draghi.n reality, there will be quite a lot of positions going into the meeting and we would like to see some volatility as he is speaking. he has a thin line to tread. already he has said something which suggests they are making a small move toward the exit. he has not backtracked on that so far, he has had plenty of time to do so and he has not backtracked so that probably means he wants the message to go ,cross to people in the market that the ecb is very slowly moving in that direction. amehow, he has got to prevent taper tantrum. he does not want a repeat to happen -- of what happened in the u.s. where the bond market got out of control. he will have to use his language carefully to let the message be clear that we are giving serious consideration to make an exit. we do not want you to get excited about it and cause a panic in the amount -- in the market. how he does that will be interesting. will continue to committee kate with you. briefly, what is his positioning looking like, how are

the dovish europe draghi -- mario draghi.oomberg. ♪ vonnie: in the days 10:00 a.m. in new york, 3:00 p.m. in london, 10:00 p.m. in hong kong. i am vonnie quinn. nejra: i am a vucevic -- i am nejra. welcome to bloomberg markets. vonnie: here are the top stories from the bloomberg and around the world. is keeping the door open for further euro area stimulus. doesn't it make good news for investors? and united states, president donald trump to revise his plan to reveal and -- repeal and replace obamacare. we are seeing concerns about the u.s. reaching the debt ceiling this fall. and bondholders are heading back to court to recover money from puerto rico's bank rep c. -- bankruptcy.

draghi, the more dovish he becomes.ul and he mentioned that financial conditions are worrying him. i think the more were reading he will be he -- the more worried he will be he has to be dovish. nejra: despite of the overall dovish tone, which is what you to the weight, the euro continues to grind higher. to this chart. hedge funds most bullish on the while the dollar is falling out of favor. in your view, you do sort of see tightening from the fed where you think there's no rush from the ecb. doesn't this which around with the hedge funds it getting it wrong? thisn ahmed: right now at current level, some tapering is already and the price. , i think we extra are into pre-qe levels on the eurocrisis. that is an important the level because from here on, you would need hawkish to support for the rises. -- further rises which i do not think will come through. i think mr. draghi and his supporters of the council will take it very, very easy. eddie tightening can be quite dangerous. nejra: what does it mean for bond markets?

did investors misjudge draghi's speech?> i think it was actually very eloquently put. >> i think the words are pretty confusing to be honest. >> a titanic shift we have been waiting for. >> the speech itself, i'm not sure the market misinterpreted it. there was a very clear shift in the tone relative to the last policy meeting. it was quite a dramatic tone. >> a back slide to explaining how the tight seasoning not really a tightening and i think the hope was if you explained it that way, financial markets will not get into a tizzy. >> i didn't read draghi's statement on tuesday to be anywhere near as bearish it is a market is taking it. actually i took it the other way. i think it was a signal from draghi that even if there was going to be further support and tail wind in the economy that, the central bank is still there. >> they need to get going early here. they are already late getting going. jonathan: eloquent and confusing. -- with morgan stanley and from boston, senior portfolio manager with the wells fargo asset mana

the big issue, did investors misjudge draghi's speech?> i think it was eloquently put. >> the words were confusing, to be honest. >> is this the titanic shift we have been waiting for? >> the speech itself, i'm not sure the market misinterpreted it. there was a very clear shift in the town relative to the last policy meeting. it was a dramatic tone. how backslide to explaining tightening is not really a tightening and i think the hope was, if you explain it that way, financial markets will not get into it. >> i did not read the statement on tuesday to be anywhere near as bearish as the market was taking it. i took it the other way. i think it was a signal from draghi that even if there is further support and tailwind, the central bank is still there. >> they need to get going early here. already they are getting going . jonathan: was it eloquent or confusing? analysts is david and from boston, senior portfolio manager with the wells fargo asset management. let's get to the quote itself. these are the words that seem to move markets. this

