last month the e.c.b. president hinted that today a cut may be on the cards. >> comfortable with acting next time. before we want to see the staff projections that will come out in the early june. >> bloomberg's guy johnson is in frankfurt where draghi will be delivering the central bank's latest decision. he is eagerly awaiting the projections and is going to tell us what is expected from the e.c.b. today. guy? >> well, the projections are going to be interesting. they will tell us about projected c.p.i. moving forward from here. inflation is acting as the catalyst at the moment. the low growth environment is the catalyst to get the e.c.b. moving. the bank will be charged to part money overnight at the e.c.b.. this is a big move not to be underestimate. probably the market is anticipating. then we might get credit easing, some kind of funding for lending scheme. and we may -- just may get some announcement related to the asset purchase scheme. this could be q.e. ala e.c.b.. we'll see what format it takes

the e.c.b. and what went on here now they lowered rates instituted negative deposit rate instead of credit operations to induce banks to lend to small businesses and households but here's my question can you walk us through what these steps are and what these measures mean for the euro well the the big news here was the negative deposit rate banks are sitting on a lot of excess reserves they have depositing them with the central bank and of been picking up zero percent now they will small marginal penalty of one tenth of a point. my own view on that it's a i'm a little apprehensive about it there are some potential. downsides to this that i don't think i've been addressed enough. one thing that you are doing in a sense is you are throwing costs back on to the part of the banking system at zero there was nothing either way now this was a small little tax so presumably it's going to pass that back either it will be on deposit is or conceivably it could be passed on to lenders so you could actually

the e.c.b. has already fixed that.or lending scheme out of the bank of england will target s.m.e.'s. they are impaired. capital impaired now. funding for lending schemes could be on the cards here. they could lower the risk weight for the banks. that would help. certainly did in the united kingdom. then get on the the big one. could we see some kind of q.e. here today? les of loans from the banks to s.m.e.'s so they can reuse that noun do more loans. that is something that is controversial. global regulators are down on securitization. they have been launching a campaign of late to get the rules change to allow the securitization of s.m.e. loans. the infrastructure is not ready. he may talk about that today. are we going to get all of that? the market is short euros expecting we will get an overdeliver from the e.c.b. as a result of what we're going to hear today. if they don't deliver, do we get towards 140? back to you? >> thank you very much. it is not just the bank of eng listened. not just the e.c.b.. we kick off

first up the e.c.b. announced some drastic measures today what are they and how effective it will they be we look into a coming right up then we have dr thomas sally live and in studio today dr polly is sitting down with me to discuss the e.c.v. is announcement as well as keynesianism in the context of the world of monetary policy domination of cool and in honor of the one year anniversary of edward snowden the n.s.a. revelations we have lived our lives and on the show today i sat down with all of our earlier today to discuss how the government bullied him into installing surveillance equipment on his servers which ultimately forced of the shutdown is company not cool you don't want to miss a moment and it all starts right down. we've been anticipating this all week and it's now finally happened the european central bank has introduced a number of different measures aimed at stimulating the eurozone economy measures like negative interest rates and cheap long term loans to banks now these secrets deposit

i think the e.c.b. wishes they would but you know when the week that the e.c. made the announcement the euro got down about one thirty five we haven't taken out that level the low for the year with said earlier this year in february at about one thirty four seventy five or so we're not at those levels i that's i think the e.c.b. the bit frustrated with how resilient the euro has been but partly i'd say this is the way predictable in a sense that we too are looking for a firm euro after the e.c.b. announcement for a couple reasons one is the markets are incredible but the anticipatory nature since may drag him to be able to do something in june the markets had been discounting that in addition to that what we saw happen with the federal reserve announced q e three back in september of two thousand and twelve they had tipped their hand the market anticipated it to dollar sold off before q e three was announced and then valued afterwards as if the markets were selling the dollar on the rumor and buy on the fact that is the essence what we thought was going to happ

