find a bid to sell anything. first quarter, you couldn't find an offer to buy anything. alix: an ideal time for fiscal spending in germany. the european central bank start a new round of bank loans. the search for yield playbook is back. john williamson says the fed might not have to tighten as much as they thought. investors keep piling into emerging market bonds. david: welcome to "bloomberg daybreak." ecb day comes the day before jobs day. the presidentbs, convened his new advisory board at the white house yesterday, getting together big ceos including tim cook. he made a little mistake about tim's name. >> you've put a big investment in our country. it, tim apple.

david: he's named his company after him. why doesn't everybody? alix: i would like to see somebody who speaks in public who hasn't set the wrong name -- david: i've never done that. alix: he's saying we should make the phones here, bring it back home. him,: lou dobbs went after saying you are too close to corporate america, cuddling up to corporate america. alix: really? david: and they are very tight. alix: maybe we are looking at a change to the volcker rule. it feels like the things he's coming to say are more appealing

to his base. interesting. happy ecb day, guys. a bit of softness in the equity markets. s&p futures down six points. the conversation yesterday was all about those transports, the nine-day losing streak, the worst in decade. tol draghi be dovish enough move the currency in either direction? yields moving lower by one basis point. crude up over 1%. a solid stockpile draw in the products yesterday. david: time for the morning brief. at 7:45, we will get the ecb rate decision, followed by a news conference with mario draghi at 8:30. 10:00, equifax and merit ceos

testifying on that massive data toach that gave access information on 145 million americans. then paul manafort goes before a federal judge in alexandria, virginia for his sentencing. we are joined by peggy collins and romaine bostick. let's start with the ecb, indicating with the consensus is on where gdp growth is in the euro zone. peggy: we did see some data coming out today in terms of european stats looking better, looking like we might have seen some of the worst of it towards the end of last year. of the car some sales are stabilizing. that may spur some growth. romaine: capital

spending was up. that was in the data leading up to this meeting. policymakers there have something to hang their hat on today. it's not that bad. it's a matter of how you want to press the market. alix: what happens to euro-dollar? draghi, you dovish will see the euro rise. a hard time have scoring it once they announced this loan program. that will put downward pressure on the euro. seen, theng you've lowest overnight volatility we've seen in a while. that will stick around. europe and thein dove in the u.s. -- john williams talking about the neutral rate and where we are. risks don't seem to be out there right now at

all. again, suggesting somewhat -- that we don't need to tighten the policy as much as we previously thought. alix: we are back to the old playbook of 2018. do we just rewrite the total yield playbook? romaine: this is a pause. don't look at the price in the options market. look at the market reaction. a lot of the pause in malaise -- and malaise we've seen is giving you a better picture. if we are we in trouble are talking about how dovish the central banks are? we should be talking about how robust the animal spirits are. peggy: that's right, in terms of

growth. across the world, we are seeing these developed markets struggling with an aging demographic. a long-term cyclical issue we have to deal with. david: larry fink has been speaking to erik schatzker at a conference in europe. he said this is a time to relax a bit. this auld almost call goldilocks moment where it's not so bad, it's not so good. central-bank behaviors are one of the dovish -- on the dovish side. i would say it is a time for investors to be more relaxed. david: a little more relaxed. on the markets showing investors themore relaxed -- are markets showing investors are more relaxed?

reallythat seems to not be driving as much optimism as we thought. it does seem like we've had some pop from the beginning of the year versus the volatility we saw in the fourth quarter. the question is whether there's something out there that could shake the markets again soon. romaine: they are relaxed on the sidelines. you don't see a lot of money coming into the market to the levels we had in the run-up to this bull market. even the big hedge fund investors. relaxed,, you can be but do you have the risk appetite and stomach to get back into a market that is at the end of a 10 year bull run? alix: there's nothing to buy. you can't find something because everything is bid up again. >> and valuations back up above historical averages. he's right. erik: after he said that,

asked what are you not hearing about, he was worried there would be a deal with china because -- >> that is a big issue people are looking at enough. if we get a comprehensive trade , we wouldn't have china , would we. treasuries find someone else? the: you can find all charts we just used on gtv on your terminal. coming up, what to expect from the ecb decision. this is bloomberg. ♪

viviana: this is "bloomberg daybreak." bill browder filing a criminal complaint against martin's bank for money laundering. he's the cofounder of hermitage capital management. he claims they handled $57 million linked to the death of sergei magnitsky. sweat had $4 billion in suspicious transactions -- sweat bank had $4 billion in suspicious transactions. this deal may be announced today.

it is owned by eqt partners. a tough start to the year for alan howard. overseas felld 8.5% -- oversees fell 8.5%. its onceachs shrinking dominant commodities unit, cutting 10 positions from the unit, about 5% of the workforce. the unit is still recovering it had its worst result since goldman went public two decades ago. david: the european central bank will announce its decision shortly, along with its economic projections, which according to census are softening. we welcome jane foley, rabobank

head of fx strategy. down about 1.4%. what do you expect out of the ecb? will there be any surprise? is fairly broad in its consensus that we will have those downward forecasts from the ecb today. it wase last year or so, very disappointing. we have italy in a technical recession. germany, the economy barely grew in all. -- at all. what will be interesting is what draghi actually says about the outlook. there is some reason to be relatively optimistic. you look at the labor market in germany, it is very firm. they have managed to get some reasonable pay rises out there. some positive figures there.

