draghi's tight rope, the ecb discusses in qe for the first time, while mario draghi has to contain expectations. wild side, on the chairman powell shakes up the fed. no more for guidance and four rate hikes the issue. your move, disney. comcast raises its bid to $65 billion. david: welcome to "bloomberg daybreak." there is a new sheriff in town and jerome powell. , there ist this note a new sheriff in town, walks through the saloon doors -- david: he is different from his predecessors. alix: he felt like a business .uy here i shocker. cut to the chase. get the deal done. the market is not getting the deal done this morning.

fed futures flat. -dollar up. the dollar could not sustain traction. the curve continues to flatten. this is amazing. flat into a much soccer match -- match? game? it is something where they kick a ball. pitch.a match on a it is time for the morning brief. followed ecb decision, with mario draghi's news conference, which we will bring you live. 8:30, u.s. retail sales and the latest job numbers. cup begins today in russia with saudi arabia meeting russia allhe first match, and for who follow golf, today is the first day of the u.s. open with

tigers teeing off, playing the first round with justin,. i know you are waiting for that. -- justin thomas. i know you are waiting for that. yesterday we talked about where tiger woods will be staying. we have a photo now. alix: how can he warm up on a boat? david: $20 million. alix: to be clear, it's not a small boat. 15 miles of two lane roads. it takes a while. alix: do they have a tiger lane. david: ok. we will keep you up-to-date on the u.s. open. we will do bloomberg first take. we are joined by our economic chief economist and our macro strategist. jerome powell gave his news

conference and was bullish on the economy. >> the main takeaway is the economy is doing very well. most people who want to find jobs are finding them. unemployment and inflation art low. interest rates have been low for some years while the economy has been recovering from the financial crisis. david: if i did not know better i would say he is a booster. >> a very incremental booster. fed thatot a dramatically became more hawkish or is changing its tone. the forecast are slightly tweaked for stronger growth and firmer inflation. the fed, while it tilted towards changersus three, didn't the interest rate profile over the medium-term horizon. inare still at the endpoint 2020 and the neutral level at so same level as well, again, not a wholesale change, just tinkering around the edges. david: they did have a change.

you see on the right-hand side here, it has gone from three bank to four. they took oneat, hike out of 2018. the cumulative amount did not change. the terminal rate did not change and their estimate of neutral it in change either. alix: in bloomberg, you can see the yield curve continue to flatten. the see 20 basis points for 2-10. what is your take? >> that seems reasonable. the fed is telling you policy will be restrictive earlier than they thought it would be. a curvenaturally flattening. it would not be a surprise to see the curve inverted next year. they said they think the neutral ise over the long run a set level,bove

and even more so in 2020. that is an environment if they are getting restrictive him a you would expect securities to reflect that. >> if that curve is getting close to inverting, we might be back to three rate hikes for 2018. that decision does not have to be made until october. i would not say the fed has convincingly moved to four. >> i would say there is a new sheriff in town, because ben bernanke after the crisis and janet yellen tended to be glass half-empty come in the sense if there was an excuse to pull back and be cautious, they tended to do so, and the paulo fed seems to be a glass half-full type person. german pal fed seems to be a glass half-full type person. alix: our next story is mario

draghi, glass half-full, glass half-empty? he has a delicate balance today. he has to upgrade inflation forecast, but not growth, but temper expectations. chief of the ecb has dropped an enormous hand that they are talking about the exit from qe at the meeting today. will they come to a definitive decision and let us know? if you ask 100 people, 50 say yes, 50 say no. do know is qe as currently scheduled is slated to end abruptly in september, and they will want to go on a collide path. the consensus overwhelmingly is that will be done by the end of endyear, qe will end at the of the year and targeting a rate hike by the middle of next year, but the challenge from mario draghi is not to pre-commit too much. they want to maintain some

flexibility so they can adjust on the fly. david: talk about optionality for central banks. does that mean they will put it off for one more month? have that they discussion today. i think the markets have gotten ahead of themselves thinking they will declare when the end will be. the pmi data has not been good at if europe. dismiss that weakness to bad weather and a number of factors, then that rolled over into q2. a have to watch what is happening in the economy. it is hard to say inflation will pick up in less you see more stability or some acceleration in the economic figures. we have not seen that yet. i think they wait a little longer. the northern european hawkish central bankers want to get this done before italy pulls a greece and the ecb has to intervene. we have a reminder to stay

with bloomberg for the ecb decision in a little over half an hour. we will take mario draghi's news conference at a: 30 a.m. eastern time. the merger that may not ever be, 21st century fox, comcast up to its bid, $65 billion. i will ask david westin who wins? david: i don't know. .t has been a while you have two big ceos, both of whom want to get this done. they need it for the company in the future. they have a fair amount of money to spend. there is some history there as well. it will be quite a fight. alix: in an environment where mergers and acquisitions could get easier. and did you make of at&t the story we will see a big boom in m&a. >> the decision does open the floodgates.

what a would say about this comcast thing, $65 billion in and they're also bidding $30 billion for sky in the u.k. they have $6 billion in cash currently. that implies a lot of borrowing moving forward. circle to gog the back to the fed, that is another reason why jerome powell is correct to be looking at the glass half-full, because if you leave rates too low for too long, then you end up with an m&a bloomfield too much by debt. david: bob iger has a stronger balance sheet. he has got more room to run. >> ironically enough doesn't disney want to pay in shares? david: although bob thinks rupert murdoch would like his shares. the one thing you have to think about is the herb allen's sun valley conference this year will that will have bob roberts, bob

iger, sherry redstone, and les moonves. >> they should have an amateur boxing match. alix: i want to see that. thank you both very much for being here. fed's hawkish hike. jerome powell praising the u.s. economy after interest rates were raised for the second time this year. more on that next. this is bloomberg. ♪ ♪

great,he u.s. economy is something you don't hear often from a fed chair, but it is what jay powell said yesterday after the fed hike rates. to fosterrman i hope

a public conversation about what the fed is doing to foster a strong and resilient economy. one way to do so is having a press conference like this after our fomc meetings. we will do that in january. that will give us opportunities to explain actions and answer your questions. aix: joining us now is themberg view economist and vice president of global asset allocations for a bank. ofl us the significance someone who comes in and says press conference at every meeting, no for guidance. what kind of fed or we looking at? >> a rational fed that is truly data dependent. the day his name came up as finalist for fed chair i wrote he will implement for press conferences a year. the reporters ask him about it. he alluded to this move, and then he made this masterful

move. it was not in the statement. it is wonderful news. when it was in his opening statement, he said we will not start this until january. the markets freaked out, then came back. he calmed everything. you don't have august 2 on the table. aboutwhat is interesting the market action is the rhetoric he was more hawkish, but dollar rallied then sold off. the curve continues to flatten. the curve makes sense, but why did the dollar not respond? >> i think a lot of the news was priced into the dollar. the dollar did move up after the news, but ended the date lower. i think that is because the focus is shifting to the ecb now. alix: fair point. if you look at the curve, are we still pricing in weaker longer-term growth versus the fed hikes? how much can we tolerate?

