, but it will slow down. >> the longer term is not looking good in terms of consumption. >> we do not expect the market to go down 4%. >> the unemployment rate depends on whether you have -- figurere still trying to out the recession. announcer: this is "bloomberg surveillance." jonathan: good morning. this is "bloomberg surveillance." andgside tom keene and lisa abramowitz -- angeli lee sabra whitcomb i'm jonathan ferro. ecb decision is 45 minutes away. tom: all the reports i get is this is not routine, that madame lagarde has a set of issues, starting with slow economic growth. we will get a reset. some people are talking about a

lift. but i do not buy it for a minute. jonathan: it is tricky. you have to be vigilant about the downside risk, but you do not want to boost the euro. that is the fine road it she has to travel down. tom:tom: what is so important is all the conversations we have had is they talk about 1.30. we are are at 1.18 and talking about this, things have changed in a month. saw 1.2 zero last week, gets it done. they will say, we do not target inflation or fx, but rather inflation, but the fx shadow hits are inflation objective. it is like being a kid when your mom shouts up the stairs and uses your full name, you know you are in trouble. if they hear that from christine lagarde, that is it.

are you long the euro? maybe you shouldn't be. tom: there are other distractions. no you will do a data checki -- know you will do a data check as well. we are riveted by premier league opening this weekend, lisa abramowicz is a study. lisa: yes. jonathan: she might have chosen a team. rumor has it. lisa: i will not reveal anything until monday. on monday, i will come in and it there mayor and may not be paraphernalia -- and are there may or may not be paraphernalia for my favorite team. jonathan: if you have gone with a london club, can you give us a preview? lisa: you have to wait like everybody else. there is a lot going on today. as you mentioned that 7:45 a.m. meeting. we will get that rate decision.

the meaning 45 minutes later's later,is christine -- speaking is christine lagarde. and 8:30 a.m., the u.s. jobless claims. we will probably see ongoing improvement. we saw that yesterday. the question i have is when do we reach new normals, the potential longer-term damage in the labor market. this tenet is going to vote on a skinny relief bill today. the democrats may have enough to block the vote. this will be interesting to see what gives and take there will be on state and local funding, that seems to be right now the hot issue. tom: i have to come in, you said the ecb meeting was a snoozer. we never said that the ecb meeting was a snoozer. [laughter] you know, i have to disagree with lisa. today is not a snoozer because of the reset on economic growth. lisa: i said there was a rate

decision. jonathan: do you want to clarify what you said? lisa: the rate decision is probably going to be held steady. i cannot believe i am going through this. i am totally falling for this. i think that christine lagarde will not be a snoozer. it will be interesting to see what she has to say. jonathan: the ecb will be happy with what you said. the weather in london is absolutely beautiful. i am in a good mood. one of those mornings when you wake up and it is just -- mmm. it is photo on twitter, coming out of whatever -- jonathan: you were not with me. tom: you got that right. it was so emotional. lisa: he has not gone to sleep. he was out clubbing. jonathan: we look at the price action.

equity futures negative on the s&p 500. let's give you the price action. -4/10 of 1%. breached 1.20. yields treasury unchanged. we are in the middle of the range since april 1. the bottom half is 50 points, the top end at 90 points. there it is. worldwide, we want to bring in our first guest troy gayeski. it is great to catch up with you. have becomeon, you more defensive in alaska but weeks, why? troy: one of the major drivers of the explosive upside has been massive expansions of the balance sheet. they expanded by over $3 trillion, that led to monthly

supply growth in three and a half months. but since then, it has been flat and the balance sheet has been flat as well. and we have close to 25 earnings tech 25 times earnings in the s&p, markets cannot go higher. but without support from the fed , it is hard to see meaningful upside. and you look at just about every chart, you have stocks like apple and the broader nasdaq -- the world is not going to end, but you have much more risk down. tom: it is way too early in the morning for that. troy, you are the most qualified thatere, because you see hedge fund business with uniqueness of skybridge. there is a lot of assuming. beenhat has the carnage among those on the other side of the trade who got this call option play wrong? space, that equity

has been a standout this year because longshoremen -- long this-- long-term equities, year, you had significant gence and a pretty good run. there is a downside this month. those who are focused on tech and health care, but ups has seen enough damage in markets because anywhere near the price action we had not only in march, but also in q4 of 2018, that was another people. e -- period. lisa: does that mean the rotation into cyclicals is over? troy: i think it is really hard to get overly bullish on cyclicals across the board until you see another round of fiscal stemless. those stocks, just like credit, is tied to the real economy and needs to continue to post growth.

