>> absolutely their decisions ahead. >> the fed has the upper hand. >> we still have long-term structural forces that weigh against significant acceleration and growth. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. jonathan: from new york city for our audience worldwide "bloomberg surveillance, good morning. this is "bloomberg surveillance -- for our audience worldwide, this is "bloomberg surveillance ." alongside tom keene and lisa abramowicz, i'm jonathan ferro. we will have an ecb rate decision.

you will hear from president christine lagarde. credit suisse down another 6.5% in zurich trading off the back of raising another $2 million and taking another $600 million hit off the back of this archegos chaos. tom: the intraday chart on credit cease is fragile, down 6% ash on credit suisse -- on credit suisse is fragile, down 6%. jonathan: lisa, raising capital, raising capital. the issue for credit suisse's we have seen this story so many times in recent times and over the last years, too. lisa: we still don't understand exactly what happened at credit suisse. a lot of banks are evaluating how much they will extend within their credit units. of course, hedge funds pushing back and saying that would tip their hand and subject them to

potentially bad publicity. jonathan: are we calling this a hedge fund now? for all intents and purposes -- lisa: for all intents and purposes. jonathan: i think it is an important question to ask because, if you are a hedge fund, i think you're are thinking, what are they? are they a hedge fund? lisa: they call themselves family offices but operate in an even more risky manner. jonathan: you understand the history of this more than i do. we often ask the european banks, what do you want to be when you grow up? we still haven't figured that out, have we? tom: there are partitions of european banking, and people can disagree. zurich is a world of its own. ubs clearly outperforming, but even there, ubs' relative

performance compared to the u.s. banks is tepid. how long can they sustain that? jonathan: credit suisse is down 19% year to date in a year where goldman sachs is up 27%. go back to that citi call in the last hour, different world, different execution. same climate, same price, and yet it is a different world for these two banks. tom: maybe apples and oranges and all that. i don't know what the apples to apples is on credit suisse. i just think there is a point where patience runs out. out of all of the reporting, what i really noted is credit suisse's relationship with the swiss elite community is really what is at focus here. that matters in zurich. jonathan: american airlines seeing second quarter total revenue down about 40% versus 2019. i think it is important to compare things to 2019 and not 2020 because 2020 was so bad. second quarter revenue down

about 40% versus 2019, really underlining the fact that, yes, we will reopen. travel demand will be huge in the united states. the international story is going to look very different for the time being. tom: ed bastian at delta told us that 8, 6 weeks ago. it is just the way it is. to focus on the constructive international -- excuse me, the domestic story in america, that is completely related to vaccines, case dynamics, death dynamics. cases have leveled out. that's the lead this morning. jonathan: tom is right to point out that cases have leveled out. the issue with america right now is vaccinations. vaccinations have started to roll over little bit as well. from new york, here's the price action going into the opening bell. on the s&p 500, we are down by six points, negative a little more than 0.1%. in the bond market, unchanged at

1.5556%. euro-dollar the one to watch. it is a nondecision at 7:45. $1.51. it's got to be that ecb decision. you want to frontload? you want to buy more debt? are you doing that? that's what a lot of people are asking. lisa: they are frontloading the debt, but not by much. that decision at 7:45 a.m., we got christine lagarde coming out with a press conference. meanwhile, at 8:00 a.m., president biden is kicking off a two-day summit on climate change. he has pledged to reduce u.s. emissions in half by 2030. it is a tough sell, especially a thought of countries try to battle the economic pain -- especially as a lot of countries try to battle the economic pain

of the pandemic. u.s. jobless claims come out. they are expected to show an increase in filings, highlighting the pain, perhaps highlighting how this is an unreliable figure in determining labor progression. but it really does raise a question of how quickly we are climbing out of this hole. we still do have restrictions in place. jonathan: the president will speak a little later this morning. we will take some of those comments at 8:00 a.m. eastern time right here on tv and radio. the president addressing earth day, but how he sells this domestically, it is about creating good paying union jobs. in the word of this administration, it is about putting america at the epicenter of this. tom: we are at the beginning middle of what jp morgan and michael feroli say is a 7 million job creation. we've got to do that before we start adding the jobs off of february of a year ago. jonathan: we got to work our way through this international pandemic as well. forgive me for jumping from

