>> you get the protection of the european union art ecb.n you look at the economies of these countries, would you 145 or an a 10-year at u.s. treasury at 280. it goes up and down the line. i think he gives great currency protection, market protection. what to be sure of italy and spain here? >> sure. we forget there is an election coming up very soon. last year, french markets hold off materially. i think italy probably has not participated in the selloff in late's -- rates over the last few weeks. jonathan: mispriced for how much? is this get in and get out orders it something that will ?ave a more sustainable upside >> i can't make a promise. i think it is a more structural trade. if you look at the dependency ratios, that demographic issues italy is facing over the next couple years is not a pretty story. i think it is more structural ,ut in the near term, the ecb the vast majority of the debt -- jonathan: you talked about how you'd be willing to short japan but -- >> we've had short positions going back to 2005, especially with greece a

when you start thinking about the ecb post-draghi?u're hoping it is a german who takes the top spot? lisa: i think that may be the case. it is a selloff environment for european bond yields that have been anchored by the ecb program, by low rates. it is a totally different set of members as well. it is a different cast of characters and we are trying to make expectations based on what they are telling us. it is a whole different set and it could be a whole different ecb next year. jonathan: kevin, let's think about it. you are at the bloomberg terminal one morning and the headline says he is the next president. do you react to that, should you respond to that? kevin: not immediately but i think there may be a shift in focus. much like it has been a pro-usa or pro-america focus since donald trump was elected, that maybe there is a pro-german focus within the ecb or within the european union. that could be to the detriment of some other countries. jonathan: could you imagine the damage done if you have an aggressive repricing of soverei

if you are at the ecb, you would be more focused on peripheral spreads.is more remarkable is the likes of italy and spain have not been part of a selloff in a material way. at all. spreads are still tight. does that make sense? kevin: it's never made sense to me, but you get the protection of the european union or the ecb. when you look at the economies of these countries, would you rather own a 10 year at 1.45 or a u.s. treasury at 2.80 today? it goes up and down the line, it offers great protection, currency protection, market protection. at some point, that will crack. jonathan: lisa, your thoughts? do you want to be short italy or spain? lisa: i definitely want to be short italy. we forget there is an election coming up soon. before the french election last year, french yields sold materially. as there were trends of headline risk, and i think the market is forgetting about that. i think italy has not participated in the selloff in rates over the last few weeks. this is a market to me that is materially mispriced. jonathan: mispriced by how much? the

she asked how it will impact ecb bond buying.e the ecb, the only true risk of the monetary system is whether italy has to think about leaving the eu. first of all, it's unconstitutional, so you cannot even have a referendum. you need to change the constitution first. italy try to change the constitution and it failed. so secondly if you are to take a 130 business pointspread, you multiply that by seven and that makes about 9%. you assume the potential euro devaluation equal to 40, but he -- 25% calculated from the back of the envelope of italy leaving the euro. consider the parts that want to stay in the euro, but the 25% probability is very high when one party does not want to even discuss it and say we are 100% and it. the spread has upside, meaning it could tighten further simply because it is for the euro. francine: you are telling you this can tighten? davide: yes, not the absolute yield. the bund at 60 or 70 basis points can go higher. the same for italian bps. is vis-a-vise german bunds. that can tighten further with both

mark: jean-claude trichet, former ecb president stays with us. up next, the ecb's future.tay with us. this is bloomberg. ♪ ♪ inflation, we have come in the medium-term, the price stability will be there. that is why i think in this year, we can accept the next program in order start with coming back to a more normal monetary policy. mark: the ecb executive board earlier,eaking to us talking about the eventual wind down of the ecb qe policy. we are back with jean-claude trichet, former ecb president. a healthy debate about when and if the asset purchase program comes to an end. do you think it will happen in 2018? do you think their tv program -- end?ogram will >> it is open, they could decide to stop or continue a little bit. it will totally depend on what they will observe, at the level of the governing continues and we will hear some that are considering that it is about time to say it is over. on the other hand, they are totally defending on -- depending on inflation and there are signs that inflation now -- the underlying inflation might be there. taking into account t