i suppose it is and this is this is a long time coming at the e.c.b. has a couple of years back when it america's drug will do anything we can they have been pushed around doing everything they can to push down. government bond yields making it taking pressure off government by government finances but the bottom line is the europeans if they want to stay with the euro they've got to take some other measures and i think the simplest measure is some common financing which would then allow a european wide fiscal expansion and that's not something they have to do and that's something that our policymakers should be saying publicly that's put some pressure on them you know will the e.c.b. be effective in this you know they're just they're small first steps and some people say they'll be a little taxes all these questions but it's not a huge push will be effective and if so why or why not well for the reason is that some of the reasons i've already said some of the negative reasons the more you the more taxes you put on again you put pushing costs on to the

with the e.c.b. announcement thursday it seems like monetary policy is the only game in town the u.k. and japan are maintaining their quantitative easing programs and only the u.s. seems to be pulling back from these unconventional methods now the e.c.b. announcement is historic negative interest rates four hundred billion euros of a long term refinancing operation and halted sterilization of government bonds which the wall street journal says is effectively its own q.e. program so they're kind of just like you know us and japan now economist dr thomas poly is here to discuss the e.c.b. is announcement as well as keynesianism in the context of the world monetary policy of domination i love that term now dr polly is the author of from financial crisis to stagnation welcome to the show again it's always a pleasure having you here dr polly now i want to first talk about macro economics here but before we get there first first i want to talk about you know that you see b. and what went on here now they l

might have to do more in fact mario draghi himself said at the last e.c.b. presser so if the e.c.b. does do more what would you recommend to do and why why i think there's no doubt that mario draghi would like to push for them and that's pretty clear from his language his spotty language certainly suggested i think he wants to go forward with some version of quantitative easing large scale asset purchases it's clearly much more difficult to do in the european. tax than it is in the united states the fed of course has. been a big buyer of u.s. treasury securities and mortgage backed securities there is no version of the u.s. treasury market in europe so the e.c.b. the options are more limited and controversial they could intervene in the sovereign bond market and i think that may still be too difficult politically to get through the governing council in the next several months or as mario draghi hinted they might move forward. with the establishment. deeper asset backed security market in which the c.b. would intervene in order to push down private lending rates ben do you think that

the e.c.b. might have to do you more in fact mario draghi himself said at the last e.c.b. presser so if the e.c.v. does do more what would you recommend it do and why his language is spotty language certainly suggested i think he wants to go forward with some version of quantitative easing large scale asset purchases it's clearly much more difficult to do in the european context than it is in the united states the fed of course has. been a big buyer of u.s. treasury securities and mortgage backed securities there is no version of the u.s. treasury market in europe so the e.c.b. the options are more limited in controversial they could intervene in the sovereign bond market and i think that may still be too difficult politically to get through the governing council in the next several months or as mario draghi hinted they might move forward. with the establishment of a deeper asset backed security market in which the c.b. would intervene in order to push down private lending rates ben do you think that young vide men will go along with q b. that's yet to be seen it is signif

presser so if the e.c.b. does do more what would you recommend to do and why well i think there's no doubt that mario draghi would like to push for them and that's pretty clear from his language his body language certainly suggested i think he wants to go forward with some version of quantitative easing large scale asset purchases it's clearly much more difficult to do in the european context than it is in the united states the fed of course has. been a big buyer of u.s. treasury securities and mortgage backed securities there is no version of the u.s. treasury market in europe so the e.c.b. the options are more limited and controversial they could intervene in the sovereign bond market and i think that may still be too difficult politically to get through the governing council in the next several months or as mario draghi hinted they might. move forward. with the establishment of a deeper asset backed security market in which the c.b. would intervene in order to push down private lending rates ben do you thi