conundrum presents a for mario draghi.pite being incredibly dovish after that ecb lack of action yesterday, we have a split on whether the ecb should be changing its quantitative easing language, deferring how and when on the next to towards normalization later this sheer. index, a basket of currencies, back to levels before qe started, in fact, slightly higher. the conundrum is if you look at inflation, it has crept up to being higher than that. , and indeed,enign perhaps, that does portend, tell you some dovish this in the european central bank. again, it is the idea of how you interpret what mario draghi said. some said we will get tightening as soon as summer is over, others saying they would not talk about that until autumn. bulls areuro-yen living another day, clearly not anytime soon moving away from , in facttary stance pushing back of that inflation target. we have the euro at that 23 month high, much more of a momentum trade, or the fear of missing out trade. let's get to the markets. china and hong kong setting

issue, did investors misjudged mario draghi's speech?> i think it was eloquently put. >> the words were confusing, to be honest. >> this was a titanic shift we haven't waiting for. >> i'm not sure the market misinterpreted it. there was a very clear shift relative to the last policy meeting. it was a dramatic tone. >> that a tightening is not really a tightening and i think the hope was, if you explain it that way, rental market will not get into -- >> i did not read the statement to be anywhere as near as bearish as the market was taking it. i think it was a signal from mario draghi that even if there support and tailwind, the central bank is still there. >> they need to get going early here. jonathan: soap was it eloquent or confusing? -- so, was it eloquent or confusing? boston, senior portfolio manager with the wells fargo asset management. let's get to the quote itself. these are the words that seem to move markets. the ecb four in portugal. as the economy continues to recover, the policy stance will become more cooperative and the

draghi: we need to be persistent and patient.ery substantial degree of monetary accommodation is still needed for underlying and nation -- inflation pressures to build up and support headline inflation development in the medium-term. we are also unanimous in communicating no change to the forward guidance. we only have to wait for wages and prices. nowere unanimous in setting print i -- precise date for when to discuss changes. the last thing the governing council may want is an unwanted tightening for the financing conditions. jonathan: joining me around the table today is the cohead of global portfolio management fixed income at goldman sachs asset management. and the credit columnist for bloomberg gadfly. over in dallas, the chief investment officer of highland capital management. mike, let's begin with you. yesterday and through today, this really interesting dynamic asserting itself. the first time i have seen in a number of years, the euro is stronger and the periphery's bid. can i continue? mike: i think the euro is a curr

i think the voices from draghi's mouth and market reaction were different.re anticipating the end of qe and what that means for the euro tl dollar weakness hit there as well but it was amazing how much the euro spiked yesterday. >>> i suppose there is reason for the euro to be optimistic about the fundamentals in europe give us your view in terms of how much optimism has improved since the election of president macron >> if you look at the fund flows which was reported out of the u.s. overnight, mass amount of money moving from the u.s. into europe the interesting thing is, look, again, if you remember from trump's election, it was the opposite we had europe on its back, still struggling to recover from seven years of crisis. suddenly the trump trade we had relation in the u.s., we'll be unshackled from regulation it could not be more different now. you have huge political risk in the u.s. signs that they will hardly get anything through congress. you have macron, positive news in the eurozone, the french political and business environment returning to forwa

we begin with the big issue, a dovish draghi. ande need to be persistent, patient. very substantial degree of monetary accommodation is still needed for underlying inflation pressures to gradually build up and support headline inflation developments in the medium-term. also unanimous in communicating no change to the forward guidance. we only have to wait for wages and prices. setting nonimous in for when to discuss changes. the last thing that the governing council wants is for n unwanted tightening of the financing conditions. jonathan: joining me around the table, the cohead of global portfolio management fixed in and a columnist for bloomberg gadfly, and the chief investor at hyman capital. let's begin with you, mike. yesterday and threw two today, this interesting dynamic for the first time in a number of years. a europe stronger, a periphery bid. can that continue? >> i think the euro is the currency that is very hard to invest in. you have had the situation where win, andin, taleils i that doesn't last forever. you need to look at the fundamentals of the euro