i think the ecb is open to modifying its forward guidance.hink at the meeting next month we get some updated staff forecasts, so that might be an opportune time for the ecb to start taking further steps to the exit door by modifying its . these accounts today to support that. market bet will the watching for the march meeting, richard? get the anytime you updated staff forecasts like we do on a quarterly basis, you've always got to take a look at inflation in the inflation forecast. i think growth forecasts will also be worth watching. i think another interesting thing to look for is what the forecasts are based on in terms of the euro dollar exchange rate. what is the exchange rate they are using to basis forecasts on? if it is where it is now, that has a different dynamic than if they expect the euro to keep appreciating. plus what the currency forecast is doing. currencywhat the forecast is doing. vonnie: how closely does the ecb watch the fed these days? richard: i think they watch each other very closely. i think one of the interesting t

the ecb account coming out in half an hour. there is rhetoric out that they are to blame, and barclays shareholderso looking for its first buyback in years. david: we will come peggy collins and joe weisenthal -- we welcome peggy collins and joe weisenthal. let's start with a quote from the fomc minutes. this is what they said. you have to get all the way through the end. that thegreed strengthening return increases the likelihood that a gradual upward trajectory of the federal funds rate would be appropriate. they therefore agreed to update the characterization of their expectation for the evolution of the federal funds rate in the 2.2meeting statement further gradual increases. everyone was the word was looking to see if it was going to be there. it took the market a little while to digest what these minutes meant. we saw a rally initially after the minutes but we saw a selloff. the best interpretation i read dewey.om 10 dewey -- tim he said there is not some big upgrade in the inflation outlook , but some of the lower end of

the 2019 story, who runs the ecb next?urprised by how governor kuroda is to the bank of japan. the next person who takes over for mario and draghi has big shoes to fill. so you're hoping it is a german text the top spot? >> i think that may be the case. it is a selloff environment for european bond yields that have been anchored by the ecb program, by lower yields. there is a different cast of characters and we are trying to make expectations based on what they are telling us. set andwhole different it could be a whole different ecb next year. do you react to that, should you respond to that? >> not immediately but i think there may be a shift in focus. much like it has been a pro usa or pro-america focused -- maybe there is a pro-german focus within the ecb or within the european union. that could be to the detriment of some other countries. imagine the damage done if you have an aggressive repricing of sovereign yields and credit? let's say you have a more conservative central banker in the hot seat -- i would they want

ecb doing with a number of issues today.gh what happening in latvia. >> it's quite extraordinary. the leader of the central bank was arrested on sunday night and it's not clear why. and hisn his office private home was raided. he was question for eight hours. he was whisked away in a van. and then, now he is detained. there is going to be a press conference today where he will clear up what are the charges if any. it's the extraordinary situation and is very complicated for the ecb. the course of justice ran its course and they have to do with a have to do. but the ecb is always concerned about attacks against its independence. it will have to take a stance and he will see what's going to happen. guy: great stuff. thank you for covering the angles. the latest surrounding the ecb. you can use tv . follow the charts, the functionality, and suggest questions directly. we will be talking more about what is happening with the central banks. you'll be talking about whether the fed will deliver three or four rate hikes this yea

as one person said for the ecb, there between a rock and a hard place.ng at a chart euro at least in relation to the dollar, a little bit of a roller coaster ride when draghi mentioned that fx moves deserve close monitoring. what will the markets glean from what he is saying today in prepared remarks about the euro? >> i would have to pass -- parse this carefully. mario draghi's's comments on the euro generally refer to the fact that the euro is, in other words, there are consequences for monetary policy. the messages we have been getting from the ecb are, at the moment, the are p level is ok. they do not want to see it is these kinds of levels and changes, they could live with that. this is mario draghi's last public appearance before the next decision on the eighth. seen arun-up, have we little more of a slightly hawkish tilt from the governing council? hard one to judge. there have been hawkish shifts, for example. and then giving a speech in new york on friday, noting that the ecb can't afford to slow its bond purchase program, he forelf said he is n

ecb and forlem for latvia. question to the governor, why, if he claims he is innocent, is he not standing aside on a temporary basis to let the rule of law work and maintain the credibility of the institution which he has worked for for 25 years? to bolsterue process that? he says that he is innocent. he says the claims against him are not substantiated. therefore, why would he not step aside? why has he decided to remain in post? that's really the question we need an answer to. i'm curious to find out whether or not he has been in contact with the ecb. that connection is really important, particularly on a day that we will hear from the ecb later on. francine: how is the ecb and how has mario draghi reacted so far? guy: haven't said very much. we will potentially get a statement today. and hands seem to be. that the statement will not be strongly worded. . i think the ecb finds itself in a very difficult position. it knows that it needs to maintain its credibility. it regulates some of the banks here in latvia

