Transcripts For BLOOMBERG Bloomberg GO 20160421

Slack over this. Carson block will join us. General motors cfo Chuck Stephens on the Company Earnings coming up shortly. Payroll this is like friday. It is just under 45 minutes time that we get that decision. In the markets ahead of that decision, futures over in the u. S. Looking at equities in europe, in the u. S. , still positive. A vague lower in europe in the last hour, the dax down by 33 points after a fresh high hours ago. This is the fx market approaching that ecb decision, the euro dollar 113. 12. Earlier on, ugly retail sales from the u. K. , cable did, but now it has come back. We are up on the day by. 3301 . Of 1 . Crude bouncing higher again today by almost. 1 of 1 . Those are some of the market moves. Lets get to matt miller. Matt some company news. American express rising 3 in the premarket. The biggest u. S. Credit card issuer posted a thirdquarter profit that beat analyst estimates. Customers are increasing spending, good news for a company that has been hit recently by a loss of deals. For example, with partners like costco. Lets take a look at mattel. It is down this morning. In the midst of a turnaround, kind of stumbling after the First Quarter loss. The estimated week sales from the flagship rb toys barbie toys. They are losing partnerships with star wars and marvel toys, so take a look at the shares down 6 . In sweden, ericsson is getting crushed after first order sales missed analyst estimates. The stock is down the most it has been in four years. This is a 150 billion company. Not sure everybody realizes in the states how big ericsson is. That andt get past raise their revenue. As a result, the stock getting killed in sweden. David lets talk about volkswagen up about 24 over the last two weeks. A person with direct knowledge in the matters is that the german car company has agreed to pay billions of dollars to settle claims over the emissions scandal. Lets get the latest, joining us live is chris. Tell us how certain is this settlement and where is it and how big is it . Chris it is likely to reach a settlement today. This is the second deadline that volkswagen has faced in the u. S. It is very important for volkswagen. It will be a milestone in their efforts to get out of the crisis, which has dragged on for seven months. Details addedre the hearing in San Francisco in a few hours, but it is going to be a costly settlement. As you mentioned from that stock or today, investors are happy scandal has been dragging on for months. Nobody knows how much it will cost, so we will get more of an idea of how much it will cost in the couple of hours. We have at least 10 billion. It will probably be more. The estimates for the total financial hit for the scandal 30about 30 billion billion euros in total. About 24 tually down since this time last year, so 25 is giving back some of that. The stories that have come out in the last couple of days about mitsubishi, is that also helping the stock higher today . Thing thatone mitsubishis problem shows is that it is not volkswagen alone. Environmental groups said, we told you so, this is a bigger problem than just volkswagen and other carmakers are affected, too. In that sense, it could be help for volkswagen that they are not the only black sheep in the auto industry. But they still have massive problems to get through, so that is what we will see. David what does it cover . Is it just the United States, the government, the penalties, the criminal aspects . Is it what we are hearing is related to the civil suit that is being heard in San Francisco, so there is going to be from what we hear today, there are more costs potentially in terms of fines, criminal penalties, so the 10 billion will basically be dealt out to volkswagen owners, about 600,000 in the u. S. They will be funds set aside for Environmental Impact, future Environmental Impact and past we haveental impact heard that there will be two funds, a californiabased and nationwide fund or the Environmental Impact. That is how the money will be handed out. David thank you. Chris reiter, to our for your help. Jonathan of the decision. About 30et to that in no minutes. Will mario draghi surprised the markets . I will ask that question to peter, head of european strategy and joins me in london. Great to have you at this. The first question, will be surprised the market . The consensus is no, what are you expecting . Peter the caveat of the way big. We had so many Big Decisions with the ecb and i think this is not going to be one of them. They have Just Announced a big package and have not started with it. Yes, quite a few indicated theyre looking at that on the way, but it is just time to rule out another program. Jonathan i think what stands out is the euro at 11310. We opened around 110 last month. We could sit here and pretend it is all about the credit channel and they are not looking at that still. A crucial raise point. When i speak to investors, i am telling them that the one thing that we could get out of today, could, i am saying that deliberately, is the reason why the euro shut up is because draw the effectively closed the door for further interestrate cuts. Afterwards, there is a bit of ambiguity in there and there were a few ecb speakers that stressed in the statement that it still says that current and lower levels. The question for me is, does he take the hartline and says, that is it, we will not do any more overly relaxed that and stress that all lower level bit . If he does that, the euro will move. Vonnie peter, we should remind viewers that the euro shot up , what are the Technical Details we still need to hear about . The drit is not only , that is Corporate Bond buying were details are missing. There are no parameters. There is some great area, some Companies May be on the verge of Investment Grade, some may have been headquartered out of the euro area but included, so it will have an impact on a name by name it. They haved that, a, time, and secondly, if they announce something, it will not make or break the market. What stands out is the bit about Interest Rates. Vonnie do expect Immediate Impact . Peter again . Vonnie do you expect Immediate Impact to sovereign yield current in europe . Peter it is a relatively strong rates, andn interest if that were to come, i think yes, we would get a reaction on the front end of the european curve and on the Exchange Rate as well. Jonathan what is the biggest drive or the european sovereign debt market . You see what is happening in japan with the yield pledging to new debt and europe at the moment, does it go beyond the ecb . At the endis related of the day to the central bank, but i think you are right. Previously, one of the biggest drivers was, how the will ecb put rates and all that stuff. Because he crossed closed that alley, the market is one that i will point out, inflation expectation. Even though the equity market has gone up, it has not really followed and that is one of the is one of thet reasons why they are way they are. That is one of your drivers right there. Jonathan peter, one of the guys i always try to speak to, thank you. Much for joining us this morning. In just over, about 35 minutes, well get that ecb Rate Decision. No big changes expected, but as always, look out for that News Conference that comes 45 minutes later. 8 30 eastern, 1 30 in london. Check of the get a stories making headlines. President obama is wrapping up a trip to saudi arabia by meeting with leaders. They are discussing the security issues, including the fight against islamic states and iran, destabilizing a force. Ecuador will raise taxes to pay for that killer earthquake. The president will use emergency decree powers to boost the sales tax by two Percentage Points for a single year. Businesses will also pay more. Anyone making more than 1000 a month will lose one days pay. Donors,ey, political super pacs and other groups i spent 40 millions on ads and methods to stop donald trump from winning the nomination. He is still the front runner. Among them, job rickets. Global news powered by our journalist and new spirits around the world. Carson block. Up, out with his latest bet. That will be next on bloomberg. Coming up in over 30 minutes, and ecb policy decision. It comes at 12 45 in london, 7 45 a. M. In new york. The important bit will be what comes 45 minutes later, the News Conference. 8 30 a. M. New york, 1 30 p. M. London. That is live on Bloomberg Television. David several beers after they mobile, u. S. Shares have yet to recover. The company has shed almost two thirds of the market value. Carson block joins us now. What have you been spending your time crunching numbers on . Carson we have been looking at the german advertising company. This is a company that had been an out of Home Advertising Company until 2013 when it announced its digital strategy. Since then, it has bought a lot of different businesses. Really a patchwork in the online and digital industries. On theirtook a look website because i just found out myself, and it appears that there is rather dramatic growth. It is at 100 to be did to digital. Carson it is interesting because one of the things they point out is the way it they calculate organic growth, we cannot get the numbers to type. For example, they announced in 2014 that the organic growth in digital was 34 . Using their methodologies and the numbers, we get 2. 2 . David that is because acquisitions . Rather than organic growth . . Carson they changed the formula, so in 2015, they began recruiting from acquisitions, which is counterintuitive. Numbers,alculate these we use their formula and their numbers, and it just does not add or come even close to adding. David we cannot go to the company in advance to ask, but now we are going to ask a response. My question on organic growth is, who cares . It does not appear to be diluted in acquisitions. If theyre making good acquisitions and adding to the earnings per share, why does it matter if it is organic or not . Carson the question is, how do we know they are making good acquisitions and what are they paying . They have paid over 100 Million Euros in cash and they have increased the share count by about one third, so there is a delusion there. What is falling into the bottom line, it is not really clear the quality of that. We have a lot of concerns about the accounting. For example, we think there are certain things they are putting on the Balance Sheet that are better or should be running through the pm doubt and we think that there is really a lot here underneath the surface. David i went to be precise. This is a publicly traded company, publicly reported numbers. Do you suspect would you believe that they are misreporting their numbers . Wouldnt that be a securities violation . Carson it is not my place to judge whether there are violations or not. There are certainly a lot of questions that we have about these numbers, and we did catch what we believe is their auditor making a clear error in the cash flow statements, david how big was it . It was an important error. It has to do with the borrowed numbers. If you look at the year and cash statement, it does not look like the company borrows at all. When you look at it into reporter, their drawing down real amounts of numbers, which indicates the cash flow the business is not necessarily that consistent or that strong. When the auditor prepared or it showingepare zero borrowings at the end of the year, that is misapplication of accounting standards and misleading. David you are a researcher, and you came up with about 2. 