stocks so these central banks how do they fit in the global banking system what are they doing that is so the lender of last resort or the buyer of first order like what exactly are they doing what are they doing this i mean they become massive hedge funds for one thing but instead of borrowing money or going to investors and sit and using their money to and to find things that they are creating money that they're fabricating electronic money they're going through the financial system to basically get it out there and it collectively got about twenty one points. and trillion dollars worth of assets on their books through connotative easing which have been used to purchase corporates if you're the european central bank equities and the bank of japan mortgage assets and government bonds if you're the fed and they have become the market they've not just become a buyer in the market and a lender of cheap order to all of the major banks they have become affectively the rigor of the market so everything that's going on now is is a fabrication at the hands of the collusion that the fed beg

written a number of books in covering banking and the history of banking and historically central banks are set up we know to be the lender of last resort to be a backstop to the banking system to prevent things like bank runs from getting out of control exciter so when you have different central banks in different countries in operating up until what you're suggesting here they're operating independently of each other and their role in these economies was to as we are saying be a backstop to the banking system so what when they collude as as you're talking about that it will we answer kind of a post a post market economy in other words they pushed central banks started to participate in markets you know from the one nine hundred eighty seven crash alan greenspan and the plunge protection team which included ronald reagan and robert rubin they started the central bank began to become a player now here's a central bank of switzerland is buying aggressively buying stocks so these central banks how do they fit in the global banking system what are they doing that is so the lender of last r

do you have for the collusion or what do you mean by collusion or talk about collusion between central banks yes so basically the fed is the central collusion meister and in the beginning of the financial crisis they decided to save our banks the u.s. banks because they basically caused the crisis and they did it by manufacturing money and other things over the past decade but they also did it by reaching out to other central banker friends throughout the world particular leave the area p. and central bank the bank of japan on sort of euro banks and they said look we need your help but this was all done in the background what was happening publicly publicly they acted as if they save the system in a period of lose a colluding against their. the general public but they colluded with each other to rig rates to keep money at the average zero levels that we have today to buy trillions of dollars worth of bonds from governments and from banks particularly banks that allows them to value all of their bonds up so they basically artificially rigged the entire bond market stock market because all of

the kind of innovation around central banking i think is important.econdly, globalization has dampened, kind of, wage pressure. there's no question about that, that you constantly have new pools of labor that are entering the global labor market, the global supply chains. and so that has certainly made it very difficult suddenly to have a wage spiral going on. and then technology certainly is another piece where the combination of technology, competition, and integration of new economies, of new spaces, new pools of labor has made it difficult indeed for inflation to behave the way it would have behaved in the 1960's or 1970's. francine: so should we still look at the phillips curve? i can't make -- you know, is it broken, or is it dead? philipp: i think maybe that's the wrong question to ask when you kind of ask it bluntly like that. it is more about, how do we think these forces will evolve over time? and i think it's true that prices behave differently today than they did some decades ago. and probably that will not change. so i think we do have --

boozer conrad how serious are these allegations against latvia central bank chief. well. allegedly accepting or demanding a bribe of no less than one hundred thousand euros that's a crass allegation against such a high ranking official and it's no comfort that we have talking about events that are likely to have happened years ago that's according to the lawyer of mist which the government in rigo we've just seen the minister talk there is trying to calm down markets but at the same time the government has announced that it's not planning a no major refinancing operation no issuances of new government bonds in the short term and that of course has to do with you know the concern that the real reputation of the country is seriously damaged what about these separate u.s. accusations of sanctions busting they sound even worse. yes of course i mean talking about north korea. the connection or from from the mouth of the u.s. treasury this is the allegation against this bank a b l z that's also a tough allegation and even more so as this is not the first and only negative

raises about the us system on the european central bank in. any other game now are not the cases of corruption and money laundering in latin in the lab and banking system so one has to of rather. control. our financial correspondent can add who's in frankfurt there now germany is one of the world's top exporters but when it comes to digital infrastructure you might be surprised to learn it is still lagging way behind to take the internet for example most states are still carried by underground copper cables which have been there for decades the coalition agreement between germany is still not official new government specifies that every person living in the country should have access to high speed data networks by twenty twenty five it's hard to make anything anymore without access to the internet. it's what startups are all about and central to the operations of mid-sized companies and major corporations alike. but many places in germany outside the big cities suffer from slow connections germany is virtually a developing country when it comes

