more clarity. limits to growth. the cfo at facebook warns of revenue growth declining for the rest of the year. $16erberg and at least billion in stock in freefall. as investors search for clues in rate hikes, the definition for summer, and qe investments. and president trump and john kline longer -- jean-claude juncker declare a cease-fire. to "bloomberg daybreak" on this thursday, july 26. got aneel, we have earnings day. and $.65 angs coming share, that seems to be a beat as well. revenues a little light, coming in 25.

david: the question is -- what is going on with subscribers? directv, for example, they are really losing subscribers. what else are they really going to do to protect themselves? alix: another earnings here, bristol-myers, earnings coming in over one dollar, but they see the full-your adjusted earnings. they raised the high end of that -- actually, the raised the whole thing, the high-end at $3.65, so increasing their full-year earnings outlook. david: under armour, good news, revenue better than expected at 1.7%. duringof the turnaround the question is -- how fast can they make that turnaround? but they did better, that loss was less than expected. meantime, we have airlines earnings out. spirit had a beat. today, we have southwest. they had a lot of trouble with, you remember, that fatal engine

accident. alix: oh, yeah. david: it was rough. they are turning around in the third quarter, they think they will be in much better shape. they think they will be growing again. alix: go ahead. david: we will have the southwest ceo on later today, gary kelly, in a couple of hours. sorry. alix: definitely looking at that. horton also out. yesterday, the homebuilder was at a 10-month low. we had disappointing home permit data, so this is not bad news necessarily for the company, pretax profit margin forecast for the full year. quarter, about 12%, so pretty solid there as well. david: and we have allergan out with second quarter earnings. $4.17.eat with

alix: i want to touch on conoco real quick. earnings coming in at $1.09 a share. alix: i want to touch on conoco realconoco boosting the forecasr full-your production, and they have capital, still pretty much remaining unchanged, but they did cut capital guidance, and they are boosting their full-year views. be these guys, it will critical, how much money they are making from the rally in oil and what they wind up doing with it. strong, are pretty cutting capital guidance, but they are boosting. they are cutting capital guidance. david: but the question is -- what do they do with the money? will they have buybacks, shares? have not seeni that come out in the press release, but they did have about 1.5%. that is analysts do not want to own that company particularly. exxon, you will see a buyback coming. it will be a good day.

david: your favorite. alix: totally my favorite. facebook earnings weighing on as equity futures. very different story third into the ecb, euro-dollar a little bit weaker, $1.17. we have been range bound for a while. if there anything that mr. draghi could say that would break us out of that range? improve flat despite some geopolitical risk premiums that should be priced in considering the conflict with who the rebels from yemen. yemen.hi rebels from she is already laughing at us, gina martin adams, bloomberg equity chief strategist. david warner, the facebook cfo, gave these reasons for currency being low -- greater user control over privacy. here is what one analyst had to say on the call yesterday.

>> i want to go back to the magnitude of the deceleration. i think many investors are decelerating.em that type of deceleration considering how good the advertising advertiser feedback is on your platform. it just seems like the magnitude is beyond anything we have seen, especially crossing the number that we do not cover. alix: that is a nice way of analysts saying "what the what?" [laughter] alix: i will pull it up. anyway, gina, talk about how bad this is for facebook and overall tech. gina: obviously it is very bad for facebook. we have to remember, a company this size having a 20% decline, that is pretty phenomenal. what it means for overall tech is pretty close to nothing. alix: really? gina: there is still a lot of

growth in broad tech. for tech at large, 80% of companies reporting earnings are still beating estimates. it might have sentiment impacts on the broader sector. certainly it will be a drag on the index and a drag rise performance, but is it a drag on overall economics and earnings performance? no, i do not think it is. david: how much of this is an investor relations issue? they are still growing. they are making a lot of money, but as you heard, the analyst saying "what is going on?" had issues.y have they try to paper over those issues, and as you said, without guidance, it is a lift that we do not expect. it is throwing and currency whence and saying that is one of our problems. every corporation that says "we lost money because of a currency shift," is basically admitting

they are just not paying attention to what is going on around them. alix: the bank stocks got hit off of that. facebook hit a record high yesterday. what does this mean for amazon for tonight. investors will be on guard for some sort of news out of amazon. as a result, if amazon does beat expectations and guide positively, the stock will probably react even more positively than would otherwise be the case. there is no link between facebook issues and amazon's potential issues. they are two separate issues. are idiosyncratic risks impacting facebook, not necessarily symptoms of broader economic weakness or broader revenue weakness for the tech sector. i think they are specific issues that facebook faces. amazon is a significantly different type of company, diversify, consumer discretionary, it is retail where facebook is not. together -- they

are not actually the same businesses. they will not face the same type of risks necessarily. david: i want to get to the second story come all the way to yesterday before 4:00 in the afternoon, if you can remember that far, we were talking about trade, president trump meeting with mr. juncker in a showdown, and then they came out at the close, and by the way, just as facebook was announcing his earnings, take him out and said well, we will put this on hold for a bit. this is what president trump had to say about what the united states will get out of this may be deal. pres. trump: we will also work to reduce barriers and increase trade in chemicals, pharmaceuticals, medical products, as well as soybeans. secondly, we agreed to a strengthened and strengthening of our strategic cooperation with respect to energy. the european union wants to import more liquefied natural

gas, lng, from the united states, and they are going to be a very big buyer. we will make it much easier for them, but they will be a massive buyer. david: i want to look at this through the lens of equity. i look at it all through automobiles. is a little bit different message because of the time differences, but the upper water, the white and blue is vw the german guys. they were going down, and then they came up at the bottom of the trade deal. at the bottom is ford and gm. they went down, but they did not come back up again. very different stories because they were so worried about european tariffs. gina: it just so happens that ford and gm both missed expectations. beat expectations, but they cut down their forecast. down their, they cut

guidance. trade improve the outlook, but at the same time, you have companies coming out with information that says the outlook is not looking so great in the u.s., so that creates a diversion. also, the general view this week was the european auto dealers, automakers would suffer more as a result of the tariffs. certainly they are very sensitive to the tariffs, but frankly, u.s. auto sales kicked two years ago. we have some degree of weakness in the auto sector in the u.s. european autos were doing relatively well, the luxury sector in particular. there was a little more optimism coming into this year. taking a broader step back, everyone is impacted by trade. the perception was that the european automakers might be impacted more. we went not expecting quite the damage to the margin outlook to the u.s. automakers. story, how dohird you deal with that if you are mario draghi, you have an hour rest conference today, --press

