the ecb will need to adapt. that is the most acknowledgment i've heard of the slowdown in europe from an ecb official for months and months. is it too late, do they have enough to do enough? krishna: we talked about at the last time i was here, specifically on this. ecb has no choice but to ease, as aggressively as they can. they will kind of move away from that as long as they can, but from a structural standpoint, michael is absolutely right. europe has a far bigger problem than the u.s., for sure, and has less tools than china. being on the wrong side of policy is risky for europe.

is -- if there is hard brexit, and ecb raise rates?: if there is a hard brexit, you will see impacts on the u.k. economy. it will have spillover effects into europe. a lot of supply chain issues come into effect. i would go as far to say as the fed hike comes off the table in the case of hard brexit. i don't think the ecb says never again, but they push out that timeframe from september this year to perhaps next year. guy: it has been great to have you with us this afternoon, or this morning in your case. thank you, priya misra, td securities global head of rates strategy. this is the picture of the markets. we have a positive but lackluster session taking place in europe. the fact that we don't have the u.s. trading today means we are like on volume. -- light on volume. the dollar on the back foot. this is bloomberg. ♪ guy: from london, i am guy johnson. this is bloomberg markets. let's check in on first word news. on capitol hill, lawmakers say there may be enough support in congress to disapprove president trump's emergency declarat

let's talk about the ecb. around the bank is gaining more liquidity. they tell me we don't need more liquidity. keep the liquidity they got in the system and that will roll off. reality is that sub one year , too expensive, so they need to do something by june.

contains guidance on ecb.ssion, of trying to get policy rates back to zero at some point when it was safe, i wouldn't even call it normalization. we not have this dangerous negative interest rate for a day longer than we have to. we don't have a conversation about european monetary policy. we're not going to get that possibly for a decade. what we have not think is a series of temporary shocks. it's even harder to get to this normalization only from negative rates. an actual rate cycle, i have no idea how funny have the project into the future to imagine the idea of an ecb rate cycle where you get a series of rate hikes. francine: are we becoming like japan? i've heard a lot of economists pushback on the. kit: we suffer from some of the same things. large parts of europe, the stock parts ofve growthk europe where what monetary policy makes -- . needs to have a massive change of heart about how fiscal policy works and is much more concerted effort. europe doesn't have a mostly undervalued currency, which japan

the euro chorus grows louder, yet another ecb official focuses on change.hat next. ♪ anna: welcome back. 21 minutes into the trading day. pictures from the press conference at honda were getting a q&a session taking place. some really interesting lines coming from the ceo saint u.k. plant closing is not because of brexit. electrification optimization for the move. the challenges affecting the u.k. comments mumble of the uncertainty of brexit hanging over it, we will talk many times that the general uncertainty facing the auto sector. challenges that they face as a result. we will keep monitoring his press conference with the ceo of honda for any details. a fairly muted session underway from european equity markets. signal of concern on the economic slowdown is depressed. he is said officials could pitch -- pushback plans to raise interest rates if the downturn worsens. talked a little bit in passing about ecb story that we haven't dealt with it. when you think we will get a blooded till to the dovish side from the ecb are have we already's being fed that. s

let's talk about the ecb. member says the current slowdown in europe is significant. let's get final thoughts with jordan rochester. you think the ecb is dovish already. you think some of the comments we've already had have been dovish. do they need to do more to manage expectations? jordan: their forward guidance on rates is rates will be on hold through the end of the summer. the market is not addressing a rate hike this year at all. rate hikes,talking we're in steps of 10 or 15 basis points. because the ecb is at the lower -40 of interest rates, with basis points it is easy to price in hikes. the market does have hikes in the curve, which is different from the u.s. the ecb could do more. -- could do more to flatten the front end of the curve. that will have an impact on the fx. euro-dollar could break low on 12 if -- could break below 1.12. tros,uld hear about tl r whether they are willing to extend that sort of bank funding. we have already seen the to ants last week that led risk on and bank stocks doing

