draghi: i don't. >> ok.estion is there seems to be when people discuss the future of your program, very often the potential scarcity is mentioned. people think you might exit not because the inflation is ready, but because there is nothing left to buy. have you discussed at all changing the rules of the program just to convince markets you can do more if you want to, just to dispel these once and for all? mr. draghi: we have not discussed really the scarcity issue because so far we have ween plenty of evidence that are never -- by the way these programs were present at the very beginning of our program and we have consistently shown we have been able to cope with this issue quite successfully. remember, the change allowing the purchases below the dfr and facility rate and below the one-year maturity considerably expands the eligible universe of our program , giving it more flexibility. i'm pretty confident that when the policy decisions time comes, who is going to be able to exploit all the communities in --

it is draghi day, dd. it is draghi's day. paris is up 5.3%. .3%. by i love this.ost of one week call options on the euro are more expensive than the puts, and they are the most six pence of a in nearly one month. there is nobody that want to be caught on the wrong side of the draghi trade. nejra cehic is going to take us through the market opening. stocks are bid. relief abounds. donald reached across the aisle. nejra: absolutely. let me start with the gilt market open. 10-year gilt yields follow the yield in the u.s. lower today, we could have dropped below 1%. we are at 1.0 2% on the 10 year gilt yields, tracking european yields higher. those bond markets -- keep a close eye on the markets. we will hear from mario draghi later. up stoxx 600 overall, pointed percent. every industry group heading higher. i.t. stocks outperforming along with consumer discretionary, materials. risk on in european equities as we saw in asia and the u.s. session yesterday. you talked about draghi day. you talked about the euro. i love what you said about the calls. these are one week

draghi's dilemma.oaring euro poses a new problem for the european central bank as it debates when to wind down its massive stimulus programme. plus, high aspirations — we meet the pharma chief who's pushing cannabis as the answer to america's opioid addiction crisis. welcome to world business report. i'm sally bundock. also in the programme, the us is said to seek a ban on crude oil to north korea. details in a moment. but first, we start in frankfurt, where in a few hours‘ time the european central bank holds its latest policy meeting. the big question — when will it begin to raise interest rates from their historic lows, and start unwinding the massive economic stimulus programme that's been in place since the financial crisis? some say it's about time. but it's a big dilemma for ecb chief mario draghi. let's show you why. the eurozone economy is in much better shape. it's growing atjust over 2% a year. and the recovery is broad, including weaker nations such as greece and italy. prices are also risi

question, as it is ecb and mario draghi day, how much of a draghi distortion is in the high-yield marketr having me. obviously, the ecb will be a focal point. it has been over the last several years as the low yields has forced money off the sideline into the market, secondary or primary. the hunt for yields has been out there. we have 900 investors here, 55 differentissuers, institutions trying to do their work, their credit analysis, making sure they have the opportunity to put the money to work. $155 billion in leverage loans and bonds in 2017. 75% is refinancing driven. in thect $20 billion next 20 weeks, but it will not satiate the demand. the ecb and central banks have been keeping yields low, forcing money to find a home. he asset class has been a perfect place for it. a lot ofere has been comparison of european high-yield versus u.s. treasuries. do you get any sense from investors they are concerned they are not being compensated enough for the risks a are taking in european high risk markets? the jp morgan high yield index, the universe of euro denominated issuance, it is tradin

we're waiting for clues on tapering from mario draghi today. of course we'll also be getting an upgrade to the growth forecast, most likely downgrade to the inflation forecast. >>> the other big story we're watching today is this president trump has struck a deal with democrats to extend the u.s. debt limit by three months in a move which caught fellow republicans by surprise they preferred a longer term agreement and were harshly critical of the democratic plan. after trump sided with democrats, mitch mcconnell said he would bring the short-term deal up for a vote the move comes as trump pushed his tax reform plans at a rally in north dakota. kristen welker has more. >> reporter: in north dakota tonight president trump vowed to unveil new details about his tax reform plan over the next two weeks as political drama erupted within his own party the president met with congressional leaders this morning where he broke with the gop and sided with democrats on a bill that provides hurricane relief, raises the debt limit and funds the government for

will mario draghi try to talk down the currency?'s handling the situation? we will go live to houston for an up date. a thesea look at where are training. this is the first day in for.