presser so if the e.c.b. does do more what would you recommend to do and why why i think there's no doubt that mario draghi would like to push further i mean that's pretty clear from his language his body language certainly suggested i think he wants to go forward with some version of quantitative easing large scale asset purchases it's clearly much more difficult to do in the european context than it is in the united states the fed of course has. been a big buyer of u.s. treasury securities and mortgage backed securities there is no version of the us treasury market in europe so the e.c.b. the options are more limited in controversial they could intervene in the sovereign bond market and i think that may still be too difficult politically to. through the governing council in the next several months or as mario draghi hinted they might move forward. with the establishment of a deeper asset backed security market in which the c.b. would intervene in order to push down private lending rates ben do you think tha

treasury market in europe so the e.c.b. the options are more limited in controversial they could intervene in the sovereign bond market and i think that may still be too difficult politically to get through the governing council in the next several months or as mario draghi hinted they might move forward. with the establishment. deeper asset backed security market in which the c.b. would intervene in order to push down private lending rates ben do you think that yen vide men will go along with q.e. that's yet to be seen it is significant that he allowed druggy to go forward with the statement that the e.c.b. was investigating the use of the asset backed securities market as a means of engaging in asset purchases so there's no doubt that drug use to achieve some some progress within the governing council. now elsewhere in europe we've got some serious internal conflict i'm talking about the ukraine of course now ukraine's economy it's a mess but they were able to get an i.m.f. bailout in order to stabilize things so do you t

might have to do more in fact mario draghi himself said at the last e.c.b. presser so if the e.c.b. does do more what would you recommend to do and why why i think there's no doubt that mario draghi would like to push for them and that's pretty clear from his language his spotty language certainly suggest it i think he wants to go forward with some version of quantitative easing large scale asset purchases it's clearly much more difficult to do in the european context than it is in the united states the fed of course has. been a big buyer of u.s. treasury securities and mortgage backed. curity there is no version of the u.s. treasury market in europe so the e.c.b. the options are more limited and controversial they could intervene in the sovereign bond market and i think that may still be too difficult politically to get through the governing council in the next several months or as mario draghi hinted they might move forward. with the establishment of a deeper asset backed security market in which the c.b. would intervene in order to push down private lending rates ben do you think

i think it's tough to measure how to how to do it can be successful member of the e.c.b. did previously they gave these long term weipa operations three years allowed banks to repay them early now if you can offer is these targeted long term operations which are targeted to try to help encourage banks to lend to small businesses and households and i think you will find is that a lot of the banks will not borrow will not take advantage of the program i think that the first l.t. arrows were didn't have a stigma attached to it everybody almost every bank participated in it but now i think that with the the europeans are conducting a stress test the asset quality review the attempt to normalize bank balance sheets i think will deter many banks from taking that money that money also they can't just take that money and use it to buy government bonds like they did the first l.t. arrows this this time at least from a drug he said more details will have to be forthcoming but you are you already indicated that the banks will be have extra reporting requirements to make sure that th

how paying risks is this for the e.c.b.? >> i think the e.c.b. has been discussing a negative deposit rate for sometime. also with banks, with -- with the other national central banks. i think the risk at this stage probably legitimated. we also don't expect the e.c.b. to move the deposit rate too deeply into negative territory. >> they are going to dip their toe in the water here. i guess one of the reason as far as that is they don't understand how the money market is going to react. another reason potentially is the banks presumably will at some stage have to pass this on to their customers. if they don't pass its on, that is going to hit their profitability. banks are short of capital now. you don't want to hit the capital. i guess that is a risk as well. >> that is true. first of all, you can't go too negative. then banks and other customers are store the cash in their basement. unless you tack it. the negative -- tax it. the negative can't become too negative. banks can't pass on those costs. it is probably going to hit the profit margins,

