guy: let's talk about the ecb. mario draghi setting the stage to deliver another round of monetary stimulus, likely to come in september. he spoke at the news conference following the governing council meeting in frankfort. mr. draghi: in this environment, inflationary pressures remain muted, and indicators of inflation expectations have declined. , a significant degree of monetary stimulus continues to be necessary to ensure that financial conditions remain very favorable and support the euro area expansion. guy: mario draghi speaking a little bit earlier on. we are joined now by adam posen, president of the peterson institute for international economics. should the ecb have acted today? adam: i don't think so. i don't think it matters that much whether they act now, next month, or two months from now. at the margins, it seems they -- they tried to use forward guidance, and forward guidance never really works. also, i think for exchange-rate reasons, they are much more comfortable going after the fed moves rather

the ecb is the only game in town in europe.athan: bob michele, marilyn watson, and george bory are sticking around. i would like to get a market check on where the treasury market has been. remarkably stable by the end of the week. yields up by a couple of basis points on the 10 year, 2.07%. the front end up five basis points. still ahead on the program, the final spread. jonathan: i'm jonathan ferro. this is bloomberg "real yield." it is time to head to the final spread. coming up over the next week, u.s. officials heading to shanghai for trade talks with their chinese counterparts. a central bank bonanza. the boj on tuesday, the fed delivering an interest rate decision of its own on wednesday. thursday, mark carney at the bank of england. plus, u.s. ism manufacturing data. then payroll fridays in the united states. marilyn watson is still with me, bob michele, george bory. boj not even a part of the conversation going into next week. should it be? marilyn: they have been on the sidelines. expectations were high, maybe a littl

i think the ecb is the only game in town for europe.onathan: bob michael sticking with us, alongside marilyn watson and george bory. i would like to get a market check on where the treasury market has been. twos, tens, and 30's remarkably stable by the end of the week. yields up by a couple of basis points on the 10 year, 2.07%. the front end, up five basis points to 1.86%. still ahead on the program, the final spread, featuring a rate decision from the federal reserve. the main event with chairman powell in the spotlight. this is bloomberg "real yield." ♪ jonathan: i'm jonathan ferro. this is bloomberg "real yield." it is time now to head to the final spread. coming up over the next week, what a week we've got coming up for you. u.s. officials heading to shanghai for trade talks with their chinese counterparts. plus, a central bank bonanza. the boj on tuesday, the fed delivering an interest rate decision of its own on wednesday. thursday, mark carney at the -- mark carney's turn over at the bank of england. plus, we get u.s. ism manufa

the ecb a break. only show in town for too many years. stayine: simon and jeremy with us. stay with us as we cover the ecb rate decision at 7:45 a.m. in new york. this is bloomberg. ♪ tom: they are changing the ortains at downing street, just deciding where to sit. the chancellor and prime minister decided that. the cat checking out in the heat. right above the word prepares. that pelt you see on the doorstep is completely frazzled in the heat. is doing the 100 degrees fahrenheit duty as well today. i guess we are in a honeymoon mode. when does it end for johnson? anna: things are moving quickly, so developments could happen any moment. you always get that sense. if we are in a honeymoon, let us check out how the papers have received boris johnson. we will see what kind of greeting he has received. in reference to the extent of the cabinet reshuffle, "the night of the blonde knife" and this refers back to the 1960's when harold mcmillan dismissed one third of his cabinet. half of the cabinet going yes

>> the ecb cannot be complacent. we have not only market based inflati inflation, nonindustry goods are barely increasing. the prices for communication services are going down. we're probably stuck in a world of low flagflation. >> i hear from inside the bank they're starting to rethink the monetary policy framework and they think it's a good idea when the president changes. what do you think? is that a good timing now? >> yes it seems the ecb is thinking about bringing symmetry in its inflation target in that case i would expect the market would expect more from the ecb. there is 20 basis points difference i think the ecb should not be too heasty on such a process especially when you compare what's happening with the u.s. federal reserve. the u.s. fed is also thinking about its definition of price stability. it's a long process with a lot of consultations, so the ecb should do that also carefully because there is the real danger that inflation expectation does not react to a change in the price stability target >> t