all things are on the table according to some members of the ecb.ow, let's talk about the bond market. you've got nine fed speakers. it will be a bumper week of terms of language. durable goods, one-year paper five.s more than two and an inversion there. so it's all about duration. good morning. good morning. let's take a look at the futures. european we saw equities and u.s. equities end on friday up more than 1%. in the bit more muted futures today despite what we're seeing in the asian second. dead flat.s you've got u.s. stock and bond closed for president's day. you want see the s&p 500 moving. moving insee a lot of ftse, but positive activity coming through in the dach 40 futures. we could see another day of green. i just broke to you the numbers well. something to think about. move.k that might net revenue growing, 3% to 4%, so this is how the equity picture is shaping up. you're seeing some broad-based appetite with moving moving into well after some weakness has week. singapore has more. how is it looking over there, good to see you. looking

peter, start off with the ecb.e are hearing that a lot of action is being taken to ready the research around another -- but the ecb is taking a calm approach, what can we deduce from this about it being instituted? peter: as you said, we today got the information from the january meeting. and in their words, we need swift analysis but we should not rush with a decision. that is something that was some double well and it seems to be -- was summed up well and it seems to be the message they are repeating. we have heard from council members, laying the groundwork for a potential action. but it is laying out or rolling round is a far more complicated than it would seem at first sight. that is one of the tools that they could use. these are the loans that were issued and they will start rolling or maturing from june of next year. and it is quite a hefty sum, more than 700 billion euros. and the question for the ecb right now, the question to answer during the analysis, is to what extent this will impact the liquidity in

stall as democrats and republicans clash over immigration rules >>> italian bank stocks rally after the ecbets capital requirements within lender comforts zones and they launch an attack on italy's central bank and regulator. >>> british prime minister rejects calls for the uk to renan a customs union, urging further talks as she attempts to push through her brexit deal >>> well, good morning, everybody. happy monday just want to start off by giving you a recap of some of the action we had overnight in the asian session. japanese markets are closed for holiday. asian equities, chinese equities are back resuming trading obviously after lunar new year sentiment is better playing catch up with some of the price action we had for the week before, but generally speaking there a couple of issues still dominating market activity, one is threats of a potential another u.s. shutdown as talks between the two sides, democrats and republicans seemingly don't seem to be going anywhere. and if that does appear to be the case, then friday would be the ultimate deadline for that shutdown yet again to come

resort tothe ecb may quantitative easing.t would be a massive surprise considering the collection of peripheral european doves on the governing council. salman: exactly. and i agree with the comments heard earlier. it is becoming a political imperative to reduce the threat of recession. populism is spreading quite fast. need to beks thinking about their mandates and what populism will do. a recession would put fire to that. that is why i think this mindset will come through. they should look at the to reduce the risk of recession before it hits. ifngs will get really bad they allow this to come through in terms of the political perspective. anna: what does that mean in the short-term? going to theyields minas. anna: on the horizon? salman: next 3-6 months. the 10 year. minas 16 -- minus 2016. right now, there has been some movement in fiscal stimulus especially in germany. but those are small numbers. into what islook left as firepower. is, of course, the end of draghi's term. he is up in november. he could be replaced by som

the prospect of ecb hiking is off the cards.n terms of the high-yield space investment grade, we had little issuance in december last year. investors were de-risking portfolios. lighter in come in risk than they used to come at a time where we see money coming out of leveraged loans. that is supporting some of these more duration type fixed income markets. jonathan: you mentioned the performance in the secondary market from that 30-year issue in italy. what do you make of the unpredictability of the treasury? 250 billion dollar euro funding target for the year. do you think that is weighing on btp's? diana: i think so. especially with the outlook not great for italy. time only a matter of before investors start talking about the probability of them being able to achieve their fiscal targets when growth look so poor. markets were caught off, although they still managed to get away with it. the italian government, to be fair, they played this well. they saw an opportunity where sentiment was positive. i expect we will see more of