there is the potential that draghi could strike a slightly upbeat tone on the chance of a rebound. that will be very interesting. david: i agree. tone,s a bit of hawkish that would surprise people. shoots,es these green what will mario draghi do? >> i would caution him about giving any hawkish tone whatsoever. you have to deal with the reality of where the data is today. this has been pretty easy for the market to figure out. you have the 10 year in germany trading at 11 basis points. he would ignore that warning sign. alix: what's interesting is the complete lack of movement in euro-dollar. this chart shows three-month

implied vol. what is going to shake the euro-dollar out of the range? jane: i suppose there's a few different reasons -- what we've had since the middle of january is the market revising lower its expectations for euro fundamentals. having about the market adjusted to an outlook of a far more dovish ecb. doing the sameet thing with respect to the fed. a downward revision of dollar fundamentals in december, now a downward revision of euro fundamentals. it is quite interesting when you get this downward revision of fundamentals when you've had a good year in terms of risk appetite.

also -- the market used to markets bring central banks being more dovish. keeping the impact of volatility lower as well. david: mario draghi put this on the agenda last time, talking about new tltro's. lending is starting to trail off in the europeans and. -- in the european zone. is the problem here that it's too expensive? there's less demand for loans. what do they need to do to generate more demand? bankis point, the central just wants to continue to provide support to the economy

and markets by showing intent, that they recognize things are slowing down, they will not take a hawkish tilt as the fed did last year, and remove that risk. of low be in a period interest rates in europe for a multiyear period of time. the markets know that. it won't be as important as the horizon of a zero rate environment. alix: take a look at the implied we arefor europe -- pushing out the rate hike so far, the market is so dovish, doesn't that disconnect make you worried as an investor? >> not at all. as long as the central banks are aligned with the economic reality, you shouldn't be

worried. if you really think you will have the first rate hike from the ecb in 2020, the likelihood that is going to happen is pretty slim, the market prices that, that's some volatility. >> you have to be cautious about it'sng at the curve -- also what the market is anticipating for the policy. you are reacting to the policy tilt as much as economic growth. the longer end of the curve is a better representation of the market view. i would be looking at where the five-year treasuries are trading below 2.48 and say, boy, what am i hearing from the market about this?

the market is not worried about inflation. we think growth will be 2-2 .5%. alix: is ge building the capital of tomorrow? next.l discuss that, this is bloomberg. ♪

david: three financial stories we are watching this morning. first, looking at apollo global management. the president says he wants to build the ge capital of tomorrow. apollo has bought up billions in investments. why do they want to get into this business? is theargument here financing is different -- ge was borrowing billions of dollars in

financing from the banks. they have all these different permanent capital vehicles that are longer-term, 10 years at a bdc'sinsurance companies, and their own funds from investors. they could have a little more control over this process. -- theyhe volcker rule came out with a proposal to revise the rule. back and may pull that start from scratch. it is interesting that they want to do it again, they want to simplify it, 2.0 wasn't t simple enough. alix: they are still arguing this? this has nothing to do with what they are trying to regulate right now.

apolloit may go back to and the nonbank banks. alix: let's talk about deutsche bank. said to be making deep cuts in 2018 bonuses. season -- not so much for you, deutsche bank. >> this is a retention issue. there was an explosive story about some talk of shutting it down. not good for morale. performers, the stock is way below i where it needs to be for them to get those bonuses. it's not even like this across the board. morgan stanley bonuses are up,

for example. alix: great reporting. ,till with us, bob browne northern trust cio. bob: we don't make largest sector bets. we view it as an uncompensated risk. we have liked financials for some period of time. the european banking sector is in a different situation. it's hard to get excited about any company that's not even earning its cost of capital. every day you are in business, you are destroying value. they have to get their efficiency dramatically improved and start getting that return. indicator ofan where the economy is going overall? you don't need american banks to do well.

bob: american banks are doing well. the stocks are lagging relative to the borrowed market. are they improving capital, are run?wilell the answer is yes across the board. investors have preferred growth coming from elsewhere. the tech sector, biotech firms. thanks themselves are pretty well run -- banks themselves are pretty well run. price-to-book,rd the global value index versus world growth index, they continue to be so much cheaper than growth. what changes that scenario? bob: i wish i knew. we are value investors. you can have long periods of time where it underperforms and

this is a horrible example of that. when it bounces back, it bounces back really quickly. the risk is when you reach that pain threshold when you can't take it anymore, much of that value can be extracted. our horizon goes beyond what's happened with the next month or two. we believe we will be compensated for exposure to value in the long run. alix: coming up, it is a goldilocks moment. larry fink says the u.s. economy is not so bad but he worries about europe. this is bloomberg. ♪

alix: "bloomberg daybreak this is "bloomberg daybreak -- this is "bloomberg daybreak." happy ecb day. european stocks up .4%.

european banks down by .4%. we might see another round of cheap bank loans from the ecb later on. euro-dollar. euro-dollar goes nowhere. we did get some not terrible data out of the eurozone today. we do see robust pay gains. 12 10 year yield in germany, basis points is where we sit. have we bottomed? that is the question in the market. with a bit of a relief rally. there are some things going on outside the business world. viviana: no response yet from u.s. officials after a huawei lawsuit against the u.s. government.

