We are discussing with joe manchin, the senator from west virginia. It is a big drama. Jonathan as you know very well, there is a big question of whether it is drama or it really affects the world such as markets. Jonathan thank you very much. Lets begin by getting a look at the markets. Looking at futures, this morning. We go nowhere. Up about a 10th of 1 . The euro a little bit weaker. Treasuries on offer at the margin yields, creeping back off those 2017 lows. Alix i am taking a look at dollaryen, a really interesting morning for that currency pair. Exit from a monetary stimulus could be on the agenda at the boj. Dollar caught a bid and now dollaryen up on the day by 2 10 of 1 . Definitely an interesting level to watch. The vix goes nowhere. Well,s where, gold as off by about two dollars. Crude up by 5 10 of 1 . Lets count down to one of the big events. Less than an hour from now, we will hear from the European Central banks latest Monetary Policy decision. It is believed mario draghi will drop the phrase Downside Risk in his gross outlook. A word that is not been used by the central bank since august 20 11th. Matt miller is joining me. What do we have to look for in a statement from mario draghi outside of rate policy and what they may or may not do with the bond by program . Bond buy program . 90 of theast economists we surveyed expect that change. No longer Downside Risk to growth, but a phrase that has not been used in six years. There could be a change to Forward Guidance. Some economists have suggested that draghi may remove the word lower from his Forward Guidance for policy, saying he will just he could just keep monetary stimulus longer, pass the end of quantitative easing. He has not been able to get sustainable inflation up to a level where he wants it. 2 target is so far off that the ecb is possibly going to lower its outlook 21. 5 for inflation, all the way out to 2019. Jonathan he has to now lets that the pickup in growth we have seen across the continent and im wondering how he does that and justify the need for 60 billion euros every single month of qe. The problem he faces is the one that the boj and the fed faces as well. He is getting that growth. The final euro gdp number was 0. 6 rather than the 0. 5 we thought. Growth is stronger than what the market is looking for. We have ae time, headline inflation number at 1. 4 and a super court number well below 1 . He just cant get it up there because of the lack of wage growth and Falling Energy prices. That is how he will justify continued stimulus. Jonathan great to have you with us on the program. We will break down the decision with you. Joining us now is vasileio gkionakis, Unicredit Research head. Kate great to have you with us. Also dean turner with ubs 12 management. We could bring that quote up from the last meeting in april. Rates toue to expect remain at present at pleasant or lower levels. Well past the horizon of our net asset personages reduces. Rates to we are going to have aasileio drop in the rate easing bias. Personally, i think it is unnecessary. Priced, whenhat is i look at the market, i see bond yields marginally higher. I think you will have a dollar higher, however trade is generally higher. Lets just make sure we put this in perspective. Beenising eurodollar has half because of the euro, half because of the weak dollar story. Get what we are expecting, they drop in the ratings in bias, i think the jonathan no one really believes rates are going to go lower. Why is it significant . Dean it has to do with timing and preparing the markets for an exit from qe. Todays move should be the first step to removing the reference to lower as was pointed out. It is inconsequential. What we have to be worried about is if we dont get a change in communications, that could come as a surprise to the markets. Jonathan lets get the ecb Economic Assessment from the last year as well. A more balanced but still tilted to the downside. Do you remove the downside language . We are trying to read tea leaves, here. What does it mean, vasileio . Vasileio in terms of likelihood, this is probably the most likely outcome, and the sense that the Downside Risk will be removed. There is no point in shooting themselves in the foot. Qe was there for a reason and there is no point in not accepting that reason has been achieved to a certain extent. This removal has been priced in by the markets. I dont expect any big reaction. Jonathan as we have sets over the language of the statement that is going to come when draghi delivers the News Conference, he may also a that with a downgraded inflation forecast, as well. Vasileio i saw the news, yesterday. I am a bit puzzled in the sense that we saw the that with a dowd inflation headline suggesting the reduction all the way up to 2019 because of Energy Prices. Really . Seems i think on the they will have to be revised down, which they may attribute to Energy Prices, which is no big surprise. If they hit toward revising inflation forecasts, not only because of the Energy Prices, but because of some other underlying factors, then that would be jonathan what are you looking for . Vasileio improved balance of risk. Draghi isink that going to strike a relatively neutral stance. If it comes along the lines of what we expect, i think europe is going to euro is going to grow a little higher. Jonathan when you listen to the president of the European Central bank, they are not in a rush to remove accommodation. Why is the market taking one line in a statement and jumping 18 months ahead . We have the very mind that what we are seeing in terms of the economic data, the strength of the data we have seen is not consistent with the current policy stance. Were to see that some of that language was toned down, then that would raise some questions. Jonathan we have seen this story in reverse. When he was 2011 focused on inflation. Inflation was higher, output was lower and now you can turn the story on its head. Does that have a bit of a problem . Dean clearly inflation is the key issue and we are expecting we will not see a significant change until the fall criteria that has been laid out has been met. Inflation has to be durable and it must be more broadbased than it is, today. I think we are in a very different world than where we are, today. In terms of the forecast as you mentioned, there will be some tweaks but we are talking basis points. It is not anything material. It is the overall trend thats important. Andthan vasileio gkionakis d turner and dean turner will be staying with us. Alix i am excited. Inflation, thats all i looking forward to. 7 45, mario draghi speaking. 