draghi? >> i don't buy it.kets are much more focused on good old-fashioned economic fundamentals and just like most cycles, when i see fundamentals weakening, i'm going to want to take some chips off the table. right now i don't see that at all. i see a robust, synchronized global expansion. we are advising clients to be overweight for risk assets at the moment and underweight on the savfe havens. francine: coming up tomorrow, the ecb will announce its decision, followed by a news conference by the ecb president mario draghi. we will bring you live coverage when that happens at 7:45 in new york, 12:45 in london. he will go to the currencies. this is bloomberg. ♪ ♪ >> surveillance in washington. kevin cirilli will join us in the next hour. -- trump whom reading pitting -- putin meeting. right now, taylor riggs. >> we are starting with politics. secretary wilbur ross is at the hearings. administerntries talks today. -- trump administration toprding to people, several advisers are involved. is -- theouse european

draghi is right. monetary policy accommodation will give you bigger results in terms of the outcome. francine: are they coordinating with the fed? >> i am not sure if they are, but certainly a much more concerted move globally than we have been in the past. say this. some people d both stay with us. we will bring you the ecb's policy decision at 12:45 u.k. time. bloomberg customers can follow all of this live on tliv . plenty is coming up, including macron's moment of truth. the new french president faces his first big test as his military commander quits. will u.k. retail sales bounceback. we get that figure at 9:30 u.k. time. this is bloomberg. ♪ francine: this is "bloomberg surveillance." let's get straight to the bloomberg business flash. reporter: the outlook has been raised after reporting a better than expected 10% quarterly sales come. the german software firm is pretty thing sales anywhere from $23.3 billion euros for the year. fells announced a share buyback of up to 500 million euros th

draghi, is he sitting pretty now?en: so many stories the ecb, they are getting ready, they want to signal. --io draghi sounds like me sounds like, "me, taper?" the ecb wants to see is a tightening of financial conditions. here is what he said at his press conference. draghi: we only have to wait for wages and prices to follow course to our objective, objective.ard our the last thing the governing council may want is actually an unwanted tightening of the financing conditions. objective. the last thing the governing council mayit either slows downs process, or may even jeopardize. when we hear the stories about the ecb getting this paper started, there is also the bundesbank within the ecb. is that the voice we are hearing in those kinds of stories? we are waiting to hear mario draghi speak in jackson hall. he seemed to signal the ecb would talk about this question when they taper to october. too early for him to deliver the clarifying speech markets want to hear. david: that leaves the fed all alone in the corner. kat

draghi today then >> well, good morning. what we probably expect in frankfurt is more a balanced approach to the language you referenced the speech in sintra, that was taken quite wildly by the markets. the ecb was not happy with that what they want to avoid by all means is a taper tantrum scenario here in the eurozone. perhaps you can see that speech in sintra as a test case how sensitive the markets are. that was quite visible the day with yields spiking in the bond market, the euro jumping that's what they want to avoid today i think the focus will be on the balanced approach while staying on message that the economic recovery is surprisingly strong in the eurozone, and that inflation eventually will get there. another area of focus is the focus that we need to be persistent and at the same time prudent in order to avoid those volatility in the various markets. that will be the main area mario draghi will try to tackle in a press conference it comes with a tweak in language of course i think the most is that they're dropp

guy: and draghi will be able to live with that?: if growth and inflation do with the ecb expects them to do in the eurozone, they will not worry too much about currency devaluation. guy: what about the u.s.? in some ways, this is what janet yellen wants. she may not raise rates that aggressively, so she will keep the front end fairly well incurred. she will use the balance sheet rates. long and rates.-end it is a great scenario for them. given where the dollar is trading, it is expensive. they start to normalize her policies, the dollar will lose a bit of ground. it is a sweet spot for the fed and that will continue. guy: what is the treasury market doing around all of this? is it fairly valued in terms of where the u.s. tenure is? peter: i think the yield are fair. i don't see a reason for yields to skyrocket higher. guy: if it is north of that -- peter: i think that is aggressive, frankly. it is aggressive. what the fedng for are doing in terms of saying we will normalize the balance sheet and sell some long and securities, and t