lawsuit is aimed at a u.s. that prevents government agencies from using equipment from huawei and cte. paul manafort will be sentenced today for tax and bank fraud. manafort is 69 and could get up to 20 years in prison. observers believe a federal judge in virginia will give him less than that. lawyers claim he was unfairly snared by robert mueller's investigation. it may quitng building cars in the u.k. if there's a no deal brexit. on therawal would be agenda. the vice-chairman of blackrock isskeptical the u.k. prepared to crash out of the european union without a deal. >> the united kingdom is simply not ready for a hard brexit. you can look at that at every level, whether it's in banks,

financial services, medical supplies, logistics, transport, farming policy. you name it, the country is not ready at this point for a hard brexit. we can all hope that this outcome can indeed be avoided. viviana: global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. continue to bes concerned with global growth. the ecb expected to cut forecasts for europe. the next signals will come tomorrow from the u.s. jobs report. erik schatzker spoke to larry fink on the global outlook. >> china is slowing. it is slowing to 6%. that is not so bad. the cities are still growing quite nicely.

china is experiencing the same phase, two- two types of economies. they will experience the same populism, unrest issues there. south east asia is growing quite nicely. you see supply chains moving from china into the southeast region. we were much more pessimistic in march of 2018. pessimistic about europe. maybe it is a 1% growth, probably closer to zero. the u.s., we had the sugar high from the tax reforms. we all anticipated the economy would slow down after the sugar high. that is happening..

where is the u.s. economy this year? .7%?2 it's not so bad, it's not so good. central-bank behaviors are more on the dovish side from where they were in the fourth quarter. i would say it's a time for investors to be a little more relaxed. i don't think we will go much higher than we are today. >> even stock prices? >> we will be fine. i'm worried about rising populism. seeing shorter-term behaviors by governments. bit aboutuite a long-term behaviors. it gets harder and harder when you see governments are getting more and more short-term. alix: that was larry fink. ofll with us, bob browne

northern trust and jane foley of rabobank. what does that wind up meaning for the dollar? you have a dovish fed on one hand and then the bad economy. jane: we saw safe haven flows. that might keep the dollar propped up this year. larry fink echoed the consensus that many people are concerned about for european growth. that means the outlook for the euro is more fragile. should give you something more positive to look at in terms of the dollar. dollar fundamentals have softened. we are looking at a more dovish fed. when we are looking at the market anticipating the potential for liquidity stocks and a japanese central-bank continuing ahead with its qe

similar for new zealand. the dollar doesn't look too bad at all against this backdrop. the dollar could remain firm for the next few months even though fundamentals have worsened. we believe the dollar will be range bound. if you look at the dxy index, it's at the top of that trading range. we are not expecting a breakout. we are overweight risk. we think it is simpler to look at things with a higher probability of paying off. higher yield u.s. equities. david: i want to put a spotlight on the populism and what's going on with government and the effect that may have on trade. trade is down because of all the dissension.

bob: it's not necessarily a headwind. we have a populist president and so far, that's been good for the market. you have to integrate it into your forecast. populism is here to stay. it is not going to disappear in the next election. recalibrate as an investor and take that into account. note that said a the dollar is the long now in the carry trade. that is pretty extreme. are we at risk of going one way in a direction that is to significant?- too jane: if we consider the carry trade right now and look at the performance of emerging markets, look how well the msci has

performed this year. the biggest question is whether or not given the forecasts we have for global growth slowing, can we justify saying emerging markets or these high-risk are gaining further this year? or are we likely to see those come up? if you think the emerging trade is a crowded trade, it is likely that the dollar will remain positive. to saferrkets moved would act asollar a safe haven. it does offer reasonable yield when compared with the other g10 assets.

david: the chief economist for goldman sachs says he will be focused on wages tomorrow. >> the february number could be because ofng supportive calendar affects. the monthly number isn't necessarily the best representation of the trend. the trend is generally higher, gradually higher. that continues. david: how important will that jobs number be tomorrow? >> one data point we try to never emphasize -- if it's a , the government shutdown, you had residual noise there -- it should not be a catalyst for the fed to change what is now a neutral stance, the right stance, especially

since they are targeting average inflation as opposed to 2%. i don't think the number will be so important it should cause the fed to change its view about what is appropriate. what is appropriate is they should stay the path. they recognize they made a mistake in december. ify should take the time they are going to pivot toward average inflation before doing anything else. david: please stay with us. alix: don't miss "commodities edge." fromoke to mike wirth chevron earlier this week. 2020 is the new fuel -- havingt implications all across the refining sector, the oil sector, the shipping sector, has real material cost implications. said people don't

usually know to ask about that. alix steel knows. he was very impressed. what thekets watching ecb says about the long-term loans of banks. this is bloomberg. ♪

viviana: this is "bloomberg daybreak." hour, up in the next -- mark oa kada.

alix: s&p futures down by four. european equities software. we did get hints of long-term lending -- the softness permeates. euro-dollar going nowhere. we are now flat. the bond yield is 12 basis points. a bit lower. italian bonds as well. the 2-10 spread a little tighter now. crude up over 1%. the question is what's going to be priced into this market when there's been no movement. not a lot of volatility. david: range bound, as we say. alix: volatility still moving lower. vol thenth lowest it's been going into the

meeting. have not been tracking the fx market. does that coupling happen at any point? no change in deposit rate is expected. david: it would be big news if there were. alix: the deposit rate is left unchanged at -40 basis points. you haveeconomists say to raise the deposit rate so it's not negative. david: the ecb has announced a new series of targeted longer-term loans. they will come out with them. alix: that's interesting. they pushed back there rate hike expectations as well -- their rate hike expectations as well. david: new loans and forget this summer, it will go all the way through 2019. alix: they will start the

two-year long-term loans in september. i'm surprised. thoserket did not expect specifics to come out today. david: at the top of the program, you said, can mario draghi be dovish enough? that's what it looks like right now. .3%. euro-dollar dropping no surprise, a big rally in the bond market. yields in germany down two basis points. david: joining us now is matt miller. this is pretty dovish, isn't it? matt: i'm very surprised. on tellt expect detail throws or confirmation until the april meeting at the earliest.

