually being promising in a lot of the buying of u.s. fixed income. alix: david owen of jeffries, you will be sticking with us. mornings on deck. coming up, a maryland -- american airlines. this is bloomberg. ♪ retail.

under pressure like never before. and it's connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers rely on comcast business to deliver consistent network speed across multiple locations. every corporate office, warehouse and store

near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. alix: this is "bloomberg daybreak." i am alix steel. 15 minutes to the ecb decisions. jones features up by 33 points. s&p up i-5. this book positive earnings

helping to boost u.s. equities. in europe, the tax in positive territory but weighed down by deutsche about euro-dollar, $1.21, a little stronger. it is pretty much across the board. i want to watch the german two-year, -56 basis points, unchanged. what if we get a slightly dovish or hawkish mario draghi? how does that affect the 2-year over there? and u.s. treasury, all bonds across the board getting a nice bid today. do we see iranian sanctions from the u.s. come back may 12? that is front and center. ok, another earnings crossing. american airlines out to my

threeing's 75 cents, up cents a share than projected. was projected at the have increased fuel costs and also increased labor costs because of a new contract. the question is, how much can they raise fares? the issue is whether they will get squeezed on margins. premarket down about .4%. alix: they are announcing a new $2 billion share buyback authorization. you will onlyket, get rewarded if you boost shareholder return, which we learned from shell and from total today. fewer shares means earnings-per-share's go up. is it's given update on what making headlines outside the business world. taylor: expectations are high for the first so that between the leaders of north and south korea in 11 years. kim jong-un meets with moon

jae-in tomorrow at the military demarcation line. there is speculation the talks could end with a peace declaration, statement on the grid disarmament, or plans to withdraw troops of the border. bankeden, the central cannot get enough inflation, pushing back against a planter to raise interest rates for the first time in seven years. the bank removed a line in its guidance saying that they do not want to appreciate too quickly. want to develop in a way where it appreciates very rapidly, making it harder to keep inflation at or around 2%. slow appreciation is fine in that sense. i would not say tweaking the language is a major issue appeared taylor: since 2015, sweden poses central bank has been on a mission to restore inflation. book -- president

believes president trouble pull out of the iran nuclear agreement. in washington, he told reporters he thinks president trump will withdraw from the deal for domestic reasons. there is a may 5 deadline for president trump to continue to waive u.s. sanctions lifted as part of the deal. global news 24 hours a day on air and it kicked off on twitter . i am taylor riggs. alix: mark zuckerberg says he is five timese company' on the earnings call yesterday. the stock is up almost 70% -- almost 7% premarket. our next guest has a strong buy rating on facebook. ivan, good to talk to you yes, daily users are raising him was 13%, but you have seen three quarters of all time low rate of that increase. when does that starts to bother you? >> it does not. a 2an, it cannot grow at

billion user base very rapidly, but positive growth and, more importantly, positive engagement are the key drivers. alix: you have the issue with the daily active users, and you do not know with the privacy regulations in europe are going to do to those daily active users. how do you factor that into your strong buy rating? >> the new privacy rules going from europe will help the bigger social media companies like facebook and google, because i think people feel more comfortable dealing with the bigger companies that they think will have better ways of complying with the rules. so i think this'll be positive, and facebook has been saying for quite some time that they are working on trying to better protect user data and 11 eight hate speech and other issues, which have -- eliminate hate speech and other issues, which have been a concern for some time. can they know it will

have a minor effect? it is based on individuals opting out of daily news. if the data is not used, aren't facebook really hurt in their targeting? >> well, first of all, the concern is not that people do not like advertising. people do not like ads for things they are not interested in. but people do like ads for things they are interested in, and that is really how facebook work spirit people click on things they like. i think they will create tools the better target the advertisers' best potential customers, so i think it is a company and the users. david: ivan, always good to talk to you. thank you. davis who is looking into the e-commerce businesses from five aspects. we're looking at amazon and how

to be changing the job market. amazon rattled the grocery industry with its acquisition of whole foods, putting pressure on competitors to expand into e-commerce. walmart has struggled to keep pace with the e-commerce giant as it continues its expansion into their businesses. dan rath is joining us on the telephone. guestom washington, our is from gadfly. is amazon really taking business away from brick-and-mortar to a substantial degree? >> it absolutely is. what is important to remember, because amazon has been doing this for couple decades now, it is getting its tentacles into more buckets. this year i'm a they ramped up their production of private-label clothing and private label consumer packaged goods.