that's where the ecb is. now up by six points on the highs of the session out of the dovish ecb. euro-dollar down 2/10 of 1%. it was up on the news because you didn't see the ecb cutting -- butbut now down >> now down. record low bund yields at -39 basis points -- -41 basis points, below the deposit rate in europe. even more expectation of a cut coming from the ecb. crude pausing, gold popping. david: it is time now for the morning brief. at eight: 30 this morning, ecb president mario draghi will hold a news conference to explain all of the options the bank just told us are on the table. we will get u.s. economic data, including weekly jobless claims, durable goods, wholesale inventories, and trade balance numbers. after the bell tonight, we get alphabet and amazon earnings. let's find out what is going on outside the business world. viviana hurtado is here with first word news. viviana: new british prime minister boris johnson has made it clear he's willing to go for a no deal brexit. today in parliament, jo

we see more creative tools being used by the ecb or perhaps the ecb leading more on government and the of things putting more pressure on the fiscal side? may be lagarde achieving what mario draghi did not? viraj: i think we will see a reiteration of that. thepress conferences have iteration. we will see a continuation of that. whether it is successful or not life more in the hands of brussels -- lies more in the hands of brussels. they can only advise and call for that action to be taken. in short, i do not see any changes for the ecb under sort of a mrs. lagarde held. -- helm. we will see these political forces conflicting with the we are with ecb policies and limited firepower qe.erms of easing and it means there's limited headroom. nejra: i was surprised to see futures in the green in europe given they are flat in the u.s. and we had in some read on the screen in asia. that's an cac 40 future -- dax and cap 40 futures flat. if you look at -- cac 40 futures flat. we are actually seeing the 10 year yield study along with the 10-year bund yields steady in today's session. thedrop we s

if you see the ecb move, and we have also heard from the ecb that they want to provide some relief for european banks. what needs to be done? relief is a way that the banks could make deposits at a slightly less negative rate, than the general deposit rate of the ecb. that will allay a bit of the pain, but you are right, there the be pain in terms of negative deposit rates from the ecb. that is bad for the bank for the profitability. even so, i think it has to be kept in perspective. the ecb leadership has said repeatedly of legs the banks can do more to improve their profitability, to increase their cost. it is painful but it has to be done. consolidations in the european banking sector is needed. it would be better if it was fostered by moves to complete the banking unions. that is one of the biggest issues on the table for european commission president -- the european commission president. again, it has been ups and substantiated that unsubstantiated and motivated by monetary policy for the banks. that is what it has to do. amber: thank you, nicholas, for your perspective. our guest

the ecb suggests it will help.believe in the length between funding to the banks and lending into the economy. while others like at the lending rate, saying customers want demanding loans, and that's the problem. peter: the ecb's analysis, they put two pieces of research out. blaine give a speech last week. the ecb believes, rightly or wrongly, that if you believe, take out ecb support, it results in the interest rates to the customers and hire loans than otherwise the case. it doesn't really matter whether i believe that or not. because they do, i think they will be looking at bank bonds. the only counterargument i really see, you obviously have two arms of the ecb. one is regulating the banks, other is conducting monetary policy. armhave a dilemma, one wants something different than the other. from a monetary point of view, i think it will definitely consider that. anna: a wall needs to go up between the two parts. the greek bonds have been cramming -- climbing. 2.04% at the start of the early hours, post the ele

jonathan: and will be talking about ecb next week, an ecb decision coming around the corner.uests will be sticking with us. let's look at where bonds have been this week, 2's, 10's, and 30's. two weeks of losses in treasuries, followed by a week of gains. u.s. yields lower. still ahead, the final spread. the week ahead featuring u.s. gdp and the ecb decision. that is next. this is bloomberg "real yield." ♪ jonathan: i'm jonathan ferro. this is bloomberg "real yield." time now for the final spread. coming up over the next week, we begin on tuesday with the imf releasing its world economic outlook, and the u.k. announcing its new prime minister. wednesday, pmi numbers from france and germany. thursday, rate decisions from the ecb and turkey's central bank, too. that one could be interesting. and the weekend, second-quarter gdp right here in the united states. still with me, lisa hornby, gershon distenfeld, and noelle corum. noelle, let's look ahead to the ecb. a really interesting meeting that many people expect the president, mario draghi, to be teeing up a rate cut in septemb