that the ecb saw staff presentations trying to justify tell throws in some way. we expect to get lower growth and inflation forecasts in the press conference and 45 minutes. -- in 45 minutes. it is surprising to get the move back to next year for leaving rates on hold and this tell truax announcement -- you see the reaction in markets. the euro has been stuck in a range. it hasn't gone down to 1.12 since valentine's day. this is the first time in a month we've seen the euro fall back down below the 1.13 level. bonds could go negative again.

watch for that. still with us, jane foley of rabobank and bob browne of northern trust. initial reaction? jane: we have little to talk about at the next meeting. that was expected to come in april. he has put forward the announcement. we weren't expecting an awful lot of data. he's decided to bring this forward and calm down the markets. if you're worried about a mmwdown, we will lend the money. he's taken away the potential for the market to carry on speculating over the next 4-6 weeks. this is maybe whatever it

takes. is this whatever it takes? will it have an effect? jane: it's the right policy decision -- bob: it's the right policy decision. i commend the ecb. they have learned their lesson. it's better to be ahead of that risk. for getting ahead of the anticipated policy change. alix: why do we need the longer-term loans? this is not 2012. bob: it's about signaling, showing intend to do what's necessary in order to support intent toeconomy -- do what's necessary in order to support the broader economy. they will need more confidence in the private sector to invest. they want to know whether or not the ecb has their back. that's exactly what they showed

today. david: part of that larry fink interview is him saying mario draghi is out there by himself. germany has not backed him up. can the central bank turnaround the economic growth in the euro zone? but: maybe not by itself, it can put in an awful lot of support. there's a bit of physical incentive their -- fiscal incentive there. coming up in the next few months, there's a lot of potential political uncertainty. the elections in spain likely to reopen the wounds with respect to capital independence. investor focus an sentiment on these issues. what the ecb is doing is providing that liquidity, saying

it can provide that liquidity to give reassurances to try to cut out that potential market volatility. alix: where does europe fit into that profile now? bob: we are neutral european equities, not betting against or for. we are in other places where we are getting paid for the risk in a more profound way. we like global real estate. jane: really appreciate -- alix: really appreciate it. market surprising the and the market reacting in kind. they've announced a new round of long-term financing operations for banks. thatarkets pricing in first deposit rate hike by september of 2020. news when iting

comes to earnings. kroger full-year earnings estimates missed on the high-end, the midpoint. david: almost 8%. down, lower than expected. they were right on with same-store sales, but a slight mess on earnings going back -- miss on earnings-per-share. alix: revenue light as well. david: facebook's about-face. they will focus on private communication. this is bloomberg. ♪

david: today, i'm watching facebook.

facebook has been mr. open, right? they say we will do some encrypted private communication out. mark zuckerberg was very honest. he said many people don't think facebook can or even would want to build this privacy focused platform. adapt to what the customer wants. the customer wants more privacy. alix: my initial reaction was, yeah, good job. they wanted this a couple years ago. you missed the boat on this one. david: this is interesting with tim cook at apple. they say apple is the place to come to be protected. facebook saying we can protect you, too. alix: you will not see the return on that quite yet. what is that wind up meaning for

that -- what does this wind up meaning for that? david: it is just a small group. we don't need as many people monitoring. being private is good when you can cut down on cost. more market reaction to the ecb decision, coming up. we will speak to mark okada. newsmario draghi's conference at 8:30 eastern time. the market reaction paring back those losses. this is bloomberg. ♪

alix: ecb unleashes the doves. they will offer more chief loans

to banks at record lows for longer. mario draghi's press conference on deck. john williams is has the fed might not have to tighten as much as they thought, while larry fink sees a goldilocks moment. kroger disappoints. margins fall as the company tries its turnaround plan. david: welcome to "bloomberg daybreak." we've already had some real news this morning. they will have new long-term loans and they their guidance. -- extended out there guidance. guidance.d out their alix: where is my market reaction? euro-dollar was dropping like a stone. here we are just down .2%. i wonder what that's telling us.

is this a sign of protracted slowdown? bazooka, what is it aimed at the right target? in monetary policies ability to policyound -- monetary 's ability to turn around. saw what'sst happening with euro-dollar, lower, but really contained despite the dovish rhetoric. you are seeing buying across all bonds. yields here down one basis point. germany, yields only down two basis points. crude participating in its own risk on rally. minutes, we will hear from mario draghi.

