anchor: emerging markets enjoying the rate cut party. weak growth way on global economies. tesla drives into profit. the company posting a surprise profit with echoes of 2018. twitter and 3m are on deck. buckham to "bloomberg daybreak" on this thursday, october 24 -- welcome to "bloomberg daybreak" on this thursday, october 24th. i'm alix steel.

earnings here for twitter. monetize a bill daley active users actually came in soft. -- monetize a bowl -- monetizeable daily active users actually came in soft. that stuck down a whopping 10% now in premarket. coming out ofbers twitter. in the markets, we are still going to be waiting and seeing what happens with mario's press conference. -- with mario draghi's press conference. -- the rate coming in now at 14%. there had been concerns because of conflict with syria that they wouldn't be able to cut rates because of volatility and we can inflation, but it appears they were able to do that. the cease-fire coming yesterday, sanctions being lifted by the white house. it is a 200 to be basis point cut for the turkish central bank.

time never the global exchange. we are going to bring you -- time now for the global exchange. we are going to bring you the mark moving news from around the world. we started in europe, where the region's economy continues to struggle. rose,rea composite pmi's missing estimates, but above the expansion level. joining me from london, david powell. walk me through the weakness that we saw, particularly when it comes to germany. pmi's showed is that while there has been some weakness in those surveys in recent months, the economy stabilized at the start of the fourth quarter after considerable deterioration in the third quarter. that will provide some relief from the european central bank when it meets today, and a sense that it won't need to add to the stimulus they already announced in september with this stabilization being seen. alix: and what about other areas of europe? not as bad as we might have thought?

david: no. the global trade wars had the biggest impact on germany and the large manufacturing sector, and that has been the source of the decline we have seen in the euro area manufacturing sector. really, germany has been the worst hit, most exposed to global trade. other parts of the euro area are holding up. alix: thank you so much. now we go to europe again, where mario draghi has his final farewell. he will hold his final ecb policy meeting after eight years at the helm. joining me now from outside the ecb headquarters in frankfurt is matt miller," anchor of "bloomberg markets: the european open." were the biggest questions heading into today? matt: the main question for mario draghi is what does he want as he leaves office? what kind of demands does he

make? he gets to throw off the shackles of politics and maybe be more specific about what kind of fiscal help you needs, or from where he wants to see that. he could call out berlin, for example. you can also see, in terms of the daily business of the ecb, changes to the p because there aren't really enough bonds for them to buy, or maybe they want to buy more private debt than government debt. that would make it a little bit easier. you will be hearing a lot about what he expects from his successor and what economists expect, that she tries to reignite the divisions we've seen flareup in the governing council over the last couple of months. the last decision brought a lot of criticism because draghi is delving back into the bond purchasing program and cutting rates even further into negative territory. negative rates definitely one of the black marks, or the lack of

those inflation targets, the black marks on his legacy. alix: thank you very much. now we turn to brexit, where the eu left the british prime minister hanging as it decides whether or not to grant u.k. an extension or how long they will do so. france is pushing for november 15, while other states prefer the end of january. joining me from brussels is maria tadeo. give me the latest. maria: well, there is no question that the europeans will give the united kingdom more time before it leaves the european union for two very simple reasons. they don't want a no deal brexit, and they also believe that the prime minister is moving very close to delivering brexit. this is what the europeans want, to move forward and put brexit behind. the debate in brussels right now is just how much time, and we understand there are two camps. one is being led by emmanuel macron, who is not even in europe at this point. saying an overseas trip, that delay should be very short, very technical, november 15.

they need to keep the pressure on london, and they also need to use this to focus minds, to keep everyone focused on brexit, not a general election. on the other side, we know there's a number of member states who believe we should just give them three months because this is what they asked for. at this point, it is not going to hurt anyone. we've been here for three years. let's just give three months. at this hour, no side is winning this argument. we are not expect thing a decision to be made today. we are looking to friday, perhaps even monday. alix: good, weekend brexit drama coming through. thank you very much. now i want to turn to earnings. twitter down 14% in premarket. tesla surprising the street, nokia getting pummeled. give us some of the highlights here. reporter: what i dramatic 24 hours it's been for some of these companies. twitter broke at the top of the show, missing on revenue. analysts expected a really positive quarter, cleaning up

from the platform supplying usage, but that didn't pay off necessarily because they had bugs with their ads. this is the reason they've missed on revenue. there shares are down a germanic 13%. if you compare that to what tesla is doing -- a dramatic 13%. if you compare that to what tesla is doing, they were up on anner earnings that surprised lot of investors. they also had a lot of other positives. they are -- their china factory was up and running sooner than expected. model y also launching sooner that inspected. still, not every analyst is convinced. jp morgan saying this actually isn't the breakout quarter that has been claimed, so tesla clearly still facing some scrutiny despite this positive announcement. also facing scrutiny, nokia shares falling the most since 1991. the finnish telecom company

and cuttheir outlook their dividends. they are basically saying that because they've had to spend a lot on competitors, staving off the competition, that means that the boost they got from watching their 5g network hasn't paid off as soon they hoped for. that the 2020g outlook is dramatically challenging. alix: thank you very much update. rounding out with microsoft here in new york, reporting resorts after the bell yesterday, topping analyst forecasts, lifted by demand for azure, its cloud-based program. here in new york is bloomberg's senior analyst covering technology software and services. give us your analysis. reporter: a very good quarter, broad-based strength across the board, both unplowed and

non-cloud products. cloud and-- both on non-cloud product. microsoft is someone who will will fare better- you than other companies. the risk is macro spending. this is one area that we think will see slowdown in the six to 12 months. having said that, we think -- microsoftup grew revenue about 15%. we think the rate of growth will slow down. we expect there will still be overall growth, but the rate will most likely slowdown. alix: thank you very much. pg&e cutting service to customers and part of northern california, trying to keep powerlines from sparking wildfires in high winds yet again. joining me on the phone, kate conley of bloomberg intelligence. what -- joining me on the phone, me on the phone,

kit konolige of bloomberg intelligence. what can me expect this time? kit: it appears this is a less extensive outage, and while like the previous one, they have outages with the website, that is also looking less extensive. you don't think of it is good news, but the neighboring utilities to the south either have warned or have put into effect some outages, and there are wildfires down in socal territory. that is good for pg&e in a way because it shows at least two some people that it is not completely their fault. when they say there is a wildfire risk, it is a serious problem outside their immediate control. alix: thank you very much. some breaking news for you. we have a headline that china is willing to buy $20 billion of u.s. farm goods in one year.