guy: today is all about the ecb, so i have to ask you an ecb question.has pointed the staff to examine other assets that the ecb could buy. -- ownsalready owns xe etf's. is there much there that these be could own? -- that the ecb could own? athanasios: i'm sure they are looking at what japan has done. it is just a matter of is it politically or regulatory, will they be able to do it?i'm sure they will be looking at equity etf's and even bond etf's. guy: that's an interesting point. we will watch and wait until september. thank you very much. bloomberg etf analyst tom psaro fagis. you can find all of these factors on your bloomberg. is your function. this is bloomberg. ♪ we're the slowskys. we like drip coffee, layovers- -and waiting on hold. what we don't like is relying on fancy technology for help. snail mail! we were invited to a y2k party... uh, didn't that happen, like, 20 years ago? oh, look, karolyn, we've got a mathematician on our hands! check it out! now you can schedule a callback or reschedule an appointment, even on nights and weekends

the ecb does have ammunition.t look like it with negative interest rates but there is a combination of things they can do. i think they will take the deposit rate further into negative territory but not by much. they can do something in terms of the interest on reserves that banks have to pay to the ecb. they could cut that. that would reduce costs. in terms of quantitative easing, they can tweak the current rules they have and by a little more of corporate bonds and government bonds. anna: sounds like there is room to maneuver without being too creative from what you described. i've got a chart taking our conversation back to the fed. he talked about weakness in the global growth story and raising questions about what central banks can do to support the markets. the markets don't seem to be pricing anymore a july cut just after the truce of the weekend. is it as simple as that? some underlying data is still negative and the truce of the weekend didn't lift any tariffs. neil: we went back to where we were six week

let's look ahead to the ecb.interesting meeting that many people expect president draghi to be teeing up a rate cut in september. what is your base case? noelle: he is probably likely to leave the door open, but we think we are calling for a q3 cut, and qe, too. we might get a little bit of details on the purchase program. that is where we would be focusing as he comes up. jonathan: any idea on what they might buy? the same as before or broaden the parameters? noelle: i think they will broaden things a little bit. just because only so much they can buy without significantly moving markets. in terms of the underlying details, that is still yet to be seen. lisa: i would agree with that broadly. i think they open the door next week to the september meeting , where they unveil bigger policy. there is probably going to be some tiering of deposit rates, there could be an expansion of programs, additional assets added to that, as noelle alluded to. they realize they have to do something, and they are the ones actually o

within the ecb that negative rates haven't hurt the ecb -- sorry, that the banks actually have paidd more negative rates to corporate deposits and stuff, and it hasn't been as bad for the banks as people think. vonnie: where do you stand on where the euro goes? would you buy in in euros? said: i think the dollar broadly is going to go down as the fed really starts to significant -- really starts the significant cutting cycle. however, i think the euro has more downside as well. generallyke to be short euros against other currencies. vonnie: around what level, though? said: even against the dollar, euro can go down sub $1.10. if we start another round of qe, we will go below $1.10. guy: how does that change the dynamic? if i may euro investor, that means one thing to me. if i may dollar investor, that means something different to me. walk me through the dynamic of how the hedging story from the currency move that you are talking about will feed into people desire to be on either side of the atlantic. let's say you consider a japanese institutional investor, and say, how do they do bu

amber: we will see what the ecb decides to do come tomorrow.hanks so much to mike mckee and sassan ghahramani. i want to recap one of the big stories that is taking place in capitol hill as former special counsel robert mueller is on the hill testifying right now. he is in his second hearing of the day on the mueller report. it is aeen reluctant, long-awaited appearance before congress all day. he has resisted pressure from democrats who hoped he would reveal additional information about his investigation into president donald trump. you can watch this right now on your bloomberg terminal. just go to live go. we will be right back. this is bloomberg. ♪ g. ♪ amber: this is bloomberg markets. i'm amber in toronto. shery: i'm shery ahn a new york. more breaking news out of the u.k. boris johnson supporter and conservative mp dominic rabb was named uk's foreign secretary. this coming at a time when boris johnson is now forming his cabinet. we had just heard the former international development secretary was named to secretary of state for the home

guy: let's talk about who is going to be the next head of the ecb.e trying to figure out who will be head of the commission there in -- of the commission. there is a lot of the debate over who will be the next head of the european commission. from our point of view, what we want is a derivative of that, who is going to be the next head of the ecb. if a french person ends up being the head of the ecb -- and apparently there is a story that the french one a female, and potentiallyake it christine lagarde, coming from the imf. what do you make of those potential candidates? can you give us a sense of who would -- if we are to see a french female be the next head of the ecb, who do you think it should be? erik: that is an unfair question. that is a biblical one. i hate the idea of saying in this spot we must find a female. i think you have to say, in 5, we must have an equal balance p the problem with the ecb is that it is a very technical job. you need somebody with particular expertise, and central banking expertise, and communication skills. the fact