investors awaiting the ecb announcement from mario draghi.hifting the focus away from what we've been focusing on this week and those geopolitical tensions. a much better day ahead. pretty flat on the australian market and from the large cap stocks in china. and hong kong has turned around in the last 10 minutes or so. flat at the moment, the kospi up by 1.2%. we're seeing a lot of fine coming through in today's korean defense stocks even of the mood has shifted little. korean aerospace of by a percent. number of coming through in saying it should be getting into stocks independent have high ocean or to the u.s.. with anese developers rebound on the hang seng. gdp a little bit of a miss yesterday. froml sales unchanged june. what is helping the australian economy is chinese demand. we have not had a recession in australia since 1991. strong demand for exports holding the economy above water. you very much. president donald trump sided with the democrats on a three months extension to the u.s. debt limit and government aid for hurricane harvey

we will bring you a week full of fed speak with draghi carney as well.bloomberg real yield." ♪ vonnie: it's 12:30 p.m. in new york, 530 p.m. in london and 12:30 a.m. in hong kong. items vonnie quinn. shery: and i shery ahn. welcome to "bloomberg markets." funny: from bloomberg world headquarters in new york, here are the top stories on the bloomberg and around the world. goober loses its license to operate in london. er loses its license to operate in london. we get the company's response. and amazon is looking to crack the code on food delivery. details on the e-commerce giant latest efforts to muscle into the restaurant business. sher

i will be watching mario draghi little more.ically auto now, -- a fall, but -- the jonathan: that is the guidance. it doesn't look like they have a clue what they are going to do yet. greg: it does not look that way. the last meeting and press conference, the market interpreted that there is something to do in october. and so, i think all eyes are on him to clarify that statement even though he did not say anything. the markets are looking for him to clarify. jonathan: what is your base case for october now? greg: i think it is steady as she goes. i mean, the challenge, if you look at the inflation numbers, that are lower today, i think their real challenges are structural. they are running out of bonds to buy so they have to do something. i do think they may announce something, but they may extend it at the same time. i don't think they are willing to give up yet. jonathan: has janet yellen made mario draghi's life a little more difficult executing this balance sheet policy story now? colin: definitely. there's no doubt about t

can draghi stop the rallies?aul: there is a lot of antigone market, people betting that the euro is going to carry on, and maybe it will be held in check for a few days or weeks by whatever drop you might be able if you see reactions in the market over qe over a six-month horizon, likewise if you look at the positioning from u.s., isdata in the shows investors are considerably long the euro, but you can look at different way if you compare the amount overruled, it is still room for them to get longer. i think there is that kind of pattern across a number of different market intakes. famous, yeah,it people are betting the view, carry on going, and they are not all in yet. there is more cash behind the euro than no matter what the ecb is going to try to do to extend the game. it will not be that successful. mark: like to have you back, paul dobson. wonderful read. which i coulds, have referred to, but time, as ever, has run out. aming up, brexit talks at standstill. if the economic minister still hoping for a clean

do you think draghi will jawbone the euro on september 7? think the euro is likely to move further from here. there is tapering happening in ever a few starting in 2018 and a first rate hike in the ecb by the ecb will be in 2019. ultimately, one of the things making life difficult for draghi is the strength of the euro tapering harder. this is the path of least resistance. manus: you will come with me that you will come with me on this journey. what is that turning take me to -- where does that journey take me to? marketsis normality and are a bit extra for over exaggeration, where does it go to on a 12 month span? or you want to pick a down to shorter-term, please do. guest: our values are around 130. the euro is as much a euro story as it is a dollar story. if the dollar continues to weaken, you can see the euro having more strength going forward. there are a lot of things going for it. the most important element is the negative interest rate environment which is not conducive to better economic growth and connectivity. it is negative in t

mario draghi said it was a particular dangerous time.ng similar remarks by janet yellen who urged any rollback of post crisis rules to be modest. banks are trying to figure out whether retail banks need to charge for meetings with clients. a lack of clarity over new market rules. the danish bank plans to offer credit research for free while charging for special requests. europe's main bank lobby, because u.s. commitment to a framework has become shaky. that is your regulation news roundup. nejra: thank you, sebastian. one of the main aims of mifid ii is to improve trading transparency and another problem is how to prevent firms from using loopholes to circumvent legislation. one loophole talks about internalizers. this allows banks and alternative way to keep trading in the dark. the issue was highlighted by the european security authority to the european commission earlier this year. the eu executive arm has since adopted an amendment to crack down on the practice. joining us now is the chairman of the european markets authority, steven

