Transcripts For BLOOMBERG Bloomberg Daybreak Americas 20170907

Impacted by the hurricane as you have pipelines and refineries out of work. Its great to get a read on the state of their business right now. In particular we will be speaking to the ceo of show near , the only company that can export liquefied natural gas in the country and it is down on the u. S. Gulf coast. Is it operational . Is the buildout having any issues . What does it say for the future if you are so concentrated on the gulf coast . Look forward to that. Since you are over there, i have the privilege of welcoming lisa abramowicz. See hers so great to so excited in her element. Its a lot going on right now, we are looking forward to hearing what she comes up with. Right now lets get you up to speed about what we are looking at the head of the open of u. S. Markets. S p futures are up just the touch, the dax up more. The u. S. 10 year yield is down, which is interesting, because , butave risk on in stocks risk off, yields down, price up and the euro continuing its trend of strengthening versus the u. S. Dollar ahead of the ecb decision that will be in less than an hour. You can see that it has gained half of 1 against the u. S. Dollar, so that is where we are heading into this thursday. David it will be interesting to see what happens with it. Lisa absolutely. David time for the morning brief, the ecb decision will come out at 7 45 a. M. Eastern time with mario draghi speaking at a News Conference. Also at 8 30 we get initial jobless claims and several members of the fed are speaking today, starting with the cleveland fed president in pittsburgh. William dudley and the Kansas City Fed president will also be speaking at events later today. But right now lets get an update about whats making headlines outside the business world. But first we have taylor riggs. Taylor Hurricane Irma is taking aim at florida and it could be the most expensive storm in u. S. History. To hit florida by sunday afternoon. Mandatory evacuations have been ordered and Barclays Says that are 130 billion in insured losses. Caribbeandevastated islands and have blacked out much of order rico. South korea, another warning that north korea may launch another missile on saturday. It came as for launchers for a u. S. Missile shield arrived at a military base, saying it will disrupt the balance of power. In a surprising turn of events, President Trump joined democrats over the objections of his final republicans. He agreed on adding the three much three month extension of the debt limit to her Hurricane Relief bill. Paul ryan had said that that deal was unworkable. Global news 24 hours per day powered by 2700 journalists and than 100 20more countries, im taylor riggs, this is bloomberg. So much,ank you taylor. Mario draghi, a discussion at the ecb president has put out for months now. How will he start to pull back on quantitative easing without slowing down recovery . For more on whats in front of him, we turn to alessandro speciality. What will they be surprised by . Will they announce what they will be doing by tapering . I would be very much surprised if they came out with a fully laid out plan for how they will continue policy in 2018. The expectation for today is that they will be discussing the parameters and see how things are going and how much room they have two participate into next year or even as late as december, which would put investors on tender hooks, as it would be close to the actual end of the program in december of 2017. David there are two events today. One, the announcement itself. Then theres the News Conference that starts at 8 30. Separate those out, what will we expect to hear from the announcement, as opposed to what mario draghi has to say . As theyro discussions began, there wont be any announcement or news in the actual decision. Maybe some formal guidance as to how the ecb sorry how the ecb sees its own policy the coming months. The real news is supposed to come when he speaks, because then he is going to give his flavor of the discussion and say when they have arrived and what sort of exit they will have from the extraordinary stimulus. Lisa thank you so much for that , ill us on Alessandro Speciale covers special banks for us from frankfurt. Investors will be watching closely, hunting for clues about purchasingof programs. Also in focus, the euro, higher for a fourth day after hitting a two and a half year high just last week. Joining us from london, the head valentin masearch, rinov, and jeff allen. Much to you expect mario draghi to come out and make a statement about how strong the is ais in that this concern for the ongoing recovery in the european economy . Valentin marinov i do expect good morning, i expect them to be front and center of the press conference. Even if mario draghi is reluctant, there will be questions about the strength of the euro and, indeed, over the aggressive euro appreciation. The president is fully aware that the market is certainly in love with the euro. Its a strong conviction view and they will continue to buy unless the signal is a very strong discomfort about the way the currency has been behaving of late. Here, really, the question is how much draghi once to go this way and how much he wants to gain against the rally. I think that he will do his best to indeed discourage investors from buying the euro aggressively and in particular hes not worried about the past euro appreciation, but the appreciation that is to come if he fails to discuss it 20 today. Front andill be center of the press conference and i think that draghi will mention the euro with the ecb lowering inflation projections and i think he will lay the blame on the euro and highlight how important it is for the outlook of the eurozone inflation. David, lets get to the economic fundamentals of europe. Everyone a man money manager i speak with say they see the economy improving. And that with forward breaking contacts, it hasnt come down with euro strength. How much is this really presenting a headwind to the european economy . David at the end of the day the eurozone recovery is broadening out on the upside with more data ,rom eurostat in brussels published today, showering showing the recovery of domestic demand driving the overall recovery in gdp and the scope in the second half of the year for the eurozone to surprise on the upside. The ecb is going to revise off its gdp forecast. They may nudge down the Inflation Numbers a tad, but one of the more Important Messages is that they will be revising up those numbers and they will be adjusting in 2018. The Important Message they want to get across is that even though they will be tapering, the short end will be anchored and theres no way they raise the rate for a long time. Thats another Important Message for mario draghi. Dutifully. Set it up growth looks good, the ecb target is not going up the way they want it to. A chart there, i will describe it if you cant see it, every time mario draghi talks or doesnt talk about the euro, he didnt talk about it last time and it went up. Thats when he doesnt say anything. Similarly, at jackson hole, he didnt talk about it and that other yellow zone goes up. Then the minutes, they said they worried about it and it goes down. Given that phenomenon, does he stay