you have even seen this with home furnishings, much more than offering and that space, threatening pier 1 and bed bath & beyond. david: they have gone into retail with whole foods you would what is the next area of retail? >> it is important to watch what happens with food delivery, and that is in grocery and restaurant delivery. this is a frontier where consumers have a lot of desire and need. they want these products to be brought to the doorsteps. what it has been hard to figure out how to bring principles to people's homes in a profitable way, and that is something amazon is looking at closely. it could prove disruptive to grocers and two restaurant chains. alix: you can see that and how amazon relates to its consumers. we have a chart looking at 25 different items at whole foods in austin. we can see it ever since amazon purchase dolphins. how much will -- purchased whole foods. >> amazon is fundamentally not a

retelling company. is a companyn which a cumulative its vast quantities of data about consumer behavior and studies how best to mobilize that information. retailing is a difficult industry to know what a particular place and producer time. at the end of the day, i think they will make a big improvement in the efficiency of whole foods. i think it will turn out to be much more profitable. is interesting, because i would have thought that it would be an area of price discovery. you can discover immediately where to get the best price. muchhink it is not so price discovery as it is actually delivering to the customers exactly what they

want, when they wanted. >> i have been studying and writing about the history, and it is striking that at the end of the 1990's, people of the book trade that amazon was hiring people who could write up little book reviews on the website. they were hiring statistical phd's and physicists who studied data. they had someone called chief scientist. these are people who are studying massive amounts of consumer choice behavior. and it would you not, know who you are, know what you don't want. il of the strategizing, imagine, for what industries to ng into, would retaili segments to go into is based on a meticulous examination of what sorts of caps there are an provision. play, i information think. alix: it feels like when we

think about big technology companies, and you can argue amazon is one, does it disrupted the jobs market? if you look at some of the issues for retail, the medium pay is still $11.24 an hour. they have only added about 92,000 jobs over the next 10 years. what will amazon do to change that? do they want to pay workers more or produce in the labor force even more? >> they are employee and very different sorts of people from traditional retail. traditional retail employees people to be in stores. be in employees people to warehouse and distribution, on the one hand, and it employees more highly educated people writing software. rapidly growing numbers of people writing software. is with the discussion is about, not chiefly about extracting good tax deals from other localities.

ofre is a limited number places near seattle were amazon employees can sleep. what amazonus about is doing or not doing with experimental stores with no sales clerks. you just walk in, take your thing, walk out. is that a serious business? >> it is a powerful concept, and i think the impact is not necessarily going to be on the labor force in stores. bloomberg news went into that store, and it is about the size with about a dozen people working there. it is not necessarily a big labor savings, but it is a vast improvement in the customer experience. it is easier to get in and out of the store. sarah and daniel, thank you both very much. amazon earnings coming out after the bell today and we are moments away from the ecb decision. the euro holding steady after an earlier decline. from new york, this is bloomberg. ♪

taylor: this is "bloomberg daybreak." coming up in the next hour, chuck stevens, general motors cfo. alix: this is "bloomberg daybreak." i am alix steel. the ecb decision its moments away. a positive mood to the equity market this morning. even the dax and positive territory despite that deutsche bank is weighing on gains. these are the asset classes to watch. euro-dollar, 1.21. weaker dollar story in the g10 space, but the euro able to climb a little bit higher. how does that affect what mario draghi says about financial

conditions in the eurozone? also looking at the german points.-56 basis rates under 3% for the 10-year here. crude getting a bid. and a balancing act from mr. draghi coming in 45 minutes time, as well. we're waiting for the decision to drop. the expectation is to stay -40 basis points. the marginal lending rate expected to state-run if i basis points. no change expected for the refi

right on time. david: there is an 18-second delay. alix: there you go. unchanged, so steady as she goes to her diu kind of knew that what happened at the deposit rate facility still staying a -40 basis points. the question will be on mario draghi's press conference. ecb saying they will by bonds until the end of september are beyond and qe will run until sustained adjustment and the inflation path. the interest rate at extended levels for an extended period of time. david: looks like the same language as before. they see no change. alix: euro-dollar, nothing, 1.21. pressl be all about the conference, but have we learned anything from the decision? our guest is joining us from frankfurt. >> not really. it will be about the draghi language at the press conference just up the road here in frankfurt. the room was silent when the decision was read out. it did come a little bit late, but we got there and end are to be honest, the market is not expecting a great deal from today. it will be interesting to see what kind of questions mario draghi will be asked. i suspect he will be asked a number of permutations of "are you worried?"

heard data are starting to roll over, so will that have a meaningful impact? we will get an update on the forecast in june. still a meeting at which we can maybe expect some change in the language. or they could put it back as far as july. it will be interesting to see whether june stays on the table. today, i think he will be batting off most of the questions, pointing us towards what will happen mid-summer. i think that is what is largely expected. no surprise right now. the fx rate is barely budging, as you said, alix. david: when do we get revised if provisions are made to projections on the european economy? is,ould we get periodically, new stock projections. what tends to happen is that

those are used as catalysts to generate changes in the approach the ecb made. they can then use the new projections as an opportunity to say, right, this is working, that is not, and as a result, we will tweak this or that. we will wait for those new projections in june or we will get a new forecast. the story -- we expected highs to come through and they have not been delivered upon. david: thanks so much, guy. always great to have you. guy johnson reporting from frankfurt. david owen is with us from london, jeffries chief economist. as you said, we do not expect much out of this. what will we be looking at when we hear from mario draghi? >> i think guy really set it.