imagine mario draghi will be hinting at the way forward.oken about the fears of deflation being over and out that being a question about reflation. the next ecb meeting is on the 26th of october and that is probably the time we will see an announcement about what the plans for bond buying oui’ about what the plans for bond buying our next year, when they might be wound down, and at what pace. although as i pointed out, the economy across the eurozone is growing again, much more positive numbers, and there is growth in greece, still be economies are very vastly different. germany could withstand this rollback of quantitative easing. of course. it is different across the eurozone and there is a lot of slack in economy. the growth figures for the first half of this year are good, but if you look at the context over past decade, actually eurozone living standards are no higher than they we re standards are no higher than they were a decade ago, and therefore there is plenty of scope for the economy to carry on growing without wages taking off,

mario draghi had a chance to do that at jackson hole but decided not to.ne of the reasons we had a -- if the euro day that looks good, which it is -- speeches can have an influence but it will be critical to not let the euro go out of hand. that job morning -- vonnie: how closely is the ecb watching u.s. data and what will it and the markets have thought about today's jobs data and whether the rate hike of december is looking likely? >> if currency as an important part of the objective function, you are looking at the u.s. economy important. we had a miss on non-cop payroll data, there is a risk that the market is underestimating the fed hike. those are risk factors and not a central scenario. the ecb, its from will be more effective if the u.s. economy does better. mark: where is value in the fixed income and credit space right now? >> g4 interest rates, i do not see much value. rates shock has reduced . we are trading ranges that are narrow. i do not see strong value in duration and credit, focusing on ig is like a government bond. they are no longer sho

what was your take from draghi yesterday? how do you think he did?nk he relatively dovish speech, which ties into the fact that he is uncertainty with how to move forward when the qe program ends in january. i expect him to come up with a program that does a reduction of 10 billion euros on less economic conditions, and then will pause. saying that, i cannot claim the market for trying to force the hand of the ecb. he was too indirect in terms of his mentioning, but it was a climbs -- classic bank of japan replay. the volatility. we know how this is going to work. the foreign exchange market is testing the other side. we have a five figure upside and a one figure downside. from an economics point of view, this was dovish. matt: why does he have to go ahead with the tapered? if they downgraded their inflation outlook, they are nowhere near their target. a are further away than they thought there were previously. we saw the euro strengthening. should they not put it off? steen: you are right. the level we are at now with the .3%.is .2%, secondly, you a

i thought it was a benevolent draghi. what did you think?ask: i think the strategy cleared to taper qe. act, the medications case and from draghi and ecb will be stressing the importance of patients, persistence -- patience, persistence and prudence. that is crucial. this is about avoiding an unwanted tapering. we had a speech from an executive board member, and he broke down the euro rally into what was driving it. the bulk of the rally was domestic fundamental factors. they are not opposed to that at all. why would you be? is good news. from a segment toward the peak from 116 to 120, so a factor driven move breaking through 120 would be a concern. they need to make sure they emphasize how loose monetary policy will be in order to limit the risks on the euro. this is the one-month risk reversal. i could keep it short. derek: i think the run is done. we look at the reports on options, and we see the balance of the flows and puts, and two weeks ago there was an extreme bullish indication from the market. that has come back down close to balan

david: mario draghi basically stopped short of saying watch october.rencies in the next, one of the better performing currencies. what did he say are not say about the currency and why is the currency, the euro, above 1.21? above, .120,ing and he said that the euro needs more monitoring and is causing uncertainty. volatility in the exchange rate represents a source of uncertainty which requires monitoring with regard to its possible implications for the medium-term outlook for price stability. 438, not just what is happening tonight. year, aat happened this 14% rise in the euro versus the dollar. in 2014, mario draghi expressed serious concern about the euro as it went to 1.40. you can see the point where the euro started falling against the dollar because that is when they relaunched quantitative easing. he did say exactly that they are starting discussions now and may make an announcement and something to say about the process of bond buying in october, but said they could modify that. he is watching the data. they are projecting a stronger recovery,