one story to another. japanese prime minister suga recommending lockdown right now. this is the story right now. tom: korea doing much better. all of this wrapped around how they approach the olympics, and i believe it is 93 days. jonathan: tony dwyer joins us now, canaccord genuity chief market strategist. guest: just about everybody has gone to an air show, and they see the plane screaming across, and elevate sudden it pulls straight up, the engines are cooking, and all of a sudden it gets up to a certain part and just stops going up, no matter how much power is added to it. you just lose lift. that is our call, our analogy

for what could happen in the market. we know that the fundament of backdrop is very positive. you know how optimistic i have been and continue to be on the macro backdrop of excess liquidity fueling a strong global recovery. that is not going to change, but that is also so well-known, the markets are so overbought, enthusiasm is so high that i think we are approaching that stall speed for a little while. tom: i want to give you a major shout out. you had the courage to be in the market. i would but gina martin adams of bloomberg in that camp. there's others as well. but you link it right into economics. aren't we as far from recession as we have ever been? tony: we always try to paint each environment as unique, and of course, the reason you go into a recession is unique, and it creates a credit crisis and a fed that is extraordinarily accommodative. so where we are economically is

sort of where we were in 2004 and 2010, coming out of those kind of never before seen recessions where you get this economic lift that creates uncertainty in the interest rate environment. what is the fed going to do? are they going to do what canada did yesterday and pull a little bit out of quantitative easing? so this isn't unique. we are at the beginning of an economic and market cycle, but in that process, you can have periods of a stall. that's what we are talking about here. it is not an economic catastrophe by any stretch. lisa: the stall speed is very much having to do with markets, notwithstanding perhaps the claims number that comes out and about 90 minutes. that is the expectation, anyway. what are you looking for? what is the market looking for in order to go back into the market? tony: i really think you need to

reset expectations. the next leg higher has to come from a place where people look around and say i am that invested enough. i think most of the data suggests that everybody is overly invested, and there's been some deterioration in small-cap world and in the nasdaq stocks. so think about it this way. about six weeks ago, we downgraded the financials, which we have been very positive on. our banks and tanks call got a lot of attention. but we downgraded financials because we thought interest rates had seen a peak, and people were saying, how could you think that rates are going to come down on the long end with inflation expectations picking up and almost one million jobs being created? but that's what happened. sometimes those fundamental factors are discounted in the market and create the next leg higher, which i think will happen in rates, which i think

will happen in stocks. you just needs the pause that resets expectations to a more normal level. jonathan: tony, always great to get your perspective. tony dwyer, canaccord genuity chief market strategist. a lot to get to this morning. the president will be addressing the world, redoing the commitment of this federal government to the climate change issue. we will hear the president in about 50 minutes from now. we need to talk about earnings in america. southwest saying they are hopeful. we need to talk about the macro. ecb rate decision at seven: 45 eastern. we need to talk about the world of banking. credit suisse down by 5.76% in zurich trading. the focus for you and i this morning not much frankfurt right now, but zurich. tom: it is a relative basis as well. jp morgan with a price-to-book, 1.84.

credit suisse a little bit reduced, 0.50. it is not deutsche bank, but it is on the edge of deutsche bank. jonathan: coming up, it :00 a.m. eastern time, we will be catching up with andrew sheets, morgan stanley chief process -- morgan stanley chief cross asset strategist. alongside tom keene and lisa abramowicz, i'm jonathan ferro. this is bloomberg. good morning. ♪ ritika: with the first word news, i'm ritika gupta. president biden will pledge to cut u.s. greenhouse gas emissions in half 2030. that nearly doubles the commitment made under former president obama that was later scrapped by former president trump. president biden welcome being -- biden will convene 40 world leaders. more fallout from the implosion of a kinko's capital -- of archegos capital. the swiss regulator is asked

credit suisse to add more than $2 billion of capital. we talked with credit suisse ceo thomas gottstein. >> we are all responsible for what happened. it is now our job to take credit suisse to the next level. as i said, we have a lot of good elements in this first quarter we can build on, and together with the board of directors, we are doing this investigation, and we will build on that. ritika: meanwhile, swiss regulators are starting enforcement proceedings against credit suisse. joe biden is set to become the first u.s. president in 40 years to recognize a mass killings of armenians as genocide. that risks upsetting an already fragile relationship with turkey. the president's pronouncement will likely coincide with saturday's armenian genocide day. the killings took place under the ottoman empire, which later became turkey and various successive states. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries.