presser so if the e.c.b. does do more what would you recommend it do and why why i think there's no doubt that mario draghi would like to push further i mean that's pretty clear from his language his spotty language certainly suggested i think he wants to go forward with some version of quantitative easing large scale asset purchases it's clearly much more difficult to do in the european context than it is in the united states the fed of course has. been a big buyer of u.s. treasury securities and mortgage backed securities there is no version of the us treasury market in europe so the e.c.b. the options are more limited in controversial they could intervene in the sovereign bond market and i think that may still be too difficult politically to get through the governing council in the next several months or as mario draghi hinted they might move forward. with the establishment of a deeper asset backed security market in which the c.b. would intervene in order to push down private lending rates ben do you thin

the e.c.b. state summit in brussels. and vladimir putin is in paris. >> magic recovery. the wizarding world of harry potter, jobs appear out of thin air. you'll see why florida loves j.k. rowwilling. >> we'll show you how v.i.p.'s take in hockey's grand finale. you're watching "market makers" on bloomberg television. >> down pouring in new york. >> she's in a sunny locale but working hard. >> time for the news feed top of the stories around the world. the nation's job situation continuing to improve. government report showing new unemployment claims at their lowest levels in seven years. fell to 310,000 last week. amazon is planning to introduce a smart phone later this month. according to a person familiar with the plan. it would ramp up if rivalry with apple. the company tweeted about an event it will hold in seattle on june 18. a picture of its thin black device offering a hint of what the phone might look like. military jet slammed into a california neighborhood yesterday afternoon. amazingl

. >> coming up, the e.c.b. enters unchartered territory.es be enough to protect europe's fragile recovery? we'll discuss with a senior economist. coming up next on "the pulse." ♪ >> good morning, everybody. welcome back. you are watching "the pulse". let's take a quick look at the markets. a look at what's happening in the bond markets. equities are not doing very much today. you can see what's happening what's happening. this is the 10-year. we are down significantly. we're now yielding 2.70. you're seeing a similar thing in some of the other peripheral markets as well. you're not getting a big yield in equities. you're getting it in the 5-10 section of the curve. the euro is back down again this morning. it rallied back up after the announcement yesterday from draghi after initial dipping. the market was short as well going into that. the positioning is quite interesting. we're going to -- show you pictures coming out of -- we have been listening to president hollande speaking. the u.s. president is about to speak at the u.s. cemetery in

and the e.c.b. is now charging them therefore making gold look much more attractive because you're starting to be at the same cost of storing gold so why not just store gold in a facility and watch it rise but the other thing is is there's not an issue of supply they're saying that if if we charge you to deposit your excess reserves that that european central bank it will encourage you to lend more but on the other hand all the national governments and clued in the are a peon commission and the e.c.b. and the troika they're all pushing austerity on everybody so there's a lack of demand people are unemployed there's no you know if you're in greece and you look around you you see everybody and unemployed you see a forty percent cut to the health care budget so i don't know said it's about demand you have to put money into the hands the people well you know that there's a surplus on the balance sheet of the banks is a misnomer when banks lend to each other they create debits in other banks who and then

the e.c.b.'s governing council will be meeting on thursday to discuss how to responsibility. there is speculation the central bank will take action to boost lending to small and medium sized businesses. now ahead of the e.c.b. meeting, investors were seen taking a step back in the stock markets. urope finished in negative territory. after hitting record highs on monday, the dow and s&p 500 s&p 500 in the united states are in negative territory. general motors and ford are among the winners after better than expected car sales in may, but not enough to lift the industries above the flat line. the european union has told bug -- bulgaria pend to suspend preparations for a pipeline. it would bypass ukraine. the european commission calls for a suspension pending a decision on whether the project violates e.u. competition law. a spokeswoman for commission says south stream should be value waited in light of european priorities. european leaders have called for a review for energy supplies during a stand off with ukraine. the bulgarian minister says he believes the pipeline could bo

well it clearly is a concern and that's why the e.c.b. mario draghi is talking about potentially adding more liquidity some kind of a quantitative easing program which they think will kick off next month and they're saying oh i don't have your expectations too high they're already trying to manage the markets expectations on that one but the thing i find really interesting in the context of europe and particularly the eurozone is the split the widening divide as inflation begins to pick up a little bit in germany and deflation continues to accelerate in spain so the do lie between the two say this is getting wider that's going to make it much harder for the e.c.b. . because the one country that does have cash germany they're going to get increasingly uncomfortable with more liquidity being added and the spanish are going to say hey these liquidity additions are very nice but they're not enough we need to do more and in fact spain has recently announced their intention to do a stimulus program themselves so this divide between the two extr