that's following the central bank decision that was quite dovish. , initial jobless claims. then the massive data breach that gave hackers access to private information on 145 million americans. paul manafort goes before a federal judge in alexandria, virginia for his sentencing. viviana: while suing the u.s. government for blocking its equipment from certain networks -- huawei suing the u.s. government for blocking its equipment from certain networks. the law prevents government agencies from using equipment from huawei and zte. today, paul manafort will be

sentenced for tax in bank fraud. manafort is 69 and could get up to 20 years in prison. observers believe a federal judge in virginia will give him less than that. browder filing a criminal complaint against sweden's largest bank for money laundering. ank handled $150 million linked to the murder of sergei magnitsky. we speak with bill browder at 10:00 a.m. new york time. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. alix: back to the ecb rate

bankion, the central saying it will offer more long-term loans to banks and keep interest rates low for longer. ofning us now, mark okada highland capital management and bill snead. where's my market reaction? mark: a lot of this is priced in. tightening. see any off the 30 basis points projection for this year and one quarter, two months -- in one quarter, or two months. the softness is meaningful. it made sense that they wouldn't tighten at all. replace the support they've given to the banks. david: can they do this with monetary policy? don't they need fiscal stimulus?

bill: nothing from nothing leaves nothing. you have to have something if you want to be with me. here's all these cheap equities in europe, an economy that has floundered. what i thought about yesterday ago, the u.s. led the way by recapitalizing our banks. if you out for europe, look at the demographics of the united states, we will add to 30 million people to the key age bracket. there's a similar demographics in european countries. similar demographics in european countries. it just hasn't coalesced yet. first, the u.s. will accelerate out of this and then drag the

rest ahead. my guess is eight or 10 years hasslingle were policymakers because there is a huge amount of money being created -- when those people coalesce and we do see a significantly stronger economy in the united states, prices will get bid up. david: demographics are going to save us? mark: i don't think the monetary policy the ecb is following is working. i'm not a big fan of negative rates. it doesn't make any sense. negative rates are negative. europe is much more exposed to china.

we talk a lot about trade. policyppens with trade is it takes a long time for that to work through the economy. you are seeing the effects of the fact that we've had a trade tariffs kicking in, the slowdown across the european theater. that is something they will have to deal with with fiscal policy. i'm not sure that is in the cards here. i don't look at this as good news in any way, shape or form. look at pmi's, yield curves, there is a real growth problem across developed economies. i'm not really sure how this makes us feel as far as risk premium. there needs to be a pause. i'm glad to see they are dovish

here. the question is, what is next? do we get a deal and that makes everything better? i don't think so. alix: now, the rhetoric is, oh, no, that's bad. how much risk do you take now? afraid that are they won't buy a car. ber orill all ride in an u lyft. that is a big change we see coming. engine.he banks foralized our

years before everybody else did -- three or four years before everybody else did. maybe 3-5 be a lag of years. it sounds like you don't think that's ever going to happen. credit -- mark: i am a credit guy. the credit market has gotten back to average. we talk about percentiles -- things sold off hard in the fourth quarter. we are still not back to new highs, which is good. given the amount of debt in the world, in sovereigns and corporate, you need to have a higher risk premium against a growth challenged world. where in this situation

we bounced a bit, but is it a dead cap bounce? david: nominal debt is enormous. yet, if you compare it to gdp and earnings, it's not that i. what's true? -- it's not that high. mark: it is high when you think about what happens when something goes wrong. we just had this pg&e bankruptcy. it went from investment grade to bankruptcy in a month. these bonds went down 45 points. -- this isllion cap the sort of environment we are in. when something goes wrong, the price movement will be meaningful. and said these are good things to own, but that's

the kind of risk that's embedded. what is the most effective way for a government that owes somebody too much money to get out of it? inflation. you get everything else to go up in value, you make the debt less valuable by virtue of inflating your way out of the problem. , they don't seem to have any ability to inflate europe.y out in alix: coming up, kroger coming up short. shares falling after disappointing outlook. this is bloomberg. ♪

viviana: this is "bloomberg daybreak." right now, goldman sachs shrinking its once dominant commodities unit. the firm is cutting 10 positions from the unit, about 5% of the workforce. they are still recovering from 2017 when it had its worst result since goldman went public two decades ago. a tough start for alan howard. oversees falling 8.5% the first two months of 2019. investment ind michael jackson's music suddenly looks risky. price, $250 million.

music executives are concerned a new documentary will impact sales and commercial uses of the music. avid: who would have thought documentary would have this sort of effect? it's really profound. in $250 million to distribute his music. alix: i wonder if this could have happened 20 years ago or if it's because of the me too movement that it can now. look at kevin spacey. what is his next movie going to be? david: does it affect the value of what's already been done? work -- entire life's nobody wants to watch it. alix: it would have been a

different story 20 years ago. david: time for the bottom line. still with us, mark okada of highland capital management and bill snead. kroger earnings out today. not a pretty sight. they missed on revenue and earnings per share and they gave guidance down almost 10%. you own it, bill. bill: we bought it a month or two after amazon spooked everyone out of the grocery business. do what you have to do in the short run to meet the competition. spending significant amounts of money to be effective in the environment. ron johnson did the apple stores. he points out that having the physical locations is ultimately going to be a big advantage.

use target as an example. 28% of their online orders were picked up in store in december. that is an enormous cost saving. kroger a lotl cost of money to make their stores look like apple stores. what they have changed they think they will make for to 220. two to 20 -- how many people divorce their spouse if they are 3% less nice the next year? ab invev downgraded at rbc. continues to be worried about the company's ability to service debt.