that a substantial. that would be a lot of agricultural products china would be buying. they are willing to buy $20 billion of u.s. farm goods. s&p futures are higher on the news, but still a modest 0.2%. that is the macro as we head into mike pence's speech later today, which many had been fearing in the market. then the macro, the haves and the have-nots. the have-nots is definitely twitter, down by as much as 15% after they disappointed on daily active users and fourth-quarter revenue outlook. coming up on this program, much more on your morning trade and analysis of the markets in today's first take. this is bloomberg. ♪

alix: time now for bloomberg first take. joining me from our in-house team of wall street veterans and experts, vincent cignarella, former trader and voice of bloomberg audio squawk, michael mckee, and also with us on set, jens nordvig, exante data founder and ceo. i want to pick up on that news that china is willing to buy $20 billion of u.s. farm goods in one year. what does this do for you as a traitor? -- as a trader it is ps we seen in prior years, so a mix a lot of news on headlines, but it is really no further along than we are now. the good news is it keeps the calm or reduces the tension, lowers the temperature of the trade talks. but it is not really advancing the story. we have to wait and see what happens around 8:00 a.m. when mike pence gives his speech on china. michael: there's no detail in

the story about what they would start buying or when, but if donald trump hasn't put the trade war on, we would probably be higher than $20 billion because 2017 was about $20 billion, and since then, demand has only grown, especially with china's problems with its hog industry, so you would think we would be higher than that. it is hard to know how they do that, and where the demand comes from. do they really need that much? it would mean switching away from other countries, so whether they can follow through, it is hard to see. jens: i think the key thing is we have a crucial meeting scheduled in chile and a couple of weeks, some more than these headline announcements, it is what they physically buy in the next couple of weeks that is going to set the tone. alix: they can say, look at what we did, or we are holding back? jens: we've had situations in the past where we've had big announcements and no follow-through on the purchases, so i think the actual purchases

that are going to take place is the key in the coming weeks. vincent: i think that's very key. michael: we have this december 15 deadline coming for the next round of tariff increases from the president, and we have a late november meeting in chile. you may be seeing the chinese try to manage donald trump. we will give you just enough, just enough to keep the tariffs from coming on, and keep stringing out the negotiations. vincent: we seen it with syria and turkey. take the first step, the president steps back. china makes the first step, the president is likely to step back. they want those terrace in december removed, and i think this is a point toward that. the market is in a really deal good place right now. we are feeling better about brexit, better about trade. the president is going to need to keep this momentum going forward because we are getting a lot of flak from democrats, a lot of hostility in washington. this is kind of an easy win for him, and i think he is going to take it. alix: as long as you are not

long twitter stock, you are feeling pretty good in the market. to the point of what they are going to buy, one, you would need them to diversified away from brazil, which is a whole question in terms of whether they would do that, and two, their pigs need to stop buying because they import soy to feed their pigs, so they need them to live to feed them. those are two big wildcards. michael: we are seeing a very large increase in the u.s. herd in anticipation. bloomberg was writing about it yesterday. for all of those really worried about their bacon. [laughter] michael: but it goes beyond pork and soybeans. $40 billion is an awful lot. can we produce that much stuff for just one country, or are we going to be cutting back sales to other nations? it's all kind of a mystery how this is going to work. jens: maybe i can make one final point. the other thing part of this

equation going into this trump-xi meeting is what is happening with the currency. there's a sort of implicit deal that the chinese currency needs to move somewhat stronger into this event, and they aren't delivering on that front. they have the daily fixing. it is not moving a lot, but it is moving slightly stronger since we had the mini deal, or whatever you want to call it. so we are moving in the right direction. vincent: the market is willing to help with that as well because the speculation of selling, that some fallout is going to happen, is not really there. so the market is on board. the speculators are stepping back, so it is a lot more manageable for the pboc to move that rate towards the seven level. michael: can i ask a question of these two gentlemen? the treasury currency report is overdue now. should come out anytime. if the u.s. takes china off the currency manipulation list, which we all know is kind of

silly, does that make any difference to the currency value or to the markets? the first thing i would say is the actual manipulation announcement was a very unusual one in that it was a one page, rushed sort of announcement. that was done in a very political way, so clearly it will be removed and a political way as well. i think that is tied to what is going on with this negotiation now. they can delay that report. if it suits them to have it come out with a couple of weeks delay, that is what they would do. olive branch, not fig leaf. vincent: i agree. they are not a currency manipulator. if anything, they are manipulating their currency stronger in the past year or so, so it is a total political game. it was rushed to make some noise against china to just cause some

trouble. i think that was pushed through in a one night meeting, maybe the night before. if all goes well and smoothly, this will be the quid pro quo that the trump administration will offer back to china, and everybody will be all combined. alix: i wonder how much it actually matters in the broader sense. you have central banks cutting rates, south korean growth like 0.4%. buyingr it's just $50 billion a soybeans will really do it for anyone. vincent: i think what we need to really remove is the uncertainty. if the trade war fizzles out, just sits on the back burner for the next 12 months or so, that gives corporate america, everyone the opportunity to make some decisions going into 2020 knowing that there isn't going to be fire coming from every direction, and the uncertainty is really what needs to be lifted more than the token ag

purchase. alix: i can't believe we lasted 10 minutes and have not talked to the ecb. --ces the rela, thank you vincent cignarella, thank you. be seeingkee, we will you later. jens nordvig of exante data will be sticking with me. coming up, elon musk proving tesla naysayers wrong, at least for today, reporting a profit that meets some timelines of analyst estimates. more on that next. this is bloomberg. ♪

viviana: you're watching "bloomberg daybreak." southwest airlines taking a hit from the grounding of the boeing 737 mac. through august, operating income fell $435 million. about 9%ding reduced of its fleet. elon musk flipping the script on those who doubt tesla.

the electric carmaker delivering positive earnings few saw coming. plus, the company's founder declaring he is ahead of schedule with a new factory in china. tesla's profit and margin were better than expected. shares are surging in the premarket. that is your bloomberg business flash. alix: thanks so much. rush,re on tesla, colin oppenheimer's managing director and senior analyst, joins us now. why do using this profit might be sustained when we saw the same thing in the third quarter of last year? colin: does a couple of really important things going on. issue ishe bigger really about operational efficiency that they've been able to achieve. on the manufacturing side, they are true -- they are clearly driving costs out, and they are demonstrating that with their gross profit. more importantly in our view,

from a cash flow and resiliency perspective, they took out wondered $75 million of -- took out $175 million. that not only helps the cash flow profile, but the ability of the organization to operate efficiently and profitably going forward. alix: can they replicate that going forward? even if they take the costs out now and it stays out, do they have more low hanging fruit to cut iesco -- to cut? colin:: as you see the china factory come on and they drive additional costs out of the product, they are going to be able to drive increment of demand. make ato in thetion other em's space, where we are seeing massive problems across the auto sector in terms of volumes and labor issues. alix: true. what is the next catalyst?

colin: for us, it is really just exit fusion on a few key things. one, they are going to roll out the pickup truck in in the next month or so, and really ramping the china factory. it is not that complicated here for the stock over the next four months. alix: really appreciate your take this morning, colin rush of oppenheimer. coming up, twitter falls after a big earnings miss, especially when it comes to daily active users. american airlines on deck on this busy earnings day. an ecb rate decision just about 20 minutes away. what will the future be with the tolerance for more negative rates and rate cuts coming from emerging markets? this is bloomberg. ♪ here, it all starts with a simple...

