mr. draghi, the portugal speech, clear-cut dovish given by mr. isterday, the market appearing to take it on. we are getting a to the situation where the more the market pushes mr. draghi, the more dovish he becomes. careful and he mentioned that financial conditions are worrying him. i think the more were reading he will be he -- the more worried he will be he has to be dovish. nejra: despite of the overall dovish tone, which is what you to the weight, the euro continues to grind higher. to this chart. hedge funds most bullish on the while the dollar is falling out of favor. in your view, you do sort of see tightening from the fed where you think there's no rush from the ecb. doesn't this which around with the hedge funds it getting it wrong? thisn ahmed: right now at current level, some tapering is already and the price. , i think we extra are into pre-qe levels on the eurocrisis. that is an important the level because from here on, you would need hawkish to support for the rises. -- further rises which i do not think will come through. i think

mr. draghi? >> i don't buy it.kets are much more focused on good old-fashioned economic fundamentals and just like most cycles, when i see fundamentals weakening, i'm going to want to take some chips off the table. right now i don't see that at all. i see a robust, synchronized global expansion. we are advising clients to be overweight for risk assets at the moment and underweight on the savfe havens. francine: coming up tomorrow, the ecb will announce its decision, followed by a news conference by the ecb president mario draghi. we will bring you live coverage when that happens at 7:45 in new york, 12:45 in london. he will go to the currencies. this is bloomberg. ♪ ♪ >> surveillance in washington. kevin cirilli will join us in the next hour. -- trump whom reading pitting -- putin meeting. right now, taylor riggs. >> we are starting with politics. secretary wilbur ross is at the hearings. administerntries talks today. -- trump administration toprding to people, several advisers are involved. is -- theouse european

mr. draghi today then >> well, good morning. what we probably expect in frankfurt is more a balanced approach to the language you referenced the speech in sintra, that was taken quite wildly by the markets. the ecb was not happy with that what they want to avoid by all means is a taper tantrum scenario here in the eurozone. perhaps you can see that speech in sintra as a test case how sensitive the markets are. that was quite visible the day with yields spiking in the bond market, the euro jumping that's what they want to avoid today i think the focus will be on the balanced approach while staying on message that the economic recovery is surprisingly strong in the eurozone, and that inflation eventually will get there. another area of focus is the focus that we need to be persistent and at the same time prudent in order to avoid those volatility in the various markets. that will be the main area mario draghi will try to tackle in a press conference it comes with a tweak in language of course i think the most is that they're dropp

mr. draghi would say the same.ry union, we need political, fiscal, banking union for this to work for the next 100 years. .hat is a big ask but if we can pull that off, that would be a fantastic outcome. guy: and the world is underinvested in that? bob: to some extent. there are other idiosyncratic issues that we need to figure out. geographical placing with north africa and the middle east is not going to way. it has approached the turkey and russia -- these are difficult things to figure out. the germans have a special relationship with russia, which the rest of europe doesn't share. europe gets its own energy deals with russia. tensions down the road, but for now, let's enjoy it. we are happy to let people get boldin to this story, -- >> when you see the change starting to become clear, and if it hasn't, at what point do you make a decision -- this isn't going to work and i have to rethink my optimism. german elections, if that goes wrong and we haven't got the big changes by the end of this summer? what are you

mr. draghi talked about inflation, my own interpretation is that it will become -- it will take some timere upside risk then maybe downside, given the pessimism out there. guest: slowly we are moving their. probably not today or the next week, but we expect when july comes to the end, pessimism will be excessive. we have already now in terms of data and the situation of the market, a lot of pessimism. it can run a bit further in terms of timing. anchor: right after the election, all the talk was on monetary and fiscal policy, here in the u.s., and what that would mean for the economy. it appears that handoff is not happening, certainly not as quickly as we thought. what other risks is that handoff never occurs? how much of what we are seeing with growth and reflation is simply liquidity from the central banks being ejected into the marketplace? guest: i wouldn't be so pessimistic, particularly on u.s. growth. we think the u.s. economy can accelerate in this momentum even without fiscal policy, even without --. of course this would be helpful. what happened in the last year is a weaker dol