that is what was interesting, especially with the press conference. he was so bullish on the outlook for the u.s. economy will yet the long-term outlook is still south of 2%, so they are not anticipating growth will be sustainable going forward. david: how do you account for that? >> that was the most surprising part yesterday. the fact that the longer-term forecasts were unchanged is telling us the fed will take to betime and it is going a wait and see approach. they are not 100% sure that the productivity and gdp growth is really going to be self-sustaining longer-term after the fiscal impulse in the next two years. david: the administration putting in tax cuts said we will not get inflation because we will have more capital investment that would lead to productivity. are we seeing any evidence so far? >> we are seeing a ramp up in business confidence. hoping for a

corresponding acceleration in spending and technology, productivity, and gdp growth. time will tell. that is the message we got from the fed yesterday. >> we have to remember that jay powell started the industrials yle.p when he was at carl he knows margins are being squeezed it companies and inflation is inhibiting their ability to make capital expenditures and that is a problem. david: you have advised the dallas fed. you know the innerworkings. is -- inner workings. if we tellinking them four, it is three. >> i think jay powell is forcing a new way to ask about it. one of the reporters tried to pin him down. too hot? he refused to define it. he kept saying persistently

above or persistently below. you could have done a word count on persistently. he will not define it. this is a complete and total change from the rigidity i remember inside the fed with the sole focus on that 2% hard target. thes not there which means fed can run lower for longer or continue raising rates with of the core pce above 2%, which we know it will be by july. alix: the longer term growth expectations not rising higher. the white line is the neutral rate. how do you think the fed will react? they will go above neutral for a while, and at some point the economy will get tight versus not. what is the tipping point for them? >> i think they have an eagles i on the labor market. jay powell said he was confused yesterday. the only thing they are hearing and a definitely come everything

in the beige book is labor shortage, labor shortage. the highest level of compensation costs since 1984 when they founded it. we are at the same time not seeing it trickled through to wage inflation. i think that there is a little concern that there is a barbell affecting the economy, the trade, the terrorists, panic buying, and this could flameout. david: wage pressure might suggest there is not as much pressure to raise rates. are they thinking about the possibility of a downturn? they want to make sure they have something they can work with. so they can cut some rates. >> there is a will to get moving. at the same time the big theme is this overshoot and this gradualism. it seems like they are giving themselves a lot of time and taking that wait and see approach and see how things go, particularly on the inflation front. david: how bloomberg view

columnist, thank you for being with us. this is time for bloomberg business flash. cutting 4600 jobs in its restructuring. it's ceo, his biggest up yet to overhaul the jet engine maker and save $500 million a year. the cut represents 8% of the workforce. unilever has given a muted outlook for sales in the first half. the company said it is unlikely to remain in the u.k. benchmark ftse 100 index after it consolidates its headquarters in the netherlands. unilever is less likely to be included in fund manager portfolios. elon musk new company got a big boost. the boeing company is a winner in a bid to build a multibillion-dollar high-speed express train to chicago's o'hare airport.

the company is trying to get ambitious transportation projects underway in los angeles and new york. david: comcast made the bid for fox we have been waiting for. attention,ybody's $65 billion in cash, 20% more than disney's offer. he has hit the ball back into bob iger's court. the stocks did all the moving before the offer was announced. since then, the stock has a move much at all. we welcome the founder and former ceo of usa networks and paul sweeney, bloomberg intelligence director of north american research. explain how the market is reacting. the market for 21st century fox, we know we have a bidding war. we saw that with the stock yesterday. the comcast stock has been under pressure. it is down 20% today.

investors are concerned about the balance sheet risks, pushing leverage above four times. most investors probably feel like disney is probably the best strategic buyer of the assets long-term. most investors are battening down the hatch for a bidding war throughout the summer. david: it appears both of these companies are in it too when it. >> yes, they are. comcasthy do disney and believe they have to have these assets? toit is the fight for direct consumer. it is very important to both of them. made his plans. he wants the content for that reason. i think bob is fighting back because he has his own studio, but he wants more product. they will find themselves going direct to consumer before long. i think that is the fight here.

that is why they want the content property and the distribution internationally. david: which takes us to the question with what do they do with it? let's put up some of the assets they are going for. when you listen to the comcast call last night for shareholders, it was more of a traditional media company getting bigger. it is more what we have heard over the last several years. when you listen to the disney argument, it is about going direct to consumer with their netflix type app. espnve seen them launch in plus. contenttinued even more to compete against netflix, who will spend $8 billion on content this year. david: let's talk about who has the advantage. these are the two bids. comcast is well above disney. disney is all stock.

let's talk about who has the advantage. i talked to bob iger and asked him how he will avoid overspending. listen to what he said. do we have it? ok. i will impersonate bob iger. was ifnce what he said we do get it in an auction we have to see which is more attractive to the seller, really fox. he thinks for regulatory purposes he will have less difficulty to get this done. he suggests in fact they may actually like disney stock. >> i think that is the case. i think murdoch does like the disney stock and would like to have that longer-term. i think as the delta gets bigger, it is getting harder to justify. there is a tax efficiency in the disney bid that is not there in the comcast bid, but the delta

has gotten large so i think they have to pause and say who has the better deal. i think clearly murdoch would like disney, but i wonder if bob iger will raises bid. david: you think you might not? >> bob is discipline. he has shown he has quite a discipline purchaser. i think he will have to do something. alix: pretend that one person that's it. what does the other company do? what assets are out there that could replace fox? >> i don't think it is easy to do that. there are other content players. possibly buy viacom because they have the paramount studio. john malone out there with some properties, discovery, lions gate, and some content, but it is a different kind of content than the studio offers, the studio and the distribution

networks they have, and the international. can't shortchange that. i think they both want that international distribution with sky. david: how much of this is the library and the franchises you have with the studio, simpsons and all that, and how much is the distribution rights, the channels and things you specialize in. >> i think the channels are very important to them. i think that is one of the reasons they want all the content. the more channels you have come with more places you have to repurpose the content in different ways to the consumer. that is very viable long-term when you are looking at a strategy going direct to consumer. don't forget that all the digital information you get off of direct to consumer is really, really important. i think we have hit the tipping point on that. i think you see how the big tech companies could buy any of these companies, so they are

fortifying themselves for that dual, not only against each other, but the big tech companies. david: thank you very much. it was really great to have you here. it will be interesting. there is a big fox shareholder meeting in july. alix: i want to know if they will make more x-men movies. get real. the ecb due out with its latest decision. markets waiting to hear what say.cy markers more with paul donovan, ubs global wealth management chief economist and the spinoff in european bonds. this is bloomberg. ♪ . .