and governor of latvia's central bank now under investigation is still the only financial scandal to hit the baltic nation one of its biggest banks is accused of busting sanctions on north korea. latvia's top banking official illness from savage arriving at the country's anti-corruption agency rim savage seen here wearing a cap was questioned by authorities after they raided his offices and property already say he is being held for demanding a bribe of at least one hundred thousand euros the news comes a week after u.s. authorities proposed banning one of latvia's largest private banks a.b.l. the bank for alleged money laundering that he has finance ministers sought to offer reassurance. but it's not enough since they are i can assure you that a lot of finance system is stable banks don't have liquidity issues so depositors can feel completely safe. that all of them only use this only about worship of interest in order to protect the finance sector stability and reputation i think that from savage should resign from his post while the investigation is ongoing. now cops know that. the

central bank governor. is under investigation for bribery the defense ministry says the claims could be a disinform ation campaign from abroad intended to erode trust in the eurozone state and influence upcoming elections investigation has rocked the small baltic nation which is pointing the finger at close neighbor and former political master russia. says he's a victim of a smear campaign he's accusing private latvian banks of trying to get revenge for tougher financial regulations by accusing him of demanding bribes of one hundred thousand euros a month. i have become a target have an obvious and well coordinated campaign of some latvian commercial banks to discredit the latvian state. but one day after him ship which was suspended from office the defense ministry said the accusations appeared to be a foreign disinformation campaign in a statement it said there is a high possibility that this is a white information operation from outside and its aim is to show latvia as an untrustworthy ally. to ministry

but there's no law against it and the central banks keep issuing these synthetic products now why are they doing this because central banks like to think that they have a certain amount of reserves on their balance sheet in relation to the debt that they are issuing like the central bank of america for example is levered i think sixty to one the central bank and ireland's probably leverage fifty or sixty to one so the way to get around that to leverage themselves one hundred to one or two hundred to one they give a synthetic product a aaa rating you know which will be all this is a government issued product they're going to have a aaa rating but you know i could just as easily give a aaa rating you know to this leaf and say this is a synthetic european central bank as a bond and i could say it's worth a billion dollars and it's on the balance sheet of the central bank and therefore it's as good as you know whatever they're going to say it's as good as but it's essentially just it's if it's nothing it's zero it's nonsense it's criminal well they go into how the actual synthetic derivat

you think that the central bank is behind the curve. the market is saying no, no one is behind the curve. absolutely normal, no signs of inflation threats in their. maybe that is why the dollar is a by standard in this equity market selloff. what about the qe trade in general? is it over? i mean, i think, we've still got japan to come, i wouldn't call it over. switzerland had their flaw, then in 13, 40, with a taper tantrum. last year the esau the ecb going to move. , theuld be quite vicious yen. mark: you have upped your forecast in the euro-dollar to 125 through the year. i know it's all at pace when it comes to currency moves for discomfort levels, but is there a level at which the ecb really is going to push back again? david: central bank worries about jumping out and era plane. it is the rate of change in the speed and everything is fine. without it, you start going too fast. it is the speed at which it goes. in one week's time, that's a problem. as long as the economy and corporate has time to adjust currency levels, the central

a member of the european central bank's top policymaking counsel has been detained as part of a bribery and money laundering investigation in lafayette from save it is also head of the country's central bank his home and office have been searched vs prime minister will chair an emergency cabinet meeting on monday is here the operations of the country's central bank will not be affected as scares in india carried out

but there's no law against it and the central banks keep issuing these synthetic products now why are they doing this because central banks like to think that they have a certain amount of reserves on their balance sheet in relation to the debt that they are issuing like the central bank of america for example is leverage i think sixty to one the central bank and wireless probably leverage fifty or sixty to one so the way to get around that to leverage themselves one hundred to one or two hundred to one they give synthetic product a aaa rating you know which will be all this is a government issued product they're going to have a aaa rating but you know i could just as easily give a aaa rating you know to this leaf and say this is a synthetic european central bank as a bond and i could say it's worth a billion dollars and it's on the balance sheet of the central bank and therefore it's as good as you know whatever they're going to say it's as good as but it's essentially just it's if it's nothing it's zero it's nonsense it's criminal well they go into how the actual synthetic derivativ