. ♪ anna: christine lagarde is the surprised nominee for the ecb top job. supporter of qe with no central bank background. what will the imf chief bring to the role? treasury yields a slide to a low as bets on global using low. president trump's new nominee for the fed are likely to support rate cuts. pimco says the rally in risk and haven assets has the scenarios priced to perfection. so how much longer can they coexist? welcome to the program, this is the european market open. 29 minutes ago until the start of the equity trading day. let's check futures. . in terms of u.s. futures, they point to something a little weaker at the start of trading. ftse futures seem to be pointing a little higher than the rest. let's have a look at the gmm function to help us understand where we are in asia. recommence -- weakness in asia and disappointing data in terms of the manufacturing sentiment numbers. pmi coming through. the carney is talking aboutrecn widespread a slowdown in the global economy in the policy response that might be needed to tackle that. all of that

do not forget the ecb has been created over the past few years.e might see other ways to stimulate the economy. thatly, there is no doubt whoever leads the ecb in the future will have to find the support of the fiscal side. without the support from the fiscal side, the monetary policy will not be able to do much in the future. david: let's turn your home country of italy. there was an issue with that european union about getting the budget to the 2% target on the deficit. i will put up a chart that indicates where it is now. they are taking it down below 2%. what did the italians do to get that number down? lorenzo: the cabinet ministers yesterday night approved a small package. an updating of the budget to take into account items, spending items were lower than expected. income and the region of the pension system and it up -- ended up less expensive than originally expected, which is good news, and is a structural improvement. government time, the has produced savings, which are temporary. some amnesty and some bits and pieces. the good news is

jonathan: talking about the ecb next week, a ecb decision coming around the corner.et's get a check on bonds. followed by a week of gains. the 10 year done by eight basis points. still ahead, the final spread. u.s.eek ahead featuring gdp and that ecb decision. that is next. this is bloomberg "real yield." ♪ is bloomberg "real yield." ♪ gdp and that ecb decision. that is next. jonathan: i'm jonathan ferro. this is bloomberg "real yield." coming up over the next week, we begin on tuesday with the imf releasing its world economic outlook, and the u.k. announcing his new prime minister. wednesday, pmi numbers from france and germany. the weekend, second-quarter gdp right here in the united states. with me, lisa hornby, gershon distenfeld, noelle corum. a really interesting meeting that many people expect president to be teeing up a rate cut in september. what is your base case? noelle: he is probably likely to leave the door open, but we think we are calling for a q3 cut, qe, too. we may get some details on the purchase program. that is where we would be focusing as he c

your take on the next move potentially from the ecb.to: i am not convinced the medicine that has been prescribed in the past of quantitative easing is the solution for the problems in europe. we need to go through a more of the stepsysis necessary to create sustainable growth. we need to have reforms of various level, political economic reforms in europe and the central bank policy can only help in a transition. it is not the solution of the problems. i would be very careful about growing further the balance sheet of central banks especially when they go into asset based risk. we are at the risk of creating an asset bubble. anna: that was the ubs ceo speaking with bloomberg's manus cranny. let's get your bloomberg business flash. >> robin hood markets has closed a round of funding valuing the company has $7.6 billion up from its 2018 value of $5.6 billion. the company was founded in 2013 and allows people to trade stocks on its mobile at. the u.k. is intervening in a --e of the national security for national security grounds. the fund i

let's talk about europe and the ecb.terday, bloomberg had a story talking about the ecb revamping its inflation goal in the twilight of the draghi era. we saw bunds spiking. when we talk about the u.s. earlier, you said markets may have gone too far with pricing. could the ecb go further than the market expects in terms of stimulus? michael: the reason stories like this gain attention, one of the main things on the markets mind is how much further can ecb move and react? if they did change the inflation target, that would show they have a willingness to be more reactive. really what the key is, announcements around what they could do. our expectations are we will see 20 basis points of rate cuts this year. announcehink they will a restart of qe by the end of this year. we think the ecb will move to being more reactive. nejra: and the rate cuts start when? michael: we think september. the key thing next week's around the ford guidance, and they give an indication they will lower rates. we think it is too soon given the co