"bloomberg daybreak this ." i am alix steel. s&p futures are flat.

eight other asset classes, some interesting things evolving, the euro-dollar is actually a .3% inside the more hawkish feel from the fed. today. winning out in terms of the pond in europe, it is selling everywhere you look. take a look at the five-year bund. a different enemy five-year, i forget. there is a really fun name. david: someone will tell us. alix: the curve is unbelievable and continuing to flatten, 38 basis points. they will hit 20 basis points by the end of this year. the soccer game, i will be watching, but not for the soccer, but for the meeting between president putin and others. that is the pitch. candice: well done -- david: well done.

emma chandra here with first word news. good morning, emma. emma: good morning. as you were discussing with alex this this is the -- alix, is the world cup summit. watching the two countries for the opening match in moscow. they are trying to rework their successful deal to control output. russian once a larger increase from solvency. said that china could be a little upset by his news. the trump administration plans to announce it tomorrow. china is likely to respond with tariffs of its own. meanwhile, pushing back that north korea suggestions that economic sanctions would soon be relaxed. secretary of state mike pompeo said it will not happen until after complete -- kim jong-un completely gets up his weapons.

working for the denuclearization of the korean peninsula. global news 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i am indirec emma chandra. this is bloomberg. alix: thank you so much. bubble is the five-year. comeatest policy decision investors looking for policymakers to invest more than just the future of interest rates, including quantitative easing slowing down. also, they watch for the output gap in inflation, wages. joining us now, paul donovan, ubs global wealth management chief economist, and candice bangsund of fiera capital is with us as well. paul: i think there is a pretty good chance they will announce a schedule for ending bond buying. it will be the end of the year. what is more interesting -- if you are an economist -- is what

comes around that. what will they say about reinvestment? how do they do it, where do they do it? remember, it is italian, portuguese, and spanish, and the long stuff is german. that will require some juggling over the course of the next couple of years if they are going to be providing stability to the european economy and financial markets. alix: so what is the trade for that? how do you position yourself around this tight rope and the issues that paul was just talking about? candice: you think about the ecb and going to normalization, i think you want to go along the euro and short u.s. dollar. u.s. mentioned before, the dollar is priced to what the fed has planned for the next few years, anyway, whereas we are not seeing x federal reserve, central bank being priced in, such as the ecb, regardless of whether it is today or in july,

expect to reduce the asset purchase program and be done by 2018. really on focus is inflation and growth, but in your peripheral vision, living give you two things -- one is italy and the other is what the fed did yesterday. could that influence the way they act? alix: no. paul: run efficiently -- unofficially, italy is the scenario, the volatility of the market either causes you concern and you take a step back, or you have italian government that is willing to shower with cash from an opportunity, something that will cause you to accelerate. think mostb, i people in the markets, with regard to the volatility that we saw in the italian bond market as part of an overreaction, part caused by regulation, quite friendly.

-- frankly. for the effect of must have for banks do not talk to each other as much as everybody thinks. they do not coordinate in that sense, but clearly, they are taking account of what the fed is saying. what is the fed saying? life is grand, everything is good, and therefore we are taking an appropriate response to the. i do not think that is necessarily being seen as a signal to slowdown tightening in europe, because what the fed is saying is our economy is doing great, how about yours? david: i was suggesting the reverse of that. they are given some headroom, they are moving up, so we have a little more flexibility coming up a little earlier. paul: we have to remember, there have been factions on the ecb, the ecb president mario draghi -- clearly the rehabilitation program is working, and he has weaned away from that. there is a split in europe. everything is a compromise all of the time.

wei think it is going to be will end bank by the end of this year. alix: taking a look at the ecb vs. the fed, you are looking at the financial index in both regions, much higher in the u.s. vs. the european index, which does not have as much loosening. thes well below that of u.s. i feel part of that, canad dice, is closing out the growth, the data we have seen, output, for example, starting to roll over. how this that'll work? europe, west year in had progressive, and that is what we saw the euro strength and last year. little q1 is a concerning some of the world over, but the economy is growing at above-trend levels, helping

to close the gap and allowing so gradually,ceed i think we are going to be looking for that rate to stay unchanged until well past the end of asset purchases. alix: that is the good side. you have compensation, the white line, euro area assets in orange, the blue is the super inflation, yes, moving higher, but financial compensations are not moving as high as the u.s. i mentioned a tight rope for mario draghi. how does he talk about the theme and not addresse i just rate hie expectations? paul: the good old days where all we worried about with the interest rate -- those are gone. we have bond buying, quantitative policy, and so that is what i think the ecb is going to deal with, because you will see a tightening and regulations finally in italy. you have got still some problems

with the banking system, but banks i europen are lending more money, so we have a regulatory restrictive environment, but the banks are closed, so that is an incentive to the ecb to move on policy. frankly, we have not needed it for the last year. the question is the pace. and here i think it is going to be slow. the ecb is not what to be shrinking its balance sheet anytime soon, hope late for years, so i think it is a different mix of policy from what we have got here. policye got the monetary tightening. i think market moves to the monetary policy. conditionstary are tightening, if the euro does go up the way you predict it to go up, is that really a restraint on the ecb?

they have to be concerned about that? candice: absolutely, it is something they will have to watch, particularly on the inflation front, and i think they will be cautious from the ecb and 2019. we are not expecting them to move on is restricted to the back half of 2019. candice: what type of rating -- candice:alix: what type of rating what we see? aul: europe does not have corporate bond market the way that you guys do over here -- alix: they still purchase 20% of eligible paper. paul: they do, but it has not got thepaul: liquidity, it has not got the economic importance. the bond market is the more important thing from an economic perspective, in a relevant measure. the european investors of big bondholders at a retail level, this is where the focus is -- i think. they are not going to ignore the corporate market, but it is more about the bond market. it was really a very late decision.