5 growth rate or Something Like that as opposed to the 40 they are reporting. What does that mean in terms of overvaluation right now of the capital of stroeer . Carson substantial. This company, especially for europe, has a premium multiple because of the new sky story, where the market believes they are really good at executing this digital strategy, almost everything they buy turns to gold. When we are looking at the numbers, we see that it is definitely not the case. If you have a company that is just running around, possibly willynilly throwing money at acquiring companies, this back at a premium multiple . I dont think so. David matt wanted to jump in. Matt i was looking at the stock, and it is amazing, assumedly that your short call can drive it down just 25 in about half an hour. I see that it starts falling at 644, 6 45, so how do you publish this call and how do traders or the market get a hold of that information . Carson we post the information on their website, so i think it went live around then. To be honest, there is always the technical issue and we try to upload the report. It usually does not take right soy, the murphys law thing, we can never pinpoint exactly when we get the report online. We wanted it to coincide with the coming in the studio and talking with you guys about it. 25 in just 30n minutes time. David as we said in the introduction, you have been at this for a while. You had some very notable successes. There were other things that happened that were not so well. I think the jury is still out on. In your experience, when do you win and when do you lose . What did you learn about when this is successful and it falls short . Carson the answer to that is pretty lengthy. With a American Tower for example, i think there were mistakes we made in the way communicated the thesis. I think that actually had the material outcome on what has happened because the thesis is correct, and we are starting to see more and more people talking about what we said the few years ago, so if anything, we were early on that one. Look, obviously, but to us is successful or success is when the thought declines and stays isthe level which we think fairly valued. I think we get there about 70 of the time. Maybe 50 . It is what it is. You very much. We have reached out to the company and we dont have comments from stroeer. Thank you for joining us. Jon . Jonathan thank you. Fascinating. Up next, we count you down to that ecb decision. Just 24 minutes away and the News Conference that follows. 1. 1320the eurodollar at. Jonathan this is bloomberg. O ahead of the open, counts you down to the ecb. Lets check the scorecard. Futures and European Equity turning out a little bit lower. The euro stronger going into that ecb decision. Lets cross over to matt miller. It gold mayts say rise to as much as 1400 an ounce over the next year, a concerned about the efficacy of the bank policies. I thought this was apropos. Up on most 20 already, it moved to negative rates and now, it appears to be kind of on hold. The expected range from fully on from their notes next year, was 1150 to 1400, keep that in mind. Pimco says not to expect a big ecbct on markets from the today, say mario draghi may backpedal from his march message and indicate rates are still part of the toolbox. And analyst said she recently turned her exposure to italy and spain as valuations are less attractive now. Pimco remains modestly overweight on european peripheral sovereign spent has a preference for the u. S. Given a better Economic Outlook here compared to over there in europe. Finally, he is not an analyst, but he has built a 24 billion fortune, george soros says chinas that field economy resembles the u. S. In 20072008 before the credit markets eased up and spread of global recession. We show this chart yesterday, actually, lets pull up the chart i have. Maybe george soros was watching because he warned investors should be wary of march china growth. Shortly after off the charts, but this is china credit surging and this is what he is concerned about. It is in the terminal g btv 260. Jonathan i am sure george soros is watching. I think you have to try and work out, we are at 56 when you get the amount up before you get it down. We can have that discussion later on. We continue to count you down for the ecb decision, which is just over 15 minutes away. The News Conference is 45 minutes away. Next up, we talked to tom keene about sweden and why that is relevant. Matt breaking earnings news on verizon. Line withare, in estimates. We were looking for one dollar. 5 1. 05. It looks like missing on revenue at 32. 2 billion. We were looking for 32. 5 billion. Im going to continue to take through this statement because they say operating revenues and i am not sure if that will be the overnight number. Eps,e getting g. M. Out, 1. 26. . 13 higher than the highest estimate of all of the analysts we surveyed. To range was about . 90 1. 13. Firstquarter net income, 2 billion, the most they have ever earned. That will be a record for gm without including the big asset sale. Revenue at 33. 52 billion. Gm coming out with a record beatsr on revenue, that by about 2 billion. Let me just go ahead and collect the premarket trade on gm and see if it is actually moving indeed higher right now. About 1. 6 . Cfore going to talk to the Chuck Stephens and ask him what is behind these numbers. It is a fascinating business because not only are they working in europe, they are polling a lot of people so the ecb will be paying attention to Companies Like this. Vonnie matt, thank you so much. We are 15 minutes away from the ecbs Rate Decision. We will bring you the entirety of mario draghi plus News Conference in about an hour from now Mario Draghis News Conference. Dilma rousseff is coming to new york for a United Nations climate event. She can to the impeachment process against her. She called the process a coup. Republicans give in on part of president obamas emergency request for fending the zika virus. This is according to a republican familiar with the matter. Theyre planning on drafting their own plan with more than 1 billion. George tauro, he is similars market to the u. S. Market in 20072008. Day,l news 24 hours a powered by 2400 journalists in over 150 news bureaus throughout the world. Announced anden increase and its quantitative easing program, adding 5. 6 billion to its program ahead of the ecbs impending announcement. Tom keene joins us where he just spoke with the swedish governor. In terms of the technicalities of lowering the 0. 5, it is two minus possible for us to do that. As far as we can judge, or has real serious negative consequences as far as markets, market function, things like that. We certainly can do more if we feel that we have to. Jonathan people are fascinating by fascinated i what is happening in sweden. Would you tell me that rates are negative basis 50 point negative 50 basis points . Tom it is the greatest of distortions. Sweden is quite different. People would kill, mario draghi would kill for half the Economic Growth that we have seen from sweden. We quizzed the governor carefully on that and on the linkages of sweden to the u. K. And the brexit vote. The message i got through the entire interview was the unique independence of the swedish bank. Jonathan the other thing i took away was the willingness to do more, the idea there is no floor to rates. Tom, theon to you, research you do and people you speak to, how much of a case study is this for the biggest Central Banks . When you look at them doing what they do and the household sector home prices doubling since 2008, that is a hot economy. It, and thising at goes to the real economic effects of what is a great distortion. The idea of where do we go before negative rates, there is a huge ambivalence whether it is priced chairman fisher with an interesting support, or the interesting nuances and disagreements of can new off and adam pozen, they are struggling with the how much agnes of negative rates. The answer is we do not know. Jonathan i think that is what is fascinating about it. I remember paul krugman coming out years ago and say about the swedish rates, monetarist. Where still in that world it is a race to the bottom in the fx market where in the sense this is a Swedish Central Bank not looking at gdp but focused more on currency . Tom i would say the issue is the flow issue, which differs nation to nation and even within regional blocs. The most interesting story is germany. Ll react to i am fascinated by the negative Interest Rate effect, not on Deutsche Bank, not on commerzbank in on the midand small banks of germany. Aghi will even dr mention that, but there will be a lot of allusions to what the bank still. Jonathan that is a good point because we are talking about sweden and whether they need interest negative Interest Rates. Some people will argue that germany does not need them either. Vonnie in less than 10 minutes we will be getting the ecb Rate Decisions, and none of those. Urveyed expect any easing take a look at this index because it shows the market does not expect a rate hike for another 44 months, almost four years. Joining us is Deutsche Bank National Economist torsten stock. Is it reasonable . The ecb does not have the same mandate as the fed, but the fed only jumpstarted rates. What is wrong with 44 months . Torsten what is wild about that is that really is saying the market expects them not to do anything for essentially the next four years. If you look at the Unemployment Rate in the euro area, it is coming down quite nicely. Vonnie 10 in a lot of places, 9 . Torsten when do we start to see Wage Inflation . More and more companies are raising minimum wages so when will we start to get that in europe . By the standards, if we get to a rate of around nine or so that is when we will start to see that. I will argue that we are much closer to that point in the market is pricing. The market is negative in the euro area like in the u. S. Vonnie why are we seeing more stimulus and claiming the stimulus is not working . Torsten people tell me this is not working, they do not know what they are doing, and those discussions are sidetracked by the fact that the bond rate is falling. The question we should all be asking ourselves is how far is the Unemployment Rate away from the point where the euro area will see Wage Inflation. That is compared to how markets are pricing things. Jonathan the Biggest Issue with your 44 months is if draghi 2019, thats grams a market that is saying you do not have any credibility. Unfair i think that is the has it is what is happening in the u. S. Resistanceost a huge to accept that things are Getting Better, not only the u. S. But the european Unemployment Rate going down. It is really that markets have been disappointed for so many years so it is a battle between the psychology of the markets. Now when the fed is saying, we are close to full employment, ike wise for the ecb, the market is saying why should we rise now . Jonathan speaking with us minutes away from the ecb Rate Decision. David im here in the hewlettpackard enterprise green room. Coming up in the next hour, Chuck Stevens will be joining us. Matt miller calls it a massive feet. Jonathan