it is hard to see how we will get that without another round of stimulus. most market participants figure by late august, here we are september 10, and all we have is that slimmed-down bill in the senate. we need to be cautious on cyclicals until we see the fine print on the next round of stimulus, whether it is $1 trillion or $1.5 trillion. it will be more meaningful for those stocks, which are cyclicals, more tied it to the economy. lisa: we are going to use trill from now on. very trill. your daughter will be sending that to you. what will be a defensive asset? troy: from our perspective, you know, you look at credit markets broadly the residential housing market was in the best shape of all credit markets coming into this, had a setback with the pandemic and then delinquencies going up a slight amount,

forbearance going to a nonexistent 7%, but since then you have seen improvement and if there is still a chance to make low teen returns if spreads tighten. home prices are up about 12% median. up 3.5% in the last three months. incomes are up 7%. that is a very attractive cash flow stream and it will be very hard to disrupt the housing market from here. even if unemployment does not drop the 5% in the next year, the inventory is so tight, the existing homes, you are 4% in the broader market, and clearly there is extreme demand. i think on a risk reward basis, particularly after huge run-up in equities, and there is no money to be made in fixed income, that is a great set up right now. jonathan: no money to be made in vanilla fixed income.

what is that for you at the moment? troy: anything tied to duration. we have been tied in the range of 50-90 basis points. the economy is recovering, recovering faster than people expected, but from here it will be slow. what is going to drive the yields? we are pretty sure the fed is not going negative. even when they expand the balance sheet, that is about driving inflation higher. so it is tough to make money and duration, whether it is treasuries more investment grades. hi yields, 5.7% non-losses adjusted yields, even though the faults are expected to come down, more than say three months ago, you will roughly expecting about 10% with an average loss severity of 70%. 5.7 minus seven, it gets you to a negative yield. that is not to say you cannot have a little bit of spread. it is 535 over, but the risk

reward of hi yields is not nearly as good as it was two or three months ago, when you had more interest rate tightening. you also had room for upside. onathan: for our listeners radio, is that salt wallpaper? troy: it is. jonathan: i know you are renovating your apartment. troy: we were joking around that the vegan background does not work with -- for -- that the bedroom background does not work for the producers. so i needed something with pop for it. jonathan: i think that would suit the new apartment for you, tom. tom: we could get all of our different guests, get their backdrops and do some kind of -- lisa: no, it would say triple leverage cash fund over and over again. tom: that looks good until yesterday. look at the pop yesterday, it

was pretty good. lisa: in cash? up, we willming have frederick degrees at. ducrozet. presidenten says trump willingly lied about the threat of the coronavirus threat for months. he spoke after the president's comments to bob woodward were revealed. president trump saw woodward in purposelysaid he downplayed the pandemic to avoid panic. found some ofhas its employees improperly received relief funds intended for american businesses. the suspicious amounts of money had been deposited into checking

accounts of the workers. some employees have been fired. jp morgan is not commenting. wildfires in california have transformed the skies over san francisco. during daylight, there was a dark orange glow. more than two dozen major fires are burning in the state. one is causing 25,000 miles of path destruction through the foothills. it is possible that thousands of homes and buildings have been destroyed and three people were killed yesterday. and missing a deadline this month for the sale of tiktok. newmberg has learned chinese regulations have complicated negotiations. microsoft and oracle have experienced other complications. the sale, china says, will take time. and to keep jcpenney open, jcpenney will team up with simon property and brookfield property to divide the chain. it is valued at $1.8 billion and

would preserve about 70,000 jobs. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i'm richard -- i'm a good group to. this is bloomberg. ♪

>> we don't want to have to show panic. that is exactly what i did. i was open, whether it was the woodward or anybody else.

it is another political hit job. whether it is woodward or anybody else, you cannot show panic or else you will have bigger problems. jonathan: another defense from the president of the united states. as transaction is shaping up follows, head of the ecb decision in 20 minutes, fx market showing the euro is firmer going into this one. a stronger euro at 1.18. and a little bit of weight to this. s&p 500 futures are down. you cannot see that corresponding move in the bond market. treasuries are unchanged. 70 basis points on a 10 year. tom: it will be interesting to see how the ecb data changes things in the u.s. hitn cirilli is our chief job correspondent in washington. kevin, to begin with, the book by woodward is decisively