who has the tougher job, janet yellen or mario draghi? >> i would say draghi.ues. there are a lot of issues. guy: i'm going to ask whether the periphery is strong enough to sustain this. >> that is the big question when you talk about growth. german companies, you see the effect the dax is. that will not bring down the german economy. that is true. italy is the one you have to wonder what will they do? they have probably been helped by a weaker euro. guy: how brazen is draghi feeling? he knows the election is coming up. gohe brave enough to really aggressively down the route of tapering when he is facing political turbulence? >> i don't think he will do things because he is italian. i think every central bank president has to take charge. guy: i have got to wrap this up. thank you. flip saunders and christian keller. this is bloomberg. ♪ ♪ unacceptable and unfair. china fires back as president trump threatens to cut off trade after north korea's latest test. did schulz blow his chance to break through on the polling numbers? ceo, ang retiring surprise move. thi

the euro above 10 as draghi speaks claims do jump to 298,000. our road map begins with cohn on the outs the president no longer considering him as the next fed chair. >> plus bracing for one of the most powerful atlantic storms ever recorded. hurricane irma is is battering puerto rico overnight. >> deal maker and chief, president trump stunning republicans making a debt and harvey funding deal with democrats. >> first up stocks are aiming for a second straight day of gains following tuesday's sell off. coming off it's 7th positive session with the energy sector posting the best day in a couple of months. trying to make some connections between irma and what it might bo dodgers the gdp and rate hikes and not to mention more stories about reinsurers and the damage they may sustain. >> we saw an up tick in jobless claims this morning. that was expected. it's going to hover for a little while. at least on the debt ceiling front you got a little bit of clarity so you're adding and subtracting as we go along. >> talk about a big jump is the euro tradi

mind, keepingin in mind what mario draghi had to say.ht touch herbalism.-- we went up about 120. the bond markets, a mixed picture for global equities, asian equity markets making some advances. u.s. treasury yields approaching 2.0213. it went below 2%, it would be substantial in the yield story, but we keep an eye on that. let's get a first word news up with juliette saly. waves oversunami three meters high could hit the coast of mexico. this alert over the last half hour. a massive magnitude eight earthquake struck off the southern coast of mexico, causing buildings to sway violently and people to flee in panic as far away as the capital city. a tsunami up to one meter could hit the coast of new zealand. hurricane irma continues on a collision coat -- course with miami after devastating the caribbean islands. hurricane center is forecasting a direct hit on florida sunday, mostspect of having the expensive storm in u.s. history. storm destroyed almost all of the homes on the island of our killing atbarbuda, least eight people. president

draghi sort of polluted to it -- alluded to it. commentary seems to suggest the reason why they are not too concerned yet about the euro is because it seems to be a result of the good demand shock. it's a manifestation of confidence in the eurozone and in their policy. owning know you prefer em currencies over the euro. which ones, and why? alessio: today's decision very much fits with that thesis. the eurozone will be more cautious as a result of acknowledging euro strength and financial conditions. this creates an environment where growth is excepted to remain strong globally and inflation risks are nowhere to be found globally. in that environment, em currencies and carry trades and programs assets tend to do very well -- progrowth assets tend to do very well. with respect to which em currencies, if we find a bottom and commodity prices, in oil, in particular, because industrial metals are doing very well, maymodity currencies -- they get backing -- back in vogue. that carry trade call plays in nicely to em local debt as well. e

president draghi urges patience as the economy continues to outperform. >> it is hard to talk down yourrency when fundamentals are improving. >> the currency has been a headwind, but we believe we are justified by the domestic strength of the economy. the reason why are not too concerned yet by the euro is it seems to be an exogenous shock. it is a manifestation of the confidence of the eurozone and their policy. >> the eurozone is now growing as much as the united states. and so, i don't know if you change monetary policy if it affects it much. i think the euro is correcting for a changing growth rates that is now reestablished in the eurozone. he is trying to tight rope between not announcing a tapering decision ahead of the governing council, he really didn't have a lot of leverage with his words. jonathan: joining me here is the head of global bonds and chief investment strategist at pgim fixed income, also eric stein from eaton vance, and trey parker at highland capital management. gents, great to have you on the program. here is what jumps out to me, the last couple of months, the

when draghi made that point in the previous meeting, he was right. and still it is the case.ic conditions, lending rates, qe, the balance sheet continues growing. all of this, the monetary, credit, market going to the index he mentioned. has worsened, but other factors have been enough to offset it. that is not the case for inflation. for growth you can make a similar story, it has been doing well, but inflation, that's where it hurts. that's where pass through is significant. biggest headache. the ecb has a single mandate, which is inflation. that will be at the center of the debate tomorrow. nejra: what about the debate in on potential impact sustainability? themos: i think that's not an issue that should be linked in the minds of market participants to monetary policy. for whatever reason whether the debate of whether it's a leak is or is not in the monetary union resurfaces with a political crisis, that is a problem. that is a risk and it may resurface for the end of the year. -- italian economy in a good scenario can withstand higher yields. -- itgher yields trigger does