conference today, and is there anything we can learn that can shape the range? is summer in september or august? that is the first rate hike. this is cracking me up your the markets are pricing in december of 2019, so the markets are not even looking at this. whether it happens in june or september -- not august -- is probably the reality of the situation. i do not think we will get any timing for mr. draghi today, again, where some of the doldrums are, i do not expect them to shake things up too much. missourist likely said policy will continue to be accommodative, because the eurozone is doing better. broadcastseting the that they said in june. i cannot see him putting himself out on a limb only to have to comeback -- pull it back

september. david: what are the factors that could change, at least the talks about what they are doing? some softening of pmi's, doing the trade. gina: i do not think a lot is going to change, because they did their he strongly guide us just very recently to expect some sort of action in the second half of next year, even though the market is not a acting a rate increase until december, maybe it is going to be the second half of the year. if anything, they may acknowledge that there has been some recent weakness in european economic growth, that there may be further weakness, considering all of the trade movement. frankly, it is really unlikely we get a lot more out of today. alix: all right, bloomberg's vincent cignarella and gina martin adams, thank you so much. we will bring you that meeting as soon as it happens, 7:45

a.m., followed by mario draghi's news conference, 8:30 a.m. eastern. you can go to the tv , see a worldwide, click on it, and check it out. coming up, more on facebook's second quarter face plant. we will discuss that next and what to do if analysts start to weigh in on upgrades, downgrades, and price targets. this is bloomberg. ♪ ts. this is bloomberg. ♪

emma: this is "bloomberg daybreak." i am emma chandra. qualcomm has ended its billion-dollar takeover bid of nxp. nxp will get $2 billion in

competition. meanwhile, qualcomm plans to buy back $30 billion of stock. second quarter double that airbus. accelerating to the middle east with a best-selling single aisle jet. int led to a hold up customer payments. as we have already been discussing, shares of facebook app taken a stunning dive. the social network has lost $150 valuen in market overnight after missing estimates. facebook also warned that revenue growth would be slowing. the company has been hurt by private data, the content policy, and strange in -- and changing rules for advertisers. david: as mentioned by emma, facebook at a major setback. they discussed it in a conference but with analyst. the quarter on quarter growth

rates are going to be high single digits lower than the prior year quarter on quarter growth rate. is that what you are actually saying? if so, what is driving this fairly dramatic deceleration of revenue growth? yes, we expected to be in high single digits for the next couple of quarters. driving thewhat is deceleration, it is a combination of factors, though there is the currency a tailwind acceleration. we are focusing on engaging new experiences, like stories, and promoting those. that is going to have a negative impact on revenue growth. people, we are giving privacy, andaround

that will be focused around things like gdp are as well as other things we are providing that could have an impact on revenue growth david: we welcome now nandini ramakrishnan, the jpmorgan global asset management strategist, and also paul sweeney, director of north america research. they are still growing, they are still making money? paul: it is a little bit of both. call, the global earnings slow and revenue growth, and that is generally in mind of looking, ifreet was you look at consensus numbers. consensus numbers on revenue generally reflecting slowing growth. the issue that took people by surprise was the amount of cost increase in the duration of the higher costs, because that is leading guidance for operating generallyprofit margins from tt of the mid to high 30's.

that is a major reset. david: i am so glad you mentioned that because the thing that jumped out at me is the headcount. over 37,000ing people in the course of a year. i cannot imagine that. yes, it is amazing, and they are ope opening offices around the world. this is a part due to what is the issues. they have mandated, they told congress we will do a better job with privacy and data security. a letter that will be done with technology sources, but a lot of that will become with human duration through the site. they are hiring people for that. that goes right to the bottom line. leslie and snarky and company's financial results lend to join more pessimistic future, more utter disasters were investors. if what the company projects comes to pass, the profit margin is dead. all at once, it caught up to facebook.

is it dead, or is it we need to get through this hump, and then it will pick back up? paul: this is not a short-term blip. the profit forecast, we are seeing that in the stock rise, we saw that immediately in the opening here, that is a major reset. it is still in play, still a good story for long-term investors is the top line story. we saw digital advertising, high teens, kind of growth rates of digital ad spending over the next couple of years. david: the other thing i wonder in.s the market pricing it is not just facebook proper. they also have messenger, whatsapp in the wings. reallyight, and that buoys the longer-term growth rates. we do not have any visibility on that. investors are really reluctant

to pay for the upside of some of those businesses, so it is incumbent upon the company that they can highlight the growth opportunities to really break out that data and share with investors. alix: nandini, the fallout at facebook, tumbling in the premarket, is this a broader tech weakness signal, or are we looking at idiosyncratic factors mash-up with other factors? nandini: i say perhaps the second of your options, but it is a good reminder, today's results in the market action, that you do not want to be pending your hopes on the global appetite for the tech story just as you had for stocks based in silicon valley. wellve been saying for a that the global upswing of technology has perhaps been better at attractive valuation to approach technology. thinking about your emerging-market companies producing the semiconductors, the european conductors designing ai technology and robotics and driverless cars,

so be a negative more global in that sense rather than just a handful of companies with evaluation seem so high. alix: also the overcrowding. hedge funds are about 6.75% for facebook, and there is some speculation of perhaps accelerating. what other areas in the market have the same kind of characteristics that are at risk? nandini: anywhere that has low liquidity potential or anywhere that will be difficult for investors to tactically move out of things start to change, some of the areas in particular are maybe some of the sectors in high-yield across the world, other parts of emerging markets, face volume, the u.s. certainly with higher valuations and opportunity if you are looking for more near-term or medium-term appreciation in the stock. i think it will be a sector by sector, case-by-case basis. herability to change position is certainly something we are talking more about in

this environment. david: i have to ask the question in a slightly different way. with facebook and other tech company sort of the trees growing to the sky. the overall market pie is just getting bigger and bigger. are we seeing some saturation in that it will not keep = growing at the same incredible pace, and then you have t old-fashioned pace in market share? aul: in some markets, we very well may be, and the more mature markets. in terms of internet advertising, we continue to see the shift from traditional media into digital media. we have seen that across the board, and that is a reflection of where consumers are spending more and more of their time. advertisers are smart animals. they follow the advertising where ever it goes. you of course have the law of large numbers. you think about out of that, even though they had 25% revenue growth yesterday, and facebook has huge topline growth here. i think it is about resetting

expectations for these companies, and particularly for facebook, it is really on the cost side. the cost is much higher than investors had been anticipating, and it seems like they will be higher for longer. you have to adjust your models, and that will se -- and that we will see today. alix: really exciting earnings season. pulse we of bloomberg intelligence and nandini ramakrishnan of jp asset -- jpmorgan asset management. 90% have beat expectations. hey, we normally say earnings are good for the market. tech,eally watching because this is not a earnings story per se, but it is how the semiconductor space pares out as we go. qualcomm and nxp deal totally overpeer will we see paul jacobs, the former ceo of qualcomm, come in and want to take the company private?