talk about that ecb expectation.arly a lot of people expect policy to tighten at some stage, whether that's a rate hike or removing quantitative easing is that your expectation can the fed force that to happen quicker than expected? >> i think the ecb wants to stop buying the bonds everything is still data dependent. if the eurozone carries on to the upside, they'll need inflation to pick up slightly, and stop buying the bonds as early as september they may decide to taper into the fourth quarter but that brings with it the prospect of the first rate rise potentially as early address december but certainly early in 2018/2019 at the latest. >> when we consider the way markets have been volatile over the last couple weeks in the u.s. because of interest rates rising what is your expectation of what will happen to european equity markets when rates go up? they remain remarkably low on top of that spreads, whether you look at various country spreads or corporate spreads are incredibly tight feels like there's lots of roo

just before that we had the ecb. worried about where markets are because they see signs of inflation coming through the economy as well. the bank of england, for example , looking at the possibility of raising rates more times this year. that's enough for markets to feel a little bit more worried and the little bit anxious of the situation we had in 2017 may be coming to a bit of an end. vonnie: is there a a lot more pain to come in the very near term? you and a lot of people are talking about a correction whether it's healthier not. that's more than a couple of percentage points and really over down in the u.s. to or three percentage points in the last few sessions. paul: textbook definition of a correction clearly is that it tends to drop. maybe people are using the word lightly am thinking about the idea that this is just a setback or whatever. obviously we are little changed again today and the u.s. markets. not really deciding which way we are going to go. seems a bit noncommittal with people catching their brea

he has won the backing to become the ecb's president.uts spain back the board after a six-year absence and marks the start of a shakeup that will end in late of mario the seat draghi expires. this comes at a crucial time for the central bank as it prepares to unwind unprecedented monetary stimulus after a decade of crisis. for more, we are joined by our economic reporter from brussels and paul gordon, our european central banks editor from frankfurt. good morning. he was very heavily criticized for not having the experience of central banking because he comes from the finance ministry in spain. how does he placate the criticism? >> good morning. he is very aware of this. we spoke to him last night and people doe that some not like this transition from politics into the central bank. for that same reason, we understand he will resign from the spanish government in the coming days. that's his plan, to leave the government as soon as possible. that is one thing. secondly, he did tell us there is no conditionality to this job. there is specu

let's throw the ecb into the spotlight. let's put the specifics to let the at to one side. -- specifics of the latvia to one side. great to have you on the program, james. what is the focus? the strength of the euro something that you the ecb is going to have to talk about. james: it is all about the evolution of communication. the key policy is on autopilot until september and then we are led to believe beyond their for a paper. rate policy has been tied to the end of the key policy. there is a period. that feels the ordained and unlikely to change but they are still aspects decibel are still aspects of ecb to evolve over time. we got the issues around the replacement for the president /vice president positions will be of interest. anna: competition today around the vice president. -- conversation today around the vice president. we get news of that later today. the bigger question is around mario draghi, when he goes and he steps into the issues. the survey that we have done said that the environment is up there but also

i wonder what happens to the ecb. will we get draghi 2.0? kathleen: no. nick: no.yen is vibrant. jonathan: there you go. jeff, kathleen and nick, great to have you with me. we will be here the same time next week. this was "real yield," this is bloomberg tv. ♪ retail. under pressure like never before. and its connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers rely on comcast business to deliver consistent network speed across multiple locations. every corporate office, warehouse and store near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. scarlet: i'm scarlet fu. this is "etf iq." we focus on the assets, risks and rewards of exchange traded funds. ♪ scarlet: are we on the cusp of the whiteswife of -- of inflation eyes? ibm's watson is now stock picker, sort of. we talked to the team behind aieq.