is it all about the ecb? >> it's pretty much all about the ecb. i think that certainly on the political side we've seen all manner of manifestations of political risk in the last ten years, peripherals with spain, greece, et cetera. any impact in euro has been negligible in a broad sense. we have not seen long-lasting effects on europe. what you're seeing at the moment, nobody is talking about italy leaving the eu or anything like that or spain all those questions are gone it's tapering around the edges really >> one final question for you. we're about 42 hours into a boris johnson premiership. pound has not done much since then as he talks about this can-do optimism, can he do anything -- is there anything he can dcan da will change the calculation when it korms to steri s tcomes to s? >> yeah, he can soften his language somewhat and take a more constructive negotiation stance sure there are things he can do whether he's willing and able to come back from the situation he got himself into, he's given himself little room for maneuver >> my europea

valentin: it is bad news for the ecb.hey would love to have an upward sloping unit curve. -- upward sloping yield curve. the euro zone, it also is an important signal for the governing council that the markets are now expecting them to cut rates, potentially september or later in the year, notwithstanding that draghi's term is coming to an end. it is a case of the continuance of the ecb easing policy now being priced in. yielding negative rates is quite scary because the ecb is no longer expanding its balance sheet. and stopped really growing reinvesting. the fed has been done for two years or so. sick about what happens if the global economy now has to go into a slowdown and qe has to resume again. where will all of these yields go? that is a scary question, especially in uncharted territory. that could get even less clear, how we will deal with that down the road. anna: and policy response to come. this is a bond market story. you are in the equity world, but clearly they linked to each other. every time we see yield ta

same thing with the ecb. to lagarded give -- madame does not want to do qe and give the credit to draghi. there is a change of team going ecb. the court ecb -- core all the market will get is some adjustment forward guidance and maybe a deposit rate cut as a signal. deposit points off the rate is nothing in macroeconomic terms. francine: we spoke to someone from the cleveland fed yesterday and i asked this question. are the markets pushing central banks to take action? she said absolutely not, we are data dependent. do you believe them? mike: i do believe them, both in terms of the fed. the fed has not seen enough in data deterioration to pull the trigger in july. that is why for us it is later rather than sooner. same thing with the ecb. i think we will have to see more bad data before the ecb really pulled the trigger substantially. i don't think looking at forward indicators, whether those are short leaning or long leaning indicators. francine: how do you view central banks? expectation or 85% of a cut thi

ecb vice president.anus: and the afternoon, the italian finance minister, giovanni tria, will give a speech in rome. least, pope francis holds the russian president, vladimir putin, at the vatican today. it will be their third meeting since they last met in 2013. ♪ ♪ today at 4:00, our boston pops spectacular airing later today. the u.s. celebrates later today. sky.ction will be in the the celebration in washington happens every year, but almost never includes presidential speeches on the mall. president trump would independence day differently this time. agenda, in military parade with tanks. they will temporarily close airspace and ground commercial flights at reagan airport. protesters have a permit to display an inflatable baby version of the president. the overall cost of the event is unknown. a similar of that the president wanted to hold -- event that the president wanted to hold was $21 million. manus: it will be a spectacular boston pops. matt miller gets all of the great gigs. let's see how the

see -- speaking of, we we have the ecb this week. does it deliver something that the market is not anticipating? guillaume: the market reacted to bad numbers on the manufacturer side. it is caught in the crossfire --ween china weakeness weakness, e.u. and united states terrace. these we get clarity on subjects, this will stay with us for a while. the longer it process it becomes more of a, -- a problem because it drags the economy down. the important thing is to make the announcement and promise that more is coming in september. it is a save the date meeting. fiscale hoping that policy eventually comes to the rescue, but we are talking 2020 at the earliest. it is about restarting these rounds. if you look at how much they can do, it is really little. the two programs on a sizable basis for a long period of time that will do that. we are expecting draghi to be clear about easing, but that can take different forms. alright, thank you. stay with us. we are seeing some movement in markets. unchanged, but the down is down .5% being dragge

the ecb rethinks inflation goals. the central bank will study a ,evamp of its inflation targets bemoaning the limits of monetary policy. welcome to "bloomberg daybreak" on this thursday, july 18. lonely here in new york. david westin ditched me at nbc. [laughter] david: there's this fascinating report you flagged about the ecb reportedly rethinking its inflation target us morning. alix: you some money flooding into european debt. you saw a little selloff. the german ten-year -32 basis points. what is that going to do at the end of the day if they rethink that inflation target? david: and what does it mean? peggy collins pointed out the u.s. is taking a look at the same thing because central banks are saying we had this to %,rcent, it is not -- this 2 it is not working out. do we have to take a different approach? phillip morris the latest earnings coming out. it really highlights those that can take this environment and deliver to boost their forecast, and those that just can't and don't have the pricing power like ne