it has also been pursued by broadcom as well. this is a big loss, i think, losing nxp. they have to they a substantial breakup fee, the $2 billion. thing to do with all the cash that they have. david: it was go big or go home. it was a really big deal. if it worked, it would have transformed that part of the tech industry. now that it did not, what is left? clearly they need to go somewhere. alix: a $30 million share buyback is where they go at the end of the day. david: comcast beat under earnings per share. in a narrow miss under revenue. underscorequestions the dangers for a traditional media company, and over the top that is replacing the traditional cable subscribers. comcast having knocked out between for first century fox as that, now where do they go? what do they do? it does not really give them the level of content that bob iger has been after, and apparently

has gotten a vote, by the way, today for the disney acquisition. alix: we are looking forward to that. i want to look at d.r. horton. we have got a slew of mushy housing data in terms of the q2 read tomorrow. it feels like housing investments will be a weak place. david: they have an increased cost of labor, increase cost of materials. it is interesting. maybe a little bit surprising. as you said, there has been some softening. it is important to the economy. alix: good point. coming up, they are down, then they are up. we take a look at trade impact on automakers next. this is bloomberg. ♪ this is bloomberg. ♪

alix: this is "bloomberg daybreak." i am alix steel. welcome to one of the biggest earnings days. the story is facebook.

.8% yourtures, down facebook would lose over $120 billion in market cap. the deck still holding onto gains of 100%. ofappears to be some kind truth between the eu and the u.s. when it comes to trade. another asset class will be all about the ecb in just about 15 minutes' time. euro-dollar a little bit slower at $1.17. the curve continues to flatten here in the u.s. david? david: american airlines is reporting earnings per share estimates.t be the increased fuel costs, as you know, and they are having difficulty getting their rates. appears that they have beaten expectations with earnings-per-share of $1.63. them have been

victims of their own overcapacity, and then they refused to cut. david: let's go to auto us now. it has been a wild ride. the european automakers bounced trump talkednald about european auto imports. i got to speak with ford executive bob shank. already imposed on steel and aluminum were certainly not helping anyone. a solidth america had quarter. it generated a martyr at 7.4%, but within that, we had a etc. million dollars shift related to lost productions of high , relating tohicles a fire that occurred in the quarter that our team was able amazingly recover from in

eight days. we also had a class-action settlement related to takata airbags. if you adjust for those things, we actually ran a margin that so these to 2%, underlying business of north america was strong, and that was inclusive of him substantial hea headwinds around commodities. david: let's talk about some of the challenges you have. china had a tough quarter, and for reasons to go beyond commodities. actually, the issue that we have in china as well as europe, those were the two factors behind the guidance change that we provided today, are really more about our business. if you look at china, we were down about half $1 billion, and that was on a consolidated operations as well joint ventures, which are unconsolidated, and largely factors.number of

an aging portfolio, under and ask in terms of the portfolio vis-à-vis the market, which is really hot, with a lot of strong demand from consumers for a crossover to utilities. we also have them go to market strategies and the order, some capability issues, which have resulted in issues with dealers in terms of the profitability and stocks that we have to address as well. these are issues that we have to address. we already have a plan to do so. already are making progress, but clearly that was a very disappointing result in the quarter coming from china, because it is a very important market. david: those are things largely within your control. you say you have a plan. what timetable do you have? when do you expect to see a turnaround? you are expecting a significant loss actually for the year there. bob: yes, we are, and what we are asked acting in the second half is we will get new products, new exports, a new focus. there will be a whole slew of new products that start to

address the age portfolio issue, and that includes a number of suv's. the team is working very hard to address the issues in terms of production adjustments and also addressing the dealer profitability issue. i it will take some time, but can tell you we are doing it with a sense of urgency, moving very quickly. david: commodities, some of the input cost issues that you face, how large are those problems? can you quantify that? and how much of it is some of the tariffs that have been put on and the trade uncertainty as opposed to underlying? bob: yeah, that actually is a big headwinds for the business. at the beginning of the air, we indicated that we thought we would see commodities increasing for the full year of about $1 billion. that now looks like $1.6 billion. that difference is largely due, if not entirely due, to what was the threat of tariffs originally and then real tariffs on steel and aluminum, because we can

happened once thated threat was there and then the implementation of the tariffs, price of steel, the price of aluminum has released that well above the price is that we see outside of the united states. that is a big hit, primarily on our american businesses. david: price of steel, the price that was part of my interview with ford cfo bob shanks. still with us is nandini ramakrishnan of jpmorgan asset management. how do you take these? they are very different aspects. we have the commodities, steel and aluminum, as well as with european autos. as you assess a company, how do you factor this in? nandini: yeah, this is a big challenge without the tariffs are implemented across jeffries and across borders, yes, actually the the escalation -- across territories and across borders, yes, the de-escalation, if trade tensions were waiting

on european growth, companies saying they were quite nervous about what could come, potential escalation between the u.s. and the eu. it does seem broadly positive. you can see the european automakers doing well today and positivity around that, but there are still so many nuances about where products are coming on, where they are manufactured versus the brand under which they are manufactured. that will be a case-by-case basis on some of the companies and where they can benefit from input versus their output or export. all in all, i think it is good for europe in a broad sense, but i do not think it means we are completely in the clear in terms of trade tensions down the line. alix: thank you so much, nandini ramakrishnan of jpmorgan asset management, you will be sticking with us. united national foods is buying supervalu for $32.50 per share in cash. supervalu stocks surging about

60% in premarket. interesting as we continue to see him in a in his face that has to wind up competing -- seeing him in a in a space that has to compete with the likes a space that has to compete with the likes of amazon. david: vertical integration. alix: in some ways, it makes sense because you have amazon whole foods market you some distribution for yourself if you are a natural produce company. david: exactly. as you sent them a integration going forward in the grocery business. alix: yep. also taking a look some distribr yourself if you are a natural produce at american airlines. yes, they did bea on earnings, on.vert -- held let me get my thing up your. third-quarter capacity growth rate, and they are cutting their forecast for their full-year adjustment earnings.