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a camera might figure it out. that was easy! glad i could help. at xfinity, we're here to make life simple. easy. awesome. so come ask, shop, discover at your xfinity store today. alix: this is "bloomberg daybreak." you've got some macro and micro headlines over the last hour playing out. asna says that it will buy

much as $20 billion in the first year, potentially ripping up to $50 -- potentially ramping up to $50 billion, of agricultural goods depend on negotiations. in other asset classes, not a lot of movement as we head into the ecb meeting. curve continues to steepen in the u.s. a touch of selling in the european bond market. euro-dollar not going anywhere as well. we have some earnings coming out from american airlines. on an earnings basis, $1.42 a share, so it was able to beat estimates. operating revenue was a tiny bit light, but still up 3% year on year. pretax margin was able to increase by about 7%. the real question was airlines going forward is what do they do when the boeing 737 max comes back in capacity starts to increase? what is their pricing power, and

what is the strategy? joining us on set, brooke sutherland of bloomberg opinion. jens nordvig of exante data is still with me. we are branding all day. particularly want to hit on 3m, cutting its profit and sales forecast. are we seeing a theme emerge among all these industrial players yet, or no? brooke: 3m is a unique case. iny stuck with the earnings organic sales guidance, even though they saw a rebound in sales that looked rather optimistic. at the time, analysts had a lot of skepticism as to whether they were going to actually hit those numbers. now they are taking a pretty significant step back. i will say this guidance cut does include a $.15 impact from one acquisition. that is not a deal that investors particularly like. it involves 3m loading up on a lot of debt at a time when sales are slowing, they are not performing particularly well, and they've had to halt

buybacks. that is one factor in the earnings guidance, but the other is the macro guidance. thoses where you see shorter cycle businesses that do did respond more quickly to -- that do tend to respond quickly to a slow down. alix: what was the biggest question going forward? is it all china trade, or other stuff that is happening? brooke: one question i have about the 3m leadership team. there's been a lot of guidance cuts, a lot of excessive optimism, and some questionable decisions, so how long do investors have confidence in this management team to continue to lead the company? going forward, 3m has said we are cutting costs, we are getting our inventories down to a more reasonable level, we can grow off of that. that is a real question for them as they go into 2020. is some of it execution? they did in knowledge that they did not respond as quickly as

they should have to signs of a slowdown. alix: how much of it is just trade, and how much is broader? there was a headline in "the journal" that i loved, "peak auto sales slowing the economy." that can be irrespective of trade. that is just a global slowdown. jens: we need some big shift into electric, something that is going to revive demand. there's no doubt if you look at on, we have a global slowing. industrial is leading that slowing. one part of that is the cycle you've mentioned. we've had a couple of quarters in europe where the drag is the important part of the gdp a question -- the gdp equation. if we get through that, i think growth can at least stabilize. that will be important for monetary policy, whether we can find that stabilization. alix: do pmi's need to increase or just stop falling? how long do they stabilize before everyone starts to feel

better? i think the momentum matters a lot. if we had a bounce today, that would make a difference. brooke: one question i have is the impact of the gm strike. how much of a sales miss is the gm strike? how much is the backdrop in autos? i think that will come up on the call later today. alix: i'm glad you brought up the gm strike because that is a broader issue to me in the u.s. of labor and unions starting to gain a little bit more power, wanting higher wages. with the strikes and protest you see in chile. if there a narrative we are starting to weave about inequality finally disrupting -- are you laughing at me? jens: i'm not laughing, but if you look around the world, there's definitely a change going on.

politics has become much more important, and the demonstrations are part of that. it is in hong kong as well. but when you thing about the political picture overall, every election we are going into come of the spectrum of possibility is so much wider than we are used to. we have democratic candidates that are advocating policies that are pretty much unheard of. that is a factor at all investors have to put much more weight on than the past because it really matters. alix: and if you don't, you get protests. there's a real repercussion for it. brooke: the flipside is that you have railroads cutting a lot of jobs, and caterpillar talking about cutting costs, cutting production, which means job cuts there as well. it is still happening, maybe just with more political risk. alix: fair point. brooke sutherland and jens nordvig will be sticking with me. we are about 10 minutes away from the latest ecb policy decision. michael mckee is laying it out

for us. michael: in a few minutes, we will find out if mario draghi has one less surprise in his toolkit for investors. investors don't think so, which means that come 9:30 this morning when his news conference dead, longe king is live the queen. ist is steam lagarde -- what christine lagarde's job going to be? way toot to figure out a figure out what tools can she use to boost growth and raise inflation in the euro zone. look at what has happened. a veryelying on qe and low interest rate. it did raise bank lending, the white and blue lines, but growth, the yellow line, did not respond, so that is a problem.

if the tools don't work anymore, what does she do? her first job is going to be mending fences. after the last ecb decision, we saw a whole bunch of councilmembers disagreeing, something that hasn't happened before, particularly a lot of particularly a lot of them from the northern european economies. she's got to mend some fences. one quit, and there is a new governor. we will see if she is more on lagarde's side. she has some peacemaking to do before she moves forward. alix: bloomberg caught up with christine lagarde last month before she officially takes the reins at the ecb. she weighed in on the global slowdown. -- ms. lagarde: it is not in the baseline to have a recession. that said, it is mediocre growth that is at risk because of essentially one major threat, war that we trade

brewing, andng or the uncertainty that invest -- and the uncertainty for investors and anybody making economic decisions. that is what mark carney called the tragedy of the horizon, which is the climate impact on our societies and economies that requires action now, but will produce effects later on. alix: still with me on set, jens nordvig of exante data, and mike mckee as well. what do you care about today? jens: today is a bit of a farewell party. i don't think we are going to get that much in terms of monetary policy. i think the key that could be relevant from a market perspective is, is draghi going to present a very strong signal on this fiscal theme? like, ok, we've done a lot of monetary policy. we need european integration. we need more push on the fiscal

side. how aggressive he is on that i think is the key, and that is what everyone is looking forward to lagarde. she was the finance minister of france, after all. she has the connections to sort of start to have some more coordination between monetary and fiscal policy in europe. michael: i think what we are all going to look for today is how strong draghi is in calling for fiscal assistance going forward, whether he really admits that they are tapped out. jens: he's not going to admit it. [laughter] michael: that's the problem. this is something that came up last week during the imf meetings. "the wall street journal" had a great line. everybody is calling for fiscal support and saying that's what's next come about what we are missing is that there isn't going to be any. i want a pink pony, but nobody's getting any pink ponies. [laughter] michael: germany doesn't want to do fiscal stimulus, and they have laws that prevent them from doing too much.