maybe the market has no belief that the ecb cost tools will work -- ecb's tools world work.e a little higher mario draghi with speaking. matt: the idea is because they are not mulling stimulus, there are concerns that the german economy, the engine of europe, falls into a recession. when you have got those kind of concerns, it causes a risk-off kind of run to bund yields. nejra: it could be higher, matt. matt: maybe you could be correct in that thinking. on the other hand, you would think that as well if it is because of draghi, it has the same kind of move. it is definitely an interesting debate. you can see the timing of the schulz interview. i have got it surrounded in red. that is why i think that, you know, markets moved on the schulz interview. we did not speak until right after. nejra: matt and i are going to go for a drink and keep on talking about this. what u.s. second-quarter gdp number would traders need to keep a fed rate cut bet alive? kallum pickering has been patiently listening to me and matt sparring. let's talk about the u.s. we are looking ahead to this g

we have the ecb tomorrow. the fed as well coming up, the imf cutting its forecast for global growth yet again. they still have some optimism in asia, given the fact for the trade. netherlands aes up nearly 0.2% as well. let's take a look at what is going on in these individual needs. it will be an interesting day given we have had so many earnings. breadth is tohe the upside, 294 stocks to the upside. itv is higher this morning, up some 5%. they had some slowing of ad revenue, but announced that love island, i know a lot of people in the newsroom love that show, 2 series starting next year. onpmakers will be moving trade optimism as well as texas instruments in the u.s. yesterday reporting stronger than predicted results. peugot with results. all of these moving higher. anna: thank you very much. we are live in westminster, because today is the day that we see a handover of power from prime minister theresa may to soon to be prime minister. theresa may -- soon to be prime minister boris johnson. this afternoon

up next, the new boss of ecb, christine lagarde.s, to trump nominees for the fed that are a lot more dovish than what we have. we discussed yields. there is a big move when it comes to the bond extending gains and the u.s. holiday. tomorrow is the fourth of july. we discuss all of that shortly, this is bloomberg. ♪ . . hey! i'm bill slowsky jr., i live on my own now! i've got xfinity, because i like to live life in the fast lane. unlike my parents. you rambling about xfinity again? you're so cute when you get excited... anyways... i've got their app right here, i can troubleshoot. i can schedule a time for them to call me back, it's great! you have our number programmed in? ya i don't even know your phone anymore... excuse me?! what? i don't know your phone number. aw well. he doesn't know our phone number! you have our fax number, obviously... today's xfinity service. simple. easy. awesome. i'll pass. . ♪ francine: the time difference between d.c. and frankfurt is six hours. the real difference is in the ata. the rates debate. bloo

if the ecb acts one way or another?llow the ecb as closely as the fed because ultimately the ecb helps set the lower end, and the treasury never trades much about it. if you look at the 10 year treasury and the u.s., they have never traded in the last 30 years more than 250 basis points above the german bund. that is -40. longif the fed wants the end up, they will have a hard time doing it. aggressive going into his exit to set the course of action. i think he will do more quantitative easing. we think he has lowered the cost of debt, but not the cost of equities. it would not surprise me to see him move away from sovereign debt and into corporate bonds or something with equity to drive down the cost. there are a lot of stocks with huge dividend yields when bonds are yielding negative. there is almost 5% of the european high-yield index that actually has negative yield. that strategy worked on the sovereign debt side, and it seems crazy, but it is true. on equity they have not lower the cost. anna: fascinating conversat

imf managing director christine lagarde is touted to be the head to hit the ecb -- to the ecb.and emily roland of john hancock are still with us. what can the next head of the ecb actually do to ignite growth? alicia: the ecb is really between a rock and a hard place. the christine lagarde candidacy is interesting. as we've been discussing over the break, she is really a political figure much more than an economist. much of europe's problems extend from the politics and the political economy. what does that mean to have different fiscal policies when you have one monetary policy and how that plays out politically? at first i was skeptical, but as i think about it, it may be that this is more of a finesse job, and is very political. bestld assume she has the economists that can help her with this. it is a little puzzling because she's not known as one of the leading economic minds out there. she's a political person. david: it is fascinating. is there a parallel here with jay powell? he's been on the fed for a while, but not a trained economist. absolutely. i think alicia makes