we have been talking about the overcapacity issue. they are finally setting their forecast for that capacity growth rate, also causing them to reduce their earnings as well. david: you called it. that is exactly the question. you have to get the traffic down, you need to rise prices, the fuel costs, as you pointed out, and also unemployment cost issue. alix: you cannot win either way at the end of the day. coming up, you have threats of a global trade war and the ecb's plans for tighter monetary policy. how to trade risks weigh on the ecb's plan, and what is the definition of "summer" in europe? this is bloomberg. ♪ this is bloomberg. ♪

emma: this is "bloomberg daybreak." i am emma chandra here in the hewlett-packard enterprise greenroom. coming up in the next half hour, the chief executive officer. of -- this is bloomberg. ♪ are just moments away from the ecb's announcement. no and aroma screen shot is with us. they have given -- nandini ramakrishnan is with us. they have given us some guidance. there is potential for

forecb to a knowledge the ecb to a knowledge maybe a slightly better picture, a more optimistic view of the second half of the year, perhaps the u.s. booming in terms of the current growth picture, maybe has a spillover effect into europe, acknowledging yesterday's big decision, meaning the eu and the u.s. on trade. it could be a little bit more positive than expected, but overall, you are right. there is not too much of a market moving development that we would expect from the meeting today, other than perhaps continuing to and the size the plan, which is reducing qe toward the end of the year, and the interest rate may be in the second half of the year for the latter part of 2019. alix: i am glad you brought that up, because i have been joking all morning along about what the definition of "summer is," leading to interpretations as to what "end of summer" meant. some are thinking end of september, summer thinking august. is that an important conversation?

nandini: it is, as always, a bit of fun to really nitpick the central bank's statement spirit we love doing that in the economic community. it will happen at the end of 2019. as wel get something evolve in the next 12 months, and that could solidify what happens, but for now, interest rate hikes are a story for the second half of next year. it has very much to do with the fact that as we evolve there is not a strong growth that you had expected one year ago with some of the survey numbers in europe. it is a little bit more moderated, and the ecb will turn into that as we progress into the second half of this year. david: take us to the meeting a little bit and what is likely to be discussed. do they focus on emi, on italy, because they cannot quite get a budget together? what are they principally going to be looking at? nandini: it is certainly a risk that we have been monitoring, and of course the ecb has been looking at very closely, but a lot of the rhetoric from the

italian political sphere has been reduced to terms of italy leaving the euro or large issues around that front. i think there is a workable solution that will come through the italian government spending. the broader issue that was really plaguing european companies and consumers with the trade exhalation and the data -- escalation, the data, the pmi, really lagging behind given detention and the fact that we just got this really lagging behind given detention and the fact that we just got this recent use may mean the ecb is more optimistic. i think they will be brought european story rather than just italy, and we will see in a few minutes what they have to say. alix: all right, stay with us as we do a quick market check. as if he nasdaq futures weaker. that will be the story of facebook, but the dax holding on to their gains, thank you for a much to german automakers and the cease-fire between the u.s. and the eu. something we will be watching over the next 30 seconds, euro-dollar coming into the board a little bit weaker, $1.17.

the yield on the 10-year bund is up tw basis points. set.asis points is how we it will also be a story every investments. did they end up taking the money that they make off of that and by longer-term bonds? that will be a lot of questions happening throughout the press conference on the. -ten spread continues to flatten. unchanged at -40 basis rates. all his other rates remaining unchanged. they will reinvest maturing debt for an extended period of time. re-investments will last as long as necessary. again, some conversations coming in, keeping rates unchanged through the summer of 2019. it feels like the reinvestment our conversation, david is getting a little more clarity on that,. david: the question is -- what are they investing in? how long is the duration, right?

they said they will be reinvesting, but i do not see where they will be reinvesting. itx: right, but either way, seems like they will be looking at what that means further bonds, for the balance sheet. joining us now from london is executive editor for economics, simon kennedy cured walk us through what you are seeing and the surprises in the statement spirit simon: the interesting -- in the statement. thing ise interesting the investment, obviously talk about the operation twists that the fed did and try to bring down the long-term rates. this takedown down that idea. they see this as a technical move. some of the big questions for mario draghi later in this rest conference -- will they use the reinvestment as another attempt to boost the economy, to use it as stimulus, or do they see it as a sort of technical nature to reinvest what is running off? alix: what will be the topic of

conversation at the press conference? is there anything mario draghi can say on the dovish or the hawkish side that will really have an impact? simon: i think he will be able to clarify a few things. one of the interesting things is the recent decision, he talked about not raising rates until after the summer of next year. most of the eurozone has many languages, and then in the translation of that statement in german, and french, in a couple of others, there were different words used. no one is quite sure what he means until after the summer. there was an effort that clarifies that, does he mean that year from now, or you have to get into september of next year? there will be pressure to clarify that. be on about the reinvestments, what his strategy is there. the bloomberg opinion writer they have to be somewhat cleaner on communications and that the same time really he will be able to maintain that message to market that he has been able to do

increase press conferences, the kind of goldilocks, a little bit of a withdrawal of stimulus, but not too quickly. much, simonyou so kennedy, bloomberg executive editor for economics. to recap, the ecb rates remain unchanged. they plan to halt the asset plans through the end of december, and rates will remain unchanged through the summer of 2019. . the big thing with the reinvestments, they are looking to facilitate reinvestments as long as is needed. investing where, we do not know, but the twist is what we were assuming what happened. david: let's ask nandini ramakrishnan about that. this is how confident mario draghi is that job?s done his it is six years ago today -- did he do what it takes, and if he did, does that mean he does not have to worry about an operation flip? nandini: that is a great point -- how they achieved the goals they have set out to do? if you look at the continuous

forecast they make in terms of gdp and growth, and actually consider that the stimulus have been working. europe has been growing very nicely over the last six years in particular versus its history. stomachsense, gdp why yes, inflation has not been hitting the 2% gdp target. core inflation is stubbornly around 1% in many economies in the eurozone. you could argue it has not hit the mark in that sense. but ecb has done a great job separating the reduction of qe, and now qe is going to come to an end, growth has been quite good and well supported, but inflation is the low target. disentangling those two elements and monetary policy, which also two macroacro -- indicators will be something he will explain in the press conference. to your point, it is something we will have to watch, and it could be important in europe as in his push towards those