different because he did 18 interviews with the president. this makes it a remarkably different book. and as was mentioned this morning meant this is not fake news, it is on -- this morning, this is not fake news, this is on tape. kevin: i think that this is what it is going to come down to. january 28, according to his new book, is when o'brien met with the president and said that this is going to be the greatest threat -- those are the words he used -- the greatest threat that your presidency faces. at the same time, while health officials were traveling or sona, and in the day that followed, the world health organization declared the highest level they could. on january 30 1, 1 day after the who declared that is when the

president restricted travel from china. so the events between president thoseand president xi and four days in january, whether you praise that or criticize that is what it will be about. tom: is the book different enough to change the undecided, the 10%-14% that is undecided? kevin: no, this is a book that hastape, it has legs, it the clout of woodward behind it, but once the debates start, i think that it will dramatically be focused on the economy and reopening. but what joe biden did yesterday in michigan was tap into the fore, for lack -- rage, lack of a better term, that the book touches into. he said that the president did this on purpose. jonathan: do you know of anyone

that has not made their decision, developed an opinion, on how the president handled this pandemic? does anybody really need a book to make that decision? kevin: no one in my life. jonathan: i do not know a single person. into: even if you go out pennsylvania, the battleground state that i always talk about because i grew up there, people ae really dug in, but it is turnout election unlike anything we have ever seen. jonathan: we have to talk about the journalism. how on earth did you conducted these interviews, interviews i imagine people knew about and thought they were bombshells, and sit on them for eight months? fi you really -- if you really thought the words of the president were out line, if you really saw or thought the president should be doing a better job, why wasn't it in

print in march? kevin: i spoke with a senior advisor to the reelection campaign for the president yesterday, and he said he was wondering why the audio was leaked and questioned the timing as well, but i have to be honest, washington, d.c., it is like a political tradition -- he used to work for george w. bush, or he wrote a woodward book woodward wrote a book on him and it was controversial. how to woodward knows get those books. lisa: you talked about turnout. how much visibility do we have into turnout when so much of it will be vote from home? kevin: two points to make. first and foremost, there will be an increase with mail-in voting and there have been the

talks on capitol hill about louis dejoy, the postal service and whether or not there will be a result come november 3, or whether it will take days or weeks after. secondly, in terms of the turnout is where things get, it is where things get nuanced, because for all of the unrest and all the frustration we have seen in the country, will the protesters show up to the polls coalitionhe trump and base of rural america, will they turnout? that is what i think the republicans are really focused on, especially when you look at minnesota, which the president lost by two percentage points in the last cycle, that is within striking distance. so, a lot would have to go their way if the election was today for battleground states. bea: to push ahead, we will getting a vote today potentially in the senate on the skinning bill. it will be torpedoed, right?

kevin: i do not think speaker pelosi will get her coalition on board with this, either way it is a benchmark, $500 billion of fiscal stimulus, that is the lowball estimate in washington. jonathan: great to catch up with you. kevin cirilli qamar washington correspondent. tom, you caught up with henrietta treyz. i love catching up with her. sorry, i forgot her whole name. i think my brain is feeding. but -- fading. but what she said was interesting. we said that the election is an incentive to get things done on capitol hill. what she had to say this morning, what she had to say is now all of a sudden playing the blame game is good politics on both sides, for the democrats

and republicans, and that is a massive change in the last month. tom: to go to the $2 trillion stimulus the democrats will do if we get joe biden is a removed sharply from the republicans as well. had trouble i concentrating this morning because i am trying to gain the premier league for lisa and this is riveted, i know that our viewership is riveted on this, then all of a sudden sheffield united is a natural for lisa abramowicz. jonathan: i think she is going with arsenal. tom: that would be a london thing. when we all go over to lender to see you -- jonathan: north london. lisa: the suspense will build and you will know on monday. am: sheffield united, she is def leppard fan. it works. lisa: i will come into work with the hair. jonathan: i am feeding. i need the hair of the dog to

get back up to speed for the ecb in about 20 minutes. tom going into the ecb decision. sois 12:30 p.m. in london, it's perfectly acceptable. this is bloomberg. ♪

jonathan: this is "bloomberg surveillance." i'm jonathan ferro. the price action in shaping up as follows. equity futures stateside and a look at the euro 15 minutes away from the decision from the ecb. 1.1841, we are firmer on the euro. that is a stronger euro going into this decision. and in the equity market, futures are down, -.5% the70 basis points for yield on the 10 year. and right in the middle of the trading range from the last seven months. tom: there is a function that shapes up three days in, we are down three days in a row with a big up yesterday and we pulled