. ♪ coming up, president draghi -- his words fall on deaf ears elsewhere.o --ion trade juggles struggles to fly -- find buyers, and counting down to the fed's decision. we begin with a big issue, a dovish draghi to push back against markets. ande need to be persistent patients. a very substantial degree of monetary accommodation is still needed for underlying and nation pressures -- inflation pressures to build up and support headline inflation development in the median term. we are also unanimous in communicating no change to the guidance. we only have to wait for wages and prices, we are unanimous in for setting no precise date winter to discuss changes. -- when to discuss changes. the last thing the governing council may want is an unwanted tightening for the financing conditions. jonathan: joining me around the table, head of the global -- and the credit columnist for bloomberg gadfly. over in dallas, the chief investment officer having capital management. begin with you. yesterday and through today, this very interesting dynamic asserting itself. euro

don't skip off into mario draghi land. on.e what is going people becoming more bearish about the dollar? absolutely. years, ifive or six thought we were only in the early stages and people unwinding those dollar positions. it for the way from negative yields. senseonly really been march that you have started to see a reversal. we are at the peak, close to the peak of dollar positioning. there is a lot that can come out. anna: where did that take us next on the dollar? what are your expectations of forecast. s? hit the peak of the great dollar trend. i think we could be in a multiyear bank trend. the question is how will be central banks react? about evenings later, but it depends on how other central banks react. maybe we move back towards currency wars again. some of these stocks will realize they had an issue. the u.s. is going back. -- the u.s. is pulling back. the trade agenda on capitol hill. manus: we will begin to that more. simon, you stay with us. here is what you should be watching today. meetsemmanuel macron michel

tighten what to expect from mario draghi i don't have particular ensight.ut i think the weakness of inflation in japan, in the u.s., globally has to give them cause for concern about moving aggressively towards tightening. it's a global phenomenon this weakness in inflation. >> robin, thank you very much for joining us robin harding, financi inghardi. >>> still ahead, one tech giant worn out from wearables. first, here is today's national weather forecast from bill karins >>> good thursday morning to you. the heat is the story. we're at the peak of the heat wave st. louis, omaha, kansas city, wichita and even philadelphia under heat warnings. heat advisories from bothen south to philadelphia and washington, d.c. just about everyone is in the heat wave. some of the hottest temperatures in the midwest once again. omaha feeling bike 1like 110 dallas, 107. new york city peak out at 100. d.c. on friday, feeling like 103. little rock, 105 by the time you get to saturday, relief in the northwest, but still hot tennessee through arkansas a few isolated severe storm

all he got out of draghi today was autumn. richard: we will be getting the updated forecast in september, inwe could get something september but perhaps they wait until october to make an announcement. the key thing to remember is that if the ecb changes qe, it will not be massive. it will be incremental probably, so we have gone from 80 billion a month to 60 billion a month. we met go down to 40 billion -- we might go down to 40 billion, but perhaps, if they do keep it up 40 billion a month in 2018, that still a pretty big amount. through the reading notes before we had the ecb decision and citigroup pointed out the root cause of the ecb should is the technical need to terminate ecb qe lying in 28 -- buying in 2018 and draghi did very much focus on that inflation outlook. there was somebody saying it was about immigration, inflation, inflation. richard: for the ecb, they have a single mandate, all about inflation. in this inflation gets some sort of upward traction, they are going to want to carry on. they are going to have t

what are traders thinking of the draghi hook? notghi just impact to the euro and the bond markets, but also what do.pean equity investors finally, speaking of bond market, i have been keeping a close eye on the treasury bond spread. we saw this tighten up yesterday. it is near the lowest since november. julie? julie: the ecb policy decision is out tomorrow. officialsto euro area , the ecb staff is now examining stimulus plans to consider in december. while members have not yet held formal discussions on the end of bond purchases, investors are expecting hawkish guidance tomorrow. danny blanchflower is joining us with his perspective on the central bank. great to see you as always. great. julie: what do you think we will hear from the ecb? some of the recent communication has been a little bit more delicate given the market reaction. what do you think will happen this time? danny: i think they've got to be a little delicate and a little bit concerned about where the data are going. not least the inflation data. i was just looking