it was not something they went to the first instance for various political reasons. thebond market will be market and the markets with more fiscal constraint, higher levels of debt, that is what they need. david: so on the list of things to watch for, concerned about trade. early indications about germany exports may be down some because of the uncertainty of trade with the united states, frankly. how big of a factor is that? candice: it is a big factor for everybody these days, particularly in europe. you have the combination of the stronger euro and the lingering trade. likely it will factor into the global focus from ecb in general. alix: candice bangsund of fiera paulal, thank you, and donovan of ubs global wealth

management stays with us. the latestng you details next as well as market reaction. ahead, you have oil diplomacy. will in way as the world cup begins. meeting on the sidelines. we will discuss in the next hour on my new show as well, "commodities edge," at 1:00 p.m. eastern time. this is bloomberg. ♪

emma: this is "bloomberg daybreak."

i am emma chandra in the hewlett-packard enterprise green room. coming up next, enterprise capital. ♪ alix: we are seconds away from the latest ecb decision. let's take away -- look at the way that the markets are moving very pretty much flattening equity markets here in the u.s. little softer over in europe. in the asset classes, you want to watch the bond market, the currency market, euro-dollar picking up .2%, the euro kind of winning out on the talks of the ecb yesterday. will mario draghi be able to walk the tightrope? two questions the currency market will have to decide for us. a selloff in the bond market. 10-year up about 10 basis

points. german bondr yield, over about three basis points as well. 38 basis points here in the u.s., watch for the continuing pressure on the ecb. no expectations for a rate hike, but it is a color we continue to wait for purely the composite facility rate down about 40 basis points. also taking a look at any changes in the bond buying program, if they will wind up paring it at all, will we learn about it now or in july? here we go, rates unchanged, no surprise there. -40 basis points. they do change their forward guidance on interest rates. they will buy bonds until december. they will buy $30 billion worth of bonds until the end of september. we did get that announcement where they finally make the and of qe at the end of december.

let's go to bloomberg's matt miller, who is live where the ecb meeting is. spiking on the news, matt. , want to point this out unchanged until at least the summer of 2019. it sounds like they got their ate itnd eight it to -- too. matt: it is fascinating, and i think the position going into this meeting had a lot to do with the movement of the euro. even if we get more dovish stance from mario draghi during the press conference, who, by the way, just drove in a motorcade behind me into the bank building, you still may see the euro gained. if the euro gains against the dollar by the end of the trading session today, the first time in six european central bank decisions that we have actually seen the currency stand against the greenback. it had a lot more to do with the positioning meeting than it does the message. most of what the ecb is saying accepted with the

exception of the fascinating interest rates, the on hold headline that you point out there, alix, and of course the timing of an exit from my state of easing. alix: we are getting more headlines, so to clarify the position come ecb said asset purchases will be about $15 billion a month. from 30 to 15 to zero in december. -- 30 billion to 15 billion to zero in december. those of the big headlines we are looking at, matt, what will be the first question in the press conference? matt: thematt: first question, well, they are also going to give in outlook for the economic growth, and outlook for inflation. all the questions at first i think are probably going to center around this decision of timing, the decision to end qe, the decision to announce that to the market, and then there will be talks about rates. because they say they will leave rates unchanged until the summer

of 2019, that will become a real focus. reporterseady heard this morning talking about the forward guidance for actual rate moves, and the fact that the ecb is bringing it up i think leads them to a lot of questions for the conference. alix: ok, bloomberg's matt miller, thank you so much. the euro-dollar spiking to the one-month high. you see the selloff pair a little bit. bcp only 27 basis points, pretty flat when it comes to bunds as well, and flat when it comes to portugal, in terms of their debt. it feels, can i say, like a dovish paper. cannot make that call? paul donovan at ubs wealth management, your thoughts. paul: i think it is largely expected, the forward guidance on interest rates is in line with what the market six active. we were expecting a summer rate hike in 2019 anyway. isward guidance itself perhaps a little unusual.

i do not think that matters a great deal. most people do not know what central banks do, far less whether interest rates are, so you cannot forget that reaction. the bond taper i think is largely to be expected. we will for them to carry on until the end of the year. we were expecting 30 billion. they have got to scale it back. what they should've done some time ago, this is what the markets was expecting them to do, so it is just locking them in a bit. today, we are getting the announcement that the bond buying is done by december. today, we are getting the announcement implying that rates may go up in september. they have not actually set the. in playing we will get a summer rate hike without coming out and saying that. david: in a broader sense, is this mario draghi announcing victory? "my job here is done , i did it, now we will go back to normal." he does not want to leave

by saying i was the one who think the euro, i got us through this process. there is an element of that. the ecb does not declare victory -- the economy does. david: i expect mr. draghi and others might say that the economy is there in part because of what the ecb did. paul: it is certainly true to say that yes, the economy is funny because the ecb responded, but it is also fair to say that the recession happen because the ecb did not do enough. that then created perhaps a more severe downturn as well. the second major central bank that is stopping qe, and that has got to take liquidity out of the global market. hood of thatlikeli -- i beg your pardon, i'm so sorry. paul: this is, i think, one of the critical issues.

they were not necessarily taking money out of the market. this is what a central bank is doing. central banks are reacting to falling demand of cash. that is what is going on. $100 billion of cash on our balance sheet -- we do not want it. that is a reduction in the demand for cash. if you have foreign demand for cash and you leave the supply unchanged you have got a problem,. what they are doing is simply reducing supply and demand -- as demand falls. that does not necessarily take money away from the market overall, because on a net basis, they are simply reacting to a decline in demand. alix: to your point, the ecb says they will reinforce their debt for extended period, taking liquidity out of there is conversations. paul donovan of ubs wealth management, thank you so much. i want to take a look at the market reaction. it has been very important. by six basisup points to her they were up by

about 10. the euro where you can see the statement.n of the it is hard to see on this particular chart, but there was a spike up in the euro at the one-month high when you got the headline they were going to end qe. then the euro took a leg lower as the headline cross that rates would be unchanged until the theer summer of 2019. a firm commitment, in some ways, on rates that i do not think the markets were necessarily expecting. we do have a selloff in the bond market. it is continuing, but much less. david. david: coming up next, what some forecasters are saying about china's trade surplus. or will it be a surplus? that is coming up next. this is bloomberg. ♪

david: what i'm watching today is the chinese current-account surplus, which might surprise you. i have the new favorite chart, which actually came from

standard chartered, which is in the "ft" today, the "financial times." what this says is in the top in the lighter yellow, that is isd, the orange line below in services. there is a substantial surplus and goods, bringing down a deficit, and standard chartered predicts that a couple of years from now, there may be a negative numbers for the first time in 25 years, and what it is, they are exporting less stuff, and they are having more of us go over there. an interesting way against president trump and his complaints, because he talked about the trade deficit with china, and you know he is talking about goods. alix: that is true. it had some disappointing numbers today, investor sales, numbers coming in like, and you see lighter inflation, in particular, so is the economy

slowing, and which area might that hurt the most? print going to produce more, and what happens to the services gap? david: i am looking at a 50-year time horizon. looking at the one belt, one road. alix: you say china is great, china is stable -- if china slows, how do you compare? draghi's presso conference. the ecb says they will not hike rates until the summer of 2019. the bond market reverses in europe. d is downar on the bun by two basis points. and coming up, we're joined by mark okada. this is bloomberg. ♪ this is bloomberg. ♪