he's tweeted about mario over here in europe, the ecb.'s also going to be a change of competition in the fed and a couple names has been put forward. one of them is the chief head of asearch from the u.s. fed bullard decented last time in favor after a rate cut that suggested dovish bias the other person is a lady called judy shelton who believes in the gold standard so what does this mean about the future composition of the feds and what it could look like in the next year or so if these nominations go through >> well, i do think both of these candidates are clearly qualified to be on the federal reserve. christopher waller is currently st. louis and director of research, but what it says is that if you look back at 2018, you had fmoc unanimous vote on every move the fed made and it might be good to have actually some different perspectives and thoughts on the economy on the fmoc economy if you believe like i do that they made some grave errors in 2018, i believe having some dissent will be good. >> thank you very much for taking the tim

either way, we know the ecb is on an easing path.lear thatade it they have to stimulate the european economy, would be prepared to do this. the theme here is, the market is looking at this as a continuation of draghi. breakn't get that clean that break that would have come with weidman at the head of the central bank. shery: give us more insight into the commission post. just a few months ago, we were talking about weber. what happened to him? maria: it has been a disaster for him. of elite concept candidates, this system of political groups in europe, everyone except emmanuel macron agreed to, and they said for months that the head of the european commission would be somebody that participated in european elections. clearly that is not the case. weber is out. the current german defense inister, a woman known germany, but not outside of germany, not many europeans will know who she is. she did not run in this european election. many will tell you that the lead candidate -- to come outl has with the negotiations with something to pres

a lot of volatility provoked by the ecb meeting.bout what's going on with asia equity markets because european markets look for positive in the futures and the u.s. futures point higher. in asia, things look gloomy. the earnings story very much to the fore once again, u.s. gdp data later on. the futures dewpoint higher so perhaps we've got intel and alphabet outweighing the negatives around amazon. we'll talk about that. just want to draw your attention to the british pound, down 2/10 of 1%, as the initial response to the boris johnson premiership has been a no from the other side of the channel. more on brexit later. let's get into the markets now. matt: absolutely. let's go to mark cudmore, our managing editor out of singapore. first off, what do you think about u.s. gdp today? i think it's the mliv question of the day. what number keeps the fed cut alive? it's a balancing act, isn't it? mark: yes, very much show. generally, the number is expected to be stronger than the consensus forecast of 1.8%. not just on the whisper function

can france security ecb present -- secure the ecb presidency?ia: officials do believe they have a way in. the french think they have high-profile women and they do see there is a path to the european central bank. ae issue is, if this comes to mann does notweid get the job. reporter,t was our tadeo in brussels. jensishing prospects that weidmann will lead the ecb. the common currency may need to look for outside support to stem its decline. here to explain is dani burger. if timmermanss, gets the job, that we will not see jens weidmann as the ecb president. because of this issue, we saw the euro fall to just about a two-week low. with someone who seemed to support cuts but we might get the altar easy policy outliving draghi. a slightly weaker dollar. we are seeing analysts come out and say this. expectations versus the u.s. and euro area, which is in white. he says it is starting to rebound. that is support for the euro. we are seeing options markets back this up to some degree. they have finally entered a bullish stage thinking that the risk is

henry: we follow the ecb as closely as the fed because ultimately, the ecb helps to set the lower endnd the treasury never trades that much above it. if you look at it, 10 year treasuries in the u.s. have never traded in the last 30 years or than 250 basis points above the german bund. the german bund is -40. even if the fed wants to get the long end up, they are going to have a hard time doing that. draghi will i think be very aggressive going into his exit to set the course of action. i think he will do more around quantitative easing. we think he has lowered the cost of debt, but we don't think he's lowered the cost of equity. we wouldn't be surprised to see him move away from sovereign debt and move into either corporate bonds or even something that is equity like to drive down the cost of equity. there's still a lot of stocks in europe with a huge amount of yield. the european high-yield index actually now has negative yields. that strategy has worked on the sovereign debt side, and it seems crazy, but that is true. but when you look on the equity, they haven't really lowered the

the ecb cannot do much. difficult to get super excited at this point.athy: i could see in the short run you see that outperform, depending on the duration, the steepening of the curve. over the long run, hard to see that. jonathan: what do you make of the quite selloff in the german bond market? 16, 70 basis points on the 10 year. mike, it has been so quiet, hardly anyone has talked about it. mike: high correlation to treasuries right now. it is really duration in general selling off. jonathan: i am wondering if this can start the repricing in europe. we talk about this polish 2029 euros-denominated note. anything issued in euros right now is being bought aggressively. then when you see german bunds starting to reprice, i wonder how this bleeds across the fixed income universe in europe. kathy: i think you have to be nervous about that. yields are so low, spreads are so compressed, even a little bit of positive news, a little bit of disappointment from the ecb, there is room for the rates to move up. how much more room is there for them to move down? jo