job fornot an easy mario draghi.as to manage to sound optimistic on the economy and at the same time, not sound like he's going to be too hasty about reducing qe. something that could come out in the press conference, if they say that actually started discussing how they might end qe, that would be news. so for they been saying they haven't had the discussion yet. side on theobably side of caution and not try to shop the markets too much. will bring you all the time,s at 12:45 p.m. u.k. followed 45 minutes later by mario draghi's news conference. manus: let's turn our attention to china. there has in an agreement to narrow the trade deficit. the statement came after high-level negotiations broke up yesterday with the world's two biggest economies unable to produce a joint statement. anna: let's bring in malcolm scott. good to have you on the program. there were some they comments from both sides but still no joint statement, the fact that we got this announcement from the chinese just a few hours ago, some of where w

your headlines >>> the euro surges to a two-year high against the dollar after ecb president mario draghi hints at when the central bank could shift its policy away from easy money. >> we were unanimous in -- in setting no precise date for when to discuss changes we simply said that our discussions should take place in the fall >>> pay safe shares rocket to the top of the stoxx 600 after a consortium by blackstone bid for the payments firm. >>> mediterranean delight for vodafone the mobile operator calls in with forecast topping numbers on the back of a strong performance in italy and spain, sending shares higher. >>> dimming down on sales. philips lighting posts a 2% decline for its professional lighting arm, despite a beat on core earnings. the company's ceo tells cnbc that growth will return. >> we were declining by 2.4% for the full year of 2016, we have been declining by 1.3% for the first semester of 2017 we will go back to growth in the course of the second half of 2017 >>> it's a choppy start to trade today in europe with mixed colors across the board. some red, some green, rememb

draghi goes dovish.ill be assessing -- the message to britain as brexit talks in brussels end with division. good morning. this is "bloomberg surveillance." tom keene is in new york. happy friday. it is a busy day. we're looking at dollar and the rba in australia. tom: look anna clark fascinating was about where the nation goes. it started yesterday morning around 10:00 a.m. with a story from greg farrell. there is no other talk in the nation but this financial 'snkage into president trump financials. jonathan: -- francine: we will focus a lot on that. let's get to first word news. taylor: we are starting with washington. multiple reports that some of president trumps lawyers are trying to undercut special investigator robert mueller. according to the washington post, lawyers are building the case that he has conflicts of interest. the new york times says he is trying to get some of their team fired. colorado, mike pompeo said the russians want a warm water naval port. kingpin ofecome the the middle east

how close is mario draghi to policy normalization? this is bloomberg. ♪ mark: here is the bloomberg business flash of juliette saly. reporter: unicredit has revealed it has been hit by security breaches. the italian banks says 400,000 customers have been affected. since the breach in september and october, with june and july this year. inmler reported a 15% jump second quarter profit. it delivered another double-digit boost to revenue. earnings climbed to 3.7 5 billion euros, but came in lower than estimates. german carmakers are reeling scandals. of the automaker has chosen the u.k. over alternatives in germany and the netherlands, despite risks associated with brexit. that is your bloomberg business flash. mark: thank you. rejecting mitch mcconnell's bill. this came hours after a dramatic 51-50 vote, allowing the republicans to start the debate on repealing the affordable care act to vice president mike pence. let's get more with our u.s. congress important. -- congress reporter. what are they ultimately voting on? what amendments w

boom, everything goes up draghi has had to rake those back so, it's a mess.tom line is this. expect more volatility as the markets try to figure out both the extent of the global recovery and swrus how far central banks can go in walking back this low rate world that they created melissa v a good weekend >> you, too, bob i go to bk here. this to me is the biggest thing that's going on in the market niehaus. the big trade has bottom europe, better growth there. everybody's piled into that. now, that these es has reversed. when i look at money flows, where is everybody going to start putting money, this is something people are going to start unraveling and this could go, if it unraffvel, into the bk stocks, so many me, it is a potential for a bid in the u.s that being said, i would not be surprised. to see mario draghi come out and try to talk down the ur o again because nobody wants a strong curren currency don't get too over your skis in switching around in position, but watch this space because it's how you're going make money. >> but the four under the mark