back -18 on the futures. i take your point that it is sort of just there. do you think that the ecb will move the tape? i am not sure. jonathan: i have no idea, unless they give it more qe and surprise to the upside in a very big way. tom: let me bring up a headline. this is the argument between the french and those at 57th street and fifth avenue in new york. and this headline is extraordinary from the french. tiffany did not follow ordinary course of business. jon, this is getting nasty. jonathan: and it will continue to get nasty. handling of the crisis was not good enough through 2020 and there will be accusations, some are getting reported this morning that they may have let or lent on the government to give them some cover, to back away from the

deal as well. we know there is tension between france and the u.s. over the export of french goods as well. so, tiffany is caught in the middle. tom: i think if you go from tiffany's down the street, past obama and to gucci, that is where the president lives. lisa: you clearly have no experience with that path. i wonder how much this crutch of u.s.-french tensions have been used. lvmh wants to drop the price. i think they will get it. at what price are they back in is the question. is, does question that u.s.e the umph has? hastary conditions,

christine lagarde donnee jerome powell for europe? jonathan: let's think about the deal. lvmh was able to pay virtually nothing on the debt to fund this deal. it is right there in the heart of it. you got it with the former chief economist, who i spent time with in frankfurt, who is still dovish, and he made the argument that they need to keep financial conditions loose. they do not have to drive the curve much lower, but they have to keep financial conditions loose. i and legend that will be objective number one for christine lagarde. tom: no question about it. let's get to the next meeting here, which is september 16, for the fed. we have with us frederik ducrozet, a strategist from banque pictet & cie. what is the accommodation in europe, is it fed-like? frederik: i would not say so.

but the main mission today and beyond today for the ecb, is to ensure that there is -- that remains in place. that things keep tightening. and you want to avoid any communication mistakes at that would jeopardize this. i would say it is fed-like in the way of lending to banks and in buying of assets. tom: what is your number one observation on how this will affect markets, i am not sure she can sell markets on a major move. frederik: i agree, only because we have the fed next week and the fed is still having an influence on the ecb, or the strategy on the ecb side has not even been out yet. but it is about the currency. that has been a big market mover. it is more dollar

than 4% on a broad basis. and that is where the ecb credibility will be tested. this is something that could cap the euro. i doubt it. unless she puts at the right cap may be. jonathan: it is like a schoolyard standoff. some person shouts something, the other person says, what are you going to do about it? what can they do about it? frederik: they are both right, it was hawkish last week, and others are more dovish. that is reflected by the currency. it's a good thing. it's something that the ecb does not need to address fully, only to the extent it will lead to the unwanted tightening of financial conditions. that will be reflected today in the projections. looking at the forecast, it's

the first time in the history of the ecb that you have code inflation throughout the forecast horizon at 1%, not something that the ecb can tolerate. so they have to react. jonathan: you sound like a central banker. that was always my question, are we seeing unwarranted conditions? unwarranted tightening of conditions, what does that look like? frederik: you will know it when you see it. get slightly higher oil prices, tighter spreads. and i expect today there will not be instrument of case for a strongo move, -- be enough case for the ecb to move. after a long time of undershooting the inflation

targets. we heard it a few days ago from the chief economist, it does matter, range does matter. will be closer to 125 for them to act. lisa: besides at the euro and how strong it will get, there is a question about how minimal tools in little box that the ecb has. jay powell says they have lots. is the ecb looking at potentially buying stocks or junk bonds in the future? do you expect them to signal anything? frederik: today, we need to hear from christine lagarde that they are ready to step up. even before you make a decision on expanding the program. then you can include the reference to the exchange rates in the statement. p.m., the at 2:30 full statement. and then what they usually do is

to look time, asking into the options. go with thee always refinancing operations for the banks, easing the financial conditions, and you could lower the interest rates to -1%. lisa: you talked about how they have to convince everybody that they are really accommodative, in order to keep conditions where they are. do you expect them today, to go more to the bearish side than the conditions warrant in order to keep things where they are? frederik: i do, but i see more t, because we of i will have striking influence. said, it is ayou test of christine lagarde's leadership as well.