the ecb need does to act now?k there has been some shipped in stance -- has been some shift in stance, but the market has been pointed to new -- we have to see which way they jump. vonnie: where is the neutral rate for europe right now? >> are we saying neutral in an environment holding up a trend? vonnie: yes. >> if we are going to stabilize a trend and inflation gets neutralarget, then the industry would be around two cents in my view. guy: would that be an excuse, what european banks jump on that. who wouldo investors love an excuse to exit some of those positions. be shortright trade out of it when it comes to european banks? >> from a trading point of view, i would not like to comment, but from an investment point of view, we find some attractive value in the european banking market. but there needs to be consolidation in some markets with italy being an example. the key point, if you are picking stocks, they are created equal. guy: we could say that with some degree of certainty. thank you. we're counting yo

the ecb will need to adapt. that is the most acknowledgment i've heard of the slowdown in europe from an ecb official for months and months. is it too late, do they have enough to do enough? krishna: we talked about at the last time i was here, specifically on this. ecb has no choice but to ease, as aggressively as they can. they will kind of move away from that as long as they can, but from a structural standpoint, michael is absolutely right. europe has a far bigger problem than the u.s., for sure, and has less tools than china. being on the wrong side of policy is risky for europe. having said that, they will do an ltro, other things. fiscal expansion, we are at a better place there than we have been at any point in a while. at the end of the day, the potential for europe is 1%. if we get close, we are high-fiving. jonathan: we have talked about the structure of the economy in the u.s., europe, asia. we have painted a pretty dreadful picture of what is happening in the global economy. i think the sovereign de

a -- tould it go from the ecb?: there have been indications that they would want to and it might provide support. restarting same as asset purchases and would not be the same degree of economic support and policy support for the region. need for additional support is by pushing back interest hikes potential he into 2020. even then, the potential for rate hikes is in question for the eurozone given the degree of slowdown at the moment. guy: let's dwell on that. do you think the ecb will hike rates this economic cycle? james: it is a very close call. it would be difficult in the near term. there is possibility that the recent loosening in financial conditions we see rapid by the central bank easing policy providing boost in 2022's short-term cyclical, then that might be possible. the main messages we won't get a lot of hikes from the ecb due to the difficult macro environment and weak inflation. commissionropean downloaded growth expectation in italy, would you expect to see the ecb deliver on that? do you think the

the ecb is keeping his eye on the data.lowdown is "significant," and the bank could change its guidance if it becomes clear the situation is not temporary. the combat -- the comments are another dovish signal as they prepare for a new central bank president. saudi arabia has dismissed a report that ben zalman once to buy manchester united. the crown prince could be prepared to buy the club. the saudi information minister called the reports completely untrue. global news 24 hours a day on air and tictoc on twitter, and powered by 2700 journalists and analysts in more than 120 countries. this is bloomberg. thank you.na: the rally in crude oil rose. the highest level since november on trade optimism and tightening supply from saudi arabia. in precious metals, an all-time high. and the south african producer has kicked off a heavy week of commodities earnings by upping its dividend. joining us is will kennedy. to you.d morning we see once again oil prices going higher, not far off of three months highs. it is not just oil. comm

the prospect of ecb hiking is off the cards.rms of the high-yield space investment grade, we had little issuance in december last year. investors were de-risking portfolios. people have come in here lighter risk than they wanted to, starting the year, at the same time where we see money coming out of leveraged loans. there is a big complexity. that is supporting some of these more duration type fixed income markets. jonathan: you mentioned the performance in the secondary market from that 30-year issue in italy. what do you make of the unpredictability of the treasury? bringing something to market like that, a bit of a surprise to a lot of people. 250 billion dollar euro funding target for the year. is that something you think is weighing on btp's? diana: i think it is somewhat weighing. especially with the outlook not great for italy. it is only a matter of time before investors start talking about the probability of them being able to achieve their fiscal targets when growth looks so poor there. markets were caught off, althou

the ecb has to check bank works.ill come up with some liquidity operation, but they don't want to give something out targeted at italian and spanish banks so they will find a solution which will only be liquidity. do you see any more interest in the ecb? in the last press conference, draghi went from talking about a few members to several. is this gaining some momentum? ofthe bigger question whether or not the ecb should bring some relief to the banking sector. it will be whether or not they will ship the deposit rate. we will get a hike in the rate. we're seeing them also implemented negative rates to allow more money being put on the current accounts. -- issue iss shoe how to bring relief. this will bring momentum between march and the june meeting. you talk about raising rates to ease the situation for banks. canquestion of the day is the world escape the low rate trap japan is a stock in? -- stuck in? is this going to play out here in europe? what we have seen over the last 20 years? >> we are following the foots