nick: what is mispriced is the ecb.hen you look at policy setting in europe, it is at absurd levels. it is that emergency levels, and you are clearly not in an emergency. so the risk is that we see that ecb raise rates and that will have a dramatic impact on the currency and will lead further to a weakening of the dollar. by year-end, 135 is not unreasonable for the euro-dollar exchange rate. jonathan: are you advising moving away from dollar rated assets? nick: we like the dollar assets in places like high yields, but critically we want that currency hedged. jonathan: nick, kathleen and jeff, sticking with me. coming up on the program on "real yield," the auction block. that is coming up next. this is "real yield." ♪ ♪ jonathan: i'm a jonathan ferro, this is "real yield." i want to hit the auction block, high-grade u.s. issuers of all places. wednesday, there was a session with zero issuance in a session. later in the week, three of 10, 30 and 15 years. $7 billion of 30 year temps were sold. it covers 2.31, which is le

ecb minutes released today at 7:30 a.m. eastern.e didn't expect too much market movement off the fed minutes yesterday. that was wrong, so another reason to keep an eye on the ecb. keep an eye on energy prices crude and fat ral gnatural gas inventories are out today. haven't hi recent highs were up to 65, but they have pulled off that high and hpe has the first earnings report since meg whitman's departure. a quick check of futures as we go improvement throughout the show. we were down nearly 100 points at the start of the show, now down 35 points the s&p in positive territory. that's it for "worldwide exchange." thank you for joining me "squawk box" comes up next manug that brings big ideas to life. and cutting-edge transportation development to connect those ideas to the world. along with urban redevelopment projects worthy of the world's top talent. all across new york state, we're building the new new york. to grow your business with us in new york state visit esd.ny.gov. ♪ [alarm beeps] hey... hey, sweetheart. let's get up. it'

don't fight the ecb, bank of america, etc.pital chasing too few goods, but there is no draining capital yet. it might be coming but not this year. tom: i love it when i guess disagree. marcus ashworth, you can come back tomorrow. you can disagree on a thursday. francine: thursday and a friday. we have a great yield spread that we will show shortly. marcus ashworth, thank use a much. marc chandler stays with us. coming up shortly and about 15 minutes, we speak with the rio tinto ceo. look for that interview at 6:30 a.m. in new york . that's 11:30 a.m. in london. andill be talking m&a dividends and the good news that we saw in commodities is finally filtering through the minors. that interview that you don't want to miss right here on bloomberg. this is "bloomberg surveillance." ♪ . . ♪ morning must-read's, we like to give you a narrow perspective, sometimes a broader perspective. mr. brooks, the victorian politicians had a stewardship mentality. thank you, mr. gladstone. he listens to the people that stood slightly apart. thank

alix: what is your base case for the ecb?glide path to begin tapering later in the year. ecb has told us with their plan is for the next nine months. focused on forward guidance. in policy arees still nine months away. david: gina, looking at the u.s. market, is there an imbalance that will have to resolve itself sooner or later? gina: it's a good question. strategies have tried to play the europe card for years. we have to get more optimistic about european shares. for years, we have been generally disappointed. i think the market is telling you something about the u.s. outlook still being very solid, fundamental outlook is strong, earnings outlook is stronger, and europe will struggle a little bit as long as the euro is a problem. if you get a reversal, if you get some dollar strength in your weakness, that conflict the scale. but even though we have had strong growth in europe and improvement, and monetary policy makers have been easier than in the u.s., it has not translated into results. a lot of that is translated to th

. >> the ecb will beginning a new vp. news of new construction and staff reduction.eaders can finally decide on mixed signals coming from markets. >> we aren't expecting any more multiple expansion out of the u.s. equity market. we think it has to be earnings driven from here. >> when we look at markets, we think the u.s. bond market and australia are the most attractive. >> the insurance of prostate costly promises is virtually limitless. releasentral banks meeting minutes with important clues for investors while the fence stock profit. >> they overreact to everything. they overreact to the upside, the downside. host: plus, the earnings continue loud and strong. >> what is pleasing is all of this is performing well. we are pleased with where we are today. host: it is all straight ahead on "bloomberg best." hello, welcome. this is "bloomberg best." your weekly review of the most important business news, analysis and interviews from bloomberg television around the world. markets were closed in the united states on monday but there was plenty of drama elsewhere as we s