signalsave heard mixed from other governors and she has position herself. guess, i i had to would not suspect she is on the dovish side still. jonathan: are they going to ask about brexit in the news conference? tom: oh, man. i m going to walk away. -- i'm going to walk away. frederik: nobody knows in the u.k. or brussels. but it does add for the reasons for the ecb to be cautious. wh knowso what will happen after the u.s. election. they have important deadlines to watch as well. safe,other reason to be rather than sorry. jonathan: are you still with us,

tom? tom: somebody just drove off the pennsylvania turnpike. they are not going to bring up brexit, come on. seriously. jonathan: it is one of those long news conferences. at the end, you might through brexit out. tom: this is important for the audience, why is that press conference different than the one that michael mckee attends with mr. jerome powell? jonathan: i think the federal reserve has change things. at the ecb, there has been a tradition, to ask follow-up questions. and i think there has always been a longer exchange between the ecb president and the audience in the room. that is my take. i have always said, excuse me for this, but i always found the ecb, in the room at the

they work together a lot more in a way that the fed and the press there do not. it has always frustrated me. and being in the room at the bank of england, if you are not satisfied with the response, another journalist and will follow up on the question for you. i see it more in europe than the u.s. tom: folks, he is absolutely correct . the difference between the press quality -- press conference quality there and in washington is distressing. 50e turkish lira printed 7. twice this morning, does that count? jonathan: and to the euro is firmer. it is up about one third of 1%. that is a stronger euro. an ecb decision around the corner. an interesting news conference

coming up in 15 minutes. ecb and christine lagarde. she will have to tread that fine line. you do not want the euro to be a whole lot stronger. gallo.up later, alberto on bloomberg surveillance radio and on bloomberg tv. another setback in on theent trump's bid t pandemic. he has had to acknowledge downplaying the threat of the virus. he told bob woodward in march that the virus was far more deadly than the flu. at the time, he was telling americans not to worry. fire at the poor a little more than a month after a massive explosion there. at army said the fire was

warehouse where oil and tires are stored. damagedth, an explosion thousands of buildings in the lebanese capital and killed and hurt hundreds. and buying during a recession. they are selling brick and mortar properties, as they try to focus on digital infrastructure. they spoke with jason kelly. >> i have always looked at real estate for trading, i never looked at it as permanent ownership. in 60 years, look at the building we are in, those across the street, many of them were built in the 1920's, the streets in the teens, and nothing has changed in 100 years. so, the ebb and flow of real estate values has always been challenged by functional, physical and financials.

ritika: global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. .'m ritika gupta this is bloomberg. ♪ jonathan: a decision from the ecb, only 50 seconds away. the unofficial guidance from lisa abramowicz is the decision might be a snooze, but the press conference at might be more interesting. we have a stronger euro. 36 right now, a stronger euro going into the decision. you will get a headline about ford guidance. you will -- ford guidance. then you will get the rate decision. then when the news conference

starts, you will get a statement from christine lagarde and it will be followed by some forecast as well. we understand that there could be reduced confidence in the forecast. euro, itmber, a weaker happened about five years ago. we are up off of the 2015 weakness. jonathan: unchanged on rates. 0% on the marginal lending facility. 0.25 unchanged. -50 basis points on the depot rate. and here they are on the forward guidance. they will keep the pandemic bond buying program, pppwill reinvest maturing bonsai through the end of 2022. as far as i can see on the asset

purchase program, no big changes, either on rates as well. the euro rolling over a little bit, 1.1840. it is all about the news conference in 45 minutes. tom: do they have a 2% inflation target? let's go back to jackson hole. it seems it was six months ago. do they have an inflation target that is less because potential growth is us? jonathan:jonathan: they have a price stability target around 2%. and they might reinterpret that inflation target. remember at the federal reserve, the ecb is in the middle of that. we should get a conclusion to it in about 12 months. i wonder if it will leak into the reaction function. the ecb was in the middle of a review, and everybody told you about it before the chairman finalized it. remain untils to

inflation is heading to target, that is very non-fed, because the fed it says get to the target and beyond. that inflation turns, could be a dramatic thing. lisa: you are starting to see a little bit of a rollover in the german bund's, so perhaps that is a response, but more than the inflation target i want to understand what central bankers are thinking about how to measure inflation, what are they factoring in, as well as how they assess what they have gotten wrong. they have consistently undershot inflation, so what makes them think that they can get it going this time around? tom: are you there? jonathan: i am here. i thought you're going to break into "o canada." tom: i thought you had a brilliant observation? jonathan: i do not have one right now. tom: he has earned this.