i am sure everyone will try to ask mario draghi the same question. he will give another script answer. the july meeting they will explain exactly what they will do. where in the17 october meeting, they described what they were going to do in weeks before the end of that year. i think the same will happen in july. june is a key meeting for forecasts. the market will focus on those, but july is when they actually tell us what they will do next. alix: how does the ecb retain a link to inflation without administering a big dose of stimulus to the economy? that is a very fine line that will have to address as they tweak the language and get into july. audi they do that? >> -- how do they do that? >> do not forget that they are

buying bonds every month. asy will review the amount the equivalence of almost having policy rates moved by 25 basis points. it is additional stimulus into the system. euro carries on strengthening, that will offset weakening in the bond buying. mario draghi will stress the reinvestment points. reinvestment was powerful and april. they have come through certain key months. mario draghi will want to have spreads come in further. the we crossed, still are right and the years and picks up momentum going into the second half of this year. alix: deutsche bank talking about corporate bond buying and how they have been slowing purchases since easter. do you feel that is indicative on how the ecb feels about the economy or is it a scarcity

problem? >> i would not view it as a scarcity problem but an opportunist problem. day, they willhe pick up more bonds on the corporate space if there are more issues going forward. a very flexible program. i would not read too much into what we have seen in recent days and weeks. weid: in the united states, hear about the federal reserve being concerned about having ammunition before the next turned down that will happen sooner or later. is heario draghi, concerned about that? does he feel some pressure so they have something if there is a recession down the pike? >> absolutely. you read the statements and the speeches. we will have the france governor and london this week saying the same thing. they need to complete the

process. the politicians need to move more turn economic union to also help make the eurozone stronger when we come to the next downturn. i am convinced mario draghi is concerned about this. as to what he can do, he is hoping that by the time he leaves ecb next october, he would have raised rates. that depends on the economy continuing to surprise on the upside and pick up momentum. david: david owen of jeffries, thank you so much. coming up, general motors posts first-quarter earnings above estimates. alix: i am watching ecb. euro-dollar not changing. they will still reinvest their maturing debt for his on is necessary. buying bonds until the end of september or beyond. all eyes on mario draghi's press conference in 45 minutes time. this is bloomberg. ♪

david: ok, what i am watching right now. outronny jackson has pulled of his nomination by president trump of being the head of the v .a. he was his personal physician. amazing accusations coming out about him. he says they are totally false and he never would have been nominated otherwise. expected tough questions about the v.a. but never expected this. it has been a great honor to serve for the president, but he is pulling out. it was sort of inevitable. alix: at this point, it was before he got the nomination or before he got the post, like a lot of other individuals coming under so much heat. david: in washington right now, he is probably losing it for the wrong reasons. the real problem is the biggest

government needs someone who is a manager of a huge organization. he may be a great doctor, but a lot of people thought he should not have the job but it had nothing to do with all of this. how xbox same kind of idea with betsy devos, department of education. david: there is a big event coming up. it is not the exxon earnings. it is actually your birthday. alix: oh, my god. [laughs] no, i am boycotting my birthday. david: you will have a small gift. alix: coming up, my non-birthdate and we will be breaking down mario draghi's press conference. this is bloomberg. ♪

walk,draghi's tight rope

walking the line between a knowledge and weaker economic data while and it bond purchases this week. and deutsche bank abandons wall street in favor of wealthy and corporate climate spirit the new ceo tries to sell job cuts and decisiveness. and facebook firepower, mark zuckerberg says he is proud of the company five times on the earning call. more big earnings on deck. david: welcome to "bloomberg daybreak." it is thursday, april 25. alix: not my birthday. i am david westin. i am here with alix steel. they have adjusting $2.20, andr-share of we had it at $1.25. revenue of $8 billion. time warner with a nice beat. the big issue is the merger with at&t and the trial and court decision.

alix: final statements on april 30. david: the judge might have a criminal trial, so there could be a delay. i think there is a june 15 deadline for the breakup. alix: union pacific out. the railroad company to measure the health of the u.s. economy. earnings killing it, $1.60 a share. revenue at almost $5.5 billion. both of them beating estimates, as well. 0%enues for ag products, growth, an interesting side note. operating ratio only 65%. -- solid lied numbers headline numbers. that's docketing a boost. david: everyone seems to be beating, but it is not necessary reflected in the shares. also saidolk southern they saw a promising outlook for 2018 and couple days ago. in the markets, it is about

waiting for that ecb meeting at 8:30. s&p futures are up 7%, buoyed by facebook. euro-dollar unchanged on the day now, 1.21, was a little bit stronger against the dollar, but the dollar is weaker on the day overall. the u.s.,lts in gracious bond buying across europe and here. 2.99%. crude up .9%. it feels like a weaker dollar story in feels like we could have iranian sanctions come back and play in the u.s. that will be determined in the next few weeks. futures trading in positive territory this morning. strong earnings forcing a rebound in u.s. stocks. a flood of earnings today. we will learn about half of the s&p by the end of the day. luke is our asset reporter. we spoke to you, and you show this bar chart the show before

the bell, you see increase in equities that report up. then lower. and then lower by .3% for the whole day. why? >> a big question we have been trying to answer. a member of wells fargo was pointing out that a lot of the companies that have been underperforming relative to the s&p 500 coming into earnings, whether or not they beat or miss , they do better than the s&p 500 that day. maybe it is a case of a lot of optimism priced in at the top end of highflying companies coming into this. a lot of happiness about the ones that were going to do good and it was already in the stock and maybe some more rotation of elliott with things kind ofe beating up, sharing in the still growing economy but offbeat growth. alix: what i find interesting is