where do you see market expectations for the ecb versus how you interpret draghi?as the market.net right? significante a pricing, for sure. but the question is if markets were complacent ahead and before this speech. i think there was a bit of complacency and may be a bit of wait and see attitude before the ecb changes forward guidance. board guidance from central similar particular is to a state driver. if and when it changes, it may trigger some reaction and volatility spikes. i don't think the market is completely off track and inconsistent with what the ecb has been saying. sooner or later, it will be a rate hike. indeed move the curve. been a storyways going on at the same time. anything that is why it is so difficult to distinguish between market expectations and the liquidity effect. julia: that is a huge point because is much as we can point to confusion over mario draghi's words, we have noises of other european central bank board members as well a looting to the same thing. you think whether or not he made a mistake overplaying his hand, do you think the

, how much of a risk is a strong euro to draghi? serious risk. the higher it goes, the more we have to think about it. however, indicators of domestic demand are fairly strong. an externalhaving surplus. what were seen at the moment is that the rebound of the emerging markets, to some extent includes china, it more than offsets a little damage done by the exchange rate of the eurozone export outlook. anna: thank you for your time this morning. daimler is recalling more than 3 million mercedes-benz in your. anna: it could help the company avoid the massive penalties set for volkswagen. whos bring in chad thomas joins us now. what led to this recall that broke after trading hours last night? chad: this has been bubbling below the surface or daimler since earlier this year. german prosecutors and investigators started an investigation into daimler and possible emissions cheating in march of this year. it really was boiling before the -- below the surface and last week it that speed when some of the details leaked out in german media, p

we begin with the big issue, a dovish draghi. >>

there, theo draghi head of the central bank committee. is with us. something right in their face. they didn't get an aggressive enough point, did they? they got some attention in terms of the euro. this is the bloomberg euro index back at 2015 high. the fx markets, did they need something more aggressive to move them? bilal: absolutely. past, theook at the ecb has talked about volatility sharp moves. -- arkets the market is expecting a september announcement. manus: that is autumn. bilal: we spent time yesterday on wikipedia to see when autumn starts. it starts in september. is it the first of september? bilal: i guess wikipedia is not reliable. we think it will be september. manus: in terms of what level of to you get in 2018 -- level of 2018, what level? it would mean a rapid wind down of qe programs. given his comments yesterday, given the data, we probably will be more confirmation of inflation picking up. xe.us: let's have a look at f this is the forecast for the euro going through the end of the year. this is a bit anemic to me, given the momen

mario draghi is going on his road trip to jackson hole.time he was there, he was talking about the lack of inflation expectations. he could not see them at all on the horizons. he did not consult the governing councils and we had to eat. three years later, he is going to jackson hole. has it tapered or changed in every way? what would it do to the spread? that question for the market because the ecb meets with them. in kits view up to 120. this is the point, here is where we left. here is brexit, here is the great british drop. a rate rise would do very little to move cable higher. the dynamic for cable, as you can see, is how much risk is already priced into this market and where is the next level that we go to on the pound? the gilt yields, we are waiting for those two print. i will leave that with you, guy. just a slight tip higher. guy: stories happening within the sectors this morning. some real divergence, particularly with the pharma sector. i've set it up for index points. similar story with the making sector. have rochede, you bid

two months later draghi hinted at a policy shift. after the inflation rate fell below zero for the first time since the financial crisis, the ecb announced the beginning of quantitative easing, that was january 2015 the program extended to corporate bonds the following march. but is the end of qe now approaching? are there people out there, i know there are people out there, possibly northern europeans who think there are terrible things handling because of happening because of qe. after draghi's somewhat hawkish speech this year, euro hit a 12 month high markets took it as qe was coming to an end. and emha he will have a second speech at jackson hole next month. people are getting ready for fresh ecb moves. >> they are gearing up to a move we have the fed already on its way out. so we are heading towards a very interesting 2018 or 2019 which will be the years of the synchronized withdrawal of stimulus and it's very difficult for any analyst, any trader, to quantify the effect of that >> i should say the latest us federal reserve dec

did investors misjudge draghi's speech? >> i think it was actually very eloquently put