i'm ritika gupta. this is bloomberg. ♪

>> the american jobs plan is the

cornerstone of the administration's approach to address climate change. it will be the most significant public investment in america since the 1960's, dramatically reducing u.s. emissions by greening the electricity and transportation sectors. jonathan: it is about creating good paying union jobs, at the epicenter of this push on earth day. from new york city this morning, good morning. alongside tom keene and lisa abramowicz, i'm jonathan ferro. here's the price action. your equity market looks like this. on the s&p 500, down 0.1%. in the bond market, yields 1.5609%. euro-dollar advancing 0.2%. here's the announcement. the president will be speaking. . at about 42 minutes this coming from the -- speaking in about 42 minutes.

this coming from the administration. the president to announce a new target in reducing greenhouse gas pollution for 2030. tom: the switch from trump to biden's extraordinary. maybe we have never seen it in the history of our pollution. but it is also the international set up as well. josh wingrove joins us come our white house correspondent, specifically on this speech. the president wrap this around a busted paris agreement which was 196 parties. which of those parties is the president speaking to this morning? josh: he's focusing on the big emitters, in particular we've got vladimir putin participating, and i think what we think they are going to do is try to reclaim or take a stab at reclaiming the mental of u.s. leadership -- the mantle of u.s. leadership.

that 50% number is double what barack obama pledged. president biden wasn't mr. progressive a year or so ago. this move will obviously delight to that wing of the party, but open him up to attacks from republicans. he doesn't want to lose some of those it'll -- some of those middles, but he's exceeding expectations to hold together the democratic coalition. tom: you mentioned the gentleman from russia. i don't know what is climate change strategy is on the eastern border of ukraine, but there's all these other international issues. is climate change discrete from those issues, or does the president adapt to other stories? josh: i think they have tried to tamp it down because they have said there will be no bilateral schedules as part of this.

at a conference, you get the pull aside conversations in the hallways. at a virtual summit, very little, if no opportunity for engagement on that. so i think they are purposefully punting on that. we might see that come up down the road, if and when in particular joe biden starts traveling again. he's coming up on his first 100 days marker. they think they have done well on vaccinations. they think they are doing pretty well on the economy. they are starting to tout that new aid package. next week, he's going to detail the next package, the families plan, the third bill. that one is least likely to pass congress right now. so he's starting to pivot, and that is the backdrop of this climate summit. jonathan: as you point out, it is the federal government that has a credibility issue here. corporations, cities are going

ahead and doing what they need to do, regardless of who is in the white house. what are the policies behind this renewed effort from this administration? josh: it remains a very open question what power biden has or even congress has to restrict new oil and gas develop a ton public land, that sort of thing. there's been a question from environmental groups whether they can do more on methane. but overall, to get to this number, they've crunch the numbers, and this is what their tools can get them to. i think this is what a lot of people want to see, thing that is a pretty big number two had on your own. lisa: it is also going to be on what legislative proposals he can get through they somewhat support he has or doesn't have from republican leadership. where are the republicans on coming on board some sort of green proposal? we know they are on board with some types of infrastructure spending. how much on these climate -- or

carbon reduction policies? josh: not showing a lot of love for them so far, fair to say. the talk right now is whether that jobs plan itself might be split into, "empire strikes back," split into three movies in a trilogy. the question for democrats is, we got the second bill. do we put some of it in on a bipartisan basis and ram through the rest on our own? when republicans talk about infrastructure, you might get them to talk about some green infrastructure in terms of energy maybe, but really, they want to stick to the sort of traditional, old-school infrastructure. roads, bridges, that sort of thing. so not a lot of appetite from republicans on this, accusing biden of having hollow pledges of bipartisanship. they think he is basically ignoring them.

jonathan: we have seen that before and we will see it again. quickly on diplomacy, the u.k., when biden was elected president of the united states, it was believed the outreach would come on this particular issue. there was a belief also that the bridge building would be around this particular issue. is this a bargaining chip to avoid a collision elsewhere for the likes of china, the likes of russia? josh: i think so. i think they do it more broadly than that. they are only going to have chips on the table if they get in the game, and i think that is the context of them making these pledges right now. that is the context of them hosting this summit. one of the big questions is whether joe biden will attend the g7 summit in person. that is where you will see them put those chips on the table. jonathan: i know you don't usually wake up before 8:00, so thank you. [laughter] tom: i think we ought to do this tomorrow.