we are about three minutes away. Away from an ecb Rate Decision and we will bring you that live. Banke to say that deutsche chief economist torsten stock still with us. We had such a huge package stimulus at the last meeting but the euro opened at 110 and now it is around the 113 mark. Does mario draghi have work to do . Torsten that has been a big surprise. Everyone agrees the fed is on a hiking cycle and the ecb is on an easing cycle. You should see eurodollar go down. It will be disappointing for the ecb that the euro is still fairly sticky at these levels and resists the decline despite the significant package they had. Jonathan the narrative has shifted away from the fx channel to the credit channel that the accusation is still the same, they do not have much space to do more. Does that resonate with you, that argument . Torsten one of the transmission channels and one of the most important is the Exchange Rate channel. If you can improve the competitiveness of your companys, historically it almost always helps export. That is why the number one channel historically has always been fx. Other channels with purchases of assets, forward guidance, other things that Central Banks have done, they are all very new and experimental. I would argue on the margin they might help somewhat but it is all about Interest Rates and what the fx will do that matters for the economy. The more the Exchange Rate goes down, the more difficult it will be for business. David i am interested in the practical effect in the real economy. What is it doing in terms of Capital Investments and underlying growth and productivity . Torsten it is a big problem. We have a huge overhang of lack of confidence from consumers and companies. It is a lack of belief that the future will be good. The rate may be falling ever so slowly, but that lack of confidence can have some consequences for what the outlook looks like for the economy. David can the Monetary Policy infuse confidence . Issue, theat is the u. S. Monetary policy has been the only game in town so they probably feel there is only a limit of what they can do with the fx going up and down. It is much more the issue of, if you want to help the economy, you have to get more money in the hands of those who are going to spend. Jonathan we are just awaiting that decision. Usually it comes seconds after the 45 minute mark. The deposit facility already at 40 basis points and it stays there, rates unchanged as expected. The main refinancing rate already at an alltime low and 0 and stays there. Rate, staysfacility at 40 basis points as well. A marginal lending facility, that stays at 0. 25 . As for the Asset Purchase Program, that stays at 80 billion a month. The last meeting that increased from 60 billion to 80 billion. I think that is what is really interesting, if we go forward to the News Conference we want to know about the implementation of the march 10 measures. We know they of increased qe and they intend to buy Investment Grade corporate debt. The question at this point, how much will they buy . The ecb saying details will follow, so expect that detail at the News Conference. Matt miller, what do you think of the market . Matt i do not see a whole lot of movement in the euro. We did run it up this morning to ut one dollar 13 point 1. 13 but we are holding steadily. Let me pull up the german two year and see if we have any reaction because at the shorter end of the curve where the Central Banks policy changes have the most effect, we do not see a lot of movement there either. Negative 31ng at a hundredths of 1 , hovering just around 0 sorry, i am looking at the price, i should be looking at the yield. The numbers did not make sense. Here we see the german two year yielding 0. 49 . Not Much Movement here from this decision. We do not really expect to see a lot of movement at 7 45 new york time on an ecb day. A lot more movement coming at ec 8 30. We have a function on the whicherg terminal, ecmi will show you the reaction of certain Asset Classes to the decision. Here we have the january, march, and april decision, and you can see reaction here. Going out five minutes. Can you make that an hour or so we can see what happens at 8 30 . Now you see what happens. Heres what happens when the euro, 7 45, 45 minutes later mario draghi begins to speak, and you see Real Movement at 8 30. That is why the beginning of the speech is much more interesting and valuable for participants in the market. Jonathan i think at this point we always expected unchanged. Every single economist i spoke to was looking for rates to remain unchanged. What the market wants to see is the detail of the corporate Sector Program. We will get those details at the News Conference. I want to bring in torsten sauk. From thee big prizes last ecb meeting was the Corporate Bond buying that will start later this week. What kind of detailed do you want to hear from president draghi . Torsten the question i have been getting from clients, what are they going to buy, what is the timing, and what is the magnitude . Is this going to be 2 billion, 20 billion, or less . Are many details we do not know and we are hoping to get that in the press conference. It actually says in the statement that further information will be released after the press conference on the website. He is a goodink communicator and he has clear answers to all the questions he is getting. Following the pattern at the fed, when janet yellen has a press conference things come out on the new york homepage. Obviously credit markets are eagerly awaiting to see what is it they are going to buy and where is it they are going to go in. A month whens back they announced three important decisions. Going to 80 billion euros a month, they already implemented that. And then Corporate Bonds and the tltro. Which is most likely to make a real difference . Torsten if you think about the transition to Monetary Policy, there is no textbook that can tell you what is most efficient of these things. What we know historically is that Interest Rates have been an important driver of what drives Monetary Policy transmission, but at the end of the day, if the whole exercise is about using financial conditions than the purchase of assets is very important to try to support the broader conditions of Financial Markets. Say the whole package overall is throwing the whole kitchen sink at it and hope that something sticks. Jonathan just quickly to button this up, 80 billion euro Asset Purchase Program, how much of that do you think will be corporate and do you expect to get the answer today . Torsten we are hoping to get an answer today. From ap or macro perspective, the question you are asking, i think what is most important is that it Shows Confidence and what he is doing and he continues to push and say, we need to get the Unemployment Rate down, inflation remains extremely low. We need to continue to do these initiatives, and that is why details become important but overall it is steady forward for the ecb in terms of continuing to support the economy to get the Unemployment Rate down. Jonathan torsten sauk, thank you very much. Ecb president mario draghi and a News Conference coming up. Gm truck sales help the automatic the automaker get a 2 billion profit. David coming up in the next hour, the gm cfo will be joining us to discuss their performance last quarter is pretty impressive. They posted firstquarter sales y trounced analyst efforts estimates. Matt, i know you are site. Psyched. Matt a Record Number for General Motors. As you and i were talking about yesterday, their share price has not benefited so the question is, what gives . I have a chart. The 1000th chart we have added to the library. David we can celebrate later. Matt i will. This shows total u. S. Car sales driving to the seasonally adjusted rate of 18 million but kind of rolling over. We are up to a record. This is what analysts are concerned about, that we are peaking in the u. S. Market. David you have gone from 9 million or 10 million to 18 million. Is what weblue line hope to continue. Although the data is not as recent as we have for car sales, has not quite rolled over yet. The average age of a car on the road is still 11. 4 years. People have to replace those. Whetherou Wonder Services are doing such a good job to make them last longer. Matt the product out of General Motors has improved dramatically since the turnaround of the carmaker, but the question is, can they continue this uphill climb or continue to make money if they level out in sales . David we should have Chuck Stevens with us. He is coming up in a few minutes. Jonathan looking forward to that interview. I am looking forward to counting you down, just over 30 minutes away, mario draghi holding a News Conference on Bloomberg Television and bloomberg radio. Ecb Monetary Policy unchanged. More details on the program. We waited for Mario Draghis News Conference. Analyst estimates posted record firstquarter adjusted earnings. Chuck stevens joins bloomberg go. Jonathan we are truly global this week. I am Jonathan Ferro p or my colleagues are in new york city. Vonnie were talking about the ecb decision last hour and a next hour. What mario draghi will say live in his News Conference. Hoping for Little Details of anything to trade on. You can follow on. Mark, a reals is expert on fixed income. And an expert on research. They will talk to us about what were looking for in the remarks. 29 minutes away from the News Conference. Here is your scorecard. The euro is a little stronger off the back of a nondecision. Stocks lower. Session, down. 6 . The euro. This is how you do the News Conference with the ecb. The euro dollar right now 11333, session highs up one third of 1 . Retreating from a fivemonth high, 44 and . 12. Minutes, it is all about the ecb. Leaving the Asset Purchase Program unchanged. Euro ahead of all of this. Guest. Mark, i want to start with you. The focus of the News Conference will all be about, it seems, the corporate debt program. How much will they buy and what will they buy . My first question for you, do we face the prospect the ecb could buy noneuro, u. K. And u. S. Issuers . They could. The expectation is that they will start buying in the next half. Five to the into 10 billion. This is important because it is the first time the ecb has done this. This will have an impact on the market. We have seen credit spreads tighten significantly as they are front running the decision. We could get more details in a half hour. This is a dilemma for all investors in the world because 75 of german yields are negative and yields are 75 of the japan bond market negative as well. Searching for yields and the yields are low and they are about to get lower with the ecb buying Corporate Bonds in the second half. Jonathan you expect around five to 10, around that number. What does the market expect, already an impact on the euro, around thatl mark figure . No, i think around 10. The market has already from learned just front run the decision. We have seen a significant depression and credit spreads. You could argue maybe half of the move has already occurred given the announcement. Last time we had him on the show, he said it was a huge move in march. You agree . It is a huge move but the question is, how does the shock have what was anticipated . It was a shocker in the bank of japan also anticipates shocks. A drop on the euro and how they achieve that . I think in his press conference today, he will be defensive, not offense of. He might say i could do more, but he has got a real problem that the germans especially are really pushing back against, negative Interest Rates, accusing the ecb of fermenting a political move to the right. German elections are in 2017 and there is a little old pressure. There is no question. That is why they are reacting. Lets not forget about the backdrop were talking about. 