no other country really has the fiscal space to spend a lot of money to boost the whole euro zone. alix: to that point, you were mentioning earlier on break sweden committing to a rate hike in december. the appetite for negative rates is eroding. jens: i think we sort of learned that the cost associated with negative rates are significant. the problems in the banking system are real. it is on the ecb to come out and say we have changed our minds, but i think the speed at which they move after the september meeting, very reluctantly another 10 basis points, that this is a tool they have really not actually sure whether it is going to be powerful, and not sure when the negative sector is going to dominate, and that is why they are moving so cautiously. alix: mike mckee, thanks a lot. jens nordvig of exante data is going to stick with me. we are minutes away from the ecb rate decision. we will take a look at the press conference in about 45 minutes'

time. they did wind up beating on earnings, but they only see their revenue per seat up about 2% for the fourth quarter, and in essence, they basically are raising their high-end -- excuse me, lowering their high-end of the forecast at american air. , little bit of weakness there that stock down over 1%. this is bloomberg. ♪

viviana: this is "bloomberg daybreak." coming up in the next hour, ajay kapoor, be they merrill lynch head of em strategy. alix: we are moments away from the ecb rate decision. i want to get a quick check of the markets. s&p futures are at the highest of the session. the dax in germany pretty strong , mostly geared in the manufacturing sector. in other asset classes, not a lot of movement happening. we are waiting to see what happens in the ecb, but more importantly what happens with the press conference. yields in germany at -38 basis points. the curve continues to get steeper. what do you do with that? does it say anything about growth, or is it more technical? crude, a little bit of risk off

by 0.2%. $1.11 is where we trade on euro-dollar. is there a euro trade to make? jens: i don't think there is a euro trade to make. the question is whether lagarde will look for more stimulus, and then there will be a trade. she will have to go aggressive on the negative rates to generate another eating move. alix: here we go -- another easing move. alix: here ago, on surprise. deposit facility unchanged at -50 basis points. this language seems somewhat similar. they will continue bond purchases as long as needed. rates will be at present or lower levels until inflation is near their goal. they are going to stop buying bond purchases shortly before they raise rates. they confirmed they are going to start buying 20 billion euros a month starting in november. this doesn't seem like a surprise to the market at all, reiterating what they had already said. it is going to be more about mario draghi's outlook and any push into fiscal. bloomberg's matt miller is

joining us with the latest on that rate decision from frankfurt. there doesn't seem to be any change. anything stand out to you? what can we look forward to? matt: if i look through the headlines that just came across, there's no real change to policy, but we weren't really expecting a change to policy. a couple of things we do expect to see during the press conference in 45 minutes, mario draghi his call for fiscal help from governments, specifically from germany. you guys have been having that discussion. i wonder how specific he's going to get, if he's going to call out any companies that he will -- any countries that he will directly make a request to berlin. saysee that headline that purchases start november 1, when madame lagarde takes over, but

what kind of bonds is she going to buy? there's going to be a shortage if you stick to government debt. she's going to have to veer towards private or change the p. that will be one of the -- the change the capital key. that will be one of the interesting things in this press conference. alix: again, no change at all in the refi rate and deposit rate, reiterating much of what we already knew as we look forward to that press conference. for more, david kohl, julius baer chief economist, joins us as well. what is your biggest question headed into this press conference? really, what the rhetoric will be from mario draghi this time in order to deliver more of what people want to stimulate the economy. on the interest rate front, we are more or less exhausted of the potential to stimulate the economy.

the economy now is in a weak spot, to say the least, so what does the ecb do to do more on that space? the rhetoric very much is focused on the fiscal policy. keep in mind, it is not the matter of any central bank to control fiscal policy, civic can be only limited in what is coming from the ecb press conference for the economic outlook. alix: and part of that, as you mentioned, they just don't have enough bonds to buy. we have a chart that shows the breakdown of where they've actually spent most of their money in terms of bond purchases. if they had to buy more, there's been a lot of things floated, like going to buy equities, perhaps going in and buying green bonds. what is your best guess? still theyuess is will concentrate on the bond assets because every thing else has been too risky. they might do more than that, but even other central banks,

like bank of japan, with very similar problems in the bond space, they stick most of that to the bond space, to the sovereign bond space. you can say we will keep the target rather than the interest-rate level on the amount of bonds, so my guess is it will go rather in this an broadening the portfolio of what you're buying, and really going into the risky space where they have not been yet. alix: part of that also leaves how much more negative can you go on the deposit rate. we were talking earlier was jens nordvig that if you look at sweden and say they really forecast that hike, the appetite is being eroded a bit for lower deposit rates in negative territory. do you have a read on that on how sentiment is in europe on that? david: when we look at the bank lending survey, the

latest shift of the ecb seems to have loosened monetary conditions, so lending conditions have loosened again. , you can doe rates very little on the credit demand side. speakhink the ecb should very cautious to negative territory. be the malaise which , and this trial has to be done by the governments. the most the ecb can do here is with the financial union, sue can improve credit demand going forward. alix: you did mention it was able to loosen policy. with the tltro's, they can push more money out from the banks. at what point do you feel like

this monetary policy, the negative deposit rate, inhibits loan growth? point -- thatwo tipping point? we go lowerbly when than the deposit rate will grow. -1%,ink it will be around -1.5%. most negative rates we get in switzerland, even there they have been cautious in lowering. to -1%. they have not done it yet -- lowering to -1%. why? not have the stimulus effects they wish. alix: thank you very much. really appreciate it, david kohl of julius baer. we will hear from mario draghi, ecb president, one more time as he winds down his eight-year term, at 8:30 a.m. in new york.

the actual statement yielded nothing in terms of any changes. as we had to break, we want to check out a few stand out earnings this one. first up, taking a look at tesla -- twitter, down by about 20% in premarket. they actually disappointed on daily active users. that hurting the stock. tesla surprised profit, but that really echoes what happened last year in the third quarter. is it actually sustained? and microsoft commode of the biggest companies in the world, really dilip -- and microsoft, one of the biggest companies in the world, really delivering, but if the growth slows, what does that mean for the overall tech space? coming up, watching oil ahead of president mike pence -- i had a vice president mike pence's speech on china. tuneu are heading out, into bloomberg radio on sirius xm china 119 and the bloomberg business at. this is bloomberg. ♪

alix: time now for trader's

take. joining me is benson cignarella of the bloomberg audio squawk -- is vincent cignarella. of the bloomberg audio squawk you are looking at -- vincent cignarella of the bloomberg audio squawk. you're looking at vice president mike pence's speech. vincent: oil was really interesting, and i finally got it way too late from a trader in asia, who said there is three times the short positions in the crude market than typically speaking, so this was just a massive short, and they are coming back. people who stopped out yesterday coming back into this trade, trying to reestablish positions. that sets this up with a better mood hitting the street for a rally in crude back up to $60 a barrel for wti. we are expecting pence to come out with a little fire and brimstone later at 11:00.