jonathan: we were so kind to him for so long, if a five minutes. josh will be back now, tom, tomorrow morning. tom: absolutely. jonathan: i look forward to it. this is the defining issue for this administration in many ways. they are trying to sell it domestically by talking about hiring, good paying union jobs. i think lisa was right to point out how they sell it internationally might be a little bit different. tom: what is so important here is what happens after the biden adminstration. if we have a democrat administration, or particularly the gop wins, what do we do? do we swing back to the trump view on climate change? jonathan: that's why the federal government specifically has a credibility issue, not the cities, and not corporations, who will continue to do what they have been doing for the last several years, the last decade. lisa: that is why it is interesting to see what proposal they have.

jonathan: on this thursday, also in ecb rate decision day. this is bloomberg. ♪

♪ jonathan: from new york city for our audience worldwide, this is "bloomberg surveillance," live on tv and radio. about 15 minutes away from an ecb rate decision. equities coming in five points on the s&p 500, down around 0.1%. the nasdaq down by 0.2%. romaine bostick will jump in and just a moment and give you some of the numbers to look at. if you get to the bond market -- why do i do that every morning at 7:30? can i start again, tom? tom: you're a little rattled. it is hard to focus given the football in europe. you've been off your game for three days. jonathan: i appreciate that. i don't know if that is an insult or support. yields up on the 10 year to 1.5 680% -- on the 10 year to

1.5680%. what happens to yield? will it be consistent with the outlook, or will the ecb stop that move higher? tom: i thought you were talking about the super league in germany. germany largely avoided that, right? jonathan: they did. i'm not talking about that. i'm talking about bunds. tom: i lost my head. jonathan: clearly. deutsche bank talking about the quarter for europe. this is what goldman was talking about. rate differentials in europe's favor. flows in europe's favor. the euro-dollar, a move towards $1.25 perhaps. you can hear the bulls, starting to sound a little bit louder around a stronger euro. tom: i agree, but when did they start arguing about $1.25 euro is being damaging to the business might of europe? jonathan: that's the issue.

at what point does the ecb start to step in? questions for christine lagarde around an hour from now. romaine, you are so patient when tom and i go through all of this. we appreciate it. romaine: absolutely. i do my yoga every morning before i come on. tom: radio, remaining -- radio, romaine is bowtie-less today. romaine: i'm sure they appreciate that. basically, earnings were more or less in on with -- more or less in line with what the street expected. the outlook is going to show declining revenue from 2020 levels. a lot of the airline ceos are trying to point to 2019 and say when you look back at those levels with regards to capacity and passenger traffic, they say they are getting back there. american airlines saying they could get there this summer. southwest saying that by the time to get to june, july, their cash firm might finally be

through. they may finally see 2019 levels of demand. they say the worst is all behind us here. despite that optimistic tone they are taking come of numbers themselves are bad. we should point that out. but investors seem to think that may be a bottom is in the works. i also want to bring your attention to forward, up 2% -- to ford, up 2%. there was an upgrade at wolf research ahead of the earnings next week. a lot of people have their eyes on this climate summit in washington with joe biden, saying this is going to put a lot of focus on the ev makers, specifically the more general automakers. you flip up the board, and you see the downgrade we saw this morning from goldman sachs, saying that these smaller companies like fisk or and others are going to be left in the dust now that ford, gm, and

the other automakers have caught up here. goldman is saying that this is now i competition between gm, ford, tesla, and a couple other automakers. tom: it is almost an equivalent to what vw and porsche have done. romaine: now everyone is saying if you look at the proposals on the table, unfortunately, some of these smaller company's don't have the capacity. tom: i have no clue what i am talking about. i am just trying to pretend i'm matt miller. [laughter] romaine: you are doing a fantastic job here. how about one of the european once before i leave? all tricks -- four tricks -- qualtrics one of the biggest movers in the premarket come up about 13% -- in the premarket, up about 13% on its earnings. tom: can you -- jonathan: can

you promote "the close?" that's the fee we have to pay. that's it. tom: how my doing? lisa: you're doing great. tom: peter westaway with us. this is important. a really interesting pedigree out of cambridge in operational research and economics, advance guard asset management now as their chief economist. i am thrilled to have you on today about the complexities of the moment for the ecb. to me it goes back to the heart of the matter, the almost bipolar ecb of years, going back to the germanic thrust of worry about inflation versus everybody else. is that bipolar nature still in place? peter: i think it is definitely the case will it have two, say, the fed versus the ecb. but let's face it, and the