that big oil on the gets rewarded if the issue some share buybacks are dividends. it they just grow the business, it is not getting rewarded? >> i think it is an important i believee story, and it was highlighted on bloomberg intelligence, the shareholder yield versus the 10-year yield kind of creeping together, some kind of enhancement of what shareholders are getting back. holding a risky asset seems to be more and more a part of the story in something that has been important, but i'm not sure. was trying to look at the difference between the sectors. you can see. the equity earnings yield versus the 10-year yelled. they -- yield. they have been converging. aree do not hold that 3%, we back to the six-month

playbook? >> i think so. that is one of the other big questions we are wondering, orther 3% is just a number whether it is something that can spark rotation under the surface. one idea we're trying to flesh out when looking at different factors, right now it is the or eighttretch of six sessions of value, outperforming growth and outperforming momentum on a daily basis since the middle of 2016. far from worrying about a growth slowed down, but maybe this is increased certainty about the near-term broad prospects for growth among s&p 500 companies. not something we have been talking about when looking at the internals. bloomberg news. always great to get your perspective. david: g.m. beat estimates on

revenue and earnings per share. the stock is off about .6% in premarket trading. joining us is chuck stevens, the chief financial officer of general motors. you beat on earnings-per-share and on revenue. you are profitable across the board. give us the highlights from your point of view. it, david, thet headlines from our perspective would be q1 results solid, very much insistent with the guidance we provided for the year for another year of strong earnings and cash generation a general motors. two point $6 billion in profits, 7.6% margins. performance in north america, especially given the planned downtime in pickups. record profitability in china. gm financial, $600 million of equity income in china.

almost $450 million of earnings at gmf. plan and consistent with our guidance for the year for another strong year. profits in china, a big play for general motors. when i woke up this morning, i saw china is considering cutting their tariff on imported automobiles. will that affect your business at all? >> i think the impacts will be minimal. we build where we sell. the vast majority of products we sell in china are built there. we have a strong position with 14.8 per share -- 14.8% share, very strong brand. we believe the tariff impact in , whether they reduce it or not, pretty minimal to our business. david: in free cash flow for the quarter, you were actually negative. what was that about?

>> typically, we burn free cash flow, and it is just seasonal factors anything about working capital. in a typical quarter, it will be about $1.5 billion. as wequarter of 2018, expected and as we guided, we expected free cash flow to deteriorate versus typical rhetoric, largely german by the truck downtime that impacted -- largely driven by the truck downtime. the timing of production. and driven by incremental capital spending in the first quarter versus typical run rate in support of our launch of the full-sized pickups. we expect that to completely reverse into q2, q3, and q4. and we continue to generate carryover free cash flow generally in line with 2017, about $5 billion. david: is as like a timing issue

largely. >> sure, as expected. david: exactly to what about commodities? are you feeling margin pressure, as some of your competitors are? commodities, cost increases and the pressure of now versus the beginning of the year, are greater. when we look at what has developed around the world, both from a steel and aluminum perspective, as well as general commodity increases, if you look at our first quarter numbers, we were able to offset. broadly speaking, about a $200 million headwind. we offset it with approved commercial, material performance, technical savings. our expectations for the year are that our material performance will mitigate commodity headwinds, and that is what we are executing, too. we have not changed our view on the year from a got its perspective. we are very focused on offsetting those headwinds.

david: it looked like you might have to walk away from something, but is it a result of a deal with the labor unions? >> i would say that we are on the verge of a landmark, historic agreement in korea. on thursday, korea time, the union ratified a very important labor agreement. taken with the labor agreement and the efficiency in that labor agreement, as well as the previously closure, we will generate between $400 million and $500 million a year of savings, putting us in a profitable position in korea in 2019. in addition, we have a preliminary agreement with the korea development bank to co-font 750 million dollars of future capital investment to build the foundation for future success in korea. this is a demonstration of shared sacrifice across all

shareholders, ourselves, union partners, the korean government, and the korean developer and bank. the outcome will be a viable, sustainable, profitable business, and we are pleased with that result. david: a big turnaround. thanks so much, chuck. a busy day. cfo for general motors. alix: thank you. we have president trump speaking on "fox and friends." he says he had a fantastic time with them and they accomplished a lot, but macron views iran differently. will the u.s. wind of continuing to waive sanctions from iran or not? in addition, he's talking about what will happen with the new v.a. position as mr. jackson has pulled out as nominee. he says he does not know who his nominee will be, but he will have political capability.