0. 3 unemployment even if we look at the most recent forecast by the ecb, they are not even getting to 1. 5 and nation and the growth forecast is well below. That gets us to the shock and our question. They keep saying we can do more, they do more, and yet the economy does not respond the way they expect. Monetary policy simply cannot solve and drug he said that. At the same time, he said, if we cannot get the fiscal response, heres more from this that. It is a broad thing to say you find the euro credit after last month. Tell us what you have been doing inside euro denominated corporate credit. Month, weveast been buying european Corporate Bonds quite aggressively but we have taken a step back recently. With yields low all of the world, we have been favoring the u. S. Credit market here and we said credit in the u. S. Could wither equity like returns one third of volatility. We have been picking up the pace in Investment Grade select highyield and nonagency mortgages. We still think even today, the markets can deliver mid singledigit returns. On a global basis and a relative value basis, Corporate Bond markets are the most attractive in the world. Jonathan i think we have got a great guest lineup. President and chief investment strategist, they are sticking with us and we will take Mario Draghis News Conference in full after the decision to leave rates and Monetary Policy unchanged. We will come to you about 23 minutes. Matt miller. 3 exactly in the premarket after reporting earnings that beat analyst estimates. Chuck stevens, the ceo, joints me now. On the whole, it is a record profit, the most money per share you have ever earned per what was the big driver of that . I think it was broadbased improvement. Europe and south america also improved significantly year over year. Almost 400two, million. We are very pleased with the broadbased improvement in 2016. Matt you mentioned north america and europe. What about asia . What about china . Betterles figure was far than analysts estimated. Was that do with growth in china even as we had concerns about china there . Tothe china market continues perform as we expected. Low single growth. More than 500 million of Equity Income in the First Quarter, 9. 7 net income margins and we are on track to deliver another strong year with strong margins, just as we provided guidance in early january. We are constructive on china. Been talking with david westin. He is interest in the subject because his father used store get the plant in flint. I wonder about the stock and we were wondering about, what is the problem with the stock . Why dont investors recognize what you are doing here as he posted record after record as far as prophets concern and margins continue to rise . From an investor perspective, there is a lot of negative investment in auto in general and whether the industry in the u. S. Is paid or how margins and profitability get better from i think within that context, we have performed reasonably well in the next several months. Our focus is delivering shortterm and longterm results, x using our longterm plan which will drive shareholder value, and if we continue to put the results on the board like we have, we will see the improvement in stock vices at some point and that is what we are focused on. We have seen markets rise. The story over the weekend i ofe you saw, saying because increased efficiency at General Motors, your stock is worth 25 more than it is trading for now. Even if sales roll over. Investors areost worried about. Are you expecting u. S. Auto sales to plateau here or even come down a little in 2017 and 2018 . We think the fundamentals in the u. S. Will support a strong industry level for the next years. 18 million, that is what the baseline plan is. By low Interest Rate and low fuel prices, strong Balance Sheets, and that is what we are operating toward. We will continue to drive strong in north america and take advantage of our strong Product Launch cadence. Inhave talked about that number of times. 40 of the volume will be off newly launched products. We are starting to see the benefits of that in the First Quarter with the crews and the cadillac matt . Are seeing suvs everywhere. They are obviously popular in the u. S. The chinese are gravitating toward an s uv as well for transportation. Is that what has driven you to break up this quarter . Know, from european perspective, it is really executing the plan. We have been working on building the brand. We are entering into a strong Product Launch cadence. More profitability in the vehicles they replace, and to your question, we see a shift to crossovers in europe and when you look over the next couple of launching all be number of critical crossovers, including a complete refresh, a small crossover in europe which has done excessively well. Matt i know you look forward to profitability in europe. There is no familyfriendly way the macro picture in south america. It has been a real struggle for everyone who does business down there. You have substantially improved your results are you are only down about 100 million in south america. What do you see in the coming quarters and years for the macro picture . Quite it is difficult to predict when it will be a macro recovery. South america will always be a volatile market. Clearly the recovery in brazil will be key. Were focused on positioning the business to be in a strong position when that recovery comes. The action we have been taking over the last couple of years to take costs out of the business and continue with a strong product pipeline, continue to build the brand, i believe it puts General Motors in a position to earn significant profits when the macro situation improves in brazil. Matt one product question, you see more and more volts on the road. It was launched with great fanfare in detroit. People are talking about General Motors getting mass production, electric vehicle, even before tesla does. How close is the future for these vehicles . I think the architecture is obviously critical, from being a 200 plus mile electric vehicle at an affordable price, massproducing, we will obviously be launching it later this year, and potentially as a significant platform when you think about ridesharing. We like our position and we like our capability. We are excited about both of those products and how they plan to the future of transportation. Matt thank you so much. Chuck stevens from detroit. I am here in new york and i will now toss it back to john in london where they call those cars boxholes. Jonathan i dont think we should have that debate now. The News Conference from mario draghi, not a time to talk about that. 16 minutes away on bloomberg tv and bloomberg radio. Ahead of the News Conference, check out the eurodollar. We opened up the last meeting at about one 10. The session high, the biggest in three weeks against the dollar. 11355. Vonnie we are less than 14 minutes away from one of the biggest News Conferences of the year. Mario draghi. What will he say and how will the market react . Latest Bloomberg Business flash. Blackstone says firstquarter earnings fell 77 , missing estimates. Folks like and has agreed to pay at least 10 billion to settle claims over solutions tests. According to someone with knowledge. It is not clear how much individual car owners would get. Today is the deadline for gw to say how it will fix the cars. Exports have fallen to the lowest levels since 2009. Down almost 9 in the First Quarter. Exports to hong kong were down 48 . They were down 33 in the u. S. As we wait for the mario draghi News Conference at 8 30 eastern, we want to talk more broadly about investment strategy. What makes sense in this world of low yield high risk . Pimco global credit cio mark is with us. You were with us a month ago now and you said you thought credit fixed income offered the best opportunity in four or five years. Are you still at bullish and why . We are quite constructive. If you look at the risk premiums in the world, credit is still elevated. Credit can deliver equity returns with one half of the volatility. Investors in cash earnings, zero thenegative rates, 75 of market is negative yielding. Investors all across europe are looking for something that even offers mid singledigit returns. Equity investors are looking at the process of derisking and credit. If you look at where the economy is, credit spreads are too wide given an economy that does not look like it is going into a recession. The need for income around the world is huge. We see it form our clients. If you have an investment prospect, which are funds are yielding now, it looks extremely attractive relative to Global Alternatives today. We think fundamentals will still outperform this year. Vonnie you said u. S. Corporate bond markets are the most attractive in the world. If you will invest in fixed income today, we would advocate high in credit, select yields and nonagencies and definitely favoring the u. S. Market over asia and europe. Is that what your research tells you, particularly on the volatility part . I agree with everything he said. I think it is a brilliant call. Earlier this year, Financial Markets were priced from 2008 all over again. Bank stocks were cheap. A highyield market has gone from six to 10 with some of these securities. Some of them are still distressed in a probably dont want to go there. There are tremendous opportunities in the fixed income market. Side, i like the u. S. And stocks are not particularly cheap. I think there are opportunities in health care which is also an underperformer in the past year. As we get to the end of the political cycle, they will not get beaten up as hard by the politicians. I completely agree with mark on the fixed income side. You know fixed Income Credit so terribly well, lets go to the chinese credit situation, which is in the news a lot. Last night, saying it is really headed for a cliff. What is your analysis of the situation, how bad is it . We are definitely cautious in the medium to longer term. Turn givenh has to the balancing of infrastructure and building things to one that needs to turn more Service Oriented so that change in the composition and growth will slow growth. In the near term, we are more constructive here that is because when you look at what started the year, there is massive concern over the currency and communication was poor since then and it has changed in the last couple of months. Outflow data has come down significantly. They are trying to go for stability on the currency front. Factors, thesk Central Banks, all three of those have become more constructive in the last couple of months. Eight minutes away from the beginning of the News Conference. Willoughby the best outcome for traders like yourself . I think mario draghi will sit back and wait. They want to digest this. Clearly, inflation is running below target. They are targeting the 2 inflation but they are nowhere close to that. The u. S. Is