right now we are going back to alberto gallo, who has been wonderful in giving us perspective. the fixed income reaction of europe is very different than it is in the united states. alberto, how will the people of will, notes and bills, how they respond to this, what we are seeing today? world is on bond of low yields today, think about $80 trillion in bonds in the world, and only 5% are yielding over 3%. is $14 trillion yielding negative. so the investors are sleeping on a dynamite pillow. and that dynamite is inflation. at these levels of yields, you can only lose money against

inflation, you either do it slowly if everything remains where it is because in central banks keep the yield curves flat or lose them quickly because there is a steepening. so i think with the ecb is telling us is they have no rush today,more ammunition but think about what the fed is doing and what the bank of england is doing, they are more aggressive, so there is a competition going on for debasing paper money. and eventually, you are right, inflation has not reached its target in the past, so we may see new ways to get there, including more monetary theory or what you would call helicopter money. the risk is underestimated by the fixed income market and underestimated big time. jonathan: a dynamite pillow, tom keene. have you ever heard that? tom: you have to be poetic and

italian to do that. he sounds like a genius. jonathan: dynamite pillow. let's expand on the risk. what are you doing to avoid them? aberto: if you need yield as fixed income investor, you want to have assets where you are beating inflation. there are areas where you still get high-yields. if you are lending to the transport sector, which may recover if there is testing, immediate testing, then you are getting double digit yields. so you want to some equities that have returns and cash flows linked to inflation, gold, real assets essentially. bonds have done well in the last 25 years, but history cannot repeat itself, unless we start from zero. tom: i do not mean to interrupt, but this is important and the

first key conversation of the september season, what are the indicators are that you will see to begin to see a vector or trended toward lower fixed income prices and higher yields? alberto: i think the u.s. elections would be a turning point, because you may have more of the same. the status quo is more of the same, qe based on asset, corporate tax cuts, and the real economy does not benefit. but you may have a change, you know, with a democratic government that wants to help more of the people, so you may have more money to the different states, more money to the schools, more money for education and more benefits that go to the entire population. what you would call helicopter money. surprise, surprise -- when you give people who do not have

money, money, they spend it. so instead of asset inflation only, we could see a bit more real inflation in that scenario. that could be a turning point. and i do not think that people are prepared for it in the fixed income markets, looking at were treasury yields are. lisa: that is exactly where i wanted to go, fiscal support. in europe, they have a plan and they will be issuing eu bonds for the first time, joint bonds. blackrock wants to buy them to firm up in the region. do you see this as a way to get in on the growth and cohesion and change the physical stance in the eurozone? alberto: europe has been a big step forward. 750european recovery fund, billion euros for growth, it is getting close to a fiscal union, but it is not there yet.

there's more to be done. but there is more stimulus compared to the u.s. inflation is still relatively far away in europe from the u.s., because we have spending at 4% overall, in the u.s. the deficit is double digits. it is small, but it is a big step to cap the downside. i am more worried about inflation in the u.s. and in the u.k., then in europe. the ecb has less incentive to be super proactive and continue the e-zine. i do not -- easing. i do not think they will be extremely dovish. tom: i saw in the headlines a real nuance, the idea of inflation heading toward a higher level, versus the fed saying, we will wait until we get there. is that the influence of the bundesbank, where we are still worried about their turn toward higher inflation before the getting there of higher

inflation? alberto: at the moment it is a little bit like everybody is assuming we will not get there for a long time, so the fed is a saying we will keep the rates at zero for five years, then you may have inflation exceeding moderately 2% for some time before we do something. there you can see the vagueness, when they use the word moderately, it is uncertain. they are leaving the option to do something. but they still see the relatively unlikely scenario. but this could change a lot if politically it becomes almost very difficult to withdraw help from families and from states. and if you think about the politicians, that will be a really bad or unpopular choice, to withdraw health, so after the

elections we could see more fiscal stimulus and the debt modernization will continue. extent also in europe. jonathan: we love catching up with you. alberto gallo on the ecb decision and a global bond market. that news conference and 35 minutes. can you define what an emergency is? the asset purchase program was an emergency program, and some officials on the governing council, once they decide the emergency is over they will push the idea that the asset purchase program should end, but other people will disagree. it is the tension within that community that will play out publicly very soon. tom: and you think about some of this will go out to 2022. i'm sorry, it is about aggregate demand. it is not in the u.s. and it is not there in europe. i have to say, it is a

balanced argument now. a lot of people are taking the other view. it is not a consensus like it used to be. good morning. this is "bloomberg surveillance." ♪

>> we are in a recovery, but this recovery is about to slow down. we don't expect the markets to go down, we expected to send test to trend sideways. solved the source of the recession. we are still trying to figure it out. this is "bloomberg surveillance." tom: good morning, everyone. interesting press conference coming up with christine lagarde. we've been looking at this every morning.