mr. draghi, you said you had not asked the committee get to prepare options for an exit.e chances at the next policy meeting you have concrete that youn the table could make a decision on? or are you only tasking the committees to prepare the option after your initial discussions on a possible exit in the autumn ? and you have highlighted the governing council's flexibility. what the you think are the chance at this point you would the rules of the qe program to ensure they are sufficient? thank you very much. >> thank you. the answer to your second question is we have not discussed that. to the first as well. we have not discussed what we are going to do in view of september, are even less so what we will do after september. was a unanimous conclusion. don't set dates. we need to think. we need to have lots of information that we don't have today. there is a lot of uncertainty around. the governing council did not want to be forced to make decisions and absence of full information. >> good afternoon. first, on the inflation picture at the moment. secondly, with regards t

mr. draghi.e recovery in europe is really as sustainable as what we have got going on in the u.s. economy hasthe u.s. reached exit velocity. it has been growing steadily. i think the european growth in 2017 has been more to do with the weaker euro and may prove to be less sustainable. if that is true, mr. draghi has to get some tapering in while he can still do so, face-saving. i think he is more and a box then chair yellen, so i am listening to her much more. yielder, the u.s. 10-year is the world cost of capital. the fed can influence it. david: are they going to ask chair yellen whether she is changing her mind on the basic model? we must have been surprised don't have more wage pressure given the adding of jobs. >> i think somebody will ask her about it. it is a question. they have been trying to fit the data to the model. their belief is supply and demand eventually have to come into balance. if supply gets very tight, we have to see rising wages to meet demand. there is no disagreement that

mr. draghi is going to jacksonh hole. he's expected to make a big announcement.dollar continues to move higher. i really think this draghi story is going to be one-way really start to pay attention to as a worker way towards jackson hole. it will not be the fed. it will be the ecb and focus. tom: towards the end of august. michael mckee will lead our coverage. as mr. draghi i would hope would give the speech at lunch on saturday. that is the tradition. we have a tradition on friday to give you a bloomberg that affects every american. frankly, this is a story in europe, too. disinflation,of many saying it is transitory. here's the cleveland cpi, my favorite. here is service sector cpi in white. and down here is goods producing sector migrating down. mail from allthe of our viewers is their focus on this 3% inflation rate up top, the service sector cpi. guy: tom, can the fed have it all? tenet managed the front end of the curve and not generate a stronger dollar? -- can it manage the front end of the current? and provide lower borrowing costs acute the u.s. economy

mr. draghi is realizing negative rates is something that has to finish.we will find out if he is going to talk about that. if you are a bloomberg customer, you can watch the show using tv . the landing page is the appropriate place to start. living room,about what is happening with the sky story. also, some key coverage coming up. mr. kaplan talking about policy later. here is some of the video, as well. what have you been watching? janet yellen, two-minute testimony. down whatited she had to say. that is the most-watched video on bloomberg. matt: i just want to point out that our producers had a headline that the jp white --ersing gains dropping to a jpy reversing gains dropping to a low. trump and macron meet in paris last night, what will there be fireworks? more next. this is bloomberg. ♪ guy: you are watching the european open with 13 minutes into the trading session. ahead by level, not a lot going on. let's find out what is happening in the big test. >> seeing its for your profit margin ahead of consensus, also saying it cash position enables a

mr. draghi. i have the board up here. we are back down to 100 basis points.time was october 2016. do you continue to make that trade? peter: i think it could do for a wild. i think they are likely to continue steepening very modestly. we are in around 55 basis points in german defense. year-end, 70, 75. it will tighten a bit more. it is not going to be a riskless trade however. spain.e this in it is about to be not legally binding. the market is completely discounting it at this stage. this trade could continue. that spread could continue to tighten somewhat. the issue is really that the ,ype of political uncertainty once it starts, it does not stop. exactly. at some point, it blows. for athe trade could work little while. i am not so sure whether i would want to load up on spanish debt at this point given those concerns. guy: october is were the referendum is coming up. nonbinding, but nevertheless, the story could be interesting as we work our way towards that. you have the german election coming up. let us take you to the mov screen to show you what is hap

mr. draghi.n reality, there will be quite a lot of positions going into the meeting and we would like to see some volatility as he is speaking. he has a thin line to tread. already he has said something which suggests they are making a small move toward the exit. he has not backtracked on that so far, he has had plenty of time to do so and he has not backtracked so that probably means he wants the message to go ,cross to people in the market that the ecb is very slowly moving in that direction. amehow, he has got to prevent taper tantrum. he does not want a repeat to happen -- of what happened in the u.s. where the bond market got out of control. he will have to use his language carefully to let the message be clear that we are giving serious consideration to make an exit. we do not want you to get excited about it and cause a panic in the amount -- in the market. how he does that will be interesting. will continue to committee kate with you. briefly, what is his positioning looking like, how are