♪ rope,draghi's tight

saying the ecb will end asset prices in december, but will not raise rates until 2019. draghi's press conference on deck. shaking up the fed announcing a press conference. no more forward guidance and all rate hikes -- or rate hikes this year. president vladimir putin will talk about raising oil production with their energy ministers. david: welcome to "bloomberg daybreak." i'm david westin with alix steel. alix: i love the movie. david: is it interesting how the markets have reacted to the ecb decision? they said, let's take another look at it. alix: it was the two headlines. there was a higher euro call. and then a reversal.

s&p futures pretty much flat only up four points. bank stocks got hit hard in europe. euro-dollar down .5%. the selloff in the bond market in europe has completely reversed itself. it is buy bunds. continues topread rise. . am watching crude time now for the morning brief. mario draghi will be holding a news conference and we will learn more about the decision he announced. then we will get retail sales numbers and jobless. numbers and jobless claims.

we are talking about the world cup in moscow with saudi arabia starting against a russian team, meeting withputin the oil minister. alix: and we had the g20 meeting tomorrow. and then we have opec next week. surprised oil markets are so,. marketsso surprised oil are so calm. ceremony for conversation? do they watch the game? david: and watch -- and what language do they speak? alix: we were thinking english. putin i think vladimir refuses to. let's get an up date with the first word news. willia's vladimir putin

talk about oil production. the world's largest oil get aers are starting to successful deal to control output. department is about to revise a debate whether actions influenced the elections. the watchdog is coming out with their findings on how they handled the investigation. theident trump supported report. ball is in disney's court after comcast bid, making a cash offer of $64 billion. disney had also agreed to buy.

global news, 24 hours a day, powered by more than 27 journalists and analysts. this is bloomberg. alix: thank you. the euro is falling after the ecb announced they will keep rates unchanged until the summer of 2019, but he will taper in december -- but they will taper in december. is mark.s great to see you. long euro, short bunds. what is it now? mark: when you think about the european situation, it is much more complicated given how big the bond program has been versus the size of the market. they have swamped the market with their liquidity, so any changes going forward will be reflected in the some of these

markets. what is happening is very interesting to see that global growth is turning a bit in europe, and the numbers have gotten softer at the same time we have got an announcement. as far as the market concern going forward, i think you will see widening as far as credit --eads across the good news i guess is they kept the rate hike pushed off, which should keep conditions, at least from a rate standpoint, fairly benign for quite a while. do they have a concern over the rate of growth in europe? mark: the numbers are turning over from a very highpoint. we had that big boost last year across the global economies.

and so, a little bit of softening here given the rhetoric on trade. given the fact you have some real issues popping up in the emerging markets. it kind of makes sense to us to see that softening, but it is not something at the alarm state at this point where you see them may be rivers some of the decisions -- where you see them may be reversing some of the decisions they made. the bond buying program is good for markets in the long run. you have to remember they really manipulated the rate market in europe and the currency market by being such a big player. david: you mentioned trade. let's talk trade in italy. let's talk geopolitical risks. how is that dampening what is going on in europe? mark: i think the picture is complicated. we have a pivot going on between the u.s. and the china relationship. and as china i think looks to pivot its economy more toward europe over time, that will be a

positive for your, but on the other hand, this protectionism coming out of the u.s. is negative for both situations. i think it is negative overall. i think you could continue to see pressure because we have that certainlynd is a negative -- a net negative, but again, this is happening at a time with the numbers are very strong. i don't think it is time to get to excited about this. buyinge are seeing bund in europe. what is your favorite european trade right now? mark: i think we like, i think we like the dollar versus the euro. i think if -- i think the dollar continues to strengthen against the euro for a while. that is our call there. alix: if that is the call for the europe trade, let's go to the u.s., particularly what the

fed chair said about the yield curve. >> we know why the yield curve is flattening. it is because we are raising the federal funds rate. the short end would come up. alix: but you cannot escape how flat we are getting, mark. terminal, .2%,he continuing to flatten. call and what is the trade for you? mark: well, we are in the camp of retire across the board, so the flattening that we are some, rates need to move higher across the rate curve. given were inflation is going, we talked about oil earlier in the program, but i think i will continue to put pressure on inflation numbers. and the strength of the u.s. economy, i think, it really

hasn't seen the benefit of the tax deal yet in any meaningful way. that is where the biggest , whereons we see across you have this massive increase, at a time where we are at a very tight employment level, the punchline means that we have to see more inflation. that means the back end of the curve will stretch, too. this flattening everyone is worried about, leading to some sort of recession, is not our call. it is not what we see the corporate we are lending to, or the equities we are involved in. the corporate economy looks very strong in the u.s. per se. i think the flattening of the curve is something that people are getting very concerned about, but i don't think it is a recession signal. i think j. powell is right that they are raising the short-term

crating a lot of flattening, but we will see rates rise on the backend and the steepening from their. focus on the spread between high-yield and ig. what are you seeing and how are you seeing it? mark: if you look at total return between ig versus high-yield versus bunds for the year, it has been stunning. the ig markets is down 4.5% year to date and underperforming with everything out there, except for emerging markets, of course. you have the higher-quality corporate credit market down less then the investment grade market. i think that is telling about what is happening as far as this fixed income marketing credit market where we have several change in the city dynamics across it -- where we have a dynamics across

it. we have seen widening and it is pretty concerning. david: beyond the question of liquidity, how much of it is because of duration? people are that getting nervous, and they would rather be in short duration? mark: that is absolutely going on, david. some minutes are everybody is very concerned about. but i think it is even more than that, which is interesting, because we are getting red widening on top -- because we are getting spread widening on top of that. in the i.t. market at least, it market, ate ig least, you are getting hit by interest rate concerns and some of this liquidity dynamic, which is causing spreads to widen. alix: mark okada will be

sticking around and the world cup is kicking off in moscow. discuss vladimir and oil production is bloomberg. ♪ is bloomberg. ♪