i wonder what happens to the ecb. will we get draghi 2.0? kathleen: no. nick: no.yen is vibrant. jonathan: there you go. jeff, kathleen and nick, great to have you with me. we will be here the same time next week. this is "real yield," bloomberg tv. ♪ ♪ yousef: welcome to the "best of bloomberg markets middle east." i am yousef gamal el din. here are some of the major stories driving headlines from the region this week. crude comeback, oil recovers ground following its worst week in more than a year. the iea says the global surplus has almost been cleared. as u.a.e. report earnings we hear exclusively from industry cfos. and the sky is no limit for air arabia as it beats on full-year income. the ceo lays out the carrier's ambitions for 2018 in our exclusive interview. hundreds of global political and

we heard about this from ecb officials before.'s noteakness, much that the ecb can do about that and that trade weighted euro has not been as strong as the euro-dollar. 130, and a run towards fair value is around 126 in our view, if you cross over 130 quickly that is a stronger argument it is becoming too expensive. alix: when we go into the italian election and a potential coalition with germany, what is the downside potential? vassalli: ultimately i think the outcome will be benign, but going into the elections markets like to hedge their bets. we will see more than increase in euro downside risk going into the italian elections, but we think it will bounce up after that. for us, the focus will be more about the fed and the reaction. thank you both very much for being with us. intois it take to make it the 1%? next.l explore that if you can't watch the television, you can listen to the radio from 7:00 to 9:00. is on bloomberg surveillance and you can hear them in new york, boston, the bay area, and in washington, d.c. on sirius

nick: the very clear risk price is what is mispriced is the ecb.hen you look at policy setting in europe, let's be frank, a fairly absurd levels. it is at emergency levels, and europe is clearly not in an emergency. so the risk is that we see that -- that we see the ecb raise rates and that will have a dramatic impact on the currency and would lead further to a weakening of the dollar. by year-end, 135 is not unreasonable for that euro-dollar exchange rate. jonathan: nick, are you advising moving away from dollar rated assets? is that what you are doing? nick: we like the dollar denominated assets in places like high yields, but critically we want that currency hedged. jonathan: net of jpmorgan, kathleen, and jeff from blackrock sticking with me. , coming up on the program on bloomberg "real yield," the auction block. csx holding a auction to break up the u.s. market. that is coming up next. this is bloomberg "real yield." ♪ ♪ jonathan: i'm a jonathan ferro, this is bloomberg "real yield." i want to head to the auction block where inflation fears s

could we see a bit of a shift in ecb policy over the next year or two?dam: maybe, -- gavin: maybe. we have got situations like greece at the moment, and obviously spain. so i think that he is probably not going to focus too much on that. the broader aspect, as i mentioned, a place like germany facing the big, inflationary pressure. it is very much a balancing act for some of the other member states that probably could not handle the tighter monetary situation. yousef: gavin, great having you on the program. the gavin parry, appreciate your time. a preview of what's up next. we will check in on how some of the markets in the gulf have been faring so far this week, and what we can expect going into the later part of today. this is bloomberg. ♪ yousef: let's get you up to speed with how some of these equity markets in the region have fared. it was a mixed picture across the board, mostly higher in some of the key benchmarks. the dubai index up .2%. volumes relatively in line with the regional gain. gcc, indexes lower. saudi arabia was an interesting story,

a shared vision i suspect that the ecb at the moment is that they do not want a stronger euro.will say a stronger euro keeps us further away from the inflation target that we already have doubts about the the hawks will say that means we will have yet more qe, a more prolonged time of negative interest rates. both in the parties interest for the ecb to talk the euro lower and at least prevent it from rising. big sigh ofe is a relief and we can begin the normalized process on the rates fund. on thehe big event central bank front is the boe quarterly inflation report. expectations brought forward and when the bank will raise rates, some suggest it could happen as soon as may. services pmi has made people rethink. it is a difficult task on thursday. what is the message from the governor? i do not mention him. he mentioned services today. all of those levels of growth, 0.3 rather than 0.4 and .5 in terms of gdp q1 q. what we will try to do is put the bank in a holding pattern. looking toward a may hike, the upcoming meeting, i do not see why he will pin himself down. .e is a skille