the speech is supposed to be towards human rights, which obviously doesn't play well with china. the feeling is that he's not going to come out and upend a trade deal they've been working on, so he's going to push playing a little but of a bad cop, butnot -- a bad not nearly as he did last year, which we think the markets will take in stride. the mood on the street is much better than it was a week or two ago. alix: interesting. bloomberg's vincent cignarella, thank you very much. edge"nto "commodities later today. coming up, more on the ecb rate decision with lale topcuoglu, joa cm portfolio manager -- lale cm portfoliooh manager. ♪ manager. ♪

♪ alix: welcome to "bloomberg daybreak" on this thursday, october 24. i'm alix steel.

let's take it right from the top. >> behind those doors, they intend to overturn the results of an american presidential election. alix: house republicans stormed into a closed hearing on impeachment yesterday, saying they've been shut out. that delay testimony for several hours. >> i guess when you're desperate, you go back to complaining about the process. alix: house democrats say testimony will end in a few weeks, followed by public hearing. >> we need some convocation on the u.k. side. alix: the european union puts boris johnson on hold. >> they need to keep the pressure on london, and they also need to use this to focus minds, to keep everyone focused on brexit. alix: the british prime minister is waiting to hear if the eu will approve his request for another delay on brexit. the bloc appeared to be in favor. it just cannot decide on how much time to get him. and china agrees to buy $20 billion of american farm

products if they agree on a trade deal. willuropean central bank keep its benchmark interest rate at 0%, deposit rate at -50 basis points. they are going to keep that level until the bank nears deflation goals. mario setting up for draghi's final briefing with the media later this hour. in the markets, you're not really seeing any kind of reaction to the ecb. you some more of a reaction in the s&p futures of that china trade headline. currency market goes nowhere, bond market goes nowhere, commodities go nowhere. joining me now for the rest of the hour is lale topcuoglu, johcm senior fund manager. good to see you. you sat down, and i'm like, what is the number one thing on your mind at this moment? what is it? lale: i should have said brexit. [laughter] lale: never heard of it. alix: what are you thinking about right now? lale: it really is more of the

environment. i was surprised nobody picked on saw that little poem halfway down the stairs to my wonderful poem. that's really how i feel. you're just looking out and thinking, what are the risks? where should that money flow to make money for clients and investors? i think on the margin, and this is going to change for us in the last two weeks, we are probably on the verge of turning a little bearish on credit here. the upside-downside doesn't seem attractive. if you want to create a really bullish story, ironically it is on the equity side, and that is quite normal before a downturn. equity typically leads for the last six months, and then both take a nosedive. that is pretty much on my mind, except for breakfast. let's go to the ecb right now in frank it.

matt miller -- in frankfurt. the ecbler is outside headquarters. matt: i just want to point out i had a schnitzel -- massive auernschnitzel for breakfast. [laughter] ready foro draghi is the next stage of his career. i'm sure he feels like he achieved something. i know most observers here feel like he made an heroic save of the euro zone, of the european project, and it is really close to his heart. i think it's probably more important to him than the inflation mandate. surely he would disagree with me publicly, but that's where he's kind of dropped the ball come on

inflation. they haven't been able to sustainably get their target close to 2%. he had to go back into extraordinary measures at the last meeting that really divided the governing council. one of christine lagarde's jobs, over than finding a way to spend that 20 billion euros a month he has prescribed, is to bring this governing council back together, and it is not going to be an easy one to do. alix: i like that you brought up what to buy because we've been talking about for months and months that we've run out of it. we have a great chart that kind of shows what they have been buying and how much they own, and if you look at the forecast of where it is going to be, it is an incredible amount. what did they do? what is your take on that? lale: there are obviously challenges. suffering bond purchases are the most logical. europe, you've

got to keep it in balance so you can't be tipped into the periphery for all these political reasons. on the credit side, everyone is super excited in the investment grade market because you can buy bonds. if you assume they still won't someinancials, but buy bonds, what people don't understand is there are a couple of things. one, 20% of the european corporate index is already in negative yields. it is already negative. the ecb already controls and owns about 20% of the ig nonfinancial european investment-grade market. on top of it, but i think it's fascinating is, historically, they bought somewhere between $3 billion to $9 billion a month. net issuance in the i.t. market a month is generally about $10 billion. they are not buying fins. buying,hink of ecb's you have a price insensitive buyer that's been buying nearly

60% of corporate ig issuance. it is ridiculous. andy fact that, and this is where i think relative value gets people into trouble, people are doing relative value judgments and say, well, there's good value ecb is going to buy, let's take a step back and look at the numbers. everything in the world is disordered -- is distorted, and i strongly suggest people look at risk returns. i think the rubber band is stretching a little thin here. alix: matt? matt: bloomberg economics ran the numbers, and if they do stick to just sovereign, which is the obvious choice, the plain vanilla trade, they are going to run out of bonds to buy if they don't change their rules by the end of next year. in the next two years of the program, there's going to be a 60 billion euros shortfall, so that got to either buy more of that private stuff, and as you point out, they are already the size player in that market, or

they have to change the capital key, change the distribution. they've got to do something else because they won't have enough to fulfill their mandate. lale: partially, i think you're seeing it in the u.s. with the repo issue and how much the fed is now buying. i think you can draw a parallel to the emerging economies. i know that is going to cause some people to scream, but in em, it is quite normal that the central banks start financing deficits.ries' because of bond buying in the u.s. and europe, we are almost replicating what happens in em. central bank some are coming to fecteau funding for government fiscal deficits, and i think that is a very slippery slope. alix: why do you think people would have a problem with what you're saying? lale: to make the ark meant that germany, -- to make the areument that germany, etc. on the passive emerging market economies.

alix: but it is not the first time i've heard that argument. if you're trying to figure out politics in europe, this is what i've been dealing with in em. you're just not used to it in developed markets. lale: what is the right risk price for that? alix: i don't know. matt? matt: you know, you were just talking to david kohl, the chief economist at julius baer, and he was making the point that the fiscal stimulus is not in the ecb remit, which is right, but the question is, what is the line between extraordinary monetary policy and fiscal stimulus? toy really get close crossing that line in em, and this is the concern, that that someone-- would have, that the ecb is getting too close, and germany really has a problem with that. alix: matt miller, thick you so

much. lale topcuoglu will be sticking with me. we have a slew of companies out with earnings overnight. sarah ponczek is taking a look at some of the bigs movers. earningstail of two reactions -- a tale of two earnings reactions. i will start with twitter. missed on the top line and bottom line, and see they see -- and say they see a range of sales that compares with an estimate of $1.06 billion, so quite the miss. twitter blamed greater than expected advertising seasonality , and revenue product issues. as you can see right now, shares absolutely being pummeled, down 16%. i do want to add that since twitter went public, we have whichour other periods in after earnings come of the stock fell more than 15%. tesla really blew it out of the