directions, rather than broad government reinvestment. they will have to explain it either in this meeting or maybe the next few meetings over the course of the year. alix: find yields, do you see a steeper curve in europe, or is flatter the way to go? nandini: we do not have a huge expectation of a large steepening or even an increase in the long end of european rates. it is pretty much as it has been over the past few months. what does that mean for the euro differential? well, the fed is expected to raise interest rates to more times this year and we expect to more in the first half of next year, see you have an ever widening distance between treasuries and bunds or government bonds, and that will be interesting for those who are perhaps seeking value and u.s. treasury as opposed to the german or the eurozone market, which continues to be low yields, flat valuations on a

global basis. nandiniank you so much, ramakrishnan, jpmorgan asset management. in less than an hour, we will head over to cranford for mario draghi's news conference at 8:30 a.m. -- frankford for ecb president mario draghi's news conference at 8:30 a.m. coming up, it is a big day for earnings. we break them down. we have airlines, under armour, southwest, america. on the bloomberg terminal, check out to th tv . just go right to tv on your terminal and check it out and this is bloomberg. ♪ this is bloomberg. ♪

alix: earnings bonanza. more than half of the companies in the s&p 500 will have ordered orderly results by the end of the day. to take us where we stand, here is emma chandra. emma: as you said, we are almost halfway through earnings season

here, and the results have flipped a little bit from the early peek. the numbers are still very strong. you can see 211 companies have ordered here. we are seeing earnings growth of about 88% of companies seeing earnings growth, and aggregate of 22%. sales growth slipped back a better we are seeing an aggregate of 86%. -- 8.6%. one of the earnings is under armour, up over 8%. it was a sales rebound in north america that really powered revenue beats. once they get most of their sales from north america, so you will see 28% growth in international business. we are also seeing a bunch of earnings from airlines is morning, alaska, spirit, and southwest. flown per mile, a key metric in the airline industry,

declined about 3% over at southwest. point out they will rebound in the third quarter. they are recovering from the fatal engine issue earlier. they had forecast of capacity growth in the fourth quarter and adjusted. airlines also exposed to tariffs , new tariffs on aluminum. trade concerns have begun creeping their way into earnings calls at the moment. this chart put together by our bloomberg intelligence colleagues, it shows the numbers of earnings calls. managers and the industrials and financials are more keenly interested in that topic. 3830ly, we have got g #btv here, and it is showing a tough comparison. we have got eps and sales growth. alix? alix: thank you so much, emma,

bloomberg's emma chandra. interesting, though, because what i'm noticing, too, is we have idiosyncratic factors like ford, fiat, facebook, and when kle on the macro, it is difficult for concerning. david: exactly right. daimler way up, but they actually missed, to your point. you might get lost in the shuffle a little bit. isx: what is interesting caterpillar comes out on monday as well, to talk about trade affects. that will be front and center. ofing up, matt hornbeck morgan stanley interest rate strategies will be joining us. ♪ s. ♪ alex: deciphering draghi.

ecb leaves rates unchanged. investors search for clues on rate hike timing and qe reinvestment. more clarity. limits to growth. .nalysts hit hard at facebook zuckerberg loses 16 billion in stock in freefall. jean-claude juncker declares cease-fire on tariffs. >> welcome to bloomberg daybreak. it is earnings season. mcdonald's is out. mcdonald's beat on earnings per , a slight be on revenue. this is what i found interesting. comparable sales. it is a different story between the united states and overseas. in the u.s. they missed on

comparable sales. overseas they beat. people were focused on how they were going to do. alex: mastercard is out. i want to pay that to that. talking about the consumer. share. revenue coming in strong at $3.7 billion. strong quarter for mastercard. operating margin over 50%. purchase margin up as well. and mcdonald's, a good read through of consumers. mastercard off by 1% in premarket. david: these a had a strong report yesterday. it was thought it would be a good read on retail sales. alex: good point. markets, it is earnings dominating the narrative off by

five. nasdaq teachers getting pummeled. but around 117, weaker unchanged. alix:,ss conference crude flat on the date despite -- the press conference, crude flat. time. basically it is one we are going to get wholesale imagery data, most of it durable goods data. we are going to hear from mario draghi at a news conference in frankfurt, which we will take live here. held interest rates steady. additional support will come from reinvesting maturing debt. attention turning to that press conference at 8:30. joining us is matt hornbach.

part of the conversation is about the average rate of maturity. what are you going to do with that money rolling off? >> we think they are going to push further out the curve without money. the issue is how far in advance are they willing to let the market know what they are going to do. you can see steepening in the german curve this morning. priced ine market this extension to a large extent. we need to see some clarity on what they plan on delivering that may not happen at this press conference. we have retracement in the curve today but we think it is brief. cand: how much guidance they give? they have been explicit. unless they change they are mind -- their mind. >> this is the thing. it is not just the ecb. the fed has been trying to get ahead of things quickly. the great example is the press

conference chairman powell advanced six months in advance. this is unprecedented. please see central banks trying to get ahead of these stories quickly. boj, markets have responded to what is going on in japan recently. alix: good call. we're going to hit a lot of central banks. what does it mean for the short end? this is the two-year treasury. points.s if you are looking for a flatter to start in germany, what does that mean for this differential? >> over time think that will compress. it depends on how far the fed does with it policy, and how far the ecb is able to go to its policy. it will depend on how far these things are able to manipulate

their short rates. alix: is there a trade to be made here? >> when you look at the yield -- we could see the two-year push higher but we are not with anything dramatic. your a good stiff put money. we are seeing investors push those views. place toa reasonable put your money. we can see that spread compress overtime. david: how much is it likely the treasury prices will be effective of what happens in the ecb? the long end has been suppressed. they are out with a call that they are going to go over one on the 10-year bund. >> 1.0. exactly. ultimately, what happens there is going to be determined by how

fast the ecb can normalize policy rates. you look at the u.s., we are fairly priced for what we generally expect the fed to deliver. it is a good opportunity for investors to see that overtime. alix: what do you do with the corporate bond market in europe? >> good question. a lot depends on how the political developments transpire over the course of the next year . italy was a big focus. instarted to see weakening corporate bonds around that time. we have seen stability in italy. politics end up dominating that investment over time. alix: is there a trade in terms of issuance? because of prince are going to be reluctant to issue because they do not know if the ecb is going to be buying? is that a conversation now? >> not in my space. i am focused on the sovereign's part of europe.