you see a deeper rate hike by the ecb by the end of the year.is while you're saying central banks are turning dovish globally. why would the ecb hiking globally while data in the eurozone has been poor? richard: we are setting as ourselves up for a tale of two halves. there's no reason for draghi to sound hawkish and discuss that right now. we come into a march meeting, one where he continues to be dovish. having that's the big debate, but he can save that for april or june. as the data starts to turn around, it could be as soon as next month, that starts to build over time. i think we shouldn't discount the ability and the potential interest in the ecb and governing council to move negative rates. there is a debate whether negative rates are good or bad at this point in the cycle. we know they are costly for banks in terms of what's going on. there's a lower hurdle for the ecb to provide that tempo rate hike, still at a gradual pace, but end of year is feasible. we go to 2004, the last time they started a cycle the exact same way. the fed was h

let's talk a little bit more about the fed and the is th -- ecb. market has started to price in the potential cuts from the fed which is the deposit rate and basically the markets five years out where it is pricing the deposit rate. i think we are at 55 basis points, which is not much higher than the -40 where the ecb is right now. is the market correct on both sides of the atlantic in its pricing? really inis ship is reaction to the meaningful news we had out of the fed last week. we had a significant payment. -- pivot. fed causes that the in both march and june of this year, no rate hike for the first half of this year. from there on out, we think they will be data dependent. should we see data and the united states continue to hold up where it has been fairly strong up until now, should we see some sort of resolution on the trade front, because that is what is weighing on global markets and brought the global growth dynamic downward. if that occurs, within it is likely we could see one or maybe two hikes in the second half of this year. it is im

>> both sides, the fca and ecb have really sought to ensure continuity of business. there are still, i think, some fine-tuning required, but either way, whether it is in no deal or deal, we'll get financial stability. >> when you talk about continuity of investment, how difficult is it in your role, outward looking, to sell investment in london, to strengthen the investment trade ties, when there is no certainty when it comes to policy? you look at the various outcomes, and it is not even very binary. >> so you are right. in terms of the uncertainty, it has been very frustrating. in many ways, what brexit is masking is huge levels of innovation that have taken place in the city and across the u.k. last year, we had another growth of 18% in venture capital gain in fintech, innovation in cyber, life-sciences. in many ways, i'm very confident that as we look beyond brexit we are going to enjoy a period of growth associated with the fourth industrial revolution. that's where the u.k.'s strengths are. >> also this week, south africa put forward its 2019 budget. the govern

at the fedd you look and the ecb, is that it for normalizing?en: it certainly is the big buzzword. it looks like this was it in terms of normalization. also, for the fed and the next six months, at least until the summer, there's so much uncertainty. they're all of these external risks. we might see in the second half of the year another move and might see another attempt by the ecb to normalize. today,rently, judging by the probability that all of these risks will have a benign outcome is low. francine: is it a recession risk? is the of curve inverts, is that a sign of a recession to come? or is it different this time around? carsten: it is different this time around. there is the idea of a business side. slowdown,ather be a which means we don't necessarily have to see an easing of central bank policies. but we will see that central banks will simply move on and a very horizontal direction. francine: what is your biggest concern? what are we misjudging? carsten: probably the u.s.. the biggest risk is that the tax release and tax cuts would not

ecb has tried to signal the end of kiwi. the market is skeptical.ll replace mario draghi. ♪ told the ceos of sprint and t-mobile that the merger is raising red flags. john ledger had this as a defense. >> we will win with lower prices and better services. how? our costs will drop sharply and our network capacity will expand tremendously. >> this market, the wireless market, is already very concentrated. at&t are four companies, and verizon are the dominant companies, followed by sprint and t-mobile. this would further consolidate and already consolidated market. right off the bat, the two companies are facing an uphill battle with regulators. they need to convince them that despite that, there are going to be benefits that outweigh any harm to competition. as you know, t-mobile really has been a maverick in this market, competing very hard against at&t and verizon. regulators are wondering, if the industry gets cozier, does that competition go away? ♪ >> airbus scrapping if a 380 double-decker, marking the end of the jumbo jet euro in this particula