hendersono the janice cohead of global bonds. >> the trip b market makes up half of the investment grade debt out there. bad, gradual very decrease in the rating that these bonds have. buto own triple b's, focusing on good sectors is critical. we were talking about the scale and size of that today -- debt today. the investment grade bond market is something interesting to look at. -- ifa $7 billion market we look at the number of borrowers, the issuers within have leveraget

above the triple b high-yield index, compare that to the number of issuers within the ig index, it's about 120%. there's over $500 billion worth of bonds in the ig index that have leverage above the average .everage in the double b index when you have this set up -- at&t,companies, cvs, ge, they have a lot of levers to pull. this is a negative story for the equities. they will cut dividends and sell assets. at some point, you have this potential massive amount of downgrade risk that hangs over

the high-yield bond market. creditat happens, spreads have to widen everywhere. that pressure will dampen the economy. is it now? i don't think it's now. we are not looking at a recession anytime soon. it is something we have to keep an eye on. david: it also affects how you run your business. talk about somebody who has a lot of debt. saying they have chargers that will charge your n 15 minutes. mark: there bonds trade in the upper 80's. i wouldn't on them. this is not a debt story to me. this is an equity play. equity guys are great at or the growthereof -- great at

or the lack thereof. valuegrowth has stumped for 12 years. there's a massive tailwind behind that. foods back ran whole was in aol chat rooms -- he wasompetitors caught by the sec. that is elon musk. if you could hear what these isple say, my guess is there the least amount of truth telling in that part of the market. alix: where are you getting compensated for the appropriate risk? mark: things are coming a bit

wide because of all this hoopla around credit. we certainly played this balance we have seen across ounce across credit. there are some good place to be made. -- plays to be made. this is a play this, time to increase diversification, the overall carrys pretty good -- is pretty good, you have a higher diversification across ableolios and then you are to catch some falling knives. bill: equity or debt, free cash

a companyybe you have that has quite a bit of that. if you have free cash flow, you can repair quickly. david: free cash flow is everything. coming up, the euro falls after -- afterrates on hold the ecb sees rates on hold for the remainder of 2019. ♪

alix: the euro hitting its lowest level since mid february after the ecb announces rates will remain on pause for the remainder of 2019. what will be the biggest question for draghi? think the number one question will be why now. the market was expecting tell -- tell be announced

and theo be announced raise rates until the end of this year. panicking -- is the ecb panicking or is this trying to get ahead of the curve? is mario draghi trying to show the markets you can do something about the economy? maybe he's trying to prove a point that he can dust off this bazooka. we are seeing bond yields move down to almost 10 basis points even. the number one question will be why now, mr. draghi?

david: still with us, mark okada of highland capital management and bill snead. is monetarystion, policy going to do the trick? bill: no. the law of supply and demand does the trick. interest rates are set by how many people want to borrow the money and how many want to supply it. david: is it a problem internal to europe because of populism issues, a problem because of trade in china or something else? bob: that is way above -- bill: that is way above my pay grade. we are stock pickers. are five europe centuries old, change doesn't

come easy. , washington is 150 years old. change comes easy because we don't have as much history. change.always been what does this wind up meaning for the dollar? this will not be good for the trade representative for president trump. mark: if we look at what's happened as far as economic growth across europe and think about what's happening in the states and the differential the u.s. led last year with six hikes. you had four hikes and then the loss of forward guidance. led as far asinly

slowing down. mechanism ision happening outside of the u.s. it's really affecting what's happening in europe and china. you are seeing this global slowdown. pmi's across the european theater were quite negative for quite a while. pause we have from all the central bankers needs to happen. as far as the strength we've seen in the dollar, that's been a function of this growth we've had here in the states. a real growth problem overseas. does that change anytime soon? does that change anytime soon? i think what the ecb is telling you the fed that are not change. we need to get something done on

trade or fiscal policy. alix: thanks to mark o'connor and bill smead. thank you very much. to set the stage for mario -- overall we are looking at s&p numbers into positive territory. if you have more stimulus in some capacity that will be a positive for the equity market. european banks, no surprise there up .1%, reversing earlier losses as we get clarity from the ecb on longer-term loans. in other asset classes, the question becomes what that means for the euro-dollar. finally i am getting a selloff. that range bound trade, maybe we will break that today.

still 11 basis points for the german ten-year yield good still have wages, still have employment solid in europe and germany. we are watching mario draghi walk in with his team for that press conference. nonfarm productivity up 1.9%. a big jump. alix: when we are talking about i'd up margins -- when we are talking about the divergence in growth from different countries, that is stark when it comes to productivity picking up, versus a europe where mario draghi had to bring out all of the bazookas . what that means for the longer-term, we thought maybe this would be a short-term blip in the economy and now the question is how long is it and what gets us out of this?

lots of questions on why now as we see the head of the ecb begins his press conference. pres. draghi: the vice president and i are pleased to welcome you to our press conference. based on our regular economic aalysis, we have conducted total assessment of the economic and inflation output. also taking into account the latest economic projections for the euro area. as a result, the governing council took the following decisions in the pursuit of its stability objective. first, we decided to keep the key ecb interest rates unchanged. we now expect them to remain at their present levels through the

end of 2019. in any case, for as long as necessary to ensure the continued sustained convergence of inflation to levels that are below, but close to 2% over the medium term. second, we intend to continue reinvesting in full the principal payments from maturing securities purchased under the program for an extended time past the date when we stop raising the key ecb interest rates. for as long as necessary to maintain favorable liquidity conditions and an ample degree of monetary accommodation. third, we decided to launch a new series of quarterly targeted longer-term refinancing

in septemberarting of this year and ending in march 2021. each with a maturity of two years. these new operations will help to preserve favorable bank lending conditions and a smooth transition of monetary policy. three, countries will be entitled to borrow up to 30% of the stock of eligible 2019,as of february 28, at the rate indexed to the interest rate on the main refine financing -- refinancing operation over the life of each operation. like the outstanding tltro program, tltro three will feature built in incentives for credit conditions to remain