he is responding to mr. comey, saying he is a leaker and a liar. to me, they're about how mr. macron are disagreeing on iran and how that will wind up. deutsche bank scaling back on investment banking, while barclays says it is gaining momentum. we will look at that. this is bloomberg. ♪

david: deutsche bank shares are down after the latest orderly results. performerthird worst of european banks over the past five years. johnson theguy

spoke with the bank's cfo about the bank's overall plan. >> there is not that significant a shift in terms of strategy for the company. we aim to be a corporate led global investment bank based in europe with global reach. oure is rescaling of ambitions, particularly internationally. in terms of focus, making sure our activities in the u.s. and, to some degree, and asia align with that. >> focus on the u.s. for a moment then. same question, u.s. focus. what does the u.s. business look like after restructuring? >> obviously smaller. with leverage exposure, we have an even -- an inefficient use of the balance sheet in the u.s.. the starting point is to reduce it leverage exposure. it are strategic discipline here is making sure that when we are present in an activity in the u.s., it has to have some connection with the real unique

selling proposition of this company, which is the european investment bank with global reach. to the extent there are activities in the u.s. that follow side of that perimeter -- >> you would not care to mention some of those activities? >> we do not want to be too precise about what that means, but some obvious candidates will fall out. a littles rescaling bit in the u.s. and acknowledging that we cannot compete with our u.s. brother and in terms of scale and every business product, market, content in the u.s. >> the other day, it was cash equity as the main area you were going to be withdrawing from. >> there was speculation. we have said we are putting the equity business under review. we want to be careful there to measure twice and cut once. the equities business is a global business. cash derivatives and prime

finance to have interconnections, so we want to make sure that we are very deliberate about the actions we ultimately take. again, it is about ensuring we can defend our european core where we continue to have leadership. good staffou keep during this process? you just hired a new head of equities. . his entire business is not under review is he going to be around? how do you keep these kinds of people? recently inired europe at a senior level, too. he is completely committed to reshaping the franchise. towards a sustainable equities business with global reach, but one that leverages our course in europe. alix: that was the deutsche bank cfo speaking to guy johnson. joining us now is allison williams, who covers all banking for bloomberg intelligence, a

senior banking analysts. from frankfurt is david kohl. start withwant to you. i feel at the conversation is, who is going to be left for investment banking in europe? >> if you look at the announcement by deutsche bank today, i would say it was more of a pivot than a change. they said they want asset management, the retail is nice, and banking -- business, and banking to be about 65% of revenue by 2021. 2017. basically 63% in first quarter was 59%, that there is a seasonal trend. we're talking about the ib going from 37 to 35. alix: why don't markets see it like that? one of which is the investment bank and how big deutsche bank has become has been a big question mark over

time, especially since the crisis. they were one of the foreign banks that came into the u.s. a made a lot of progress, but since the crisis come a when we started to see differentiation in terms of capital strength, u.s. bank scout their problems behind them and were stronger, deutsche bank has struggled and had legal risks. that caused clients to pull away. i think deutsche bank has had issues getting them back. it is a different environment that during the crisis with all the banks were weak. now we have had u.s. banks very strong, making progress, making technology investments. those are paying off. perhaps some of the europeans trailing behind. david: david, what could this mean for the reparations doing business in europe? going away from investment banking, on the one hand.

i believe exploring more intensive capital markets is a way of raising capital for corporations. what is going on, and how could it affect the growth pattern in europe? >> in terms of credit development, this is becoming more and more healthy in europe. when looking from the micro level, we have seen the most recent bank lending survey and corporate lending is picking up and lending conditions are quite easy. this is not so much a function of deutsche bank but really in the interest rate environment. and with the ecb has done for the economy and for the credit cycle. alix: allison, euro bank lending bluee white line and the line is european bank stocks, and they pretty much contract each other. if the model changes, can we helping theing as banks sector or is it a different paradigm?

>> in the u.s., we have seen loan growth slow but we saw a record debt fees in 2017. as europe moves towards that model, perhaps it is not as earningsnt to tracking , but it still might be meaningful to the stoxx. access to credit, whether through traditional bank lending or through capital markets or through nonbanks, is it a constriction on european growth at this point? credit goes by the traditional bank lending channel in europe. this is unchanged. there was a project in the euro crisis to encourage market-based lending. so far, the was no big success. it is moving in the direction everybody wants it, but a good bond market or credit market is not here and play. it is the bank lending channel,

and banks, no matter if they perform good or if the equity market has the ability to lend because conditions are plentiful, this is more a micro reason. it is also due to the banks have done their homework in terms of propping up the balance sheet. there is potential for bank lending there. and the demand has come back and goodming back with economic performance. alix: david, is that bifurcated? say again? alix: is it bifurcated in terms of foreign peripherals? lending coming back, banks getting better, etc. >> half of the bank ellen's -- balance sheets in italy have problems with bad loans. italy, conditions have eased quite considerable.

the solution is probably nearer than 12 months ago or toy for or 24go -- 12 month ago months ago. with the lending activity, it is still not where it had been before the great financial crisis. at least it is normalizing. we have seen some convergence here given by the dynamics in italy. allison williams of bloomberg intelligence, thank you for joining sp it we are moments away from mario draghi's news conference. richard jones is joining us from london. david kohl will remain with us. david, back to you on the euro. you are an fx specialist. where is the euro headed at this point? it seems that the euro is and that theupport ecb will be more hawkish or will promise removing stimulus,

allowing speculation about some rate increases in the distant future. given this weaker momentum from think the ecb is very comfortable on staying here on hold, signaling no more hawkish tendencies. this will probably weaken the euro going forward. the disadvantage on interest rates is sizable. this is matching a euphoric positioning for the euro. these divergent trends are probably not sustainable. we think they will converge to a weaker euro. alix: richard jones, the feeling seems to be that the ecb will continue to normalize. this is a tight rope mario draghi will have to walk in about six minutes. part of this has been a stronger euro story. richard, if mario draghi does not feel dovish, what do you