there is a framework around central banking that basically emerged firmly in the mid-1990's, let's saythat price stability can be maintained, can be guaranteed. that has impacted expectations banking has something to do with of economic agents. so that is part of it. that is certainly part of it. the kind of innovation around central banking i think is important. secondly, globalization has dampened, kind of, wage pressure. there's no question about that, that you constantly have new pools of labor that are entering the global labor market, the global supply chains. and so that has certainly made it very difficult suddenly to have a wage spiral going on. and then technology certainly is another piece where the combination of technology, competition, and integration of new economies, of new spaces, new pools of labor has made it difficult indeed for inflation to behave the way it would have behaved in the 1960's or 1970's. francine: so should we still look at the phillips curve? i can't make -- you know, is it broken, or is it dead? philipp: i think maybe that's the wrong question to as

surely contributed greatly to global growth over the last two centuries and we would expect the central banks would think twice before disturbing the source of capital to the private sector that's a heinous lie i mean a so ridiculously over the top absurd to say the fractional reserve banking is contributed mightily to the group of the growth of the economy it has grown mightily to the growth of debt and made us put the globe into this debt straitjacket hundreds of percentage of debt to g.d.p. around the world it's essentially like saying to pablo escobar that putting baby powder and just cocaine which is like fractional reserve banking banking contributed enormously to his cocaine empire that's true but if you want to run the world like a cocaine empire like the jamie diamonds and the lloyd blankfein and then the new central bank president then it's not healthy for the global economy third denial they know that fractional reserve banking is a part of the whole to problem is to parasitical problem is the whole destruction of the economy yes lended to well no pun intended to growth and debt bu

, the genie is out of the body and the federal reserve, the european central bank, the bank ofput any more stimulus into the markets which means the era of repression, of volatility is is over and further equity gains have got to be justified with strong growth, they cannot justify the cheap justified with strong growth, they cannotjustify the cheap money justified with strong growth, they cannot justify the cheap money any more. thank you fearon ellis is good to see you. now let's brief you on some other business stories. london city airport has been closed after a world war two bomb was found in the river thames nearby. flights have been cancelled with passengers advised not to travel to the airport and to contact their airline. its largest operator, british airways, has cancelled the majority of monday's departures and arrivals. the state of new york has filed a lawsuit against harvey weinstein, his brother and their production company, alleging the company's executives and board failed to protect employees from weinstein. the lawsuit comes four months after the hollywood mo

run the world like a cocaine empire like the jamie diamonds and the lloyd blankfein zan the new central bank president then it's not healthy for the global economy third denial they don't need a fractional reserve banking is. part of the whole to problem is to parasitical problem is the whole destruction of the economy yes it's lended to well no pun intended to growth and debt but also a growth and fraud and a growth in injustice i would say as he had mentioned at the top it was the global financial crisis not in particular the global financial crisis like he kind. skims over what the white paper actually says but it was the the fraud of the global financial crisis that was in the big white paper the bailing out of the losers of the parasites that the central banks and able so that that is only possible had we been on a gold standard or any other standard by which central banks would have actually it would have cost them to bail out their buddies and their cronies who are parasites then you wouldn't see who said this this is j.p. . morgan saying this so there is fractures or banking is not d

questioned by anti corruption all forty's now him say which is also a member of the european central bank's governing body he was questioned for hours amid accusations of bribery and money laundering in the country's financial system . that feels top banking official from savage arriving at the country's anti-corruption agency from savage seen here wearing a cap was questioned by authorities after they raided his offices and property it's unclear exactly what charges he is facing but the news comes a week after u.s. authorities proposed banning one of latvia's largest private banks a.b.l. the bank for allegedly to north korea latvia's finance minister sought to offer reassurance. i can assure you that the latvian finance system is stable banks don't have liquidity issues so depositors can feel completely safe in a sense that along the way the flow of the snow me privately is this going up watching you know in order to protect the finance sector stability and reputation i think that room said it should resign from his post while the investigation is ongoing but not enough not to tell the lat