♪ >> this is bloomberg daybreak. cutting 4600 jobs in a restructuring. it ceo -- it is the ceo's biggest debt yet to save billions of dollars a year. unilevergoods giant

has given an outlook. they said it is unlikely to remove -- they are likely to stay in the ftse index. leaving the banks means unilever will not be included in the portfolio. importsff aluminum could mean a hit for they their company. that leaves miller several options. they may have to cut production or raise prices. market share will be hammered by just a $.50 increase on a 12 pack. alix: thank you. soccer and stay for the oil diplomacy. vladimir putin and prince mohammad bin salman are using the world cup as a backdrop to discuss the opec meeting.

they are suggesting optimism that a deal would be reached. dealid we could come to a that will satisfy the markets, but nothing outlandish. anding us is regina mayor marco o'connor -- and mark okada is still with us. ok, so the prime minister saying we will raise more, but the question is, by how much? >> who would think that the start of the world cup would create such drama in the oil markets? they will raise production, but the question is by how much? my thought is probably one million barrels a day. but they are you a -- but they are at a crucial tipping point where demand construction could take place. they need to balance things. they realize opec is once again

relevant in the oil market, so they will want to play this very carefully. alix: one million barrels of oil a day seems like a concession to russia. you can see total opec production versus russia production. russia that wants to increase production in the next three months. they are pushing more for the one billion barrels of oil a day and saudi are pushing for 300,000. how do you see that dynamic playing out when you countries like iran saying no raising output at all? cut farthe saudi have deeper than the russians have and i would anticipate that we will continue to see that. and the saudi will try to drive a balanced increase, and the other players will end up coming along. stay in wants things to

the $70 to $75 range. i think that is what you will see in terms of the meeting next week. alix: interesting you say that because a few weeks ago, we had mr. putin coming out, saying we are not interested in the price of energy and oil. i say we are perfectly happy with $60 a barrel. what ever can lead to certain problems for consumers is a problem for producers. they need to start pumping now before it gets cold. regina: exactly. it is not like these things get turned on and off like a light switch and they need to balance it. i see gradual production increasing. you will see the saudi is playing a stronger role in terms of restraint, but they will feel -- they will fill that gap. david: do we have a good sense of what the prices at which you start to destroy demand? above $80.

you will see these countries responding to higher gas prices and they will take different maneuvers to manage their demand. alix: mark, from an oil perspective and a credit perspective, i have an interesting chart for you. you are taking a look at the break even curve for the five and the 30, the white line. it is flattening, and the blue line is the spread for oil. i cannot help but notice how closely related they are. remote, so i am cannot see your graph, but i would say that as far as oil prices are concerned and how they are going to affect this market, it is very interesting what we saw back in 2015, 2016 where we saw oil dip in that created a real issue in china in a bad way. right now, we are nowhere close to that. we are in a place where $60, $70 is a nice place for russia and

opec and u.s. producers to be making a decent amount of money, so as long as we stay in this place and don't get down into the 50's, we should not be too worried about how it affects markets. david: the increase of energy could have a dampening effect on global growth. are we ok in the $70, $80 range? mark: absolutely. demand has been very strong, stronger than people anticipated, and that is why prices have been pretty resilient coming even as the dollar has strengthened pre-dramatically, you have seen -- strengthened pretty dramatically, you have seen the demand being decent. in this area, we are in a good place. opec can increase and russia can increase. they are not even that the quota level. are 900,000 -- they are 900 barrels a day below the quota.

the demand has been decent. alix: but on the flipside, what about futures? if you take a look at this chart, this is production they can bring on in three months that is sustainable. that has been dropping a lot and the idea is if you pump more now, that equals higher prices later. regina: you are right and i have seen analysts seeing a curtailing in u.s. production. notink that is why you are seeing as much volatility in the current price, we are seeing it at $77. it is not reacting, even though the saudi say it is inevitable that we will increase production. but they know that the supply opportunity is not as a massive to come online very quickly. you regina to see and mark okada.

we will be talking about oil and opec later on commodities edge. tune in with me and one of people eastern to get your fix -- two in with me at 1:00 p.m. eastern to get your fix. here is what we are looking at. it is all about selling in the bond market. even italy's 10 year yield is up by one basis points. a lot of money coming into bunds. more on that next. this is bloomberg. ♪ oomberg. ♪

♪ alix: we are taking a look at euro-dollar. we getting after the ecb announced it will keep rates unchanged until the summer of 2019. it will also lower is monthly asset prices to 15 billion euros to zero by december. also in the bond market, we saw selloffs all across.

now it is all about buying. you have yields in germany on the 10 year down by three basis points. joining us is matt miller out five --joining us is matt miller. what are we going to hear at the press conference? matt: the biggest question will and ratefour guidance rise plans for next year. but the statements we got out about 40 minutes ago is much more dovish than the market anticipated because and rate rise plans for next year. draghi is saying they are going to expand quantitative easing. it was previously planned to any debt in september, going to the end of the year. they are committing to not raising rates until the second half of 2019. datehe hawks got their end , an anticipation for an end date, and the does got the sequencing. david: why isn't anyone

surprised at this? downpeculation was a taper and go to december and you would not have a rate hike until july? why is it a surprise to anyone? matt: you are right. this is what most economists were saying. they did not expect draghi to commit to not raising rates until the second half of 2019. number one. number two, we were not sure he would give us and end date -- an end date. at the last press conference, they said they did not even discuss and -- and you end time for quantitative easing. it is uncharacteristically theseh of draghi to give kinds of details, even if the market anticipates that timeframe. now he has done that, and that information flow is what is

surprising investors. it was certainly surprising to me to get this much information out of the ecb. alix: matt miller, thank you very much. joining us is brad bechtel. he comes to us from his office in new york. what is the trade with the euro-dollar down? --d: the market was exciting excited going into the ecb meeting. the market was looking for -- andng hawkish and the draghi delivered a lot of information, which was a bit of a surprise. people were looking at july for him to set the table, so the market got a lot more detail, but it did not get what he wanted, now we are selling off. we will remain under pressure, and the press conference is important. draghi tows more of a dovish line. in thet we will weaken euro looking at levels like 116.