>> i think mario draghi really has to tight rope monetary policy.e has to slowly normalize and bring down the pace of quantitative easing. look at global yields. they had been falling. now bund yields are going to fall as well. the way we have always looked at currencies at eaton vance is one versus the other. the dollar has been weak this year. this is the inverse of dollar weakness in addition to the positives we mentioned in your. robert: the other thing on burns is there is no supply. the fixed supply is a small market to begin with. the ecb is fine based on capital key. a quarter of their purchases every month are getting squeezed into the bond market. that market is under pressure. jonathan: trey parker, after hearing from mario draghi of the ecb yesterday, what is the base case for you now on the recalibration of policy later this year if it gets announced? trey: i think mario is still trying to walk a tightrope in terms of waiting and seeing the data. i don't think he is too concerned about euro strength. on a trade weighted basis, it is onl

i will be watching mario draghi little more.itely autumn, or the fall -- jonathan: that is the guidance. it doesn't look like they have a clue what they are going to do yet. greg: it does not look that way. the last meeting, the market interpreted that there is something to do in october. i think all eyes are on him to clarify that statement even though he did not say anything. the markets are looking for him to clarify. jonathan: what is your base case for october now? greg: i think it is steady as she goes. the challenge, if you look at the inflation numbers, that are lower today, i think there are real challenges that are structural. they are running out of bonds to buy so they have to do something. announce something, but they may extend it at the same time. i don't think they are willing to give up yet. jonathan: has janet yellen made mario draghi's life a little more difficult executing this story now? colin: definitely. there's no doubt about that. i think she makes my life more difficult because within the fed we have no

the euro extended its gains. 0.4% now ahead of that >> testing mario draghi. >> testing mario draghi, yeah. the yen higher by a quarter percent. the pound higher by 0.2% so slight dollar weak day. gold preices have had a good run of late. back up today, 3 1,343. >>> mitch mcconnell introducing a bill last night that would link $15 billion in disaster ai and relief with the deal struck by president trump and the democrats to raise the debt ceiling and keep the government open and funded until mid-december mcconnell announced his support for the plan following the surprise announcement by democrats that president trump backed their request that any deadline for extending the debt ceiling lineup with the short spending package republicans wanted a longer deal on the debt limit, 18 months through the midterm elections. the "washington post" says the senate is expected to vote on the bill tomorrow what comes out of this is a three-month punt down the road which sets us up for pre-holiday politics where republicans who disagree with the strategy might say democrats have an upper hand when i

this is a man who taught been bernanke at mario draghi -- ben bernanke and mario draghi.ark: you wonder what mario draghi is ranking with that big thinking with that they did -- thinking with that big decision for trump has of the power to shape 2 institutions for he has withd the supreme court the appointment of neil gorsuch a he can shape the fed and his -- and he can shape the fed in his own light. how do you expect them to do that? marty: he is acutely aware of the feedback for market participants and business leaders. he wanted to be a member of that club and frankly done things to try to please those people in many respects although notwithstanding and daca notwithstanding. he will try to shape it in a responsible manner because of that is the way he has approached these previous fed them nominations -- fed nominations and kept gary cohn close to him. i think that would be his legacy, just like you think gorsuch was a tremendously viable pick and a -- if i may say, judicious one, i think he will go in that direction, a person uniquely qualified for that position. ju

draghi declining to talk about any action to reverse the course. highest for the euro against the dollar since 2015. look at the u.s. 10-year yield. down by a basis point. lowest since november 8 last year. you know what happened on that day, the election in the u.s. geopolitical tensions, hurricane irma, driving yields lower across europe as well. nymex crude is lower today. it is headed for the first weekly gain since july as gulf coast refiners ramp up crude processing after destruction from hurricane harvey. let's get the bloomberg first word news. taylor: in mexico, the president says an earthquake struck off the country's southern coast am the strongest in a century. the 8.1 quake hit the ocean 20 miles off the coast and has killed at least five people. the pacific tsunami warning center issued an alert that tsunami waves were possible across some coasts of mexico and guatemala. hurricane irma continues on collision course with miami after battering puerto rico and a chain of caribbean islands. the national hurricane center is forecasting a d