water yesterday after the bell. the key overhang for tesla's can they turn a profit. they proved yesterday that yes, they can. adjusted eps came in at $1.86 a share versus an estimated loss of24 since a share -- $0.24 a share. shares are surging. i do want to mention microsoft because it is the most valuable company in the s&p 500. it was really solid, not astounding, but solid. strong across the board. beat on the top line, pete on the bottom line. we saw a revenue growth for azure, their cloud computing business, that all-important segment, rose 15%. however, it is a deceleration. they have made it clear they are paying attention to margins, especially as we do see this

deceleration take hold because how long can you be growing at a rate like that? alix: really appreciate the round up. coming up on the program, china is willing to buy $20 billion of u.s. farm goods in one year. we will have more on that with a thinkor -- was aj kapoor, of america merrill lynch head of em. this is bloomberg. ♪

alix: china is open to buying at least $20 billion of u.s. farm products in one year if it signs a trade deal with the u.s. of bankus is ajay kapur of america merrill lynch, head of em strategy, and with me

still is lale topcuoglu of johcm. what do you think? ajay: these two countries, the u.s. and china, are going to be in a long period of competitive and strategic rivalry. this doesn't really make a difference. regardless of which party is there, i think it is just a more comparative rivalrous situation. have this of america going from globalization to localization. globalization was sort of over 10 years ago, so you don't even need to look after your own country and generate your own demand. so obviously it's a big challenge for emerging markets. lale: i was saying earlier, first of all, your reports are great. if no one is reading your reports -- if anyone is not reading your reports, they really should. would love for you to expand a little bit on it.

where do you see it going? basically, central banks were throwing money at everything. ajay: that's correct. the monetary and the top 20 countries shrink and yarn year, it is primarily because of the u.s., which is a pretty monetary base, and also china. people talk about the trade war all the time, but not so much about what the central bank balance he is doing. bank balanceentral sheet is down year to date. i think that is one of the reasons why they are slowing down, although they've cut reserve requirements many times. monetary basen numbers need to pickup. last time we made money in emerging markets was 2016. guess what the chinese monetary base was doing that year? it was up about 12% or so when they injected almost one trillion u.s. dollars into their

financial system. now they are doing just the opposite. a colleague was on yesterday, and i think she was saying correctly that these guys need to ease policy, but i don't really think they are. alix: doesn't this go to your whole point last segment that central banks in some ways are gaps?g lale: it is a derivative of that, i think. markets monetize fiscal deficits, and they've been doing it for a long time, so it's a long pattern of bad behavior. however, that bad behavior has improved and changed in the last 15 years or so. we blew up in late 1998 to 2000, and we have since improved our behavior, and we are now passing on our bad habits to the developed countries. [laughter] that?how do you invest in we were talking about this during a break, that as you keep finding yourself, at some point you have to pull back, which is

what we are seeing in emerging markets, but that has repercussions. look at what is happening in chile, for example, or even egypt. how do you deal with that as an investor? ajay: the world is very unequal, and there is massive income inequality. i live in hong kong, and you talk about chile and others. we are just stuck with this come about re-member, and the last 10 , it simplyqe exacerbated wealth inequality. equal old, indented, in -- unequal, and monetary demand in that in bar but is going to remain weak, so the government -- in that environment is going to remain weak, so the government has to come in and spend pretty responsys. lale: is it a negative or a positive? ajay: i think it is a positive. we are going to spend money, and you the taxpayer will not have

to pay taxes, or your children won't come up because we never intend to repay this money to the citro bank -- to the central bank. an inflationt target, and once we hit that target, we will reconsider and rollback. otherwise we will be growing at a very slow pace. the monetary toolbox is pretty much empty. lale: i can see the presidential candidates going berserk over that comment. [laughter] alix: let us pretend that was happening more officially. does that make you more scared in the market, or are there pockets where you have to go take risk because of that? lale: i think if you are going to take risk in that scenario, the best way would be equities, particularly cyclicals. that is the pain trade. the pain trade is not credit goes tighter. the pain trade is cyclicals or european equities go higher. if you can at least get to a point where everybody feels confident that we are bottoming from a growth down, spiral point of view, and perhaps that will

pick up, that will gain in momentum. but right now we are kind of in no man's land. alix: same question on emerging markets. who is going to buy to domestic equities? stocks in looking at china because remember, the two countries that are in the trade war, the u.s. and china, are both up 20% this year. we are in brazil also. they just passed their pension package, and i think the economic freedom there had collapsed in the past 15 years, and that probably is going to turn around. so there are selective markets, and also in emerging-market mid-caps, particularly in china, the philippines, those are looking really attractively valued. alix: how much of that has to do with rate cuts? indonesia cutting rates for the fourth straight month, the philippines lowering the reserve requirement ratios. this is a great chart that shows central bank policy and how

emerging markets are following developed markets in rate cuts. do you need to look at what the central banks are doing? is it one-for-one? ajay: generally, yes, with a lag. countries like the ones you mentioned, india and the others, have been cutting for a while. by the end of this year, early next year, we should begin to see some bottoming out. but we really need to see the chinese data pickup. that is the most important driver of asian and em equities. alix: where in emerging markets would you like at all, if you're going to take risk? lale: i think we always will look at the beaten-down ones. i think political stability is important because in some of these em countries, sovereign risk and the credit equity risk go hand-in-hand. our favorite trades have always been companies where they are professionally managed, but two, where they are listed perhaps in an em country, but more than 50% of revenues come outside of the country, and they are a lot more diversified.

that requires a lot more digging as opposed to broadly making a and znt call for x, y, country. alix: what winds up stabilizing the data out of china? if you come into the bloomberg, there's basic global data. china is the white line right here. what makes that go above 50? ajay: pretty simple, it is monetary and fiscal. iao, who was on the show cutsrday, said a few tax here and there, a little adventure structure. i think the -- a little bit of infrastructure. i think the most import thing is the monetary base to grow, and to get inflation to perhaps 10% or 12%. alix: simple, see? peasy.y -- easy

[laughter] alix: tune in later today to "bloomberg: commodities edge." we will talk about what that means for the overall commodities market. coming up, tesla surprising on profit. the bulls and bears weighing in. this is bloomberg. ♪

viviana: you're watching "bloomberg daybreak." today, shares of twitter plunging. quarterly sales and revenue forecast falling far short of wall street estimates. twitter says privacy issues involving its advertising business will keep having an impact from the previous quarter. daily active users rose 4%. southwest airlines taking a hit from the grounding of the boeing 737 max. through august, operating income fell $435 million. the grounding reduced by about 9% the planned size of its all

737 fleet. elon musk flipping the script on those who doubt tesla, delivering positive earnings few saw coming. foundere company's declared he is ahead of schedule with a factory in china. tesla's third-quarter profit and margin at her than expected, shares surging in premarket. alix: thanks so much, the fianna -- thanks so much, viviana. when i want to know about tesla i go to our bloomberg editor. "when all of tesla's value is ,ssentially in its multiple stratospheric growth has gone negative, it is fair to say a pitted to earnings had best be ongoing and better than hundred million dollars or so -- better than $100 million or so a quarter." lale: i think you have to take

it in the context of the markets. the market always think about what are the expectations if you beat the expectations of the market. for some reason we always look at it on relative terms. i think that is probably the problemwas -- the with our broader industry. high profits, high multiples, still losing billions per year, you still have to ask yourself, the issues that we recently had with wework, have they found religion now? have they shifted to what a larger company would do, thinking about profitability and margins? that's a hard shift because when people are valued off of growth, profitability -- alix: exactly. stick with me. ecb decision up next. this is bloomberg. ♪ devices are like doorways