part of your. pmid: we have seen the softened. looking at the data closely. lester was a great run for europe. we are starting to see softness. our economists are below consensus when it comes to growth and europe. it is not something we are panicking over. alix: what is the most overvalued on? >> great question. overvalued, in the sovereign very, when you look at the front end of europe it looks fairly priced to us. i know that is confusing. --think it is priced to can

priced to perfection. the backend could be overvalued depending on what the ecb devalues. whether it it vary is spain or italy? >> in general we are cautious. we had an amazing move. goingear the ecb is not to be adding bonds to its portfolio on a net basis. that does raise questions. that is one of the topics we are focused on in the united states. the federal reserve is no longer growing its balance sheet. it is shrinking. that is the report from the fed balance sheet is going the way we may have to pay attention to that in europe. put yourself in the room with mario draghi. that would be the number one question to give you clarity? >> aside from trying to understand their intention, i

would want to know better through the summer means. iswhat degree that contingent on how the economy evolves, is that something they threw out as a way to make the market, down from their promise to end bond purchases towards the end of the year? to what extent are they able to continue to expand their balance sheet if the economy does turn south in 2019? that is an issue markets are not focused on at this point. at some point the ecb may need to extend, how might it do that? david: we talk about the fed not having very much ammunition. at least they have something to work with. >> there are bonds they can buy from the private market. alix: when they wind up hiking is it going to be 15 basis points, 25, how frequent?

>> market consensus is anchored around 15. but, hey. it is an odd number. possibly they could go 25. 15 is the base case for most people. alix: -25 basis points is going to give a nice chunk of ammunition. , mario than 30 minutes draghi's news conference. facebook second quarter face plant. we will speak with an analyst who has a strong buy on the stock, his faith not shaken. this is bloomberg. ♪

>> this is bloomberg daybreak. comcast has made it clear why it is going after big deals. beatd quarter profit estimates. sales came up short. --cast is interesting buying interested in buying sky. buyback, theshare drugmaker says sales of botox were higher than expected in the second quarter, and strong sales of restasis. and shell will start at 25 billion share buyback plan. second quarter earnings were a billion dollars less than

analyst estimates. shall reported operating expenses rose and trading results were lower. we talked to the shell ceo. >> 4.7 billion dollars, a solid result. if you look at integrated gas, up with a factor of last year, upstream upstream business, downstream business more than 30% down. that is linked to a difficult refining environment, trading environment as well. --that was been been burden ben van beurden. alix: they have so much cash now , a huge stockpile of what do they do with it? don't get it. how do they miss so much on the

price of oil went up so much? that should benefit them. alix: you don't know what hedges they have on. you're going to have refining. probably hedged poorly. admitof those in the u.s. they lost because of hedging. it was interesting, conoco reported they increase that is a budget -- different conversation than the one we are used to, especially with conoco. david: spend more money to make more money. going back to shell, we are going to have a buyback. alix: $25 billion. lng,o mention the fact, they are going to be a huge lng's are prior -- supplier.

commodities, very bearish equities in the permian. really good conversation. do not miss that. facebook's face plant front and center. shares for facebook down 20% in premarket. phone, theto the director of research, who has a strong by reading -- buy rating. this brings the stock back down to the level it was at the end of april. right after they started to data misuse problem. nothing facebook said yesterday

is any different than what they have been saying for some time. they said growth would slow. the company will not probably grow at already percent mobile -- at 30%. mark zuckerberg has talked about quality of user engagement. people may be spending too much time -- he would like the time be of higher quality. that is a trend. and the reduction in profitability, they have been telling you about that as they have had to add people and put systems -- and invest in things that will help them ferret out false news and bad actors. nothing they have said is different than what they have been saying for some time. youd: i'm sure you are follow this closely. the market did not seem to have get the message. whether they have told us about it or not, is in a different is

news than we thought it was a year ago? regulations in europe are hurting them. political issues united states. and there are 30,000 people they are adding. >> not really. it is still the largest social network. they lead and control the whole social graph. companies are spending more and more on digital media and continue to focus on ways of connecting with gentle customers through digital media so advertising trends are in their favor. in number ofose people through the data scandal. what they have been saying is what is playing out. .t is a positive backdrop i think the stock got ahead of itself when it ran up over the 190 two from just under 217. there is still a number of

positive drivers. they are a leader in social media. they are getting more digital advertising revenue. their penitentiary -- their penetration continues to grow. david: what is coming next and why won't they tell us that we have messenger in whatsapp. as it becomes more and more part of their revenue instagram has the potential to be bigger facebook facebook, as that usee grows and facebook continues to migrate toward it. they continue to monetize it through advertising and instagram and messenger. messenger, they keep increasing the functionality. they offer transactions, payments.

even voice communications. alix: what is going to be the bottom? >> it is hard to tell where the bottom is. it looks to me low 70's. 60's. one 70's, high one when you can buy a company like this by with both hands. six months from now a stock will be significantly higher than 173. david: thank you. always great to have you on. leaves ratese ecb unchanged. investors searching for clues on rate hike timing. that is moments away from right now. this is bloomberg. ♪

david: as we wait for mario draghi's news conference to start, we turn to simon kennedy, coming to us from london. set it up. what is the one thing people are looking for coming out of mario draghi? >> he is trying to clear up communications, they hope. successful in smoothing the way .ut of a stimulus he started to pave the way for that. the in re investing of those , theyon his balance sheet tried to add bite to the stimulus as they reinvest those bonds. there might need to be clarification on when he wants to raise interest rates. [applause] 3 yes talked about that not happen until the end of summer.

when you look at the ecb statement, you get different indications of when that might be. maybe he will be asked to title -- tidy that up. david: thank you simon. alix: summer may not be over until october. rates at thets purchase plan. , the jeffries fx strategist, and matt hornbach. in the range from 117. had we break out? -- how do we break out? >> we have been holding this range for some time. everyone was convinced he would go lower. we have seen a lot of length, and of the markets. positioning is neutral, maybe short. ecb is starting to gain confidence. they gave us an outline, they gave us a plan.

disappointing little bit less. to the extent draghi sticks his chest out and becomes more confident, perhaps the euro will come back and bears will unwind. we are feeling set up for a run here. incould challenge the upside the near term. means a weaker dollar. could that mean a stronger yen? that is what happened on the 10 year yield in japan, having the biggest increase in over a year. we are at 10 basis points. nonetheless it was a move. what the you make of that? >> every basis point counts when you are near zero. the issue is this. for the bank of japan for a couple of decades have been trying to goad inflation higher. we don't know the counterfactual

but nevertheless what they have tried is not achieved their inflation goal. they got creative in 2016. they got creative in the same year, implementing their yield curve control policy. now they're trying to figure out is the benefit of yield curve control enough for the banking sector? that is the question they are grappling with. according to some news reports over the weekend, continuing into this week we now think or suspect they could have more leeway to allow that yield to creep higher. the issue is we don't quite know what to believe. the governor denied these stories. he denied they would take rates into negative territory in 2016 only to find out they take rates into negative territory.