the closest to a 2 target. You look at Inflation Expectations, the market is pricing in only 0 inflation over europe for the next five years. For hiswill be watching qe. If we do not see more, you will see more qe down the road. Jonathan thank you. Both of them are sticking with us. Next up on the program is the News Conference from mario draghi. The decision not to do anything. City ofhere in the london, probably one of the least anticipated decisions in quite a while for the ecb. The details on the Asset Purchase Program, all of that is coming up next with a euro at a session high. Jonathan i am Jonathan Ferro from the city. Mark is still with us. Looking at eurodollar right now, session high. Typically, an objective going into the News Conference. Classy needs to reiterate confidence in his policy. They want to see higher inflation and they want to see the private sector engaged. That is bring down Interest Rates in qe and credit spreads. Ideally that is what the Asset Purchase Program is doing. Believe it or not, banks and and maken borrow now loans into the economy. He will sit back and try to sound relatively confident in the context of a struggling economy and where inflation is well below target. I want to borrow at 40 basis points. Thank you. Jonathan moments away from Mario Draghis News Conference. Investors watching very closely. You can track every single detail. Blog. N find a live here with us, pimco cio of global credit. Ed, the narrative of the last month or so has been a shift away from the credit channel. Is we to believe the euro not a problem for the ecb . Is a problem but not when they can do much about. They have tried. Negative Interest Rates, quantitative easing, qe and spending quantitative easing. It does not seem to be working. One of them is the price of oil. There is a correlation between the dollar is weak, we typically see that is because oil prices are going up. Because Oil Producers are diversifying into other currencies, like the euro and the yen. They do not seem to care about the fundamentals. Jonathan it seems to be that way to i would say going into is president s, draghis biggest problem what is happening at the fed . The chinese took care of that problem for them. I am a believer in the shanghai conspiracy. Ever since then, everything has gone the right way. The chinese put a lot of pressure on the fed to back off on rate hikes. They threatened they would devalue currency 10 to 20 . You notice that yellen mentioned chinese currency in the speech in new york. It does not help the euro either. Jonathan we do have some data from the u. S. We got jobless claims out at 247,000. 247,000 was a number. Were will looking for 265. I have charted this out and i have figured this is the lowest level we have seen jobless claims since my birthday, since i was born. Over 42 years, we have not seen jobless claims this low. I do not know which is more shocking matt has not been this low for 42 years. David i want to turn back to you, mark. Go into the News Conference, who are the most important members of the audience . Particularly what he needs to say to germany to keep them on board. Classy needs to say they are going to transition from emphasizing rate policy the deposit rate is 40 basis points. Going to see more qe and more stimulus in the economy. I think that is good for germany. Fight is against negative rates on the banking side and the savings side for individuals. Putting money back into the real economy through bank lending and credit spreads, i think that is better. Youll see in a week or so the bank of japan tilt toward that policy as well. More credit easing into the real economy. Do think mario draghi thinks he may have made a mistake, going to negative. 4 and he would rather have done this instead . China and see it with the fed and ecb. Policymakers are learning. They are adjusting their policy according to feedback. The fact the fact that markets are giving their feedback, that is good. Jonathan thank you. For anyone who has been to the ecb headquarters, it is quite a walk, right at the top of the tower down from where the news, with his. The big passage of stimulus measures unveiled at the last meeting from 60 billion a month to 80 billion. It took all rates deeper into negative territory. Out go, the top lives blog today. It is about details of the program they unveiled on march 10. Corporate credit, when and how much . To be more precise, what will it be . And the april News Conference. Mario draghi ladies and are happy to invite you to the conference. Also by the Commission Vice president. Analysis,ur regular we decided to keep the key inside rates unchanged. We continue to expect to remain at present or lower levels for an extended time. Horizon. Standardian no measures, we decided on march of 2016 we have started to expand our purchases under the Asset Purchase Program to 80 billion from the previous amount of 60 billion. As stated before, the purchases are intended to run until the march of 2017, or beyond if necessary. Case, a sustained adjustment in inflation, consistent with its inflation aim. In june, we will combat the first operation of our new series of targeted longterm operations. Commence purchases under our program. Of the information will be Sector Program after the press conference on the ecb website. Following our comprehensive in early march, broad financial conditions in the euro area have improved. The path through all of Monetary Policy stimulus to households, notably through the Banking System, is strengthening. However, uncertainties persist. Forward, it is essential to preserve an appropriate degree of accommodation as long as needed in order to underpin the momentum of the euro areas economic recovery and in order to accelerate internal inflation to levels below but close. The council would continue to monitor closely the evolution of the outlook for price stability, warranted, to achieve by usingtive, will act all of the instruments available within its mandate. Context, it is crucial to ensure that a very lowinflation environment does not become entrenched in second round of facts on wage and price setting. Let me explain our assessment in greater detail, starting with Economic Analysis. Real gdp, increased by in 2015. Ter in quarter demand,d by domestic dampened by relatively weak export trains. Incoming data for the first going tof 2016, ongoing output growth, at a pace similar to the final quarter of 2015. Ahead, we expect economic recovery to proceed. Particularmand in continues to be supported by our Monetary Policy measures. Their favorable impact on financial conditions together with improvements in corporate profitability is a benefit to investments. Moreover, our Monetary Policy stance continued employment gains resulting from past Structural Reforms, and a relatively low price of oil, ongoing support for households, real disposable income, and private consumption. In addition, the fiscal stance of the euro area is likely expansionary. The same time, the economic recovery is still dampened by the ongoing Balance Sheet adjustments in the sectors. Insufficient pace and Growth Prospects in emerging markets. The risks to the euro area Growth Outlook still remain to the downside. The recent Monetary Policy decisions have improved overall financing conditions, which should support the outlook for consumption investment. Persist and in particular to developments in the Global Economy and geopolitical risks. The euro area annual h icp wasation in march, 2016, zero. , reflectingh 0. 2 mainly a Rising Services price ahead on, looking current futures for energy, inflation rates could turn negative again in the coming months. Before picking up in the second half of 2016. Supported by Monetary Policy and economic recovery, inflation rates should recover further in 2017 and 18. Turning to the monetary analysis, money continues to grow at a robust pace in february of 2016 with its annual rate of growth remaining unchanged at 5 . As in previous months, annual growth is mainly supported by its most liquid components with narrow monetary aggregate and one growing at an annual rate of 10. 3 in february after 10. 5 in january. Ofn dynamics follow the path recovery since the beginning of 2014. The annual rate of change and increasedd for 2016, upebruary of from 0. 6 in january. Developments in loans to Enterprises Continue to reflect the relationship with the business cycle, credit risk, and the ongoing adjustment of nonfinancial Balance Sheets. The annual growth rate of loans to households increased to 1. 6 in february from 1. 4 in january. Lending fora bank indicatester of 2016 further improvements in loan supply conditions for and in loan demand across all loan categories. Improvements in demand for nk loans were supported by the lower level of Interest Rate, financial needs for investment purposes, and housing prospects. Overall, Monetary Policy measures in place for june 2015 have clearly improved conditions for households, as well as credit flows across the euro area. A copperheads of package of new Monetary Policy measures adopted underpinsf this year the ongoing upturn in loan thereby supporting the recovery of the real economy. To sum up, a cross check of the outcome of the Economic Analysis of the signals coming from the mantra analysis confirm the need to reserve an appropriate need of monetary accommodation in order to secure a return on inflation rates toward levels that are below but close to 2 without undue delay. Focused onlicy is maintaining price stability over the mediumterm. The stance supports economic activity. As emphasized repeatedly why the governing council, and in both european and International Policy discussions, in order to reap the full benefits from our Monetary Policy measures, other policy areas must contribute much more, both at the national and european levels. Structural policies are essential, given continued unemployment and potential output growth in the euro area. In particular, actions to raise productivity and improve the business environment, including the provision of an ad that public infrastructure, are vital to increased investment and boost job creation. A swift and Structural Reforms in the Monetary Policy, will not only lead to higher sustainable Economic Growth in the euro area, but would also make the euro area more more resilient. Fiscal policies should also support economic recovery while remaining in compliance with the fiscal rules of the European Union. For when consistent implementation of stability and growth is crucial to maintaining confidence in the fiscal framework. At the same time, old countries for a more growth friendly composition of fiscal policies. We are now at your disposal for questions. From bloomberg news. My first question is on the Corporate Bond program. Could give us more dictates on the composition, beurity, how this will carried out and what is a contribution you expect from corporate buying two of 80 billion target of your purchase thatams, and you have said you remain ready to use your instruments available with the mandate. My question is, socalled helicopter money, you consider it in this direction to feasibility and it does not run into the prohibition of government financing. Thank you. You will get all of the details of the Corporate Program shortly after the press conference. Let me say a few things here. It is a dressed to all nonbanks, also