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and if someone trys we'll let you know. xfi advanced security. if it's connected, it's protected. call, click, or visit a store today. savior.is is "bloomberg -- daybreak." this never happens with mario draghi.

futures on the high end of the session. all waiting to hear what he says about the fiscal outlook going forward. other areas of the market we are not seeing anything happening, whether the bond market or the currency market. unchanged for the euro-dollar. data in the echo u.s.. 212,000. durable goods coming it at 1.1%. down .3%.tion looking at that as well. mario draghi speaking. let's turn to the headquarters where he is making the final press statement and will take questions from the press. also by the commission vice president, and the incoming president, ms. lagarde. based on the regular economic and monetary analysis we decided

to keep the ecb interest rates unchanged. we expect them to remain at their present or lower levels until we have seen the inflation outlook robustly converge to a level sufficiently close to or below 2%. in such convergent being consistently reflected in underlying inflation values. as decided at the last meeting in september, we will restart the purchases under our asset purchase program at a monthly pace of 20 billion euro as from november 1. we expect them to run for as long as necessary to reinforce the effect of our policy rates and to end shortly before we start raising the key ecb interest rates. also intend to continue

reinvesting for the principal payments from maturing securities purchased under the app for an extended period of time, plus the date when we start raising the key ecb interest rates. in any case for as long as necessary to maintain favorable liquidity conditions and an ample degree of monetary accommodation. reiteratedng council the need for a highly accommodative stance of monetary oficy for a prolonged period time to support underlying inflation pressures and headline inflation developments over the medium-term. in particular, the governing guidance willard make sure financial conditions adjusted in accordance to changes to the inflation outlook. in any case the governing

council continues to stand ready to adjust all of its instruments as appropriate to ensure inflation moves towards a sustained manner in line with its commitment to symmetry. the incoming data since the last governing council meeting in early september confirms our previous assessment of a protracted weakness in euro area growth dynamics. the persistence of prominent downside risk and needed inflation pressures -- mutued inflation pressures. increasing wages continue to underpin the resilience of the euro area economy. the comprehensive package of policy measures that we decided providesst meeting substantial monetary stimulus which will contribute to a further easing and borrowing

conditions for firms and households. this will support the euro area expansion, the ongoing build of the domestic price pressures, and thus the sustained convergence of inflation to our medium-term inflation aim. let me know explain our assessments in greater detail, starting with the economic analysis. euro area real gdp growth was confirmed at 0.2% quarter to quarter in the second quarter of 2019 following a rise of .4% in the previous quarter. andming economic data information continues to point to moderate but positive growth in the second half of this year. growth mainlyin reflects the ongoing weakness of international trade in an

environment of persistent global uncertainties which continue to weigh on the manufacturing sector and are dampening the investment growth. time the services and construction sectors remains remainednt -- resilient. expansion is supported by favorable financing conditions, further employment gains in conjunction with rising wages. the expansionary euro area ongoingtance and the slower growth in activity. in particular these risks pertain to the prolonged presence of uncertainties related to geopolitical factors, rising protectionism, and

vulnerabilities in emerging markets. inflationannual hicb decreased from 1% in august of 2019 to .8% in september, reflecting lower food and energy price inflation. on the basis of current prices for oil, headline inflation is likely to decline slightly further before rising again at the end of the year. inflationf underlined remained generally muted and indicators of inflation expectations stand at low levels. while labor cost pressures have strengthened but made tighter labor markets, the weaker growth momentum is delaying the path to inflation. over the medium-term inflation

is expected to increase, supported by our monetary policy measures, the ongoing economic expansion and robust wage growth. turning to the monetary tolysis, m3 growth increased 5.7% in august of 2019 after 5.1% in july. sustained rates of growth reflect ongoing bank credit creation for the private sector and low opportunity costs of holding m3. m1 narrow monetary aggregate continues to be the main m1 continues to be the main contributor to broad money growth of the components size. the growth of loans to firms and households remains solid benefiting from the continued pass-through of our monetary commodity monetary

stance. loans to financial corporations increased to 4.3% in august from 4% in july. while the annual growth rate of remainso households unchanged at 3.4% in august. the euro area bank lending survey for the third quarter of 2019 indicates a slight easing of credit standards and increasing demand for loans to households, while demand for loans to firms remains stable. our monetary policy stance will help safeguard favorable bank lending conditions and will continue to support access to financing, in particular for small and medium-sized enterprises. up, a crosscheck of the outcome of economic analysis with the signals coming from the monetary analysis confirms an

ample degree of monetary accommodation still necessary for the continued sustained convergence of inflation to levels that are below close to 2% over the medium-term. reap the full benefits from the policy measures other policy areas must contribute more seismically to raising the longer-term growth potential supporting aggregate demand that the juncture and reducing vulnerabilities. the implementation of structure of policies and euro area countries needs to be substantially spat up to boost -- sped up to boost productivity and growth potential, reduce structural unemployment and increase resilience. countries specific recommendations should serve as a relevant signpost.

policies withal mildly expansionary urea area stance is providing some support to economic activity. in view of the weakening economic outlook and the continued prominence of downside risk, governments with physical space should act in an effective and timely manner. in countries where public debt is high governments need to and meetudent policies structural balance targets, which will create the conditions for automatic stabilizers to operate freely. should intensify efforts to achieve a more growth friendly position in public finances. the transparent and consistent implementation of the european frameworkvernance

over time and across countries remains essential to bolster 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 capital markets union. now we are at your disposal for questions. [speaking foreign language] -- imf raise concerns about lower interest rates on the financial system. my first question would be what makes you so confident that more of negative rates, quantitative easing or asset purchase good thans doing more

harm? my second question would be on your legacy and whether you feel it is being tarnished by the recent discussions which were unusually public about the rift in the governing council and the disagreement of the policy action taken. thank you very much. you.raghi: thank the imf did not say negative rates are ineffective. the overall assessment of negative rates is generally positive. for us it is very positive. it has been a positive experience. maybe the rates have stimulated the economy, affected employment, and we are exactly in the direction we wanted to be. the imf also raised concerns about potential side effects of negative rates for very negative for a long time.

this discussion did not go into too much detail but we are aware of that. we are monitoring these risks. i should say so far -- first of all we should distinguish different categories. banks, insurance companies, action funds and other intermediaries. the overall assessment has been clearly positive. improvements in the economy have more than upset -- offset negative side effects from lower rates. the fact that we are monitoring constantly is shown by our decision in early september of introducing a theory system, which partly compensates the banks from the negative rates. question frankly answered is no. we have discussions.