jonathan: set us up for next thursday from president draghi.ebate around whether the market misjudged the speech he delivered at the ecb form. is it his job to clarify the message next week and will we have a dovish ecb? jim: i think he may try to clarify a bit, but i don't think the market was incorrect in their interpretation. there is an and or must amount of market risk when the yield our this low. the durations are extraordinarily long. unless you keep receiving good news from your central bank, a portfolio manager has to ask himself, why do i own some of this long-duration debt at these extraordinarily low yields that the central bank is not going to be as cooperative as it has been in the past? jonathan: it will be a fast rapidfire round. another story, we are going to wrap things up and wrap up this program. one question, one word answers. u.s. inflation transitory or a trend? go ahead. subadra: transitory. >> trend. james: transitory. jonathan: balance sheet policy, data independent or data dependent? go ahead. subadra: dependent. >> i

let's go back to what for mario draghi has to do. later we will have to reduce accommodation. how can you say anything of any interest even when it's the most obvious thing? >> he's trapped to a certain degree. bund yields are close to zero. to do withis has market positioning. a lot of this has to do with investor expectations which i would argue have been somewhat misaligned. jonathan: we are set up for disappointment in the european equity market. there is a huge consensus going into europe at the moment. anyone who sits around this table, we want to buy europe. how disappointed are they going to be? -european earnings are fine for this year. think european earnings are fine for this year. i think europe is a bit of a value trap. to 20% discounts. it's just a mirage of a u.s. equity market for health care and tech. david: -- alix: lagging behind other countries, does that mean you don't see synchronized global recovery? >> there are better ways to play it. got earnings which are almost as depressed. recovering much stronger. more

guest: draghi is a variable, the u.s.politics is -- political situation is a variable.rm, it's going to be driven by draghi because there is this approaching sense that the ecb has imitations on what it can do. they probably do have to rain purchases in two centigrade because of the high country traditions they have -- high concentrations they have on their balance sheet. there is so much that news priced into terraform and what that means for tax reform. and what that means for the u.s. yield curves. they have been arranging for a long time and have not able to break out. in large part due to the politics in the last few months. if you do get a few shifts there, -- guy: there is an idea floating around that yellen will be comfortable not delivering aggressively on the rate hike side of the equation. it does not raise quite as much here, but what i do is use the rolloff on the balance sheet. we end up at a situation where the dollar does not go up much, but i can keep the u.s. economy humming is long-term rates are lower than where they should be. thet: let's talk about

draghi's dovish words are encouraging traders. the special counsel will expand his russian investigation into transactions involving the president . -- businesses. microsoft is showing its turnaround plan is to act on track. good morning, good morning. daybreak." omberg futures are in change. the euro is still big. we have another point percent. bonds are big over in europe as well. the yield is down 49 basis points. the out performer is what today's bonds. -- portuguese bonds. and theel had yesterday vix hits a new record, under 10 for the fifth day and arose -- a row. anna chandra is here. multiple reports that president lawyers are trying to undercut robert mueller, who is investigating russia. according to the washington post, they are saying he has conflicts of interest. the president has been asking about pardoning aids, family members, even himself. had anican student imprisoned in north korea. he was in a coma when he was released from eight north korean prison. the imf is ended two years of speculation and agreed it to an

. >> the euro and markets have reacted very strongly to a speech by draghi. sintra suggest that august the three is going to be a tricky meeting. >> italy's commtis billions to save two banks. the countries finance minister explains it. >> it is not a bailout. >> china preaches openness at the world economic forum. the week's best interviews help make sense of a topsy-turvy world. >> there is tremendous potential for aviation in india. >> the scenario has improved from beginning of the year. >> free trade for future growth, future business of element. >> what you want to make sure is that companies are making investments based on the inherent value, not on a particular tax scheme. >> it is all straight ahead on "bloomberg best." hello and welcome. i'm scarlet fu. this is "bloomberg best," your weekly review of the most important business news and interviews from bloomberg television around the world. the week began with political maneuvering and the u.k. theresa may moved to shrore up her support in parliament while pushing the brexit agenda forward. prime mi