situation at the moment where the inflation rate is south of the inflation target of just below 2%, i don't think emerging inflation is anything that policymakers and the ecb are worrying about at the moment. for them, it is all about how long the keep this accommodative policy in place to try to get the economy moving again. lisa: there's also a question about how much they accelerate their bond buying beyond june. we've already heard differing opinions from different members of the ecb. how much of a cohesive message are we going to hear from christine lagarde today, or is this basically a moving target depending on who you speak with? peter: i think it is always difficult because there are different voices on the ecb. i think she will be on the side of being more dovish than less dovish. i think it is really important to keep that signal that the ecb will do whatever it takes to get inflation back up.

no doubt the news has been quite positive lately that the vaccine rollout is getting going now. the economy news has been good. even the news out of the u.s. is having knock on consequences for the eu because of the effect of the global economy. overall, there's some good news, but i think they are not going to take their foot off the accelerator quite yet. i think so far, the bond purchases from the ecb have probably been at the bottom end of what they could have done and what people are expecting, so i think for now, we will hear about more bond purchases, and they won't be talking about taking that stimulus away for some time yet. jonathan: can we get into the technical detail of that? they talked about frontloading in this quarter. i want to understand from your perspective whether you see evidence of that and where you look for it. it is -- is it a net buying, gross buying? peter: i think it should come in the net buying. i don't particularly by that it

is particularly frontloaded. i would be looking for them to carry on at the current rate for an even enhanced rate, pushing it up to $20 billion, up from the $17 billion they have been out so far. in a way, the question then becomes winded they start tapering it. i don't think we will see that really until sometime into q3. they could even announce an increased rate of bond purchases now, but i think, given what i just said about the slightly stronger outlook, slightly better news on a range of issues, i think they are probably going to stick with what they said before and just deliver on that. jonathan: i understand a lot of people like to ask the credibility question of a sidra bank. do you -- of a central bank. do you think they do have a credit ability issue right now?

can we call that frontloading? if we can, has this central bank got a credibility issue? peter: i would use the word whatever it takes. i think it is a bit of a push to really think that the ecb are doing whatever it takes, and ultimately, one has to look at the ability over the past of the ecb actually hitting their inflation target. they have struggled. of course, there's a pandemic going on which has affected everybody, but they've always struggled to hit that 2% or slightly below. so i think going forward, this policy review which is probably going to allow them to reorient their policy towards maybe hitting an average of inflation at 2%, i don't think they will go the whole way to go to average inflation targeting like the fed are, but at least on

average, it could roll them below 2% and possibly to something else. i think that would be a big step. jonathan: they clearly need some more structure to bind the hands of the governing council. peter westaway of vanguard asset management. in many ways, christine lagarde faces the same issue that president draghi faced. the hawks are making a little bit more noise. "the ft" reporting that there are a lot of hawks making noise over the pandemic emergency purchase program already. tom: i don't think a thing has changed. on dramatically separate occasions, i've heard the same tone that i heard from axel weber when he was running the bundesbank. they are not happy with this more modern ecb structure. jonathan: week by week, month by month, there's more pressure on christine lagarde, the president of the ecb. lisa: the question to me is the economic uncertainty.

they don't really have the same pressure the federal reserve has in terms of raising rates. it is the opposite, which is how much more can they ease and get people on board for that. jonathan: the good news for the federal reserve is the hands are tied. they are all singing from the same hymn sheet. tom: you are expert at this. the first time i saw ferro, he's standing out front in. the rain at the ecb. i'm going -- front in the rain at the ecb. i'm going, who the hell is this guy? [laughter] jonathan: this is the view of a lot of people i've spoken to. there's clearly a bit of a credibility issue here. if the ecb president comes into a news conference and talks about frontloading bond buying, and net purchases are only up 10%, is that frontloading bond buying? to what degree is it? those are the questions she will be peppered with later this morning. tom: this is transitory.