mr. draghi has reminded us that he might change. nobody i meet can honestly bunds are fairt value.ntrald tendency toward 1%. valuation is important. we'll talk about the fundamentals in the policy. about the starting point? if you buy something expenses, the risk is to go down. that is all it is. anna: where do you see bund yields? i have wondered how we will get there. this is a wake-up call. i do not to get has to go in a straight line, it probably spends the summer in a range as you have the issue and the ecb will not do much. at the end where closer to 1% then to zero. manus: you heard it here at daybreak. anna: the conversation on brexit antinues, bringing you interview with jeremy corbyn. a lot more on the market open. ♪ guy: good morning and welcome. you are watching blooper markets, the european -- bloomberg markets, the european open. i am guy johnson in london. matt miller returns tomorrow. fed fragmentation. the fomc minutes .2 divisions on when to start unwinding the balance sheet. is that -- september the most likely start date? possibly a contentious g-20 in hambu

mr. draghi should stop dragging it on. >> let me ask you a bit of a financial personal question: we have the italian ten year at a lower yield. we have the shots. the european two year in the minus 66 camp no i wouldn't but i'm a stock man buy and hold. >> i don't think you're dissimilar to a lot of investors. most likely much of that. >> paul: soerned by the southern central banks that issued witt the ecb propping it up at a level that's unrealistic in the final half minute we have left do you think negative yields in europe will persist for a long time without being addressed? do they need to be addressed >> clearly they need to be addressed. which investor will give money in order to lose money you are promised a negative return no reason to ever do a thing like that. >> it's always interesting to hear your comments all i can finish up with is they're buying the euro and they're buying he conveyties not only here but in europe. considering what you said about negative rates is there an intersection out there that everybody is ignoring? i don't know the answer but i have a feeling that

mr. draghi's important comments at the press conference. the senator from arizona.een diagnosed with brain cancer. doctors discovered it after removing a blood clot from above his eyes. the arizona republican is 83-year-old and he was -- 80 years old and he was the 2008 presidential candidate and spent more than five years in a prison camp after being shot down in vietnam. a startling revelation for president trump. he said he would not have pointed jeff sessions if he would have recused himself from the russian investigation of. -- russian investigation. the kremlin said that the donald trump did not tell vladimir putin that the united states was ending aid to syria. he said there was no secret to meeting. the bank of japan has cut the monetary stimulus program unchanged and for six time, they pushed it back timing for reaching 2% inflation. hit itsexpects to target around april of 2019, a year later than a previous projection. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries, i am taylor riggs. this is bloom

mr. draghi admits he has an easing addiction and he needs to dig a 12 step program. francine: by who? governing council. germans are in an economy with strong growth and inflation pressure. others are concerned as well about the extent to which he is extract -- extended this policy and perhaps provided accommodation which isn't entirely necessary when viewing the eurozone. i think we get some tightening from the ecb. that is not necessarily going to have a huge impact. i would argue that the euro probably does have an upside from here. coming from the fact the european growth is still particularly strong. it doesn't have the political problems and doesn't have the dependence on international capital flow with the dollar has. we of the story of a weaker dollar from an overbought position and we of the euro which isn't throwing up a reason not to buy. the counterargument to paul's thinking is that i've heard some guest, program and say the ecb as a whole would like to stay as accommodative as it is, they just don't have the germans into next year. they may ease off accommodations. viraj

mr. draghi five yeraars on here in a bit. i'm going to the bloomberg terminal.d be my chart of the year. this is complex. the pink line is labor share of the economy. a lot of the fed officials have been writing this up. to the left is what used to be, over here is a labour share as a percent of the economy. over here we fall off a cliff to a new america. what is important is how stable this trend is over 50 years, half a century. we are six standard deviations -- count them -- six standard deviations of what we knew in our youth. that is an extraordinary chart of a forever changed united states of america. nejra: extraordinary, tom. where you have got complexity, i've got simplicity. i'm looking at the s&p 500. i was talking about a grinding to yet another record high. i'm looking at bear markets. bloomberg did a survey showing the next bear market for stocks h and credit hits in 2018. the biggest risk? a messy unwinding by central banks. i know you love a historical chart. we are going back to the 1980's, that bear market peaked with a trough, a drop of 39%. t