but there's no law against it and the central banks keep issuing these synthetic products now why are they doing this because central banks like to think that they have a certain amount of reserves on their balance sheet in relation to the debt that they are issuing like the central bank of america for example is leverage i think sixty to one the central bank and ireland is probably leveraged fifty or sixty to one so the way to get around that to leverage themselves one hundred to one or two hundred to one they give a synthetic product a aaa rating you know which will be all this is a government issued product they're going to give a aaa rating but you know i could just as easily give a aaa rating you know this leaf and say this is a synthetic european central bank as a bond and i could say it's worth a billion dollars and it's on the balance sheet of a central bank and therefore it's as good as you know whatever they're going to say it's as good as but it's essentially just it's if it's nothing it's zero it's nonsense it's criminal well they go into how the actual synthetic derivativ

the central bank is further along., it is later in the cycle in much of the rest of the world. an overweight in emerging-market equities versus australian equities. the emerging-market is doing well, not suffering from date has and to handled the federal reserve hikes relatively well. anna: how positive a story is wage growth in the united states. if markets were spooked by that jobs report and the strength of the wages component of it on friday, is there a positive in terms of the political threats and the rise of populism if we are seeing higher wages and some of these western economies? mark: you are right. it is a rubik's cube all positives and negatives for investors for people. one of the things that came out kind of was this positive story. i mean, last year at davos, the abominable snowman of populism was outside the main street sure this year, it felt a lot different because to some degree, some of the rising tide is lifting some of the boats. whether it is politics or not, after the signing of the tax bill, w

but there's no law against it and the central banks keep issuing these synthetic products now why are they doing this because central banks like to think that they have a certain amount of reserves on their balance sheet in relation to the debt that they are issuing like the central bank of america for example is levered i think sixty to one the central bank and ireland is probably leveraged fifty or sixty to one so the way to get around that to leverage themselves one hundred to one or two hundred to one they give a synthetic product a aaa rating you know which will be oh this is a government issued product they're going to give a aaa rating but you know i could just as easily give a aaa rating you know to this leaf and say this is a synthetic european central bank as a bond and i could say it's worth a billion dollars and it's on the balance sheet of the central bank and therefore it's as good as you know whatever they're going to say it's as good as but it's essentially just it's if it's nothing it's zero it's nonsense it's criminal well they go into how the actual synthetic deriva

a day after he was released on bail the governor of lobbyist central bank. dismissed all corruption allegations as you should i be like target of an obvious and well coordinated campaign of some large in commercial banks aiming to discredit the lobby and state to be false good . claims he became a target because of his effort to clean up corruption in the country's banking sector. despite his assertion of innocence which was suspended from office shortly after his statement. the central bank governor allegedly demanded one hundred thousand euros a month in bribes from the owner of the lothian bank norvig bank gaza. and we can speak to our financial correspondent connoted booze and now he's in frankfurt home of the e.c.b. where of course mr rim savage is also on the governing board a good seat conrad do we know what e.c.b. colleagues of mr him said it should say about this case the e.c.b. council members including mario draghi the president of the e.c.b. have been totally quiet about this so far at least in public there's a meeting at the european central bank

surely contributed greatly to global growth over the last two centuries and we would expect the central banks would think twice before disturbing the source of capital to the private sector that's a heinous lie i mean a so ridiculously over the top absurd to say the fractional reserve banking is contributed mightily to the group of the growth of the economy it has grown mightily to the growth of debt and made us put the globe into this debt straitjacket hundreds of percentage of debt to g.d.p. around the world it's essentially like saying to pablo escobar that putting baby powder and just cocaine which is like fractional reserve banking banking contributed enormously to his cocaine empire that's true but if you want to run the world like a cocaine empire like the jamie diamonds and the lloyd blankfein and then the new central bank president then it's not healthy for the global economy third denial they don't have fractional reserve banking is a part of the whole to problem is to parasitical problem is the whole destruction of the economy yes it's lended to well no pun intended to growth and d