favorable. further details on the precise terms of tltro three will be communicated in due course. , we will continue conducting our lending operations with full allotment for as long as possible, at least until the end of the reserve period starting in march 2021. , monetary policy decisions were taken to ensure inflation remains on a sustained path towards levels that are below but close to 2% over the medium term. while there are assigned some of the idiosyncratic domestic factors dampening growth are starting to fade, the weakening in economic data points to a sizable moderation in the place

of the economic expansion that will extend into the current year. uncertaintynce of related to geopolitical factors, protectionism and far abilities in emerging markets appears to be leaving marks on economic sentiment. moreover, underlying inflation continues to be muted. is weaker economic momentum slowing the adjustment of inflation towards our aim. at the same time, financing conditions favorable, favorable labor market dynamics, and rising wage growth continue to underpin the euro expansion and gradually rise inflation pressures. supportdecisions will

the further buildup of domestic price pressures and headline inflation development over the medium term. significant monetary policy stimulus will continue to be provided by forward guidance on the key ecb interest rates, reinforced by their investments of the sizable stock of acquired assets and the new series of tltro. in any event, the governing council stands ready to adjust all of its instruments as appropriate to ensure inflation continues to move toward the governing council in a sustained manner. let me explain our assessment in greater detail, starting with economic analysis. increased byl gdp .2% quarter to quarter in the fourth quarter of 2018,

following growth of 0.1 in the third quarter. incoming data have continued to be weak, particularly in the manufacturing sector, reflecting the slowdown in demand compounded i some country and sector specific factors. is impact of these factors turning out to be somewhat longer-lasting, which suggests the near-term growth outlook would be weaker than previously anticipated. ahead, the effect of these adverse factors is expected to unwind. the euro area expansion will continue to be supported by favorable finance conditions, further employment gains, and rising wages and the ongoing lower expansion in global activity.

this assessment is broadly reflected in the march 2019 ecb macro economic projections for the euro area. these projections foresee annual ine gdp increasing by 1.1% 2020, 1.5% in 2021. compared with the december 2018 euro system macro economic projections, the outlook for real gdp growth has been revised asn substantially in 2019 likely in 2020. the risk surrounding the euro area growth outlook are still tortured -- are still tilted toward the downside on account

of the persistence of uncertainties related to geopolitical factors, the threat of protectionism, and vulnerabilities in the emerging markets. according to euros star estimates, euro area inflation after 1.4% february in january, reflecting higher energy inflation. the basis of the current future price for oil, headline inflation is likely to remain at around the current levels before declining toward the end of the year. measures of underlying inflation remained muted. cost pressures have flattened and broadened amid high levels of utilization and tightening

labor markets. looking ahead, underlying inflation is expected to increase over the medium term, supported by our monetary policy measures, the ongoing economic expansion, and rising wage growth. this assessment is also reflected in the march 2019 ecb economic projection for the euro area, which foresee annual inflation at 1.2% in 2019, 1.5% in 2020 and 1.6 in 2021. december 2018the euro system macro economic projections, the outlook for inflation has been revised down across the projection horizon, reflected in particular the more subdued near-term growth outlook.

analysiso the monetary , broad money, m3 growth decreased to 3.8% in january in december 2018. growth continues to be backed by not with a creation, recent moderation in credit dynamics. the narrow monetary aggregate remains the main contributor to broad money growth. the annual growth rate of loans january from.3% in 3.9% in december last year, -- also in some countries, the typical reaction to the slowdown in economic activity, while the annual

growth rate of loans to household remained a 3.2%. borrowing conditions for firms and households still favor both, as the monetary policy measures putting into place in june 2014 continued to support access to financing. the policy measures decided today, in particular the new series of tltro's, will help to ensure bank lending conditions are main favorable going forward -- remain favorable going forward. a cross check of the outcome of economic analysis with the signals coming from the monetary analysis confirms that an ample degree of monetary accommodation is still necessary for the continued convergence of inflation to levels alone or close to 2% over the medium

term. in order to reap the full benefits from our monetary policy measures, other policy areas must contribute more decisively to raising the longer-term growth potential and reducing vulnerabilities. the implementation of structural reforms in the euro area countries need to be substantially sped up to increase resilience, reduce structural unemployment, and .oost euro area productivity this is particularly important in view of the overall limited 2018 countryn of specific expectations as to the european commission. policies, theal thension he euro area and

establishment of automatic stabilizers are providing support to economic activity. time, countries were government debt is high need to continue to maintain fiscal buffers. country should continue efforts the transparent and consistent implementation of the european union fiscal and economic framework or work time and across countries remains essential to bolster the resilience of the euro area economy. improving the functioning of economic and monetary union remains a priority. the governing council welcomes the ongoing work and urges further specific and decisive steps to complete the banking union and the custom markets union. we are now at your disposal for questions.

mr. president, could you give whyn idea about the reasons you decided on the specific features of the tltro's three program? why are the maturities two years , wife you indexed it to the mro and why is the start date in september when the funding becomes relevant for banks in june? my second question is what you would like to achieve with this program? are you trying to keep the size of the balance sheet stable or you trying to add extra accommodation? thank you. pres. draghi: the design of the tltro response to a variety of objectives. derives from how the situation of bank funding looks

like ever the next few years. in the coming years, we will have a congestion for bank posed by the coming to maturity of the existing tltro's , the coming to maturity of a sizable amount of bank loans, various regulatory compliance e. favorables maintains bank lending conditions and a smooth transmission of monetary policy. reflects theesign changed conditions we have today. further details on the pricing and other details will be known in due time.