lisa: he says it and then drinks. jonathan: i think he just wants an excuse. [laughter] you're the only person who plays a drinking game with himself. i've never seen anything like it before. you say the word so you can have a drink. where you want to now? tom: well -- jonathan: there ago. from new york, this is bloomberg . ♪ ritika: with the first word news, i'm ritika gupta. credit suisse is raising about $2 billion to shore up capital after warning of another financial hit from the archegos capital collapse. $654 million in the second quarter. here's credit suisse ceo thomas gottstein. >> archegos was a situation that is now being reviewed also by u.s. regulators. it was a very idiosyncratic

situation with the family office , which had some deficiencies in terms of disclosure, and there were six or seven other brokers involved in that, so it was certainly not only a credit suisse issue, but we certainly have higher exposures than others. ritika: meanwhile, the swiss regulator has now started enforcement proceedings against credit suisse. the resurgence in coronavirus infections is threatening to further divide the global economy between the rich and the poor, and it could damage overall global growth if the fresh outbreaks spread or if key demand falters. more people were diagnosed with covid last week than any other since the pandemic began. the biden adminstration will restore california's power to limit auto in missions, a shift that will lead to tougher requirements across much of the u.s. two trump era policies limited

california's abilities to set ambitious vehicle emissions standards. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm ritika gupta. this is bloomberg. ♪ >> the base case is still very promising for the u.s. economy. >> we still have the long-term structural forces that way against significant acceleration in growth, aging population and other structural forces should bring us back to a modest growth , relatively benign inflationary environment. jonathan: that's brian levitt, invesco global market strategist. some really encouraging headlines coming out of the airline industry after a tough couple of weeks for those stocks. business travel return coming

pretty quickly, according to american airlines. that is another encouraging headline. the news improves this morning, doesn't it? they are all saying the right thing. tom: the pricing to me is very sharp. there's a lot of people saying i'm going to fly, but only if i am playing business, and that is across all of the economic spectrums. jonathan: futures down five or six points on the s&p 500, down by 0.1%. got to stay on top of what is happening in europe as well. here's the right decision, unchanged at the ecb. the refi rate at zero. the marginal lending facility rate at 25 basis points. the depot rate at -50 basis points. rates at the present or lower levels until the inflation goal is near. the pepp program, the pandemic emergency purchase program, will run until at least march 2022. the ecb affirming the size of

the amendment purchase program of at least 1.8 5 trillion euros. tom: i hate to say this, but ferro is actually expert at this. is this just a bunch of mumbo-jumbo? they come out with all of these headlines which are great to me, and frankly, they are just moving the deck chairs on the titanic, in this case up to march 2022. [laughter] lisa: can i say one thing? honestly, this is not mumbo-jumbo. they are keeping things the same. options trading showed this was the least anticipated ecb meeting since the pandemic started. people expected this to be a snooze fest, for them to be moving the deck chairs for now. the real news is going to be the news conference. tom: there's another headlined, end of 2020 three. are we just waiting for the ecb headline out to 2024? jonathan: here's the headline that matters in the near term. the ecb confirming significant lee faster pace of pet purchases

-- significantly faster pace of pepp purchases. at purchases running at about 10% above the average for the first quarter. is that frontloading? is that significantly faster at the beginning of this quarter? a lot of people didn't get the clarity they wanted in the previous news conference. i think they will be looking for that. it is a little bit technical, but that is where the focus will be in this news conference for many market participants across europe and beyond. tom: on radio and television, when jon says is -- when jon says it is a little bit technical, he is saying tom, you are dumb as wood. [laughter] with us is james athey, aberdeen standard asset manager. who is poorly communicating

around christine lagarde? james: good morning. can i give you a virtual high-five first? because i kind of agree on the mumbo-jumbo point. [laughter] i think central-bank communication in general, and the ecb specifically, as become really a parody. the theory is that it is transparent communication so the markets can smooth the transition between policy changes, and that is not what we get here at all. you talk about the pace of purchases. we have to argue over semantics and what significantly means. what purpose is this really serving? i'm just taking it creates bigger problems than it solves in any way, shape or form. so who is communicating poorly? the institutions. i don't think christine lagarde has necessarily settled down as quickly as would've hoped. but more importantly, this is

sort of institutional within the ecb because of the very nature of the people around the table, the fact that they come from sovereign nations which are not formally bound together in the way that the states of the u.s. are, so you have different people with different domestic economic situations to deal with in different bond markets, more importantly, to report back to. of course, that means they have a very different view of what the appropriate path of policy is. jonathan: you're making a couple of points there, all important ones. i think the ecb has a credit ability issue around the semantics right now. at a time of stress, you need real credibility. if they can't define what significant lee frontloading is, and if it is -- what significantly frontloading is, and if it is happening, the market will say we have heard this before. then you've got the problem. so the credibility issue might not be a problem, but it could be in the near term. you also brought up ecb