and not just looming central bank rate -- central bank rate .ikes but also debt issuance that is whathe government shutdown thing gets us back to. ian: that is a good point. we would expect the bulk of the issuance to be focused on the front end of the curve. but now there is a need to finance more debt. given the outright level of yields, i have to say that i was surprised not to see stronger demand for the 30 year auctions. di: i would like to throw up a quick chart. it may answer if there is more of a correction to come. this is 2851. this extraordinary streak of calm has come to an end. levels that we have come from, is there further to go in a market that is recalibrating itself? ian: that is the question we are all asking ourselves. will there be a more significant correction in the equity market? when you see the fed tightening monetary policy come it is not good for risk assets. and in range bull market correction is potentially at hand at this point. it will be a telling friday's session in the u.s. have: you would have to nerves of steel to do what some of the strategists ar

surely contributed greatly to global growth over the last two centuries and we would expect the central banks would think twice before disturbing the source of capital to the private sector that's a heinous lie i mean a so ridiculously over the top absurd to say this fractional reserve banking is contributed mightily to the group of the growth of the economy it has grown mightily to the growth of debt and made us put the globe into this debt straitjacket of hundreds of percentage of debt to g.d.p. around the world it's essentially like saying to pablo escobar that putting baby powder and just cocaine which is like fractional reserve banking banking contributed enormously to his cocaine empire that's true but if you want to run the world like a cocaine empire like the jamie diamonds and the lloyd blankfein and then the new central bank president then it's not healthy for the global economy third denial they know that fractional reserve banking is a part of the whole to problem is to parasitical problem is the whole destruction of the economy yes lended to well no pun intended to growth and deb

greg: the central banks want higher inflation. think the war they have been waging globally, the past decade is deflation. that is a much scarier proposition for a central bank then modest inflation. i think the inflation story quite frankly is overblown at this point. we are moving from this regime of deflation to slightly more inflation. i don't see it as a 1970's type of scenario. jonathan: this is the final point, i remember during this time last year that this was the trade this time last year. why is it we get to january and february and the reflationary enthusiasm returns? greg: the difference last year versus this year is last year, there was hope. investors were expecting taxes and other types of things. now, they are actually seeing it. it's a different point in the cycle this year versus last year. i think that's what the markets are reacting to and that's why vol is higher, because of the uncertainty. last year was easy in retrospect. this year is much more difficult. jonathan: it's always the easy money. it really goo

if you think about it, central banks can't lift markets. before, they were responding to inflationary risks. now, it doesn't really matter what happens to the market because the market is reacting to higher inflation, the central bank put is not there, is it? greg: no, and i think the central banks want higher inflation. the war they have been waging is deflation. that is a much scarier proposition for a central bank than modestly more inflation, so i think the inflation story quite frankly is overblown at this point. we are moving from this regime of deflation to slightly more inflation. i don't see it as a 1970's type of scenario. jonathan: i do remember during this time last year that this was the trade this time last year. why is it we get to january and february and the reflationary enthusiasm? then fades as the year progresses. greg: the difference last year versus this year is last year, was a hope. investors were expecting taxes and other types of things. now you are actually seeing it. it's a different point in the cycle this year

the european central bank has remained silent i mean accusations of money laundering a third biggest bank a.b.l. the now the latvian president the whole news has weighed in saying his country must improve its efforts to tackle money laundering and corruption bankers in the country are calling on the e.c.b. to step in and sort out the unfolding banking scandal. the european central bank governing council met today with an absentee. president bill maher's from savage still embroiled in a corruption scandal and pressure is mounting on the e.c.b. to formulate a response for his part montagne his innocence he's called allegations that he solicited one hundred thousand euros a month in bribes a smear campaign leveled against him by banks angered by tougher financial regulations he can't work while the probe is ongoing but he can't be fired either he's ignoring calls to resign. not to resign today because i'm not guilty because it's the aim of mud slingers for me to resign and to prevent me from being able to defend myself i'm afraid that the legal proceedings would last for many years and i

a day after he was released on bail the governor of lobbyist central bank. dismissed all corruption allegations or spiritual i've become a target of an obvious and well coordinated campaign of some large and commercial banks aiming to discredit the lobby and state to the souls good. claims he became a target because of his effort to clean up corruption in the country's banking sector. despite his assertion of innocence and was suspended from office shortly after his statement. the central bank governor of legibly demanded one hundred thousand euros a month in bribes from the owner of the large fin bank norvig bank gulf. oil and gas having b.p. released its annual and a closely watched benchmark report forecasting developments in the sector and this just addition is indicating an upcoming slowdown to what was once considered an all stoppable demand for thirst for liquid fuels. automotive companies all over the world are betting on the mass adoption of electric vehicles in the next decades and they're not the only one it's all well and gas giant b.p. is anticip