80. alix: you want to buy on the downside? brad: yeah, i think we will forably remain range-bound the summer and not push through 115 a must be get some curveball out of italy again, or some big policy change there. i don't expect to push through 115. that will be a buyer down on a short-term tactical basis. david: talk about the u.s. dollar. we had a fairly hawkish, i thought, said action yesterday, but yes the dollar did not strengthen. brad: i have never seen the markets so divided on the dollar. that arebulls passionate about the bullish case and doves passionate about the dovish. i think the fed is dollars supportive.

the fed was hawkish and they are hiking rates and that is also dollar-supportive. but trey tariffs -- but trade tariffs are dollar negative. central banks become hawkish and we saw an element of that with the ecb, but not to the extent goinghe doj or u.k. dollar negative, so the market is really divided on the market. i think we will remain firm on the dollar. right, thank you so much, brad. we are moments away from the press conference starting at mario draghi takes the podium. here is where we are in the market. a really fascinating session has developed in the market. u.s. equities are on the outside. the dow jones up by three basis points. european stocks moving is a positive territory.

the dax is also positive up by .3%. it feels like the dovish taper has had the markets excited. and that translates is a buying in the bond market and selling in the euro. take a look at the other asset classes and you can what i am talking about. 117euro dollar is now at and reversing. expecting this to be a more dovish press conference. bonds,u take a look at you can see the german five-year yields moving by five basis points and were selling all across the board. in the u.s., the curve continues to flatten. mario draghi getting seated. no doubt response to many questions. the ecb saying they will maintain low rates through the summer of 2019.

the markets really adjusting expectations quickly on that news. many questions as to the inflation in the eurozone. we have weakening data with trade issues. mario draghi cannot start right away. he shuffles papers. he is all over the place. here we go. let's listen to mario draghi. draghi: the vice president and i are very pleased to welcome you to our press conference. governorike to thank rest newson for her kind of hospitality and expressing gratitude to her staff for the excellent organization of today's meeting of the governing council. we will now report on the outcome of our meeting.

since the start of our asset purchase program in january 2015, the governing council has purchasessset conditional on the extent of progress towards a sustained adjustment in the path of inflation to levels below, but close to 2% in the medium-term. council,e governing under careful review of the progress made, also taking into account the latest projections measures wage pressures and uncertainties surrounding the inflation outlook. assessment of this from the governing council

concluded that progress towards a sustained adjustment in inflation has been substantial so far. that inflation expectations are well anchored. continuing degree of monetary accommodations provide grounds to be confident that the sustained convergence of inflation towards this will continue into the period ahead. and will be maintained, even down the gradual winding of our net asset purchases. accordingly, the governing council today made the following decisions. regards to monetary policy measures, we will continue to make purchases --

net purchases under the epp at the current monthly pace of 30 billion euros until the end of september 2018. aftericipate that september 2018, subject to incoming data confirming our medium-term inflation outlook, we will reduce the monthly pace of the net asset purchases to 15 billion euros until the end of december 2018, and then end net purchases. second, we intend to maintain our policy of reinvesting the principal payments for maturing apprities purchased on the for an extended period of time

after the end of arnett asset purchases. and in many cases, as long as necessary to maintain favorable liquidity conditions, and an ample degree of monetary accommodations. keep the decided to key ecb interest rates unchanged , and we expect that to remain at the present levels at least through the summer of 2019. and in any case, for as long as theus area, to ensure that inflation remains aligned with our current expectations of a sustained adjustment. today, monetary policy decisions maintain the current, ample degree of monetary accommodation that will ensure the continued, sustained convergence of

inflation towards levels that are below, but close to 2% over the medium-term. significant monetary policy stimulus is still needed to support the further buildout of domestic price pressures and headline inflation developments over the medium-term. this support will continue to be provided by the net asset purchases until the index the year -- until the end of the year by the stock of acquired assets, and the associates should -- and the associated reinvestment and our enhanced guidance for the key ecb interest rate. in any event, the governing adjust stands ready to to of this as appropriate

ensure that inflation continues towards the governing council inflation aim in a sustained manner. explain our assessment in greater detail, starting with the economic analysis. quarterly, real gdp growth is moderated to 0.4% in the first quarter of 2018. in theng growth of 0.7% previous quarters. reflects ation pullback from very high levels bygrowth in 2017, compounded an increase in uncertainty, and some temporary supply shock, supply-side factors that both the domestic -- factors at both

the domestic and global levels. the latest economic indicators and survey results far weaker and remain consistent with ongoing, solid and broad-based economic growth. measures,ry policy which have been -- which have facilitated the leveraging process, continue to underpin domestic demand. private consumption is supported by ongoing employment gains, which in turn, hardly reflect past labor market reforms, and by growing household wealth. business investment is fostered by a favorable financial condition, rising corporate profitability, and solid demand. housing investment remains robust. in addition, the broad-based

expansion in global demand is expected to continue, providing exportshe two euro area eurooviding an impetus to area exports. these projections for annual real gdp increased by 2.1% in 2018. 2019, 1 .7% in 2020. compare did -- compared with microeconomicb projections, the outlook for real gdp growth has been revised down for 2018, and remains unchanged for 2019 and 2020. risks around the euro area

outlook growth remains balanced. nevertheless, uncertainties related to global factors including increased protectionist, have become more prominent. moreover, the risk of persistent, heightened financial market volatility warrants monitoring. estimates,o inlation increased to 1.9% march of 2018 from 1.2% in april. this reflected higher contributions from energy, food, and services price inflation. on the basis of current prices for oil, annual rates of headline inflation are likely to hold around the current level

for the remainder of the year. while measures of underlining inflation remain generally muted. they have been increasing from earlier lows. domestic cost pressures are strengthening amid high levels of capacity, tightening labor markets and rising wages. the inflationout outlook is receding. looking ahead, underlying inflation is expected to pick up towards the end of the year, and thereafter, increasing gradually over the medium-term, supported , thenetary policy measures continued economic expansion, the corresponding absorption of economic slack, and rising wage growth. this assessment is also probably reflected in the june 2018 euro systems staff microeconomic

projections for the euro area, inflation and 1.7% in 2018, 2019, and 2020. 2018re it with the march ecb staff microeconomic projections, the outlook for headline inflation has been for 2018 andly 2019, mainly reflecting higher oil prices. analysiso the monetary 3.9% in april at 2018. percent -- points after 3.4% in february. and inhese lower moment the three dynamics over recent months, mainly reflect the

reduction in the monthly net asset purchases since the beginning of the year, growth continues to be supported by the impact of the ecb's monetary policy measures, and the opportunity cost of holding the most liquid deposit. monetaryly, the narrow aggregate -- it has receded in recent months from the high rate previously observed. the recovery in the growth of loans for the private sector observed since the beginning of 2014 is receding. the annual growth rate of loans to corporation stood at 3.3% in april of 2018, unchanged from the previous month from any

annual growth rate of loans to households also remains stable at 2.9%. the pass-through of the monetary of juneeasures in place of 2014 continues to significantly support borrowing conditions for firms and households, and credit flows across the euro area. this is also reflecting the results of the latest survey on the access to finances for enterprises, which indicate that small and medium-sized enterprises, in particular, benefited from the improved access to financing. outlook of the economic analysis and monetary analysis, confirmed that today's monetary policy decisions will