investors don't know what to believe yet. david: he likes to surprise. what has changed? that pressure has been there all along. that is nothing new. >> that is right. when you look at their outlook report they were clear, there were gradual risks that could build up, but these were risks not worth and attention to at this point. three months later they are going to allow yields to rising get rid of the yield curve control policy. it doesn't make sense to me. here we are. alix: we had a steepener globally. how can we have a steeper curve in japan and not a stronger yen? it seems counterintuitive. >> i think that is true. they want profitability in the bank during sector -- banking sector. if they need to tolerate a

stronger yen they will be willing to do that. there's a lot of things working in favor of the yen. not only the boj but emerging markets and trade tensions. the yen is a proxy for risk on risk off. when the markets are wobbly the yen rallies. just on these yield curve comments from the bank of japan and tensions in the market broadly they are willing to tolerate that if they can get what they want out of the banking sector. alix: does that mean the dollar has peaked? mean the dollar starts to leak lower. there is fundamental support for the dollar given what is happening with the fed, remaining on target with the fed on the path they are on. dollars support for the these of the emerging markets. as liquidity keeps being drawn out of the markets.

extentsame time to the the euro starts to rally giving the ecb, putting a positive endntum on the yen, in the of the dollar probably stays around where it is on a broad basis. both very much. i feel like mario draghi is early right now. david: eager. alix: usually i am tracking. maybe he just wants to get through it. mario draghi walking in for his news conference just about to kickoff here. insurprise in his statement a surprise when it comes to the bond market. questions to keeping rates low through 2019. what does it actually mean? talking about re-investments in maturity, where will you do that? here is mario draghi.

>> we want to welcome you to our press conference worried we will -- conference. based on regular economic and monetary analysis we have decided to keep the key ecb interest rates unchanged. we continue to expect them to remain at their present levels at least through the summer of 2019. in any case, for as long as necessary to ensure the convergence of inflation to levels that are below the close to 2% over the medium term. regarding nonstandard monetary policy measures we will continue to make net purchases under the asset purchase problem at the monthly pace of 13 billion euros until the end of 2018.

after september 2018 subject to incoming data confirming our outlook we will reduce the monthly pace of the net asset purchases to 15 billion euro until the end of december 2018 and then in net purchases. we intend to reinvest the payments from maturing securities purchased under the app for extended time after the end of our net asset purchases. in any case for as long as necessary, to maintain favorable liquidity conditions, and ample degree of monetary accommodation. is related toy the global trade environment remains prominent. the information available since

meeting monetary policy indicates the economy is proceeding along a solid broad-based growth path. the underlying strength of the confidence,irms our arian will continue ahead and will be maintained even after a gradual winding down of our net asset purchases. nevertheless advocate monetary policy stimulus is needed to support the buildup of domestic price pressures, and headline inflation developments over the medium-term. this support will continue to be provided by the asset personages -- asset personages -- asset purchases. and the associated

re-investments, and our enhanced former guidance on the qe ecb interest rates. the governing council stands ready to adjust all of its instruments as appropriate to ensure inflation continues to move towards the governing aim in and -- sustained manner. starting with the economic analysis, quarterly gdp growth in the first0.4% quarter of 2018, following growth of 0.7% in the previous three quarters. reflects a pullback from the high levels of growth in 2017 and is related mainly to

weaker impetus from previously very strong external trade. inpounded by an increase uncertainty and temporary and supply side factors on the domestic and global level. the latest economic indicators survey results have stabilized and continue to point to ongoing solid and broad-based economic juneh, in line with the 2018 macro economic projections. ,ur monetary policy measures which have facilitated the deleveraging process continue to underpin domestic demand. private consumption is supported by ongoing employment gains which in turn reflects past

labor market reforms and growing household wealth. fosteredinvestment is by the favorable financing conditions rising corporate profitability and solid demand. housing investment remains robust. in addition the broad-based expansion in global demand is expected to continue providing the impetus to euro area exports. surrounding the growth outlook can still be assessed as broadly balanced. uncertainties related to global factors, the third of protectionism remain prominent. persistente risk of high in financial market volatility continues to warrant monitoring. inflationa annual

2018ased 2% in june reflecting mainly higher energy and food price inflation. on the basis of current futures prices, annual rate of headline inflation are likely to hover around the current level for the remainder of the year. while measures of underlining inflation remained generally muted, they have been increasing from earlier lows. domestic cost ranchers are strengthening and broadening amid high levels of capacity and tightening labor markets. uncertainty around inflation outlook is receding. looking ahead underlying inflation is to pick up towards the end of the year and

thereafter to increase gradually over the medium term. supported by monetary policy measures, we continue economic and rising wage growth. turning to the monetary increasedbroad money 4.4% in june 2018, of from 4% in may. growth continues to benefit from the impact of ecb monetary policy measures and the low opportunity cost of holding the most liquid deposits. the narrow aggregate remained the main contributor to broad money growth. since the beginning .f 2014 is proceeding

the annual growth rate of loans rose to 4.1% in june 2018 after 3.7% in the previous month. of loansl growth rate to households remained unchanged at 2.9%. in the senate quarter of 2018 indicates -- in the second quarter of 2018 indicates increase in demand across all loan categories. the pass-through of the monetary policy measures put in place since june 2014 continues to significantly support conditions for firms and households, access to financing.

and flows across the euro area. cross check of the outcome of the economic analysis with the signals coming from monetary analysis confirmed and ample degree of monetary accommodation is still necessary for the continued sustained convergence of inflation to levels that are below but close to 2% over the medium-term. -- reap therip the benefits from our monetary policy measures other policy more tost contribute raising the longer-term growth potential and reducing vulnerabilities. the implementation of structural reforms needs to be substantially stepped up increase resilience, reduce structural unemployment and boost productivity and growth

potential. regarding these policies the ongoing broad-based expansion calls for rebuilding fiscal buffers. this is important were .overnment debt remains high all countries will benefit from atensifying towards achieving growth friendly composition of finances. consistentnsparent implementation of stability of growth, and the balance procedure over time and across countries remains essential to increase the resilience of the euro economy. improving the functioning of economic union remains a priority. the council urges specific steps to complete the banking union and the capital markets union.