particularly as we going to be watch the headlines. >> mario draghi will continue to be very cautiousn terms of the ecb's ultimate normalized interest rate normalization path. the data continues to show that the ecb is probably closer to the end of -- the beginning of normalization cycle, rather than at the end. i think mario draghi will continue to talk down a little bit on aggressive interest rate cycle normalization. it's unlikely to be a significant drag for further european strength -- euro strength, considering that the data continues to show that the ecb is probably on track to normalized interest rates sooner rather than later. >> i think timing is still people,t, a lot of including bloomberg intelligence looking for the discussion to take place. that's just next month at the ecb. start the policy of purchasing fewer bonds not what the fed is doing it, #btv for 65 shows you where the headline inflation rate at one point expect to go up. the core rate is down 1.2. still pretty far from that, just under 2%. are they can't be on guard the paper starts? if mario draghi sticks to h

to be honest, draghi has not spoken much about tapering since that sintra speech since then he's been hum what c mum. what can we expect tomorrow? >> in june they said in autumn they would start think being alternatives i guess september is technically the beginning the autumn time so we could hear some details about the future of quantitative easing and whether or not they'll start tapering the issue is the strength of the euro currency. we have appreciated a lot this year versus mostly the u.s. dollar inevitably that will have an impact on eurozone inflation and at tomorrow's meeting they are set to release their latest economic projections the 2019 hipc forecast is what the market is focused on it's expected to drop on the back of the euro appreciation effects it was 1.6%, expected to go down to 1.4 with that back drop it's difficult for him to come in and justify tightening financial conditions and would join some of that liquidity injected in on a monthly basis. the issue is the question of tapering is not when it happens, it's not if it happens, but when it does happen and at so

the ten-year treasury note back below 0.5% 2.04% this morning mario draghi didn't really say anything that bullish for the euro they lowered their inflation forecast for next year ecb has a single mandate either way, it sparked a broad selloff. >> because he didn't jawbone the euro weaker in a stroke enough way, so everybody took it as a license to keep buying it. he talked about how the strong euro is impacting inflation, they have to work on it, incorporate their analysis and decisionmaking but he did not say anything about extreme moves, or anything -- >> but that's not in his mandate. i didn't expect that personally. it was an odd spot for it. if we look at the euro/dollar pair, yes, yield differentials between treasuries and bunds have moved in a way the last three, four months to suggest the euro needed to rally, but not to this extent i don't see what spark was yesterday to see it jump up again. >> we talked to strategists about this, it was happening on "squawk on the street," beyond the euro factors, the fact that draghi's lack of stronger words was a license to buy north kor

but's talk about the focus of last night's debate, that is mario draghi.raghi is at a point where he is happy to talk down the euro? we're trading around 1.20. would he be correct to do so? week we arethis expecting a more dovish state than two talked on the euro, but on the 26th of october, at the conference, he is more likely to come up with a clear plan for the tapering and quantitive easing -- and quantity of eating -- quantitive easing. don't forget we are likely not going to see any move in interest rates before 2019. the regionta out of at the moment are incredibly good. the survey data, you look at the pmi's, they remain strong. do you think the market is underestimating the political tensions that could arise? looks likeelection angela is going to win, but if , maybe we get a harder line when it comes to germany's eurozone partners. we have a big meeting today relating to a referendum in catalonia. are plenty of political problems that could start to reinsert themselves this september. if you've got to political risk, you might say that it is over

president mario draghi said decisions on any change to qe would likely be made at its october meeting. draghi refused to comment on specific levels of the euro as he usually does, but says the recent strength was the cause for the downward revision of inflation forecasts. he also added there would be consequences to trade from the high euro and it would take close monitoring >> the exchange rate is not a policy target. it's very -- it's important and very important for growth and inflation. and it's so important that the medium term outlook for inflation was revised downward in the staff's projections, mainly due to the upward position of the exchange rate. so we will have to take into account this element in our information set in our future policy decisions >> joining me now for further discussion, nick nelson head of european equity structure and michael kelly from pine bridge michael, let's kick things off with you market reaction was a bit of a strange one. we saw yields moving lower the euro shot up how do you explain that? >> well, i think, you know, it's interesting times. the