this is because the ecb is buying. >> both.ssue is, under insight ecb, the only true risk is where italy ever to think about leaving the eu. first of all, it is unconstitutional. you can't even have a referendum. you need to change the constitution first. italy tried and it failed. it needs to have a super majority. i think it is pretty much impossible given the political setup. take 130 if you are to business pointspread and multiply by seven, that makes about 9%. if you assume the potential evaluation would be 40, you have 10%. ,hat gives 15% probability ballpark, back of an envelope, of italy leaving the euro. if all of the party are saying we want to stay in the euro, 25% partyh given most of the does not want to discuss it, we are 100% in it. i think the spread has upside, in my view, meaning it could tighten further simply because you're in for euro. francine: this could tighten even once the bond buying purchases a kind of scaled-back? >> yes. not the absolute yield. --hink bund, subdued percent 60, 70 basis points. here

alix: the rhetoric from the ecb was spoken about, that the ecb can pare back bond buying if they canuidance because the private sector will step in and by sovereigns because they don't have that many currently. do you think that is viable that could care back qe, see a rate low, and everything is hunky-dory? mervyn: if they pare back the bond buying, that is another way of gradually tightening monetary policy. that is seen as a substitute for interest-rate increases. that is a potential path to follow, yes. i think the big challenge for the ecb, and we have seen this through mario draghi's office, is that their sole objective has been to hold the euro area together. to get any other objective, that has been the objective. there has been no other institution in the euro area there to help them. mario draghi has done a good job in meeting that objective, holding the euro area together. at present, the pressure to engage in more sovereign bond buying has been reduced, and it may be that the private market will step in. the risk is, and i think the ecb and others in the euro area are con

now tax regimes are coalescing an ecb u.s.its corporate tax rate to meet some of the rates and the same could potentially happen in the united kingdom post-brexit. david: i think the european prospects are extremely good. we are growing slightly faster in the u.s. and unemployment is down in the single digits and the european economy is doing well. when you talk of jobs, yes, american investment in europe creates many jobs, but the same is true in reverse. is crucialvestment for job creation here in the united states. i think we both benefit from this process of investment and i'm absolutely sure that our companies will go where they see the prospects for economic benefits. europe is a good place to invest these days as the financials and new york never stop telling me. vonnie: you will need more details on that when you're in the city. institutional reform for the euro area with maybe a small bit derailed by brexit. where do you see the motivation coming from to a new the effort for institutional reform and have more countrie

jean-claude trichet, former president of the ecb, joins us.on the central bank's divergence. this is bloomberg. ♪ . mark: 11:00 a.m. in new york and 4:00 p.m. in london. 30 minutes left in the trading day in europe. from bloomberg's european headquarters, i am mark barton. vonnie: i am vonnie quinn and this is the european close on bloomberg markets. ♪ mark: where european equities are trading right now 30 minutes away from the wednesday session. yes. here are the headlines. stocks rising in the u.s. and europe today following strong gains for the s&p 500 and the tuesday session. we are covering all the action. , bloomberg exclusive conversation with former ecb president jean-claude trichet, his thoughts on brutal market moves, what he sees for central-bank policy from the ecb and the federal reserve. the chairman of the white house economic council joins

through,anish went pledging to defend the independence of the ecb.me and that makes me very an easy. >> well, you are not the only one, manus. they are very aware that the , hele who don't like this is now sitting as a central banker where he is supposed to be independent from any kind of political interference. he set up the end of the day you have to set monetary policy for the entire euro area. we understand moving any conflicts of interest in the coming days, we don't know exactly whether it is imminent, and at the same time he also hinted that there are no conditions to the appointment. there was speculation that this was part of a bigger deal, that germany will get the presidency next year. true,d none of this is but the speculation continues. anna: good morning. you spoke to him yesterday. is he giving any guidance as to where he stands on the monetary policy debate? he has been trying to cast himself as something of a hawk. >> right, and that is a big question. people don't know where to place him. he likes to present himself as a hawk but he