. >> we debate the eck cassy of what the e.c.b. rolled out after a week of -- what is your view on what the e.c.b. has done and what will it actually achi? >> i think they started the clock ticking. there was a lot talking but very little action. the market was kind of waiting to see when something was going to start. we did -- to a large extent. targeted liquidity. an announcement expected in september. left the door open to do large scale asset purchases. it is not as if -- comparing to q.e. 1, 2, 3 in the u.s., the situation is different. the economy is doing better. >> q.e. , is it possible to the tune of -- what the u.s. achieved achieved, which is 25% of g.d.p.? >> not -- i'm not -- again, i think draghi has been incremental in his approach. we will do what we have to do. there is no need for -- a trillion. kind of the what the market is expecting or hoping for. we will probably get another $200 billion. that takes you closer. >> it underpins the bond market and the stock market. >> it underpins the stock market. in essence w

first up the e.c.b. announced some drastic measures today what are they and how effective will they be we look into a coming right up then we have dr thomas elliot live and in studio today dr polly is sitting down with me to discuss the e.c.v. is announcement as well as keynesianism in the context of world of monetary policy domination of who and in honor of the one year anniversary of edward snowden the n.s.a. revelations we have lived our lives and on the show today i sat down with the dark earlier today to discuss how the government bullied him into installing surveillance equipment on his servers which ultimately forced of the shutdown is company not cool you don't want to miss a moment and it all starts right down. we've been anticipating this all week and it's now finally happened the european central bank has introduced a number of different measures aimed at stimulating the eurozone economy measures like negative interest rates and cheap long term loans to banks now the e.c.b. credits deposit rat

first up the e.c.b. announced some drastic measures today what are they and how effective will they be we look into a coming right up then we have dr thomas sally live and in studio today dr polly is sitting down with me to discuss the e.c.v. is announcement as well as keynesianism in the context of world of monetary policy domination of who and in honor of the one year anniversary of edward snowden the n.s.a. revelations we have lived our lives and on the show today i sat down with those our earlier today to discuss how the government bullied him into installing surveillance equipment on his servers which ultimately forced of the shutdown is company not cool you don't want to miss a moment and it all starts right down. we've been anticipating this all week and it's now finally happened the european central bank has introduced a number of different measures aimed at stimulating the eurozone economy measures like negative interest rates and cheap long term loans to banks now these to be credits deposit ra

first up the e.c.b. announced some drastic measures today what are they and how effective will they be we look into a coming right up then we have dr thomas sally live and in studio today dr polly is sitting down with me to discuss the e.c.b. as announcement as well as keynesianism in the context of world of monetary policy domination of who and in honor of the one year anniversary of edward snowden the n.s.a. revelations we have lived our lives and on the show today i sat down with the dark really are today to discuss how the government bullied him into installing surveillance to play.

as i've said all along the you know the doors down a little bit because a recent actions by the e.c.b. but not that much and i think it's found the floor and probably go back up against the euro as one of my my favorite currency so that's an alternative so you have gold in the euro out there now the real alternative to the dollar it's not yet taken center stage but expect it will sooner than later is the special drawing right where the s.t.r. this is a kind of world money printed by the i.m.f. it's not backed by anything it is just like any other printing money like the dollar or the euro you're not going to see the s.t.r. right away it's being held in reserve for a liquidity crisis the a c. or has always been a low quiddity tool if you have that kind of heart attack spike in volatility and there's a liquidity crisis the fed will not be able to ride to the rescue because they already did that they printed four trillion dollars in the west on where they're going to do go to a trillion i mean there's a limit to what they can do so in that situation the global liquidity is going to come