45 minutes later, dont miss it, you can watch it here on bloomberg. Live from washington, london and new york, this is bloomberg. Steel i am here with alix in new york and Jonathan Ferro in london. I am down here because of james comeys testimony expected at 10 00, today. We have just gotten released some excerpts from the vicechairman, the Ranking Member of the Intelligence Committee, some excerpts of what he is going to say at this hearing. Verylled comeys testimony disturbing. He says the special prosecutor has not worn off the committee on any issues, and he also says the testimony from james comey will show that President Trump is violating what he calls postwatergate guidelines that try to preserve the independence of the fbi from the president. Did get that prepare testimony yesterday from james comey. He went through nine different instances where he had encounters with the president. In one of them, he specifically said the president said that the investigation into the russia issue was putting a cloud on the presidency and that he asked whether there was anything they could be done to help remedy that. Joining us now is Kevin Cirilli, bloombergs chief washington correspondent. What has been the reaction on capitol hill and at the white house . Kevin republicans feel this is not evidence of obstruction of justice. This is not clearing a legal hurdle for anyone to make any type of case that there was an obstruction of justice. The president had this assertion that they feel that this was a victory for them in terms of just what is on the testimony. Clearly democrats disagree with this. Theyre going to try to aggressively go after this white house in terms of trying to frame this as an argument of the president should not be meddling in any type of investigation, even if it doesnt mean that legal hurdle meet that legal hurdle of obstruction. David is this a legal question or a political question . We do not indict president s of the United States, anyway. Even if he had committed a crime. How will this play politically . Kevin we were working on this and one of the things that all of our sources have told us is that this is so reminiscent of the campaign, when the president s back was up against the wall. They tried to make it locker room talk and now you are hearing new york talk and that was the moment in this testimony with the president told former director comey to let it go with regards to the investigation of general flynn. Thanis very different asserting himself and saying stop any investigation. David it is not a pretty picture that this testimony to paints. Said the president said to him in a private meeting quote, i need loyalty, i expect loyalty. Move,comey said i did not speak or change my facial expression during the awkward silence that all load. We simply looked at each other in silence. When you have the president of the United States oneonone saying i wonder loyalty, there is a message there. Kevin what a wellwritten dramatic statement coming from former director comey. Something that the president has consistently said in terms of a political culture that surrounds him. Whether or not it is appropriate, we have House Speaker paul ryan saying it is not. All of that said, politically speaking, because there is not a legal argument, we were talking about this before the segment, this is not going to hurt him with his base. Whether or not it hurts him with democrats and independents, that is where and why you are seeking the republican machine mobilize. They are working in tangent, right now. David i saw a ad on local television from the committee to protect the president saying we have to rally for the president. Kevin game on, for them. David we will turn to some of the legal aspects of this and bring in robert ray, a former whitewater independent cash whitewater independent counsel and a former federal prosecutor. Thanks for being with us. Lets focus on the law is supposed to the politics. As opposed to the politics. You read the comey testimony. Is there anything in that testimony that would lead you to believe there may have been a crime committed to the president by the president . Former director comey may have felt uncomfortable and that it was an awkward moment as im sure it was does not mean that the same thing as saying it was obstruction and even responsible democrats are knowledge and the fact that they are not making a contention that this is obstruction or a impeachable offense. We will get beyond that fairly quickly. David that leads us to the question of what is going on in the senate and the congress and what is going on with mr. Mueller. What is the senate doing . What could come out of it if it is not a criminal violation . Robert it is a political moment and it comes in the context of an order, a porting appointing the special thestigator and investigation is still directed to uncovering and determining whether or not there is any evidence of collusion at the Trump