expect? >> mario draghi will try to be as balanced as he usually is in these press conferences. on the one side, he will emphasize patience, persistence, prudence, the messaging we have gotten used to from the ecb. the ecb has also been very positive on growth prospects for the european economy, but we have had various ecb officials saying they are getting more comfortable of late that inflation is heading towards their goal. listen, i think david is right, it will not happen imminently. it is a longer-term game, something that will unfold itself in the next 12, 18 months. but at the end of the day, they are edging towards the exit door. that does not mean we will get anything imminent, but the rhetoric has changed over the past few months, and i expect a continuation of that. alix: i am glad you brought up inflation. we look at inflation from core versus peripheral, so france,

germany, spain, portugal, and you are seeing a very different story. yes, better growth and better inflation and core but not peripherals. does that mean the ecb has to run hot so the peripherals can catch up, david? >> when it comes to inflation, the ecb can wait quite a long time before using this argument before normalizing rates. so far, the main argument is growth. why? growth tends to lead inflation. and this is particular to peripheral countries. the unemployment rates have been high. this takes some time before unemployment rates come down. then there is a time would price increases are possible. it will be a bit longer before inflation is used as a measure of how hawkish or how monetary tightening will happen. this is something for next year. it is really about sustainable growth this time.

this is probably a warning sign that monetary tightening, which happens through the stronger euro, is already enough not to let the country's overheat. david: richard, it may be enough not to have the country's overheat, but is it enough to develop some tools to use for the downturn that will come sooner or later? >> of course, that is the big question, david. the longer that rates stay and qe is continued at current levels, the more difficult it makes it to react to any further sort of downturn. theythe ecb's perspective, might be thinking growth has already peaked in the euro area. but now probably it more sustainable levels they can continue. it will not be about the breakneck pace we head into a 17, but i think there is still room to run as far as the ecb's concern for this economic recovery and for inflation to

slowly climb towards their goal. david: why is the european company -- economy so much more fragile than the united states? the last year so, financial conditions have loosened and the fed has raise rates. why is europe so much more sensitive? europele answer is that had two recessions and the past 10 years, not only one like the u.s. probably more of a policy mistake to start tightening monetary policy back in 2012. then all this euro shock, another drug for the economy. that is why the economy needs much more 10 to recover. it is still in a fragile state. month, confidence on investment plans are not so advanced as the u.s. you get that when the business cycle is much more advanced.

the us economy powering ahead and the eurozone following. alix: richard, that leads into the divergence in spreads. 2-year year it versus schatz. continueld it be if we to widen out in the short-term? >> if we continue to widen out, the point david made earlier is valid. it will probably weigh on the euro. given how far that spread has gone, at some stage, it should moderate and we should get access to capital on the european side. if that happens, i think it will remain range bound in the euro-dollar. if it continues to widen, i think we do get the euro being weighed upon. alix: richard jones and david kohl, thank you both for joining us here at we are just about a minute away or so from mario draghi's press conference. in the agreement it is about

earnings. dow jones futures up by .1%. same in europe, european stocks up .6%. dax getting a boost despite deutsche bank weighing on indices. no doubt, earnings are front and center for they go to market. in other asset classes, it is all about the ecb. euro-dollar now flat, $1.21. will the euro find any support or will some of those longs be shaken out if mario draghi backs off from any kind of stance of moving forward with normalization? looking at the schatz, -56 basis points. 10-year yield under 3%. it does not feel like safe haven buying. crude and other commodities getting a boost from a weaker dollar. claims,e have jobless 200-9000, lower than anticipated. a remarkable number, durable

goods orders of 2.6%. they revised it up from last month to 3.5% versus 3%. that really jumps out at me. upside.ah, to the if you back out transportation, it is pretty much flat. so that is also interesting. unchanged without that transportation, but that is a huge rise, 2.6%. in some of the survey data, we have seen new orders coming in a little bit light, some lumpiness, some sentiment potentially. interesting it would hold up so well. david: you wonder about capex endurable goods. -- in durable goods. tobe you expense the capex by the big transportation feagles like planes and trains, things like that -- transportation vehicles.

alix: durable goods, those of us three years, up 2.6%. and revised for february, up to 3.5%. i will read to the press release. favorable tax policy, stable global growth, rising capacity supporting the increase of investment. --ever, we see or nurse orders pulling for machinery and electrical equipment. david: we are watching mario draghi walking in for the news conference, which should be beginning momentarily. a little bit of a beauty shot here for a few moments. the timing to get to when he actually speaks is probably one of the hardest parts of my job. euro-dollar not really moving. a lot of tight rope walking for mario draghi. questions about the recent rollover in some of the economic data. has peaked, but

momentum is to continuing. how does he deal with that? and a stronger euro. that is the question that is front and center. as of now, no movement. when will they pare back there bond buying program, until september of beyond, if needed. let's like it is pushed back to july, the announcement. mario draghi takes the podium. 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 council. based on our regular economic and monetary analysis, we decided to keep the key ecb interest rate unchanged. we continue to expect them to remain at their present levels for an extended period of time