euro draghi says volatility is a source of uncertainty as he opens the door to start winding down qe.hat do traders think of this somewhat dovish sign? -- president trump sized with democrats on a short-term debt deal. what are the further points on getting significant legislation through? mark meadows ways in. and hurricane irma has already hit the caribbean and it's on his way to florida. we will look at the potential impact on everything from insurers to commodities like orange juice. 30 minutes into the trading day and abigail doolittle is here. abigail: not a lot happening right now. opened with gains but now we are looking at small declines. not a lot of conviction from investors area they are dealing weh so much at this point, also of course have the influence of central bankers and mario draghi with all of these hurricanes and right now we are looking at unchanged markets and on the week we are also looking at the kleins based on tuesday passed big pullback. thee was mentioning influence of hurricanes on the financial markets. let's take a look at those influences. if we take

draghi theman make remarks on reduction of the bond purchases by the end of october.anus: what does he want to avoid, i am looking at the bund market. the spike took us to 6% but it was about the speed of travel to .6% that perhaps harangued policymakers. if he goes -- what do you think he is going to announce, what do you think they are going to announce in terms of the reduction of asset purchases? blackrock has a callout this morning that next year the european central bank will go from 60 billion euros to 30 billion euros a month, that is quite aggressive. that he iso think going to be a bit more smoother as with the -- following the path of the u.s. federal reserve . they are going to take their time in reducing the purchases. we think they are going to reduce purchases by 20 billion euros a month toward 40 and having a gradual decline toward year-end and by the latest by march 2019, they should be done and dusted with the tapering. so that they have room to increase interest rates in the spring or summer of 2019. if it all pans out as they expect. given the stre

draghi and the edata.he latest eurozone inflation figures show energy prices the driving price gain. will that prompt more caution as the ecb meets. this is bloomberg. ♪ mark: you are watching bloomberg "surveillance." the ecb's latest policy decision thursday. mario draghi yet another piece of evidence that advocates caution when officials discuss their plans. inflation data yesterday showing only energy has affected the driving price gains, accelerating growth. as it beat forecasts, the trend is far from entrenched. this is a great shot. 47.15. which shows the output gap. which has narrowed. but this is super core inflation and it includes the categories of prices that relate to the amount of capacity in the economy. as we can see there, it is showing few signs of life. is the big issue right now? >> it is the issue. because if you want to taper q.e. to arrestntroduced the inflation expectations. if you now want to remove that, you have to make sure that the outlook for inflation is not deteriorating. so

draghi did not say enough to stop the euro's advance. there was brought concern among the governing council, but it wanted monitoring, stopping short of that verbal intervention some thought he would give. 1.2030. remember these levels, 1.03. parity,talking about but it has been a different story ever since. manufacturing data out of the u.k., the economy having a mixed start for the third quarter. manufacturing boosted by a strong rebound in car production. the trade deficit was little changed from the downwardly revised due to construction after plunge in orders in the second quarter. these do little to dispel the view that the economy is stuck in the slowing is a brexit uncertainty -- because of brexit uncertainty. surveys showing the dominant service industry is continuing to lose momentum as well. construction the blue line, manufacturing the white line. grew less the economy than the government's preliminary estimates in the second quarter, weighted down by capex. 2.9%. they have maintained six consecutive quarters of growth, the l

draghi does is the extent to which there is growth in europe.hange the growth pattern for germany and europe? have they been held back at all in the coalition? if they go with a more business oriented coalition, does that mean chancellor merkel will be freer to pursue more progrowth strategies? >> i don't think that is the case. it has been against progrowth policies. you cannot charge them for having been an impediment to german economic growth. as we discussed earlier, i think the results of the elections will not change that picture much anyway. the key is not the fiscal policy short-term. the key is the economic cycle. whatever is decided on the fiscal side is not going to have an impact on investments or consumption before a year or so which will keep the question open as to what happens to this cycle in six months or so. the difficulty is we know the central banks have been cautious to wait until the economy would have enough momentum to start tightening. now they are doing it. unfortunately, cycle is still there. in about six months, they

a triple threat of bankers, mario draghi spoke today, janet yellen follows a suit in the coming daysith a dozen other officials in between. the price to see bruce springsteen on broadway could set you back $10,000. can you guess who is getting scammed? what did you miss? divergent tests. -- pats. sts. they are trying to boost inflation. the u.s. federal reserve announced to the return to normal last week. a plan to reduce their balance sheet but not every other policymaker is following suit. is nathanlp us sheets, chief economist at the this place. in theot to central bank united states. still, game on potentially. what is the risk for a policy surprise? a policy error from the federal reserve? willthink that sad continue to be very interdependent. it will respond to the economy. probability that the fed makes a mistake over the next six months is relatively small. on the longer horizon, the fed might misjudge the inflation process. come either higher or lower than what they expect. i would say that that is a risk. hopefully over the longer horizon, the fed will remain vigilant. abou