bank bondl central market lead.g economy, inflation set to rise and central banks need to hike. get used to hire bond yields and volatility in the market. that is not going away. guy: the last couple of days, some of the sessions have been different in how the market has reacted. there was this feeling that at some point, you need to flip out of equities and into bonds. you are telling me yet we are going into a higher regime and that trade doesn't work. mark: absolutely, right now you have to be careful. what is interesting about the recent events in markets, you have a lot of products that were designed for the old regime, and they are very much yield enhancing, return enhancing products, shortfall products which don't survive in the high-yield, highball -- high vol environment. but the market can get through this. if you look at the market, growth is good. be more of these blowups to come down the line. matt: mark, should we feel sorry for people who were all in short vol? isn't this a good thing to remind people

currencies because they're made on the say so of someone and usually it's the government with a central bank and the currency gets created as a result of two things one though they were have cash in coin and then they will also have as a result of the banking system they will take in deposits and then the banks will use that to make loans and in the process credit is created and money is created so that is the traditional way that this is done now crypto currencies are an interesting thing. the question for crypto currency in my opinion is how broadly can they be used right now they don't have a very broad usage outside of speculators and outside of sometimes illicit sources but i'll tell you the one thing that is that is not being taken into account yet on that is fraud and when fraud comes up and when legal cases come up that's when crypto currencies are beginning to find oh wait the government does begin to horn in bit by bit because now say there's a divorce i read this today in an article somewhere on the web that somebody is now being forced to give up some of their bitcoins how is tha

some of it from reinvestments at the fed but mostly of course the european central bank and the banklantes decided to get up off the couch and stomp their feet, there isn't much they can do with that kind of buying in the background. tom: greatly appreciated with cresset advisors. we'll continue worldwide on bloomberg radio. i believe i'll do that with john farrell this morning. foreign exchange, the dollar yen comes back a little bit, it was at 105, 106, weaker yen at 107. i'll call a churn to the foreign exchange market this morning. please stay with us through the day across all our platforms. this is bloomberg. ♪ taylor: wal-mart's warning signs, the world's largest retailer delivers a disappointing outlook. shares fall in free market. plus, rare miss, deutsche diss. missed estimates and deutsche bank plans to cut more staff again. and it's only the appetizer. morgan stanley says the real sell-off in stock is yet to come. >> welcome to bloomberg daybreak, i'm david westen here with alyx steele. it felt like it was a year, the long weekend. here's where we stack up and look to be

i would also tell you there is some doubt around about the efficacy of the central banks.he boj stepped in and okay, that's enough. when they move back, rates moved again. we'll see where that comes up again. in the short run, i would put my hope in finding some technical support and if you begin to get a bounce, well, a lot of those people who were too skeptical may come rushing in. i don't know if it will turn into a spiking reversal but i think it can get a quick term. >> have we manage to put washington aside for debt or no? >> no, it is going to stay there again and the debate for debt ceiling whether they issue the democratic memo now or where you go so that issue is still not clear. you know the president proclaims that this exonerates him and it does not quite do that there is no sign of collusion but they're going to debate this and keep debating anyway >> what kind of tone does powell need to set in his early days? >> i think he's got to look like i am in control and we don't need to change our plans that was a little bit of the worry in what was going on of that

there the national central bank but also of course the european central bank which is the supra national supervisor of the banking system in the euro zone all right thanks conrad say with us we want to come back to you in just a moment but first germany's booked a profit for twenty seventeen despite low trading activity profit for the company that operates right that stock exchange where six percent on the year to bring in more than eight hundred fifty million euros now something the company shareholders will be able to profit from our story shippers a chance to raise the dividend by ten euro cents c. . is optimistic about the stock exchange rate is outlook for twenty seventeen we know back over to conrad conrad you've been listening to the press conference of what they said about their plans for the future. well the order of i am of the new boss of budget bertha gave out pretty ambitious plans for this year a pretty ambitious growth targets he also said that the hopes to benefit from brics it you know this clearing business that is supposed to be transferred from london to the