and well past the horizon of our asset purchases. regarding nonstandard monetary policy measures, we can from that our net asset purchases at the current monthly pace of 30 billion euros intended to run of september 2018 or beyond, if necessary, or until the governing council sees sustained adjustment on the part of inflation consistent with the aim. the euro system will continue to reinvest the principal payments from maturing securities purchased under the asset purchase program 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. following several quarters of higher than expected growth, incoming information since our march, pointsly towards moderation while remaining consistent with a solid and broad-based expansion of the euro-area economy. of theerlying trend euro-area economy continues to support our confidence that inflation will converge towards our inflation aim of below but close to 2% over the medium term. at the same time, measures of

underlying inflation remain subdued and have yet to show convincing signs of sustained upward trend. the governing, council will continue to monitor developments in the exchange rate and other 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. this continued monetary support is provided by the net asset purchases, by the sizable stock

of acquired assets, and the ongoing and forthcoming forwardments and by our guidance on interest rates. let me now explain our assessment in greater detail, starting with the economic analysis. 0.7%gdp increased by quarter on quarter in the fourth quarter of 2017, following similar growth in the previous quarter. with an average annual growth of 2.4% in 2017, the highest since 2007. the latest economic indicators theest some moderation in pace of growth since the start of the year. this moderation may in part

reflect a pullback from the high pace of growth observed at the end of last year. temporary factors may also be at work. overall, however, growth is expected to remain solid and broad-based. our monetary policy measures, which have facilitated the deleveraging process, should continue to underpin domestic demand. private consumption is supported by ongoing employment gains, partly reflect past labor market reforms and by growing household wealth. business investment continues to strengthen on the back of very favorable financing conditions. racing corporate profitability

-- risingdemand corporate profitability and solid demand. housing development continues to improve. in a dish in, the broad-based global expansion has provided impetus to euro-area exports. the risks surrounding the euro-area growth outlook remain broadly balanced. however, risks related to growth factors, including the threat of increased protectionism, have become more prominent. annual hicb inflation increased to 1.3% in march 2018 from 1.1% in february. this reflected mainly higher food prices nationally. currentusiness of future prices for oil, annual

rates of headline inflation are likely to hover around 1.5% for the remainder of the year. measures of underlying inflation remain subdued overall. looking ahead, 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. turning to the monetary analysis, broad money continues withpand at a robust pace an annual growth rate of 4.2% in narrow range, the

observed since mid-2015. reflectth continues to the impact of the ecb's monetary and theeasures opportunity cost of holding the most liquid deposits. accordingly, the narrow monetary aggregate remained the main contributor to money growth, continuing to expand at a solid annual rate. the recovery in the growth of loans to the private sector observed since the beginning of 2014 is proceeding. the annual growth rate of loans to nonfinancial corporations stood at 3.1% in february 2018 after 3.4% in january and 3.1% in december 2017.

while the annual growth rate of loans to households remained unchanged at 2.9%. the euro-area bank lending survey for the first quarter of loan growthes that continues to be supported by increasing demand across all loan categories. and a further easing in overall bank lending conditions for loans to enterprises and loans for house purchase. the pass-through of the monetary policy measures put in place since june 2014 continues to significantly support borrowing conditions for firms and financing, access to notably for small and

medium-sized enterprises, and credit flows across the euro area. to sum up, a cross check of the outcome of the economic analysis with the 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 are close to 2% over the medium-term. in order to reap the full benefits from our monetary policy measures, other policy areas must contribute decisively to raising the longer-term growth potential and reducing vulnerabilities. suchmplementation 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 country specific recommendations, greater reform effort is necessary in euro-area countries. regarding fiscal policies, the ongoing broad-based expansion calls for rebuilding fiscal buffers. this is particularly important in countries were government debt remains high. all countries would benefit from intensifying efforts towards friendlyg a more growth- composition of public finances. a full transparent and consistent implementation of the

stability of growth packs and of the macroeconomic procedure overtime and across countries remains essential to increase the resilience of the euro-area economy. improving the functioning of the economic and monetary union remains a priority. urgesverning council specific and decisive steps to complete the banking union and the capital markets union. and we are now at your disposal for questions. ion from bloomberg news. at your last press conference, you said strong incoming data on growth was helping to reduce the variance in the path of inflation. now that we have seen some weaker than expected data, is there a risk that the variance in inflation could increase and potentially flow down -- slow

down the process of convergence? lastd question, over the four weeks, there have been quite a noticeable drop in the net corporate bond purchases. i wonder if you can the reasons for that? thank you. mr. draghi: let me answer first the second question. i think it is always wrong to f ix attention to one specific week or month. there is a certain amount of flexibility around purchases. what happened here, we had a higher seasonal amount of purchases at some point, therefore we averaged down lower purchases. this coincided also with a downsize of the problem that took place after december. so there is no specific strategy behind the lower amount of of the private

corporate bonds. the first question perhaps the report on the exchanges we had today, because this would explain the answer to your question. the interesting thing is that we did not as gus monetary policy per se -- we did not discuss monetary policy per se. their owntuation of countries. since our last meeting, all countries experienced, to a different extent, some moderation in growth or some loss of momentum. the -- when we look at the indicators that showed significant sharp declines,