question, it addresses the substance of today's meeting. let me give you a broad account unfolded andeeting in so doing response some of the questions you intend to ask. first of all, the decisions. decisions.sets of calendar-based part of our forward guidance from september to december. the second we confirmed investment in full of the principal payments from maturing securities. you understand the importance of the trade element in our monetary policy.

having move the calendar-based, so does whatever the horizon will be during which the tochases will take place keep the stock unchanged. you see this accommodation. , this is your question adding accommodation. the financing conditions have been very accommodative, but financing conditions have eased even since our last meeting. this is also partly due to the structure of our forward guidance so expected interest rates have gone down since last at the and especially end of last year as well. then we have the third element, the targeted longer-term refinancing operations we just

discussed. then we have the fixed rate and the procedures, as long as until march 2021. what are the features of these measures? they are data-driven. these are decisions that have been taken following a significant downward revision of the forecast by our staff. second, you just heard me say optionality is in all the instances, which means the governing county is both willing and committed to act when, if needed, amplifying the use of these instruments based on the data. , it obviously takes place

in an environment where monetary policy accommodation is substantial. the second point is how did we get to take these decisions? the answer is that they were unanimous. there was unanimity. given the complexity of the package, i think this is a positive sign for the cohesiveness of the government counsel and our deliberations. third, what is the general context in which these decisions have taken place? a -- we are coming to, and maybe we still are, in a period of extended weakness and a phase of uncertainty. the forecast has been revised downward quite

significantly. -- the factors that have originally caused this weakness, which are mostly of external source are still there. the uncertainty is partly thesed to how long factors will continue affecting the world economy, the eurozone economy, and confidence more generally. two observations to make about the assessment of the outlook. first, the government counsel expressed confidence. all members expressed confidence wethe baseline, which means assess the probabilities of a , asssion as being very low well as the probabilities of ada

growing of inflation oringtations -- of a deanch of inflation expectations. the reasons are the same that underpin the strength of our economy and our previous meetings. nominal wage growth continues the labor market, though it is a lower rate, it continues to improve. consumption remains by and large in good shape. monetary policy remains accommodative even now. it is more accommodative. financing conditions have eased up. there is a second factor we have taken into account in maintaining this confidence. it is true that these external factors continue to be hanging on, continue to be weighing on the eurozone economy.

it is also true that governments are responding in their respective jurisdictions with policies that are dressing these problems. in the u.s., in china. the second point to be kept in mind is that you have seen the pathion of the inflation says one thing. we have confidence we will converge and at this point we think it will take longer to get there. why is it going to take longer? willeaker growth probably further slow down the pass wages torom higher higher prices, higher inflation. you also slow down the closure -- we will slow down the output

gap. in other words, the output gap is closing. these regions are important to be kept in mind. the other important part of today's decision is that we maintain the risk assessment as tilted to the downside. this is not frequent, because we usually say when we take policy actions, the risks get back into balance. on other occasions in the past, but not frequently. why is that? we are aware our decisions increase the resilience of this eurozone economy. factors address these that are weighing on the eurozone economy and the rest of the world? they cannot. the fact of protection is one factor.

geopolitical considerations also to whatever happens ,bout the united kingdom brexit the forms in which they will exit from the european union. the emerging market for abilities, what is happening in china? we know the chinese government has reacted. monetary policy is changed. in the u.s. we have to take into to be athere is going waiting effect on the fiscal package. the load is expected there. our actions increase the resilience of the eurozone and so make us confident, keep us confident that convergence to a sustainable rate of inflation, our objective, will happen. thank you.

>> can i ask you about what you said earlier that you are standing ready to adjust all of your instruments available? does that include the net asset purchase program. could you revise it in case the economy is not going better and the inflation outlook is going to worsen? on thea question underlying assumption of your growth and inflation estimates. is the underlying assumption that the u.s. and china will come to an agreement on trade or not? thank you. the answer to the second question is our projections take into account the protections measures that have already been implemented, but they do not project and assessment of future measures or

of how the current negotiation will end. question, you see optionality's everywhere. the issue is whether we see contingencies that would justify the use of certain instruments instead of others. i do not want to speculate at this point in time. at this point in time we are taking all of these decisions and we think they are the right decision and the adequate decisions to be taken at this point in time. let me add one thing. we do not tighten when we stopped purchasing the net asset purchase program. we do not tighten monetary policy, contrary to what some of you said. i'm not sure it is one of you, but it is being said.

continue -- just to give you an idea, the balance sheet of the ecb is about 42% of the eurozone gdp. the fed is about half of it now. in order to keep this stock unchanged, we continue something in the order of 20 million euro a month in bonds. this happens in a context where the debt to gdp ratio in the eurozone is falling. the simple action of maintaining a stock unchanged in this easing is continuous because interest rates are pushed downward by this action. you can see this because since we decided june of last year

interest rates have gone down, they keep going down. the term premium is negative so conditions are accommodative. -- thein elements horizon over which we will carry out purchases to keep the stock unchanged moves together with a forward guidance. , whatish the answer weay's decisions say is that have changed the calendar based on forward guidance, based on the information we have to day, and it is data-driven. we are very open to act when it is needed. >>