turn thisg can around, it would be a word from mario draghi.f you are a dollar bear going into the ecb meeting, you'd will have an interesting day. why are we buying treasuries? well, if they can't get these things passed in united states, it probably means things like infrastructure can't get past. maybe the tax bill is never going to get done, either. any stimulus to the u.s. economy is not going to come because of what the white house is doing. it will have to come from somewhere else. there is no need for them to worry too much about inflation from the area. guy: clearly a big move in the aussie. cadaw some catch up on the story in the bond market. you see that working its way through the market over the last week. how much more run do you think the aussie has to go? statesferential the a's is growing and it seems the rba is a little concerned, but how much more can this be pushed? the handseally is in of the rba. if they don't come out and tell the market this is overdone, but we want the currency back down, it to go a very long way. the u

it confirms mario draghi said prediction -- it confirms mario draghi's prediction.elf-sustaining with trends. setting us up for the september 7 meeting. what does that mean? will they made -- will they wait until october to taper on qe? those of the decisions to be made in a few months. the final charges the euro after rising for a third straight week, best run since -- heading for a fifth straight monthly gain since 2013. six month ago, peter navarro, donald trump's trade adviser, says the euro is grossly undervalued. still 14% below its fair value against the dollar according to the purchasing power parity model. 117. 50 model. highs not seen since january 2015. vonnie: fascinating. we will be speaking with mark chandler 30 minutes past the hour. we will definitely dig into that data. to the big corporate news. julie hyman mentioned earlier, scripps says yes to discovery. charter says no to sprint. forovery is by scripps $11.9 billion, creating a cable giant, but charter is not interested in a deal with sprint. sprint's owner is undeterred. lots to discuss. foring

that is the challenge for draghi. if the euro going to challenge that momentum?let me say two things on that. on the recovery, i think we should get used and we should of been used to the fact we are not going to see a rocket recovery because there is rigidities in the eurozone and that is unknown fact. what is important about the recovery is that they are broad based. when you look at the dispersion of growth rates, among the member economies, you will find it is at the lowest it has been for some time. that means not only the eurozone but group is doing well, the strong growth is broad-based. as far as the euro is concerned, -- manus: we are on the highway to fair value, i like that. guest: the ecb is aware that the euro is undervalued. and it is related to the fact that the euro is going higher. quarterly rising was there in toer to basically tried loose lending, try to put the economy back on track, try to put inflation back on the up. the latter is definitely remaining stubborn. the outward cap in the eurozone is closing at it but faster than people expected

decisions, any city presser by mario -- and ecb presser by mario draghi.ms. it is a big weight. joining us, michael mckee, our international policy correspondent you will be in d.c. for the china and u.s. conversation. what do you expect to hear? michael: probably that the two sides are working hard to get along. theuld be surprised to see steel and aluminum tariffs this week or at least before the meeting. it would be a slap in the face and a difficult meeting to have if you have done that. we could see those postponed a little bit longer, although the president promised some announcements on trade. this has been an ongoing dialogue for years. they tried to wrap it up of bit, given the president's concerns about china. we will see what kind of announcements they get. david: what about the ecb decision? what do you expect from that in the news conference afterwards? michael: a couple of weeks ago mario draghi gave a speech that change the bond market. the question is when the ecb starts tapering. there is a feeling that draghi will not come out and say the

it is a way of saying that draghi is not signaling any imminent tapering.ark carney now saying the bank of england may need to begin raising rates. earlier, week ago, he suggested he was not in that camp. >> his comments today now suggest that august 3 will be quite a tricky meeting. i'm not sure you will get a rate hike. we are getting close to that point where the trade-off between tolerating higher inflation may not be worth it anymore. jonathan: rupert murdoch's 21st century fox inches closer to securing sky in the u.k. the first we learned from the u.k. government there were a -- they were inclined to refer them to a regulator and then we heard from the regulator that they see no broadcast standard concern. is mr. murdoch a happy man for the news out of the u.k. today? >> it is really interesting to see the sky shares surge. i think they are surging because this is not the worst case scenario for fox with its proposed takeover of sky. the worst case scenario is an outright rejection. what the government has said is that they are planning, they are mind