mr. mario draghi talking the euro down. the euro looks overvalued to us.of futures contracts. the level is not quite beyond that 115 or 116 that would cause problems. if it would get there, that would be something to watch and we would expect esther mario draghi to talk it down. they much from a foreign -- very's perspective, much from a foreign currency perspective, it will be important from a dollar eccentric. exchange rate. david: is there a zero-sum game? as the u.s. dollar goes down, the u.s. stocks game? as the euro goes down, do the euro stocks go up? paul: not really. there's a stronger case to be made for the young dollar exchange rate. in europe, they're still quite a bit of domestic consumption going on. certainly here in the u.s., we still consume most of what we produce and produce most of what we consume. i do not think the dollar is really that material yet. it could be if policymakers let it get above that 116 mark. something to watch in the next couple of meetings. david: thank you very much for being with us. paul christopher of wells far

all about the fed rate hikes now it's kind of like slightly more hawkish language from draghi less hawkish from mrs. yellen. relatively soon start pulling back on the 4.5 trillion does that mean europe will start abating? everyone is excited about european equities. >> the thing about europe, you needed to own them unhedged. in dollars, european equities have done fantastic, up 17% a complete reverse of 2015 so, yeah, that's partly because the european economy has been recovering draghi talking about exiting from emergency policy. i thought the reang shction froe fed last night was excessive we took one word, somewhat, and lowered it down to 2%. they will still be doing rate hikes next year. we're getting to the point where perhaps the contrast between the dovish fed and hawkish ecb has gone astray. >> the interpretation, just picking up on your somewhat, is the dropping of somewhat made the characterization of inflation more dovish. we will still get our rate hike in december, aren't we >> we think so it's clearly a closer call inflation has been lower than the fed thought. if it continues to be l

mr. bond himself yesterday, radical monetary policy begets more radical monetary policy. it's salting i think mario draghin bernanke and janet yellen said their mission is imposition and tom cruise is nowhere to be found. that's the reality of what's going on you can trade the market and you can try to trade the signals, but sometimes it's just better to go along, which brings me to the next topic for the most part markets in many ways are becoming like public utilities, okay central banks need more radical policy for the exact reason that dovish long was wrong. it's not about taking policy off, it's about the fact that these are just people. they get nervous they don't want to be pointed at when the market has volatility or when the markets are disrupted removing their policy that the markets have priced in and gotten used to i don't know how this game is going to end, but i had an idea about how it might end maybe we should call cbo, congressional budget office. you know, their work isn't really very accurate, but they're nonpartisan. so ifpolicy's implemented in other, it's going to cost other money. h

draghi to discuss his new column in real clear politics. we will be right back. ♪ brook gladstone, co-host and wnyc's on irector of the media, mrs.ladstone "the trouble book, with reality," in which she constitutes reality today and how the changed over the years. >> i set up biological wiring at book.bing of the wanted to show how we had evolved culture that was designed to validate us and not to challenge us. wanted to show how we not to c. our ve us the illusion realities were water tight, when were riddled with weak spots and places that would crunch in. >> sunday night, 8 eastern on c-span's q&a. >> thursday at 7 p.m. eastern join american history t.v. for a museum of the e american revolution in philadelphia, the museum's c.e.o., michael will and scott stevenson introduce artifacts and exhibits throughout the museum, including andge washington's war tent a piece of the old north bridge from the battle of concord. american es about the revolution and you can participate in the live program with your phone calls and tweets. watch american history t.v., live from the museum of the revolution, thursday starting at 7 p.m. easter

mr. mccain brain surgery and whatever you think of the politics republicans versus democrats, my goodness me returning to capitol hill yesterday absolutely dramatic what a man five years ago today, mario draghi said the ecb was, quote, ready to do whatever it takes to preserve the euro. let's take a look. so june 2014, european central bank actually cut interest rates below zero to stimulate the economy apparently and that is the point. is it still stimulating the economy? we'll discuss. two months later draghi hinted at a policy shift. after the inflation rate fell below zero for the first time since the financial crisis, the ecb announced the beginning of quantitative easing, that was january 2015 the program extended to corporate bonds the following march. but is the end of qe now approaching? are there people out there, i know there are people out there, possibly northern europeans who think there are terrible things handling because of happening because of qe. after draghi's somewhat hawkish speech this year, euro hit a 12 month high markets took it as qe was coming to an end. and emha he will have a second speech at jackson hole next month. people are getting ready for fresh ecb moves.