first of all, the fact that all countries reported means that this loss of momentum is pretty broad across countries. it is also broad across sectors, because when we look at it is both hard and soft survey-based indicators. sharp declines were experienced sectors, retail sales, manufacturing, services, construction, and then we had the kleins and industrial production and capital goods production -- we had declines in industrial production and capital goods production, declines in national business and confidence indicators. declines were sharp and, in some cases, the extent of the declines were unexpected. so the issue is how the

governing council has spread the new developments, and i think this was your question really. we have to look at the prison figures now. stabilized, and the levels today are still above the historic averages. declines happened, as i just said, after a period a very strong growth for the euro area. at 0.7%, ifquarters i'm not mistaken. so some normalization was expected. the possiblessed causes, which are heard to read. clearly, there is some things that are unexpected, which is

mostly due to temporary factors strikes, the timing, several temporary factors which may have produced this unexpected size. the discussion -- the discussion said, how much of the supply constraints are limiting shortages in some sectors, like construction? what there are other phenomena, for example, the drop in backlogs in manufacturing and the capital goods sector, that could suggest a softening in demand. weren'te, they monitoring by the governing -- they warrant monitoring by the governing council.

caution inically reading the developments, caution tempered by an unchanged confidence in the convergence of inflation to our inflation aim. the overall growth remains solid and broad-based. and the risks are broadly balanced but with more prominence to global risks. and i mentioned protectionism. having said that, measures of underlying inflation since our and meeting moved sideways, there has not been any convincing aboard trend -- upward trend or signs that it is about to come. there are encouraging signs on the nominal wage growth where we

still see some movement, which may support price pressures in the coming months. it to answerout your question. i am from "the wall street journal." the euro is considerably stronger than a year ago. you have mentioned that the volatility of the exchange rate is something you are watching closely. it has stabilized around 1.22. is this something best of concerns you? i knownd question is, you said you did not discuss the policy outlook, but a lot of analysts are looking at the data and pushing back the forecasts for when the ecb might start to raise interest rates. do you think that is sensible, and what conditions would you be

looking for before you started raising interest rates? thank you. second question first. i said caution tempered by an unchanged confidence that inflation will converge towards our aim over the medium-term. but such convergence remains conditional on an ample degree of monetary conditions. were the words used in the discussion of the governing council. our policy has, as you just reminded us, has served us well and will continue to do so. therefore, the other words we , prudence patience in assessing, first of all, patience, and persistence. saying, it goes without

that the governing council shares its steadfast commitment defined as aility, rate of inflation which is close but below 2% in the medium-term. you are first question, right, the exchange rates stabilized and volatility is less, so it was not discussed. my first question is that you mentioned protectionism as a risk factor. that thequite possible u.s. extends the tariffs on

theinum and so on, also on eu, how could an escalation of the trade dispute affect the ecb's monetary policy? and my second question is on the ge3. has recently decided that you, as ecb president, can remain a member of the g-30 group. that is not behind only if this membership poses an actual conflict of interest but also a perceived conflict of interest. why do you think the ecb itself assess thatited to there is a perceived conflict of

interest than an independent watchdog? mr. draghi: the answer to your second question is in the very carefully prepared opinion of the ecb that was submitted two weeks ago. the answer to the first question what the to see rhetoricof, so far, about protectionism will produce. have anhave -- if we increase in tariffs an increase in protectionism, there may be a effect, andt, trade they do not seem to be so far substantial. however, we don't know the

extent of the retaliation yet. obviously, we -- cannot know now the direct effects of potential retaliation. what is certainly known is that profound andhave a rapid effect on confidence. on business confidence, , generallyconfidence speaking. and confidence can affect the growth outlook. this is why we say there are risks, and these risks have fcquired more prominence o recent. so we will have to see the growth outlook and how the change in the growth outlook could alter what is the convergence of our inflation rate to our objective.

thank you. -- i am from cnbc. i would like to ask about your plans for june. there's speculation that june might be the meeting where we are going to get a roadmap from you for the second half of this year, how a potential tapering could look like. that is one question. another question is what you make of the recent movement in u.s. yields, because we have seen them for the first time higher than 3%, a multiyear high. is that affecting your thinking on monetary policy? thank you. mr. draghi: thank you. the answer to the first question is that we have not discussed forso it would be premature me to make any comment about that. as the second question is

concerned, to some extent this increasing in yields in the united states ought to be twocted by at least reasons. in is the different position the business cycle of the u.s. economy. unemployment rate which is below 4%, i believe. and the recent measures concerning fiscal expansion. a natural development of the economic situation in the united states. financial times, one of the previous questions about the importance of the effect of --de disputes on confidence

we already seeing pessimism featuring the business, particularly the german business surveys. what will you be looking out for in the -- you sound cautious, if concerned enough to change the policy stance, if you are not willing to do that yet, what for ifu be looking out that impact on confidence will produce something more -- in aul and eurozone economic slowdown? and the second question, you talked in a recent speech about , with anse effect increase of demand, we could see -- i aml in supply wondering about the impact of that on the inflation target and if that is the case, could you have this sort of phenomenon present