jonathan: i wonder what happens to the ecb. kathleen: no. vibrant.yen is jonathan: there you go.rosenberg, kathleen, n ick, it is great to have you with me. be here next week, this was bloomberg "real yield", this is bloomberg tv. ♪ ♪ ♪ show me the olympic winter games ♪ ♪ like i've never seen before. ♪ ♪ xfinity x1, yeah, i always know the scor♪. ♪ triple corks in 4k... lookin' so sick. ♪ ♪ stream live on every screen, every win, every trick. ♪ ♪ 2000 hours of coverage, get your mind blown. ♪ 50 olympic channels, yup, you're in the zone. ♪ ♪ and if there's something that you want to see, ♪ pick up that voice remote and just say "show me..." ♪ experience nbcuniversal's coverage of the olympic winter games like never before with xfinity. proud partner of team usa. retail. under pressure like never before. and it's connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers rely on comcast business to deliver consistent network speed across multiple locations. every corporate office, warehouse and store ne

and the story should be the same for the ecb.e big issues politically that markets will have to deal with shortly is the italian election. we've seen a range of elections last are taking place in europe and mostly the markets handle things. simplify i have this chart that fascinates me. this is the way italy had used the cover provided by the ecb to extend the maturity of its government debt. this led some to conclude that even if there is tension in markets as a result of the electoral outcomes in italy, that italy will be protected because of the work it has done. christophe: protected to a certain point. economy that has the highest ratio at more than 130%. with the threshold in the coming years, this is where italy needs , but ofd its majority course italy is preserved from the financial crisis to some point. , therefficult to say isn't a clear answer but as long as the burden of debt and especially the interest rate burden is quite limited toward economic growth, italy is preserved. as long as growth is well above , as long

and pressure is mounting on the ecb to formulate a response. his part, he has maintained his innocence. he has called allegations that he solicited 100,000 euros a month in bribes a smear campaign leveled against him by banks angered by tougher financial regulations. he cannot work while the probe is ongoing, but he cannot be fired, either. he's ignoring calls to resign. >> i have taken the decision not to resign today because i am not guilty, because it is the aim of mudslingers for me to resign and prevent me from being able to protect myself. i'm afraid the legal proceedings would last for many years and i would not have a quick and fair judgment. reporter: the ecb is also being called upon to respond to a crisis snowballing at ablv. it is facing money laundering allegations. the commercial banking association urged the ecb to help mitigate the chaos, but so far the eurozone central banking authority has been quiet. fanny: the european commission says it is serious about fighting cartels. it was just announced fines topping half a billion eu

nejra: the euro group has nominated luis de guindos for the ecb's vice presidential role.is a move that will hand madrid a top seed at the bank for the first time since 2012. >> it is a controversial decision because it is very unusual to see politicians making these transitions from government into the central bank, especially because that is the whole point of a central bank, it has to be independent from political interference. >> de guindos has tried to portray himself as a hawk, so to speak. he has spoken in favor of austerity. he has been a strong supporter of the policies that have been taken in the euro era in the in past few years and spain has been a star performer for the past few years. its economic performance has rebounded dramatically since the crisis. he doesn't have much of a track record when it comes to monetary policy. coming straight from politics to the central bank. julia: opening the debt floodgates today, the u.s. treasury sold $179 billion worth of debt. they're working to rebuild their cash balances. yields on the three-month notes and six-month

the ecb made an extremely smart monetary policy.raghi has been very smart in mastering the support for qe. and he still has that support. i personally believe that the phasing out would be rather quicker than slower. and i believe that among the factors which explain why the electoral promises issued so liberally and so irresponsibly by all the political parties -- one of the reasons is that there is no feeling of pressure whatsoever. francine: but what will reality look like? first, is there a real danger that reforms obese low, will be lagging, with whoever becomes the next prime minister in italy? also, there are a lot of parties offering tax cuts. how do you fund tax cuts in italy? mario: first of all, a positive to be put on record is that no party, populist or not, has any longer in their program the idea of leaving the euro, calling a referendum to leave the euro. they have all calmed down. but, indeed, the issuance of costly promises is virtually limitless. but what will happen? i am not too concerned that these promises wil

i think march 8 is when the ecb starts to have an impact on the market.nd, this is a big one on thursday. guy: let's talk about that in a minute. matt? matt: before super thursday on -- in london, as we get bmi data looking at a services pmi that came out at 56.9, beating the estimate of 55. whichmposite is 56.7, beats the estimate at 55.6. this is not a one-time thing. we have seen pmi's reading street estimates at relatively high levels, whether you look at the core or periphery. how important is this to mario draghi? peter: it's very important because with the ecb is saying is that they have a foundation of growth in the euro areas that is strong enough to allow them to slowly move away from the extreme levels of monetary easing. that's a credible statement. you look at these pmi's, particularly in the service sector, they are extremely strong. and they are going to be resilient to financial conditions in the form of stronger currency. the sector that is going to be less resilient to a stronger currency is the manufacturing sector and in particular, th