insurance companies. Bank, butpany owns a not a bank, it is eligible. A bank, then is they are not eligible. The risk is fully shared. The maturity goes up to 30 years. The limit is up to 7 . Contribute to the overall size of 80 billion euros per month. On your second question, let me surprised by you interpretation. Let me say exactly what i said in the last press conference. I said the question is about what u. S. What you asked and i said, we have not really thought or talked about it. It is a very interesting concept. Byhas been discussed academic economists and various environments and we have not studied the concept. It clearly involves complexities, accounting wise, legal wise, and it may mean Different Things to different people. I was asked about the same question two days ago and i said, propped with operational, legal, and institutional difficulties. The bottom line is, and we have never discussed it. How do you respond to the german criticism of the ecb and of view of recent weeks, and if you are invited, would you go along . The second question is the update of your inflation forecast. I am curious how much the march measures after the forecast . Interested in how the Oil Price Increase and the real Exchange Rate affects the inflation outlook. Mr. Draghi one was about germany and the other is the update of the inflation forecast and what effects it. To your first question, let me say the first thing is that we have a mandate to pursue price stability for the whole of the eurozone and all of germany. This monday mandate is established by the treaty by the european law. We obey the law. Been as stated by the law. We had a brief discussion on and report to you, the council, it was unanimous. Independence of the European Central bank and the appropriateness of the current Monetary Policy stance. Having said that, our policies are not very different from policies that are being implemented in a very large part of the world in all of the other important jurisdictions. They are affected. Just give them time to fully display their effects. If there were also Structural Reforms, the effect of these policies would be the care. The bottom line of this is our policies are the necessary for return of the inflation rate to our objective to a level below but close to 2 . Conditions for the return of growth to higher levels. And they are the necessary conditions for internal Interest Rates to a higher level than today. On your other two questions, i can only say mantra policy measures we have enacted in of avoidinge effect the second round caused by the turbulence of the beginning of the year that would have had in impact into our mediumterm outlook. Staffare estimates of the if our would happen policies had not been put in place. They do refer to policies that have been put in place is mid 2014. Not exactly to the ones we have decided at that point in time. The ones i just mentioned going back to 2014, they basically say that growth over this year and lessand 2018 would be 1. 6 than it would have been then it would be. After the implementation of the Monetary Policy measures. The inflation rate would have and if itive this year am not mistaken, about half of one percentage point less over the years. Estimates do refer to the Monetary Policy measures that have enacted since 2014. Tomorrow, and amsterdam, he will discuss the level for a proposal for possible Regulatory Risk of banks. I wondered if you had a position on that, if this is the right time, if we should be coordinating with the discussion at the global level and more generally, what is your position on this discussion . About theuestion is creation and italy in the banks to participating Capital Increase to other banks and , which young loans have pointed out several times are one of the problems affecting the european Banking System. You have any comments on that as well . We have not yet examined completely the details of this. It is a step in the right direction. I would ask the Vice President to respond to the second question. Regarding this issue, we have participated actively in the prepared aa just and report. Him toghi i asked respond because he will discuss the issue tomorrow. Activeave also been very , so our position, which has , where we have the governing council and the Supervisory Board at the same time, and our position has been first, there is reason to change , second, thatstem the revision should not create undue turbulence in the markets where sovereign debt is used, and in general, shortterm and third, it should be a change in the international standard. Meaning, coming out of the committee discussion, a principle which is also report, the any debtion of the sovereign should be decided in the International Context to ensure a a playing field. That has been our position. Comfortable combinations of concerns with over concentration of sovereign debt in the changing the risk weights accordingly and creating accumulationr that. Principles are guidance for our position. This is ahink separate problem in any other problem. It is a reflection that comes and consideration of a proper treatment of credit risk. Add there aret me three sorts of work besides what has been done. One is a report of esrb. Another one will be a report of ecb. The third one would be the working group on sovereign debt, which you are a part of. Financial times. Aboutd like to ask you global uncertainties and particularly which ones have become more and perhaps less worrisome over recent months. We have had better data from onna by rather disappointing oil. I would like to return to the point on helicopter money. Think itvery simply, t by the ecb in a way that is compatible . Mr. Draghi the answer to the second question is the same. We never discussed it. To the first question, we have taken Monetary Policy measures in march and it was a comprehensive set of measures. Financing conditions have improved. We view these measures as being important in avoiding effects in the wage and price settings. As i said, growth is moderate but sturdy. Are improving, you have to be very careful about not losing focus from our main inflation, to our objective below 2 . Inflation remains very low. They will possibly be negative in the coming months. This combines with global highlightedthat was during the imf meetings in washington. For our monetary is that of course we keep the Monetary Policy stance as decided in march, and we now focus on implementation. Second, our Monetary Policy course will continue to divert from the Monetary Policy courses that prevail in other , better placed in the recovery cycle. Third, if there were an unwanted tightening in broad financing out alter our mediumterm outlook, account will act using all of the available instruments in its mandate. Thank you. Wall street journal. Thatave emphasized twice all of your instruments strand open for use. You said Interest Rate, you did not anticipate needing to cut them again. Has that changed, why and how far . Eurod question is on the Exchange Rate, since the last package of measures, it has risen against the dollar and other currencies. How much of a concern is that . Important economic factor. Does it say anything about influencing the Exchange Rate . Mr. Draghi i will answer the second question. Exchange rate is not a policy a target. It is the same for price and stability and growth. We have taken the measures in march and the measures have been and will be effective in avoiding price and wage. Let me say in response to the first question, and i will read what i said last time as about the Interest Rates, a positive judgment about the past experience, increasingly aware of the complexities that this measure entails. I have said before and i have elaborated with some length about the complexities the measure might entail. The experience has been broadly positive for the ecb. Effected positively the credit conditions, easing them. It has eased broadly all the financial conditions. That itno evidence hampered the transmission of Monetary Policy and when we look seeank profitability, we 2015, the first fouryear with negative Interest Rates has not affected or caused negative interest income, Net Interest Income going down. It went up. We have got to be cautious because we talk about the aggregate of the Banking System in the euro area and aggregates may actually consume different realities. Conflict significant evidence that negative rates have been passed fromgh to the depositors the Banking System. The only know the experience to be positive. Is this positive experience going to be true for any level of Interest Rate . Answer is no, of course. It is not some much an issue of yes or no. It is an issue of extent. Council said he was increasingly aware of the complexity the measure entails. If there isfore, going to be an unwanted of financial conditions, that would alter the. Ediumterm outlook the governing council stands ready to act with all of the available interest estimates in its mandate. You mentioned in your statement a Growth Outlook for eurozone remains broadly unchanged. So far, the euro zone economy ,as been very resilient especially from the fear of downturn from asia at the beginning of the year. To what extent is that the factor of the euro and other measures . Goes to theestion recently published Lending Survey that has been very optimistic with more than 30 credit in the eurozone. To nonfinancial corporations. Onould like you to comment the extremely positive demand drive and the deadly rising data. Thank you. Mr. Draghi thank you. Be moderatenues to but steady. Mostly supported by consumption and investment. It is dampened by the external component. Our Monetary Policy measures have been supporting growth. With rare exceptions, i should say they have been our Monetary Policy, it has been the only toicy in the last four years support growth. So. T continued to do as i said many times, not only Monetary Policy is a necessary for returning to structural, longterm but then yourowth, have to have other conditions first and foremost to Structural Reforms. That is why the introductory receives thisy renewed emphasis on structural , which was highlighted in the last imf meetings as well. Third, the threepronged approach, the third condition in place is an appropriate fiscal thaty, where we observed further euro area, the current fiscal policy is likely expansionary, but again, the issue here is not only a but for manyize, countries, if not most, in the euro area, the issue is a question of composition. A composition that is being called here growth friendly. Taxes,sition with lower lower expenditure, and public investment. This is the answer to your first question. To the second question, i would say the bank Lending Survey. Hows credit continues it is really solid. Interruptionshout since the Second Quarter of 2014. The number of projections rate went down considerably. It has been going down steady. That is even more important, the continuation of the process. Together with increasing i am this shows our measures are indeed quite effective. We also ask, there was another question in the survey where we asked, what use will you make of the Asset Purchase Program proceeds. The banks answer was using mainly for granting lows, good evidence that the asset purchase or the qe, as it is otherwise called, is being transmitted to the economy. They also added they are using the consequence