Campaign involving highlevel individuals with the Trump Campaign. Along the way, they are going to deal with things like Michael Flynn and whether or not he provided false statements to the fbi, whether or not that should be prosecuted. Those are all matters that would be presumably within Robert Muellers purview. There are legal aspects that will survive and continue, but the moment on capitol hill with jim comeys testimony is to present to the public what happened with regard to the encounters with the president and whether or not there is anything to be done about that. Sense, it is a relatively recent development fullthey would not be a some relationship between the fbi director and the president of the United States. The protocol with regard to contact by the white house, including the president to be run through the Justice Department at the level of the Deputy Attorney general is a recent development. A development that occur during the Second Bush Administration occurred during the Second Bush Administration. There has been much more direct contact in the Current Administration with President Trump, for understandable reasons and in a political environment, it is understandable that the president of the United States would like the cloud removed of investigation that hangs over this administration. That if request something could be done to expedite things, that would be in the countrys best interests. I happen to agree with that. That is the appropriate meta amount of pushback that the president should be making and it is also appropriate for director comey to push back in making sure that the integrity of a Ongoing Investigation is protected and he certainly did not agree to go easy with mike flynn and that investigation is going to continue with the new fbi director and the special counsel. ,avid you actually served investigating president clinton. Explain the effect of the Senate Hearings on that independent investigation. I note that senator warren has gone out of his way to say that bob mueller has said dont worry about it, you can go into anything you want. What does that do if you are bob mueller . Is there anything in the comey testimony that would say we need to look into the president . Robert i dont see it. I think mark warner acknowledges that insofar as he is not commenting as other democrats have about whether or not impeachment proceedings should begin or whether or not the president obstructed justice, all he said was that he is disturbed and people can make up their own minds about whether or not they are disturbed. Is that itsn view much ado about nothing. The more important aspect of the investigation, which is what democrats recalling or and what the special counsel was important was appointed to do was investigate whether or not there was collusion by u. S. Government officials or government officials to be an russian officials. Or russian officials. In a political environment, it mueller iswhat bob suggesting is that there is nothing about director comeys testimony that would impair or impact the current investigation before the special counsels office which suggests that he has determined there was not that a of traction case would not lie. David that is very interesting. Thank you very much, robert ray. Former whitewater independent counsel. Alix the market reaction, lets go to vasileio gkionakis of unicredit and dean turner of ubs will management. Vasileio, should the markets be hedging, today . Vasileio it is difficult to tell. Im saying this because i dont think the dollar has actually of theseot on the back specific developments. , a more a general issue generalized and broadbased issue with the way the u. S. Administration is handling things. That definitely reflects as far as the fiscal stimulus is concerned, tax plans. From that respect, unless we get something which is really bad on that front, i dont think its going to be a make or break for the market, or the dollar, specifically. Alix in the testimony that the senate released, yesterday, donald was stressing that the pressure cloud was interfering with him doing his job. I heard that at least three times. Is that what the markets should be focusing on . Do we need to price out anything from d. C. Until any kind of russia investigation is resolved . Dean that is probably the right course of action. As far as the markets are concerned, it is ultimately going to be about can trump get back on course with the Economic Program and as things currently stand, that does not look to be the case while we have this noise. Jonathan Jonathan Jonathan the dollar rolling up throughout much of 2017. Dean that is a very good point. Any expectations around trump have largely evaporated from the market. If we do get to a written get a return to a space of normality, there could be further upside. Jonathan e. M. Ripped against the dollar, much of the g10 is ripped against the dollar. There anything left in tc left in d. C. In terms of Downside Risk . Dean the dollar remains a good 10 overvalued. And the euro euro. Is iaction to that wouldve expected the euro to be much higher, but its not that is why it is creating a freeze. Alix great stuff. We may have an answer sometime soon. Vasileio gkionakis and dean turner, both of you are sticking with us. In the commodity markets, i wanted to point out what is happening with crude. It was up a little bit, earlier but now has rolled over. The weakest the weakness continues. 46. Coming up, we will bring you ecbs policy decision, followed by Mario DraghisNews Conference. Just 45 minutes later. Dont miss it, here on bloomberg. Jonathan from london, good afternoon. New york, good morning. Along withan ferro david westin in washington and alix steel in new york. Lets get you up to speed on the Market Action ahead of the