everybody have discussions. everybody has disagreements with the monetary policy decisions come to be discussed. these disagreements are often made public, but often not. it has not been the first time. part andken this as parcel of the ongoing debate and discussions. thank you. >> i have two questions, mr. president. the first one is about the fact the governing council tasked the rela system -- euro system committee about the size and composition of potential new net asset purchases. taking into account the committees options, and even if the governing council did not

discuss this topic, given that had the fire fire -- firepower crucial, what is the option to be considered in a large eating the atp -- enlarging the atp? what are the main risks from see forthat you can for the european economy and financial markets? what should we all worry about the most on the short-term and long-term horizon? thank you. thank you. since you are going back to the oting and committees, let me give you some highlights. read sentences from the public account, the account you

have seen. furtherers agreed easing of monetary policy stance was warranted. discussion an open about the choice of measurements best suited to address current challenges. we give account of these discussions. bit we start going bit by at what sort of majority for each part of the discussion. we say clear majority of governing council members supported the fraud package measures ultimately decided upon in september. a large majority of members agreed to change the modalities of the new series of tltro's. all members concurred with reinvestment. members generally agreed with the proposal to enhance the state-based component of the governing council's forward guidance on interest rates. a clear majority of members agreed with the proposal to restart net purchases under the

asset purchase programs, with the modalities just explained. a very large majority of members agreed with the proposal to lower the rate on the deposit facility by 10 basis points. i majority of members went along with proposing introduction of the two-tier system for reserve remuneration. this comes straight from the public account you have seen. basicallye that today economy isl of the to maintain the monetary policy throughent basically approved entities. it is not surprising. coming to your point about the backttees, let me again go to the ies in july.

th test the committees wi ways to reinforce for guidance, mitigating measures such as the design debate system for reserve from integration, -- where's irv reserveration -- for renumeration. we already got through this on other occasions but the function of the committee is to provide technical advice to the governing council. that is what they did. besidesrning council what it deems appropriate. the governing council has different minds. no surprises there. it is all confirmed by the maintaining of monetary policy stance today. what are the main risks/ from all main risk

viewpoints but especially also for my financial stability viewpoint is a downturn in the economy. whether it is global or the euro zone, this will be the main risk from all viewpoints. from the side of convergence of inflation to our objective. obviously from the angle of maintaining a high level of employment and economic activity and of nominal wage growth as we have seen today. from the angle of financial stability itself, it is clearly one of the great benefits that the banking sector or all players in the financial system had from this monetary policy was the extraordinary improvement in the quality of their credit, other assets more generally. that comes with recovery, which

basically affected positively the profitability of the banking system. thank you. >> thank you very much. take partine lagarde in the discussion or express views on monetary policy? bushy in full agreement with the ecb's policy stance? the second question is what has been happening on the markets since the september meeting. interest rates have gone up. inflation expectations have gone down. are you worried about the market policies or are you comfortable with what the markets are pricing in? mr. draghi: thank you. no, christine lagarde did not take part in the discussions but she was there.

without taking part in discussions or deliberations. on your second question, no, i don't think -- what was the main goal of the september monetary policy decisions? it was to cement the accommodative monetary policy stance that was embedded in the expectations as they had been mediumd by the weakening term outlook. today,erning council they felt this has been largely achieved. we saw the flattening of the yield curve. transmissionmplete of a lower facility rate into shorter rates.

while we have observed is partly due to the fact there may be a part of expectations which was not warranted by the weakening economic outlook which went in a sense beyond the economic development. it is a very small part. the more important reason for the velvets we have seen -- developments we have seen is the overall uncertainty. somehow thense that lower likelihood of a hard brexit or a cliff edge has improved the overall situation. the uncertainty is still there. on this specific point it is true that it has improved in the the likelihood of having a cliff edge has gone down. at the same time the medium-term uncertainty is considered with

concern. the rest of the geopolitical uncertainty has continued to affect markets. i would read the market developments in this way. actually -- i don't think the market misread. the market showed they understood perfectly well our reaction function. thank you. >> thank you. bakeraghi, the finished sees a chance of a german recession this year. given this court on the council that you discussed earlier, does that eliminate or narrow your policy options where i know you set rates, but germany is the biggest economy and cannot be ignored. the second question -- mr. draghi: what is the question? >> given the discord amongst

policy councilmembers do you feel you have the same number of options should germany pull other countries and to some kind of downturn? givencond question is central bankers have become less popular with their governments -- i'm thinking in the u.s. as well -- we talked about the g20 cooperation, linking together monetary policy, fiscal policy, intercountry and intra-country. given the difficulties the central bankers are having with their own government, can that cooperation be duplicated if there is another global downturn? your first question -- let me say this. unfortunately everything that has happened in september since the monetary policy decisions

has shown abundantly that the governing council's determination to act in a substantive manner was justified. indicatorskinds of showing some data further weakening of the economy. just one number i remember is the pmi and manufacturing is now with the lowest level since 2012. point of observation that everybody uses to assess is resilience of the economy to look at what extent the weakness in the manufacturing

sector is parading to the services sector. until too much ago we can say the sector was fully resilient and now we see the pmi services ino declining sharply september. then we have many other indices pointing in that direction. developmentf the and the german economy that decision taken in september fully justified the continuation of accommodative monetary policy ofnce and in maintaining favorable financing conditions -- the financial corporation corporations, companies and enterprises. it is clear central banks ought to continue to cooperate, no matter what happens in other

parts of our institutional system. cooperation of the central banks within their mandate is essential. like g20 or other metal lateral form are more essential than ever. thank you. memr. president, please let to question this particular day. leavingime y'all are you want monetary policy back to a kind of normality. this has not happened. how do you feel about it eddie feel politicians could have helped a little bit more? have in the last week read

reviews of your terms of office. how do you feel about this? thank you very much. all the best. mr. draghi: thank you for your wishes. it is one question really. first of all let me refer to peter pratt's words. it is true. 2017ch so that during the we gradually changed monetary policy stance. exit thateparing to stance of monetary policy. but then conditions changed. the determination to pursue the mandate for which this institution was created and we work for it. therefore we had to change .ourse

there is one take from the thent imf meetings is that paradigm of reference has changed. imf andt long ago the the observers would say, yes, interest rates are low. they may stay low for some time but then they will go up. the sense of many discussions at the imf's they will stay low for a long time. they will stay low for a long time because the real rate of interest is also declined. this implies the exit from unconventional monetary policies has shifted in time. shifted forward in time. y i feel as so many

try to comply with the mandate in the best possible way. thank you. >> mr. arnold. >> a couple of similar questions in the same kind of vein. what is your biggest regret? the second is what advice are you giving to christine lagarde that you can tell us about? mr. draghi: i'm sorry i cannot answer either question. i focus on things that can be done, not things you can't change. you can't change the past unless you are a historian. done.s on what has been the second