mario draghi's dilemma. euro poses a new problem for the european central bank as it debates went to wind down its massive stimulus programme. plus, high aspirations. we meet the pharmaceuticals chief pushing cannabis as the answer to america's opioid addiction crisis. hello, and welcome to bbc news. hurricane irma threatened much, and it's delivering on that threat. one of the most powerful atlantic storms on record has pummeled a number of caribbean islands, notably the leeward islands, with extremely heavy rain accompanied by winds of up to 320km/h. that's 200 miles an hour. the prime minister of antigua and barbuda has told the bbc 90% of buildings on barbuda have been demolished. he said the island, home to about 1,800 people, is now just rubble. a 2—year—old child is believed to have died and 6 people are reported dead on saint martin and the neighbouring territory of st ba rts. the eye of the hurricane has passed over the british virgin islands. puerto rico awaits, as does florida. andy moore reports.

let's talk about the uncertainty that mario draghi is talking about.only uncertainty of you don't know what the current he is going. irrespective of what the said, i think the currency is going to be rising. that makes the market fundamentally isometric. on the one hand, the ecb is dovish in october or december when they fire the gun, duration will be well supported. bond prices should be rising. hawkish, the euro is still going to be rising. david: are they going to be out of the online business? vadim: they are going to have to reinvest. growth, by the end of this year it is likely that growth in the balance sheet will start to turn to zero. draghian: didn't validate the market? he said they remain accommodative. isn't that what we've seen in the fx market and elsewhere? peter: i would like to think of him being once a pattern of the other governing council members. is preservingo the euro area and the mechanism in the past, it suits mario draghi to have the euro theinuing to rise so that december forecast be revised down again. that means monetary p

does that help draghi out? christian: if you think through the weaker currency, it is better for inflation on the other side of the super euro this year was bringing down the inflation rate. a weaker currency certainly helps for the ecb to start tapering and exercise the tapering idea. quite heavy with the euro result. guy: do you think december is going to be on? what is the fed going to do that go -- going to do? christian: i think the markets always underestimates central bankers to the upside and downside so i think the fed is moving in december. we probably get two more rate hikes next year. the balance sheet reduction is similar to a rate hike condition. >> if we get tax cuts come through this week, the president is going to talk about it tomorrow. nevertheless, it is meant to be a big policy announcement tomorrow. how does that work with the mix in terms of the dollar? christian: i don't think it is happening so fast. it would take some time before it takes reforms to come in. it is a very important topi

next hour,we also talk debt fro draghi.k etf with black rock -- blackrock. ♪ ♪ haidi: asian stocks said to follow the u.s. higher as president trump makes the debt limit deal with the democrats, also talking up tax reforms. betty: the u.s. talking about banning exports from north korea. missile launchers were reportedly deployed in the south. haidi: another top vacancy at the fed, with stanley fischer stepping down. it gives president trump a choice between continuity or change. betty: an appetite for expansion, mcdonald's in japan, they tell us why they are adding restaurants for the first time in five years. they're going to love it there. this is the second hour of "daybreak asia." i am betty liu in new york. lun in sydney.di the other thing i am thinking about is the strength of the yuan. there is talk about whether it has become a reserve currency or perhaps a safe haven currency. look at this chart, 6914. the correlation in the trading pattern when it comes to gold, it has been trading very, very closely, in the event

will mario draghi try to talk down the currency? drenchedter harvey texas, how are oil and wrestling anthony's handling the situation? we will go live to houston for an up date. a thesea look at where are training. this is the first day in for. north korea tested a nuclear bomb on sunday. two industry groups are rising and the rest are lower. by twon gauge was down thirds of 1% are in now it is -- .5%..5% area the vix raised by 12%, the most since mid-august. that was the day that north korea fired a missile over japan. to trump's fire and pure he comments had the gauge rise to 19.3%, the highest since april. levelsnowhere near the we were before the french election in may. that is the german ten-year. it is down a basis point, 36 basis points as well. china sent that missile over japan. the yield on the 10 year falls to its lowest level in the yields have changed little over the week. 60july 13, the high was basis points. that was the highest since january 2016. it has come down 17 basis points eyes are on mario draghi the ecb thur