i wonder what happens to the ecb. will we get 2.0 after he goes? jeffrey: no. kathleen: no. jens weidmann. jonathan: we will have a different bond market, that is sure. kathleen, nick from jpmorgan asset management. great to have you with me. we will be here this in time next friday at 12: 30 p.m. new york time. 5:30 in london. this was "bloomberg real yield." this is bloomberg tv. ♪ scarlet: this is "etf iq. " ♪ are we on the cusp of seeing inflation in, how the latest price data is causing a shift in portfolios. we talked to the team behind ai eq and actively managed etf and use machine learning for stocks every day. in this week there is an etf for that, we take you

and the quantity that the ecb is they're going to go to zero.ro a bid. manus: the nonpartisan committee responsible for the budget expects the budget deficit to be $1.2 trillion in 2019. we have had every reason for what is moving markets. does that deficit feature on we have exactly the same number. given that the u.s. is at the top of the cycle, is a ridiculously big number. manus: even more so given that it's republican-controlled. they are all in favor of fiscal rectitude when it's a democrat in the white house. manus: the risk for this number, then. >> the risk is when we have a recession in the future. the budget deficit is going to blow up. that the u.s. government won't have enough firepower to really stabilize. i think it's a little bit reckless to be honest. the u.s. government should be trying to reduce the deficit based on upward track. the demographics means that's going to continue. anna: the explanation is that global growth everywhere is very strong and that has weighed on the dollar. you are saying the higher yields are required

defense seems to be that the ecb is looking at the exit.'m not entirely sure that is what's going on in frankfurt right now. >> i think you are right. i think there's another opportunity for the man who's is the head of the central bank to rain everything in and take the middle-of-the-road approach. sort's obviously some cour of discord, people are turning hawkish in the ecb. mr. draghi will probably say, look, let's be realistic. there's a long way to go on this process. we have outlined a bond purchase plan decreasing over time. we will stick to that plan. there is no need to rush. rate hikes are a very long way off, we don't need to adjust that, either. there's no particular reason for mr. draghi to panic, considering he has a long-term plan, which he can stick with. also, there in mind that next year he is going to leave ecb, and he may like to see everything kept nice and tidy and calm until everyone knows his successor, which could be a hawk. guy: yeah. interesting articles being written right now, is a view of the world. different vi

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finance ministers vote to replace the ecb vice president. meanwhile, the head of the latvian central bank has been detained by the anti-corruption aside with calls to step and his lawyer says that he considers this move against him to be illegal. a global security conferences to focus on the encroachment in the middle east and described the aggression as the greatest threats to the world. a minister said that iran news to pay a price for the aggressive behavior. global news car by journalists and analysts in 120 countries since you can find more on bloomberg. auctions willnd come to the market in the shape of government debt and it will how the clear guidance on they will meet the rally's. at theent selloff threshold hits the high and managed 20.6 billion pounds. and we can take this. the's will easily go to banks there is a history of it is comingd and in that area in 10 years. dealing with the global trade wars, do you think -- on this value model and the debate was if the u.s. can this.n there is stimulus to come andrly on the fiscal side

in theks do seem to be ascendancy at the ecb.ink we will see as weidman has suggested we are rolling off the stimulus program? bob: i think the hawks are looking at the data we had in november, december and early january, where we had clear acceleration in the eurozone. the basis of that accelerating -- accelerating data that inflation would increase. as you highlighted, the inflationary data has not increased and is still subdued with the core numbers close to 1%. what has changed recently is that some of the data in the eurozone has actually started to roll over. if you look at retail sales, you mentioned retail sales earlier in the program, from france today, that being very strong in november and december is now decelerating. retail sales data out of germany and italy have weakened. i think also interestingly coming back to our discussion on andeuro, is that recently there may be seasonality on this, recently export data out of the number of key eurozone economies has also slowed down. particularly, german exports have decele