>> it is difficult for the ecb.ulus has never really been about the strength of the economy. have seen good expansion in 2017. the inflation output -- outlook has remained positive. they closed qe not because they thought they were meeting there their inflation target, but they are running out of things to buy. we wonder whether negative rates does more harm than good to some financial institutions. even though we are seeing in economy that looks like it is back to trend and inflation outlook that looks like it's going to be subdued, we think the ecb is going to move toward removing negative rates. it would characterize that as not a tightening, but in normalization. -- a normalization. week, data continue to be we might see the pushback. we are expecting to see better sequential growth as we move into the first half of the year. that might keep the ecb on track for now. to be there are lines drawn between the euro zone economy and china. we were just recapping the earnings talking about how it was a mixed bag of va

regardless that the ecb has backed away the last year?not providing additional stimulus, it just stopped. the data is worse. you have they do fact that they will stop, you're not going to get yields anywhere else, but there is less confidence in a queen and other assets. you see other people coming back for safety, other times for income. the demand is still there, and that is global. jonathan: let's talk about the u.s. and the global backdrop. in december was not the deterioration of fundamentals in the united states, it the fear that they would deteriorate in the coming year. just the polar opposite. is that what we are witnessing high-yield at the moment? rapidly improving sentiment and not really anything to do with the fundamentals, just about taking out that move we experienced in december. jim: no doubt. in many cases, people look to the credit markets as the leader. i would say they were a bit of a follower in this. there was a fear of a fed mistake that would create a recession. the credit markets basically sold off. there was no

is a hike off the table for the ecb?o the point that the ecb has limited tools and is a little bit dependent on what other central banks do, particularly what the fed does. the ecb can keep rates low. it can provide additional financing. i think you could argue that cutting rates could do more harm in the sense of hurting bank profitability further and the banking sector further, then a rate rise would. tom: where are you on consumer stocks? one of the things for our audience in the next hour is craft, monfils, heinz. known as conagra. the signsumer stocks, of the debt industry or is there an opportunity there? >> i think it will be company-dependent. given where a lot of the u.s. data is -- historically, consumer, this has been as high, the fed has caused. that is been more consistent with where consumer staples have done well. and been a good thing. i think with a consumer cyclicals, do you have signs housingsing -- the u.s. has been weak recently. that is a huge part of the consumer spending story. i don't think that

that ecb is keeping the eye on the data. they say the current slowdown is significant, although the bank could change its guidance if it becomes clear the situation is temporary. it is another dovish signal as they prepare for a new president and chief economist this year. saudi arabia has dismissed a report that mohammed bin salman wants to buy manchester united. reports say the crown prince could send billions of pounds to buy the club. saudi arabia calls the report completely untrue. global news 24 hours a day on air and tictoc on twitter, and powered by 2700 journalists and analysts in more than 120 countries. i'm sebastian salek, and this is bloomberg. inncine: european automakers focus after a u.s. probe reported to say that car imports pose a risk. this could ultimately lead to the u.s. opposing tariffs. angela merkel rejects the suggestion that german carmakers compromise u.s. national security. >> we are proud of our cars.

he says normalization of ecb instruments is not policy tightening.r, is the ecb going to stick to a narrative of just trying to get away from the emergency levels of liquidity in cast thats and try to is somehow different to bog standard tightening. tim: there is an element of that that is true because of negative rates being so detrimental. however, the pretext for doing that at this moment does appear to be quite difficult because the policy target inflation is so far away from something they thoseo see that we expect have to stay in some form or another, otherwise the shrinkage you get the support that they offer goes away and that is policy tightening by any other name. of --ot so certain knack lack of normalization is not tightening. lack of certain measures, you will get tighter policy. anna: if you look at the balance sheet -- anna: not as big as qe, but it is a significant portion. matt: when they fell off the balance sheet, the have the consequence of shrinking relative such an extent that cable strengthened. not something they want to see.