we are now at your disposal for question. -- for questions. >> thank you. mr. draghi, in the assessment you presented, did you have a chance to review the agreement struck between the eu president and the u.s. president overnight with regard to trade? is this assessment only regarding sentiment regarding protectionism or are you saying an impact on growth already materializing? ,he second question is about did you discuss your reinvestment policy today? could you give us any color about the discussion? what decisions need to be made action -- and when should we expect a decision? >> on the first question, we basically took note of that.

it is too early to assess the actual content. this afternoon the commission is having a meeting exact we to this, for this reason. meeting.ote of this if one can say something general, it is a good sign. that thereit shows is a willingness to discuss trade issues and a multilateral framework again. it would be difficult for us to go beyond that. we don't know the substance of it. the policydiscuss today. >> [inaudible] >> wall street journal.

suggested interest rates will stay below zero for the next year or so. , givenfortable are you inflation is above target and you sound relatively confident about the outlook for the economy on inflation question arc -- inflation? the ecb is holding where it is below zero. that is leaving to a divergence which is weighed on the euro in the last few months. do you think president trump has a point when he complains about europe weakening currencies? >> thank you. first question. let me stress our enhanced , it conveys expectations that key ecb

, willst rates, as i said them to remainct at their present levels through 2019. in any case to ensure the continued sustained conversion to levels below but close to 2% over the median term. as broadlyective reflected in surveys, market commentary, market prices. with the anticipations of the governing council. at this stage we don't see the need to modify or add new .anguage on rates on the second question, different monetary policies reflect the response of monetary

authorities to different positions in the business cycle. we have all said several times the exchange rate is not a policy target. it is important for growth, and there is an international consensus that has been going on for years, for decades perhaps evaluationsning for of sorts. valuations of stores. all the trading partners, the euro has appreciated considerably over the last year and a half. thank you. >> i have a question about the impact of protectionism. you take note of the agreement.

in your account of the last meeting the impact on inflation from protectionist measures could be unambiguous and uncertain. answers. have my second question, you mentioned investment policies but can you give us a broad wheree on your red lines your reinvestment policy will not change? thank you. we have not done any further analysis. the reason is we have to see exactly what is going to be implemented. we have analyzed the effects of

implemented tariffs. limited.t effects are clearly, a trade war where you have rounds of retaliation and responses will create a different climate. we will have to assess both the direct effects which me -- which may be significant as the numbers go up. and indirect effects of confidence on business investment. -- we have not done .nything from the last time on the reinvestment, we have not discussed. to make it clear, the capital key from means our anchor -- remains our anchor.

that is it. thank you. >> cnbc. two questions. optimismur economic for the eurozone. looking at the confidence indicators there is a clear sign the looming trade uncertainties have an impact. looking at the current earnings seasons, what makes you optimistic? second question would be on whether they are given the inflation rate being back up to target whether there is an increasing discussion in the governing council among members of course that is perhaps time

monetaryse the stimulus in place. >> let me -- the best way to answer both questions is to give you a short account of our discussion today. first of all the governing council took note there hasn't in much of a change since last time. has not been a change in the assessment of outlook of the median term outlook and growth of inflation. it is now clear that it was before that the moderation and onwth depends essentially the pull back from unusually wereg growth rates, which ansed by predominately

unusually strong asked for performance. pullback. the performance is much less. sluggishness in the first quarter is continuing in the second quarter. levelsstabilized at above historic leverages. overall the risk to growth had been assessed as broadly balanced. financing conditions remain stable, and labor market continues to improve, supporting private consumption.

the monetary policy and the resulting financing conditions .o support private investment , the headline inflation is 2% from 1.9. the answer is you look at inflation excluding oil and food 1.1. from 1.1. the underlying inflation remains muted. it is too early to court victory. one development is nominal wage see it pickwhere we

up and nominal wage growth across the eurozone. this pick up was thrift.roduced by wage , the is a component negotiated wage component which is now the main driver of the growth in nominal wages. the conclusion was the assessment of confidence we warranted.s an ample degree remains necessary.

>> to touch on the point you made on wages being stronger i would like your view on how you think this would impact domestic demand. is it going to have an impact on domestic demand strong enough to offset the negative effects that we have seen of weaker trade figures, or du expect to see slowdown in growth in the second half of this year? there is too much ambiguity about the phrase through the summer and the changes to the translations at the monetary policy. would you care to clarify what is meant through the summer until the end of the summer when rates are expected to remain on hold?

>> i will address the second question first. clear, the english version. our counsel in english and agree on one in english text. so that is what we have to look at. the term structure money market rates reflects two things. fewer expectations of the future path of the policy rate, the uncertainty that surrounds the evolution of the economy. as far as i think i said last they are very well aligned

. policy rates will remain at their current levels through the summer of next year. viewss of market confirmed this very tight alignment. you have the uncertainty in the term structure. this attempts to be more variable. what we see is this component may have increase since our june announcement due to various factors including the state of the debate on trade. an impact coming from higher nominal wage growth could compensate trade. we haven't done this analysis yet.

the second part of this year ,ontinues on solid growth growth based across sectors and across countries. >> how do you wait to risk the the nationaled to bank? general point.a it doesn't generate stability. it is the way monetary union settles its payments.

it is devised to make sure the money flows unencumbered, companies, all economic agents. -- that is theer first thing we keep in mind. is how do weing interpret recent numbers that show a number of target liabilities? asked severaltion times in the past. depends on movement our own asset purchase programs and depends on how and when, and where the balances of the have settled.

and they settle their account with one or two core countries where the financial centers reside. the settlement of the balances do depend on capital flows from one country or another. 80% of thed institutions that sell bonds to the national central banks do not reside in the country where the purchaser resides. you have a lot of payments and anythingt do not say specific about the overall situation.

going back to the recent liabilities, they are not unprecedented. with respect to the massive movements produced by our own , the people who want to collateralize, limit, the truth is they don't like the euro. the only way a monetary union can work is they have an efficient payment system. is too early to understand.

thank you. you mentioned the capital key as an anchor for the ainvestment -- there will be revision of the q next year. you can compute something like those countries which have had more growth in the past. they will have bigger shares your then in the future. what implications will this have for the reinvestment, will this affect the reinvestment of bond? >> we have not discussed that at all. i can't answer this question now. we have not discussed anything about reinvestment policy. but you can ask another question if you want. >>