how much is the ecb going to cut this year?tephen: i think it is a matter thosee before they reel policy maneuvers out again. a does not matter if it is woman, mickey mouse. the european zone -- the euro zone defies all logic. technically it should not be there. like mario draghi said in 2012, it is whatever it takes it i don't know if whatever it takes is a good idea, but he was worried about the bumblebee. guy: but the bumblebee flies. stephen: but it should not fly, and here is the problem. keeping it together will have enormous cost on the ecb, and everybody is going to be miserable. guy: christine lagarde, or whoever it is, what are they going to do? stephen: supporting the euro zone is going to have dramatic costs, and we think it will come in the form of euro weakness and political tension. it is going to be one of the of ash one or the other. either way, it is not good for the currency. possible it will be good for the bond market, but the risk premium they are taking out has to show up somewhere. we have been drawing i

let's look at the ecb. zone, 10k at the euro year yields on the u.s., unchanged, but look at the german bund. it was down to a record low. this is down to the terrible reading, the market ism effect. this is currently what we have. about 7/10lds, just of 1% currently. this as we get the cabinet being constructed full of brexiteers. chineseyields on the bond, slightly higher on the yield. coming there was money out of emerging markets into the developed markets. that is currently the position we have on fixed income. that's find out what's going on with first word news headlines and go over to beijing. thank you. north korea has launched projectiles from the eastern part of the peninsula. japan confirms two missiles were fired and the south korean joint chiefs of staff say they flew kilometers.30 the early morning lunches come weeks after kim jong-un met president trump in the demilitarized zone and agreed to restart stalled talks on the north nuclear program. former special counsel robert mueller finally te

coming up, a different kind of ecb president. we talk about christine lagarde with jacob kierkegaard of the peterson institute. that is next and this is bloomberg. ♪ guy: this is "balance of power" on bloomberg television. i am david westin. we turn to mark crumpton for bloomberg first word news. mark: iran has a warning for europe. if it does not comply with the terms of the nuclear agreement by sunday, iran will enhance its uranium enrichment. increasing uranium enrichment could eventually give iran enough to produce a nuclear weapon. china made by u.s. farm products out of a gesture of goodwill. bloomberg has learned the volume is likely to be smaller than before. purchases could include soybeans, corn, and pork. how much will depend on the progress of the trade talks. -- isis depending defending its decision to impose restrictions on exports of semiconductor related material to south korea. shinzo abe says japan cannot give the exports preferential treatment because the country is not abiding by an agreement regarding wartime

this slowdown has been going on for 12, 18 months, and finally, the ecb capitulates? finally the fed turns around and says maybe that is not transient. aoc, larry kudlow, jay powell all agree they should throw the phillips curve under the bus. surely there are some people thinking out there that that is a little bit too consensus now. maybe i need an upside call, a call option on the inflation story. are we getting a little bit too complacent? kathy: i think so. we have been advocating long-duration since last year. we are now back to a much more neutral stance. and one thing about the phillips curve is people do not realize -- they should look at real wages, not just nominal wages. when you look at real wages, they are actually rising. not that that will trigger a big inflationary spiral of any type in the next six months or so, but real wages are starting to pick up as the unemployment rate goes down. so i think the consensus has gotten a little too dovish. mike: we think tips will do ok. so inflationary expectations are probably beaten down. i know it's dangerous t

, we are seeing the prospect of qe from the ecb. classic value, italian banks starting to perform strongly. it shows how unpredictable it can be. nejra: value, but keeping quality. froms from --alan higgins bruegel stays with us. debra: thousands of spectators packed the mall to watch the fourth of july speech. president trump praised the u.s. military and american people but put himself front and center of the independence day celebration. the event included tanks, flyovers by jets and culminating in an extended fireworks display. >> we celebrate our history, people, and the heroes who proudly defend our flag. the brave men and women of the united states military. together, we are part of one of the greatest stories ever told. the story of america. debra china is: sticking to its demand the u.s. lift all tariffs as a condition for any trade deal. some you officials -- u.s. officials have said they will stay even after a deal to enforce it. the president agreed last month to restart talks. no plans for face-to-face negotiations have