or the e.c.b. or the b.o.j. japanese people are buying story against a range of currencies not just against the dollar not just against the euro and i think it's problematic though now to chase the market because even though we're sort of consolidating now straddling those who say you want to get above one seventy i think that many people are worried that we could have a little bit of a setback before you have a rally and so my suggestion would be wait be patient and look for a pullback maybe to one sixty nine maybe a little bit below and then the upside you know we haven't really been above this one seventy level very much for several years so it's hard to find realistic short point on those charts which are important because it tells you what other actors have to respond that is getting stopped out or stopping to positions we suspect we could go up to one seventy two and a half maybe it's one seventy three and a half but we're looking at another two to three cents to the upside and so i think it's important fo

enormous ponzi scheme built on debt that can't possibly ever be paid back but as long as they get the e.c.b. in the federal reserve in the bank of england to throw out the charm line of promising lower interest rates and quantitative easing you bring a whole new generation in to be destroyed by the shark the inevitable consequences of the crash that is as predictable as night following day as just another generation gets destroyed some win some lose the call darwinism financial darwinism economic dahlan ism or just plain financial terrorism whatever you want to call it the result of the same good whole generation get wiped out and then because people still you know go to bed at night and make babies. there's plenty more chunk for that came from well this robbery dubey or chumming whatever you want it call it in because of the libel rates being very low just the colombo saying similar to what you've said is that interest rates should be at forty seven percent in most non-crisis areas of the world like say china and yet because all of their contracts most of the contracts like two thirds of t

enormous ponzi scheme built on debt that can't possibly ever be paid back but as long as they get the e.c.b. in the federal reserve and the bank of england to throw out the channel line of promising lower interest rates and quantitative easing you bring a whole new generation in to be destroyed by the shark the inevitable consequences of the crash that is as predictable as night following day as just another generation gets destroyed some win some lose the call darwinism financial darwinism economic don ism or just plain financial terrorism whatever you want to call it the result of the same good old generation get wiped out and then because people still you know go to bed at night and make babies. there's plenty more jump through that came from well this rubbery dubey or charming whatever you want it call it in because of the libel rates being very low just be close saying similar to what you've said is that interest rates should be at forty seven percent in most non-crisis areas of the world like say china and yet because all of their contracts most of the contracts like two thirds of the

enormous ponzi scheme built on debt that can't possibly ever be paid back but as long as they get the e.c.b. in the federal reserve in the bank of england to throw out the churn line of promising lower interest rates and quantitative easing you bring a whole new generation in to be destroy. by the shark the inevitable consequences of the crash that is as predictable as night following day as just another generation gets destroyed some win some lose their call darwinism financial darwinism economic dollars them or just plain financial terrorism whatever you want to call it the result of the same good old generation got wiped out and then because people still you know go to bed at night and make babies there's plenty more time for that came from well this rubbery dubey or chumming whatever you want it call it in because of the libel rates being very low just see colombo saying similar to what you've said is that interest rates should be at forty seven percent in most non-crisis areas of the world like say china and yet because all of their contracts most of the contracts like two thirds of th

i suppose it is and this is this is a long time coming of the e.c.b. has a couple of years back when it. will do anything we can they have been pushed trying doing everything they can to push down. government bond yields making it taking pressure off government by government finances but the bottom line is the europeans if they want to stay with the euro they've got to take some other measures and i think would be the simplest measure is some common financing which would then allow a european wide. fiscal expansion and that's not something they have to do and that's something that our policymakers should be. publicly that's put some pressure now in order to raise rates apparently the fed is considering fixed rate overnight reverse repurchase operations term reverse repurchase agreements and the term deposit facility in addition to the rate of interest paid on excess reserves balances so why can't they just hike the fed funds rate as always then can you tell us what all this means in women's terms. well the concern about just trying to hike the fed fund