ofure the ample degree monetary accommodation necessary for the continued, sustained convergence of inflation towards levels that are below, but close to 2% over the medium term. to reap the full benefits from our monetary policy measures, other policy areas must contribute to raising the longer-term growth potential and reducing vulnerabilities. the implementation of structural reforms in the euro area countries need to be substantially stepped up to increase resilience, ricky structural unemployment, and boost euro area productivity and growth potential. regarding the scope policies, the ongoing -- regarding fiscal , this is important in

countries where debt will remain high. old countries will benefit from intensive efforts to achieving a more growth-from a composition of public finances. andll, transparent consistent implementation of this macro economic procedures over time and across countries, remains essential to increase the resilience of the euro area economy. improving the functioning of economic and monetary -- remains a priority. urges decisive steps the capital markets' union. we are now at your disposal for questions. >> before we start with a q&a, , thee thank you

representative, for hosting the central banks. answer questions on the governing council discussions. let me also clarify that we will not comment on the situation around -- them as his case is neverg, and is he be comments -- and the ecb never comments on pending cases. >> thank you. mr. president, two questions. your statement says that you expect to keep rates on hold through summer of 2019. ratesou expect to raise once during your term, or more

than once? second question is, you mentioned incoming data is one of the conditions you confirm the current outlook. could you describe the assessment of the political situation in italy, and how that may impact your economic outlook? thank you very much. draghi: frankly, we said through -- let me reread this because it is quite important. we keep it unchanged, and we expect them to remain at the present levels at least through the summer of 2019. case, for as long as necessary, so you see, this and the other question you asked

about the data, it really shows the environment in which he made this decision. not the news is good, it is as less good, but still solid. we see increasing uncertainty. i think you said debt. the quarterly real gdp growth so there .4%0.4%, is the lessons report 7%, so -- is less than 0.7%, but it is still growth. moderation supports that from very high levels in 2017. intly justified i a pickup exports -- mostly justified by an extreme pickup in exports, compounding by an undeniable

decrease in uncertainty for a mostly forreasons, mostly for geopolitical reasons. so, the assessment that the governing council gave of the current economic environment of the underlying strength of the overall while being appropriate for achieving the decisions that were taken today, doesn't want to underplay the existing risk. by the way, we may well have being somewhat longer than it is in the productions in some countries. it is for seen it may extend into the second quarter, but this at the same time, doesn't tell the underlying strength has

not changed. the underlying strength of the economy in the medium-term is what we assessed to be adequate. so, i think -- and as far as a specific -- may have an impact, -- this is just one of them. >> ms. jones? >> mr. draghi, two questions. you gave a date for the first rate hike, but we have no real idea what happens after that. mr. draghi: i'm sorry, you said what? the firste a date for

rate hike, but we have no will idea about what happens after that. you said it is more of a next dictation than an attention -- then an intention to keep rates on hold. is there any discussion of getting stronger guidance on rates, or is there a model where you are offering investors conditional pass for rate hikes. my second question, you emphasized in your opening statement and in some of your remarks about incoming data has not been good, and threats to the outlook are on the rise, but yet you still say the risk to the outlook is broadly balanced. what exactly are the upside risks, and what would it take to emphasize thatcy the balance is now shifted toward the downside?

thank you. mr. draghi: thank you. to say that we anticipate, because that is what we say, you know? means series of actions that based on the current assessment, we are taking these actions, and so, we have this forward guidance on interest state andch is able data dependent -- which is in a bull state and data-dependent. it shows the environment that these decisions were taken. decisions,en these knowing that the economy is in a better situation. andncreased uncertainty, probably because of information that came after that date,

probably it created some soft q2 withwith continuing revising projections on q1, but q4 for the, q3, and year. judged theng council progress towards sustained adjustments of the inflation rate. it was consistent with our objective. about risk, by and large, the situation is overall similar. , theyt, you will notice remain broadly balanced. so far, because we have a questionable increase in the

geopolitical, global uncertainty. we may also have some increase in the domestic uncertainty. at the same time, no we expect that have the same time, we positive surprises with growth. with growth, we will have positive surprises from the fiscal expansion in the united likely, fiscaly expansion, but this is more medium-term, in the eurozone. several countries in the eurozone. so, that is the balance of risk, i would say. >> i have two questions. let me start on the reinvestment. is there any more guidance on how long the reinvestment will continue, and also whether they are tied to the interest rate

hike, meaning will investments have to start? and then one more general question on how the discussion -- it strikes me what we heard from you today, a compromise between doves and hawks. you have -- you keep your flexibility, but at the same time, we have an end date. how did those discussions go? mr. draghi: we did not discuss the investment policies you have noted. those will be discussed in future meetings. at this point in time, we fill there was enough to communicate in just one meeting, and we will cope with this later on. let me just respond to your second question. we went through every extensive ,iscussion on the environment

on economic scenario now, and then we went through the assessment of -- we went through whether it is convergent. so we went through convergence and we looked at projections, and we compared projections across time and projections with other sources of inflation. projections, these overtime, compare it with other with othercompared sources, showed a remarkable improvement. went through the examination of confidence, whether we can call ourselves confident about this? and again, we looked at expectations, both market-based, and the professional forecast expectations.

and again, we saw that we could declare ourselves confident. and finally, we went through the assessment of resilience. -- is it ards, it's doable convergence and a sustained convergence? and the answer to that was positive as well. i think market reaction tour announcement showed that it is a -- i think market reaction shows that it is positive. thatways have to remember the continuing convergence is conditional on interest rates remaining with investments for an extended period of time. character of the decision says remains to be patient, prudent, and persistent. and this was unanimously

confirmed, so the decision was a unanimous one. now, let me draw more carefully your attention of what it means of unanimously for the complex of the decision. first on forward guidance. the decision was unanimous about the date and state dependency. see that all throughout, there was a desire to maintain optionality in each and every part of this decision. so in the state, in the case of interest rates, we say that at least through the summer, i will point out the very spots where optionality comes in. second point about reinvestment, there is unanimity about the extended period of time. the intent to there is to avoid

of thet of tightening excess liquidity conditions. then, let us look at the various parts where optionality comes in. first of all, as i said before, we decided to keep the key interest rates in the ecb and changed and we expect them to remain at their present levels at least through the summer of 2018, and in any case, for as long as necessary. the second point where optionality comes in is at the the paragraph, that says that in any event, the governing council is ready to adjust all of its instruments as appropriate, to ensure that inflation continues to move toward the governing council inflation aim. here comes the other part of the option, --