of the ap piece for them, more to adjust price in terms of lending, more than volumes, as such. And also, they answered about profitability, which is going up. Because of Capital Gains. In funding costs that went down. And it is contributing to higher growth and to the return to price stability. German citizens are seriously worried about private entry, seriously worried about private because all of those are dependent on the Interest Rate level and they have little yields or no yields, this kind of concerns, but would you say to german citizens who are worried about these actions . Yes, we are familiar with these concerns. We closely monitor these developments. It is clearly evident that Pension Funds and insurance areanies and other actors really affected by the low level and significantly, by the low level of Interest Rates. All of the actors in this sector to resist the temptation to blame low Interest Rates as the cause of everything that went wrong and everything going wrong. Having said that, i think they are being affected by low rates, although one should keep in mind they also realized substantial Capital Gains on the bonds we are buying because some of them are the main sellers or main parties in our Asset Purchase Program. Ould also like to put point out that low interest are not a specificity of the eurozone. The United States have zero Interest Rates for much longer than we have been having low Interest Rates. The Insurance Industry has been affected, but in a different way. As thethe same way eurozone and especially the german industry and the Insurance Company has been affected. This has to do with a variety of reasons. Do withwhich have to right regulation, some of which have to do with a business model. It is not because of a Monetary Policy. Low interestint, rates are a symptom of low growth and low inflation. It is not Monetary Policy consequence. If we want to return to higher Interest Rates, we returned to higher growth and higher inflation. To do so, we need the current Monetary Policy. As a necessary condition. That is the necessary condition. Finally, we have to look at real not only nominal rates, and if we look at real rates, one will see the difference is much less dramatic. Thanrates today are higher they were 20 or 30 years ago. I am aware that to explain real rates may be difficult. Thank you. My first one is on Inflation Expectations. They have failed to pick up, i just wanted to know how disappointed and frustrated you are. The german finance minister was quoted as saying the policy was responsible i just wanted to know how guilty you feel for that and i guess we all know he. Et in washington mr. Draghi the discussions had fruitful. Positive and very friendly. Returned. I do not have it here what he said exactly but you can check, saying he did not mean what he said or he did not say what he meant. , andy, he returned on this in view of my previous words, insecurityme among people who have concerns that there would be no negative Interest Rates for a long time. For the bewilderment we have seen in many a letter election results. Which is what you were saying before in your previous question. So that is the suggestion. Whatght of in light of i said about us having a mandate, and being bound by the law, is a very silly welcome it is certainly welcome. Im responding also to remarks made by other public figures. Our policies are the same. By and large in country has its own specificity. Second, would a nonitalian president run different policies . The answer i would give is yes, of course, but that would not be enough. If my predecessor gave an interview where he said, i would have done the same things that what isd, he confirmed of the council in its entirety, which, as i said, defended the appropriateness of. He Monetary Policy stance thank you. The other question is about Inflation Expectations. Sorry. When we had low inflation for a long time, and were going to have blown laois for a long time, we should be patient. We should follow and monitor first of all, let me say one. Future path of inflation will be supported by our monetary measures is the foremost. And by thevery expected recovery and base effects. As it will more and effectsw its beneficial , and the second, more and more will materialize and the third will be the fact that will come by the second part of the year. We will see the actual inflation will and creates and expectations will also follow that. Is in the course of the 2014, there was an increase betweenlation mediumterm Inflation Expectations and current inflation. Us,oil prices, which, for was a sign that it was important to act and strongly, as we did. We now have to be patient. The correlation with oil prices has decreased. But we have to wait. Thank you. President druggie, what you drahgi, with have seen from senior politicians, because this gets a lot of publicity, that it will affect business and Consumer Confidence in the eurozone and the people might resist arlington for Capital Investment because they are concerned the germans are leaning on you and the council, and that may taking all from actions necessary, my second question is really about the same thing. Has the council seen any xit debatehat the gre in the u. K. Is slowing investment into the euro zone ahead of the june vote . Thank you. Thank you. In answer to your first a polite, lively debate may even become welcome. It helps us explain better our monetary policies. And their shape and success. Certainly, of a certain type, could be viewed or perceived as endangering the independence of the ecb. However, and therefore, causing the behavior that you hinted at, namely, delaying investment and delaying taking risks. However, we are independent. We will continue in the course of policy action we consider appropriate. The results of this is that it for policylonger measures to reduce the results that we want. Anytime a credibility of the central bank is perceived as theg put into question, result is a delay in the achievement of its objectives. Therefore, the need for more policy expansion. First of all, let me state that we view the participation of the u. K. To the European Union as mutually beneficial. We continue to say so in the coming weeks. Certainly the discussion about has alreadyity reduced some significant confidence in the markets. Quite significant. We expect a continuation of , certainlytility until the referendum. I do not want to speculate about the outcome of the referendum. Probably even after the referendum. Is it enough to endanger the economic recovery in the euro area . The assessment of the staff is the risk of this happening is limited. Thank you. Question will go to , it ishe Conference Call usually dedicated to policy announcement. Today you said he will focus now on the implementation of previously announced measures. I wonder what the message is and why you have decided to give it such prominence as to list it into the Conference Call. Does that mean you are done now . Can you explain that a little bit . Week, the ecbe said following the extension of the qe program, that you decided last month and now expect more National Banks to engage in substitute purchases. Riskst mean you see emerging at least toward the end of the program and now that you into Corporate Bonds, does it mean the next logical step might be equities . Answer, thei can answer is no, we do not see a risk of scarcity. We have not discussed that in measures. In answering this way, i will anticipate my answer to your first question. Read the statement, and say we decided in our march meeting on a comprehensive package of measures to ease financial conditions, stimulate new credit provision and of thece the momentum euro Area Recovery and accelerate the return of inflation to levels below but close to 2 . Since then, broad financial conditions have improved. Also in the context of risk aversion at global levels. Our recent measures have been avoiding the financial turbulence is we observed earlier this year. We do not undermine our accommodative stance. I think i will stop here. Thank you. Thank you very much. Jonathan that wraps up the april News Conference in frankfurt with mario draghi and his Vice President , and coming into the meeting and going into the News Conference, no change to Monetary Policy. This will be about what he thought of the current economic conditions, and whether we would get more stimulus down the road. More headlines from that News Conference, mario draghi saying the outlook risk on downside on rates. Right at the top of the statement, present or lower levels for an extended time. ,e used the word patience something he did not seem to like really. Too much into the 30 year dollar. Broad weaknesses. The eurodollar did climb throughout the News Conference up. 6 percent. We saw continuing going into the News Conference and throughout it, switch up the boards, you see bond selling up, yields climbing across the board in europe. Up 0. 2 3 , similar in france. Spanish yields up five basis points and italian yields up 1. 45 . A lot to discuss. The ecb decision, joining me now in the city of london is the european head of fx strategy, stephen. Lets get chris on the Corporate Bond program, details of it now. What we did learn maturity, aft0 7 . Is that show of big because they need to go big and have that impact . Stephen we have a little bit of both. He was on the defensive today. It is a clear that there would be consistent downward pressure and on these yield. Thatll slow that through the euro going forward. It will be more of an acute rates outsideen the euro area are going up. A cap in force on the euro and will continue to do so. Chris at this point, we have had that since the last meeting. It did not really talk the euro down. You do not want to be short when drug use on the defensive. The last two press conferences of march and april, most of the signals he is sending suggest the governing council is very happy with the trade euro being arranged. They do not want the euro to get too long and impact foreign goods exports. Weakod, a euro that is could interfere with their strategy to keep domestic growth supported. A euro that is persistently weak and get banks to trim foreign assets on the Balance Sheets which impact domestic lending and demand. They may not always get this range, but they are happy. In the eurodollar for the time being, they see it on 150 on the downside. Carson you were with us before about what to expect. Say what i heard. Basically, it is working, not as fast as i would like, but that is largely because we do not have much more Decisive Action from the government. We have to be patient, as he shots of histest bazooka only occurred in march. We knew Something Big would have to happen at this meeting. That i cannot help but be reminded of a seinfeld episode where nothing really happened. David nothing happened, we were all riveted. Abigail vonnie he was on the defensive. David he was being attacked by politicians. Saversbeing attacked by who are getting hit with high Interest Rates. A lot of others depend on these longterm investments. Defensive and say that he sees signs that it is working, well just have to wait. The problem is that we have been waiting for a long time. March was not the first time that the ecb has done something radical where they gave us negative Interest Rates. Was an example of that quantitative program. Have beenople patient, but they are just starting to lose some of their patients. Chris the question to you, his patients, markets breaking news, the Company Filing for bankrupt the after an acquisition binge. This is a 50 billion bankruptcy filing. They have been on the precipice here and they have had the trouble getting out of the most recent acquisition. You can see the penny stock is only worth . 