president christine lagarde. i have spoken to somata people on background, off the record, who have an opinion on this, but don't want to talk about it off the record. let's talk about it on the record right now. why is she finding it so difficult to communicate with this market, and why is she finding it so difficult to get the governing council to come along with her and not talk behind the scenes, not make leaks, not do all of these kind of things? what is she struggling with specifically? james: i think the first problem from the ecb's perspective, the levers they are implementing is so far from monetary policy. this has become very much managing financial markets, first and foremost. the supported transmission from actions into inflation or growth outcomes has long since been forgotten. there's not even a pretense that this is a traditional transmission of economic policy from central bankers' words to

the man in the street's actions. so the policy toolkit has become very big, very unwieldy. the problem being dealt with his huge, because trying to keep financial markets under wraps when the economy is structurally weak, but then goes through the sort of cyclical weakness we all experienced in q1 to q2 of last year, of course, incredibly difficult. i think when you get into that technical toolkit, the fact that madame lagarde's background is not from an economics perspective, not a career central banker, obviously that means she has to come up a little. she's doing that, and i think she's getting better through time, but in trying to say nothing, do not give the market anything to go on, which i think it's what she aims to do in most press conferences, she quite often confuses more than she clarifies, and we have seen this pattern of the chief economist

philip lane issuing these blog posts the day after the meeting i think to try to find tune clarify some of that message. jonathan: do you think we need a little more structure in the communication? what we have seen from the federal reserve is a shift in the action function. what it has done is force pretty much every member of the fomc right now to sing from the same hymn sheet. do we need more structure? james: my honest answer to this is we need less, not more. go back 40 years and there was no announcement, no statement. nothing. a few men in a smoky room, and then you had to look at money markets to find out what decision had been made, if any at all. that is one extreme at the other end of the spectrum. ultimately, central bankers need to understand that they cannot manage every short-term gyration of financial markets. to the extent that they do, they are creating as many problems for themselves when they try to

exit policy as they are solving when they implement policy. i think this is one of the things we are about to experience. this is something written about many years ago, and has been very accurate in understanding and describing the world post-gfc, the qe trap. this i the point, that it is very easy to ratchet up every decline in economic activity, but it is much more difficult to try and deal with financial markets overreacting. i think central banks possibly, and this includes the ecb, they are just trying not to dig themselves into a deeper hole just yet, not until they absolutely have to. lisa: as an investor, what could happen in today's press conference that could actually make you change the way you invest or what you decide to buy? james: i mean, on the technical tone, there could be

portfolio changes. i don't expect that to be the case today. what i might suspect is that prices change that become more attractive to change investments. broadly speaking, bond yields are under pressure everywhere. i think the next phase of the sort of bond market economic cycle transition, if you like, is for the rest of the world, but none u.s., non-china will have to -- but non-us, non-china will have to play some catch up. i think when you see you yields rising, i don't think that is a great place for italy to be, especially if there is any whiff of taper talk. so if we were to see a very successful dovish message from madame lagarde and see italian yields fall and spreads tighten, that might be some thing i would look to lean into, based on the fact that not a lot of change on the headlines at 12:45. i think madame lagarde again is going to hope that this presser

is a bit of a snooze fest. but to your point, jon, she's going to get asked a lot of questions about it. jonathan: tom and i got in trouble for saying that once upon a time. tom: i'm on the edge of my seat. i'm taking notes. we will have it on radio for you. jonathan: we will do it on the weekend. james: i've got to be honest, it is the pit of the job that i probably enjoy the least. tom: you're selling it, james. give it up. [laughter] jonathan: you're not alone, james. james athey, aberdeen standard chief investment director. we will see in about 40 minute'' time. tom: we will have our experts on it. rich greenfield is always entertaining. he's out with a 30% and present -- with a 37% up price target on pinterest. i still don't get it. jonathan: i don't get it. lisa: well, working with shopify

to advertise small businesses. jonathan: but do you get the platform? lisa: no. they are not clubhouse. jonathan: andrew sheetz of morgan stanley just around the corner. this is bloomberg. ♪

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♪ >> we've just been hugely stress tested here over the bond yields tantrum, and markets survived. >> clearly the market is going to have to navigate this transition from incredible monetary accommodation to thinking about what removing some of that is going to look like. >> where policy stands today needs to be seen. there are tough decisions ahead. >> we still have the long-term structural forces that way against significant acceleration in growth.