34. The news i wanted to bring to your attention. , you have the stock already lost all your money. I want to cover some big movers. The u. S. Market has opened. ,ets look at what is going on aside from the ecb move. None of this is connected to what mario has just said. Not, and america, he did really say very much. So, we are focused on company stories. Profit Getting Better for american express. Beating expectations. The stock is up 2. 4 . General motors beating the estimate. The company came out with one dollar 24. One dollar 26. The most it has ever earned per share and its a history. 2 billion atting 37 billion in change. You can see that stock up 2. 7 . It is beating the expectations. Under armour also beating expectations and putting critics and their place who thought the company had run out of steam. It has sales of 1 billion in the first order. For the first year, sales will be 5 billion. The stock market loves that. To and with a downer. Since the general market is unchanged, mattel is off 5. 5 . The company having trouble in its main barbie business. It is trying to wean itself off of the profit centers. Barbie is not cutting it. The stock down 5. 5 . Mark thank you. Eurodollar at 11335. We talked about this word. Whether the ecb could afford to be patient at this point. You need to apply some of the separation principle. Yes, on the one hand, they want inflation backup. Have important for them to comfortably low levels of inflation. Equally, they are trying to promote growth and lending. They are really trying to concentrate on getting organic domestic growth going. So, low inflation is not really a bad thing. Obviously, if you have persistent deflation, given berdych problems and parts of europe, you have to be more worried. It may be more important in the near term for them to increase things like lending and confidence, rather than sin the euro 10 lower to stimulate a business Exchange Rate. Withyou explained that deflation. At this point, once you start worrying about the second round of rate negotiations, it has been going on so long it is better than the economy. It has been tremendous. When i say europe is in a low inflation mindset, what i think the central bank needs to be in tune to is the domestic and global risk which really causes debt deflation to emerge. This is something they need to respond to aggressively. In the meantime, we have the quantitative program. They are trying Different Things. They are trying Different Things than simply narrowly focusing on and inflation target. We narrowly focused on it the target precrisis. It showed a great risk. That is what we ended up with. Just a crossover to you. Were talking about a tick by tic impact of the moves. Thehave seen enough from ecb to stimulate the kind of investment that needs to happen to really get the economy back on its feet again. Is a debate that Monetary Policy has done all that it cant. , the eurozone is growing. There are retail sales, auto sales have been good. Production is flat on its back. It easy forhi made the fiscal authorities to do nothing. He complains that they are doing time, whilethe same theyre doing nothing, i will do something. There is too much debt. Graphics are a big problem in the eurozone. He is really running into some problems that i do nothing monitor all see can fix. David i agree with you, i was wondering if there were some reason for being defense. He said this is working, although not as quickly as possible. Admitted that growth was anemic of the First Quarter. Likely in the negative before comes back for the second half, he said profits are up. What is the evidence that this is really working . Stephen there are some issues in the german political environment better putting some pressure on him. Issue, i would not say it comes down to just that issue. I think that from a Foreign Exchange perspective, there is not a lot of conviction at the moment. We say there is none at all. I think for mario, that is a good thing. Marketans he can allow forces to do what they have been doing. They insert a cap on the downside. Its basically keeps the eurodollar arranged. Some less dovish nests they would try to figure out the remarks. Mark thank you. You are sticking with us. Beid they said there may 1400 out of the next year. Matt today, 4 30 p. M. Eastern time, ceo and chairman kelly king. David we want to update you on a story we brought you earlier in the program here shares of the german advertiser are going short after the carson blocks head that his firm, muddy waters is betting against the stock because of questions over the accounting crisis is. The way they calculate organic growth, we cannot calculate a time. 2014 that organic growth was at 34 . Using their numbers, we get 2. 2 . David when we learned about the short, we reached out to the company. They said we want to highlight that our underlying Business Outlook is excellent. Nothing has changed. From the first site, we can thatdy draw conclusions the report is farfetched, contains nothing new and is defamatory. Funny the stock is down vonnie they will have an Actual Holdings data that will be published weekly. He also said with a statement from the ecb that bonds must remain for six month. Bond buying will start in june. Now, we have a day. We also have to be mindful of the impact on market liquidity. Time for more news. First time for Unemployment Benefits expected to drop. Job claims fell by 6000. The number of americans already on benefits declined to a 15 year low. Firing signal for employers was optimistic about the outlook. Agreed to pay claims over the emissions test. Almost 600,000 cars in the u. S. Will be covered. It is unclear how much individual car owners will get. There is a deadline set for how they will fix the cars. And, the transporter on wall street has taken a toll on willis street market. They had their lowest level in three years. They are sending purchases down 19 . The average price fell almost 3 . That is your latest business flash. Matt a quick look at oil. Is almost suddenly come down. One out of two thirds percent. A decent price per barrel. Considering where we have come from. With the failure of the opec meeting, and who is going on strike . Kuwait . Inventories were lower than expected. Timesil moves, a lot of stocks follow them. Here, you see the dollar with genuine movement. Here is a reaction to the ecb. It is a global market. Paces thatf the few is u. S. Linked third were you really want to see action for mario draghi. The rest of the moves we have seen today are more related to earnings. We talked about united yesterday. Coming out with earnings that did not please the street. Even withming in dead earnings estimates. A little light on sales. Verizon stocks down 3 . Las vegas bands look good on the strip. That is not good enough to boost the stock. Las vegas sands down 10 . In the business of las vegas, the city and team do not make up the lines shares of most profits. Doing have black stone earnings that missed by quite a bit . As a result, you can see them move down 3. 6 . Here, in the United States, it is all about earnings. That is keeping the market flat. Vonnie thank you. Lets go to abigail doolittle. Live from the nasdaq or she is looking at to Tech Companies moving in through trading. Abigail . Thank you so much. Yes, shares are soaring this morning after the tech company did the earnings and sales estimates. They beat consensus by 28 . Apparently, strength was driven by simplified portfolio. Their strength should continue given that they did have a bullish year. We have had a lot of price moving across the 90 level. Mayesting that shares arrive above the sailors. Now, tech stocks moving in the opposite direction. The chip company beat secondquarter earnings and sales estimates. Said theymine caught may lose some share with the iphone. Apple is one of their biggest companies. From auld be a tough low company that is recovering from declines. They had a bearish downtrend in the stock card. David thank you. We will turn out to gold. It has rally this year. They said they could hit 1400 per ounce. They said they think it is because of investors in the central bank policy. And is here with us. You think it will go up . Of role witha lot gold. It seems to be a path against inflation. Sometimes it acts like a currency. Strong,on the dollar goaltends to go down. Will come of the dollar has been week, so, naturally, gold has gone up. I think gold is also a commodity. Move in the same direction as a broad commodity index. It will move nicely after the panic from the beginning of the year. Overdid it on the downside for commodities like oil and gold. So, it is conceivable. Vonnie we have been stuck in that range. Ed yes. Ae markets start off with swoon in the beginning of the year, i think a lot of the with that we would have 2008 all over again, there were all sorts of concerns that seemed to have evaporated ever since 2011. That is when the stock market changed. I think sediments have clearly change, and people are back into risk mood. Mark if the markets conclude, janet yellen and mario draghi will not drive in and save global growth. And i think that at this point, im not sure central bankers are driving gold as much as expect it. I think a lot of this has been more like a ricochet or bungee jump. The bungee jump held, and we jumped back up. I think we have of what is going on than anybody else. John, back to you. John still ahead, were betty liu and mark barton. What is going on . Know, the president is on his way to the u. K. We be talking to john nelson. Uswill be speaking with about what we saw from the ecb. Also, on wrecked fit. Faring in a possible low Interest Rate environment. Back to you. Mark thank you. Up next, we break down what you need to look out for. Vonnie looking ahead, visa and microsoft reporting after the bell. We get gen mcdonalds among the companies expected to report earnings. Mark 25 minutes into the session, what a day we have already had. Look at what is happening in markets in the u. S. They are softer and negative. They are down to tends of 1 . Take a look at this currency. To euro and dollar close 114, now, erased all of the gains, and negative on the session. It is not so much as a negative euro story, just Dollar Strength kicking in through some of the currency pairs. They had a trade of a fivemonth high. Were going to keep on the markets right here on bloomberg. Bloomberg markets is up next. More on the funds coming up to break down the ecb. Betty i am betty liu. Mark i am mark barton. This is bloomberg markets, on Bloomberg Television. Betty well go from new york to london to read. Mario draghi said the ecb remains ready to step up if the outlook for the euro worsened during he is keeping Monetary Policy steady. Hoping inflation will pick at. Mark a bloomberg exclusive interview. They are taking the shares of the german advertising firm. The company blocked cross hairs. Betty shares of googles parents out of it is up. A preview of what to expect. The Company Faces new