silent and drive it up over inflation or does he have to address it . David thats absolutely right, they will be getting a lot of questions and they are much more able than the u. S. In terms of the Exchange Rate, but the important thing at the end of the day is that the eurozone at the moment is recovering on the upside in the is much david this is bloomberg, and im david westin. It starting to get lonely on the reserve ordered. President trump had three positions to fill and there is open open speculation the janet yellen may not be renewed in february area to give us some perspective about whats going on at the fed, charles plosser. Its always good to have you here. Charles thank you, david. David Stanley Fischer, specifically, what does the loss mean for the dynamics within the reserve . Charles i think its a loss for the Federal Reserve board. I have known him for 30 years and he is an accomplished central banker and monetary theorist. You cant imagine anyone who has more you can add more value to the central bank board. I think its a loss. Lets remember, he wasnt expected to be around much longer anyway. He was unlikely to accept the nomination to be reappointed next spring when it comes up, so this sort of accelerates a decision that was likely to come about anyway. In that sense, i dont think it except for theh, surprise in the short term because it was going to happen anyway. The bigger concern, as you noted, the Federal Reserve board has not had Seven Members in a long time. I think what worries me about that is its a sign of the politicization of our central bank and i think thats a very bad and framework to be stuck in. Not eating able to make appointments. Not being able to make nominations. And frankly, the workload on the governors increases and its very difficult. Lisa i want to pick up on that particular point. What are the tangible things that have trouble getting done without a full fed board . And can you take this idea of politicization of the fed and the potential consequences of that . Well, i thinkes the entire crisis has been a gradual loss of independence for the fed, increase in politicization of the central bank, whether it be through the appointment process that hasnt been moving very well and creates political conflicts, but on the first point, its just administrative. Is an organization of some 20,000 people across the country. A lot of administrative stuff has to get done by the board of governors. There is Management Issues and done by the board of governors. There is Management Issues and the workload on the three remaining governors is now quite high. They are very busy people doing a lot of things other than just mulling over Monetary Policy. Fish and seaif will suffer. Workload goes up on the remaining governors. They have less time to focus on the things they need to because there is administrative work to do. Regulatory work to do managing the reserve banks and the oversight of the entire system, so its just, its just a stressful environment when you dont have enough senior managers, if you will, to oversee what has to get done. David i suspect everyone would agree it would be better if we had all Seven Members of the board. Give us a sense of what has changed. Is it increasing partisanship across the board in washington . Or to what extent is it the central bank becoming even more of a part of the u. S. Economy . We talk much more about the Federal Reserve today than we do did 10 years ago. Alessandro i wish charles i wish we did. [laughter] i think its increased partisanship. The individuals to become governors try not to think of themselves as partisan and they dont want to be partisan for the most part, but they are thrown into an environment where partisanship plays a huge role. Thatery worried partisanship is going to change in a way where if the balance shrink, then nominations for governors are in debates stuck about what the fed should be buying and how big its Balance Sheet should be, things that are largely irrelevant for Monetary Policy. It takes the fed in the wrong direction. Thanks to charles plosser, joining us today from washington. Be breaking will the ecb policy decision and than 45 minutes after that we will hear from president mario draghi in his News Conference. This is bloomberg. David no sooner had we started to deal with the aftermath of Hurricane Harvey in houston than we turn to face a stronger category five hurricane sweeping to the caribbean and heading for miami. President trump spoke in north dakota, emphasizing the governments readiness. We are getting ready to respond to Hurricane Irma and the incredible people that we have a fema and the other groups , they thought they would get a night of sleep. Just one night, they are not getting everything. They are already there. I want to start with the aftermath of these hurricanes. There are issues like orange juice prices, homebuilding, the energy sector, but beyond that there have been consequences on capitol hill. Isaac, you were with us this week and you predicted that harvey would bring together the congress so that they could raise the debt ceiling and extended government funding. Lets play what you had to say, i want you to have a victory lap. With Hurricane Harvey and for and focus, there is the that willfor the deal provide funding for harvey, which is it again just the initial slug, punting the government funding issue to the end of this year and hopefully even punt the debt ceiling all the way to the other side of the midterms. David isaac, its fair to say that you called it. What comes next . Interesting, the deal came together largely as expected and they are going to punt these fiscal deadlines, but it turned out to be more of a shank than any of us expected, to tell the truth. The debt ceiling deadline has as been pushed anywhere near far back as most republicans wanted. Sorry, go ahead. Lisa right now we are looking republicanmore torn party. Is this a negative for the u. S. , in a sense . Now you truly have a Republican Party at war. Charles it has helped to lift the cloud of the debt ceiling in particular, which has been hanging over the u. S. , so maybe the correct assessment, at least , at least it seems like it, but its important to note that any extension we get be a temporary one, so the risks may still lie ahead. We do note that the price action in the fx market is highlighting that some negatives are already in the price of the dollar. With some luck through september, investors will be looking past political tensions and will be able to refocus on the Economic Data and that could dollar, especially against of the laggards of the global divergence trade, the likes of the japanese yen and the swiss franc. But right now these are only early indications. We are cautiously optimistic on the dollar but thats about it. Thats pretty hopeful from charles from valentin, there. We have a perfect storm in december coming to washington, so many things coming together and some disgruntled republicans. Isaac looking at what trump did yesterday in backing the democratic plan is retribution against his party for their stalled legislative agenda. In the fall the gop hoped they could discuss tax reform. They have created a concentration of risk that encompasses the spending deadline, a debt ceiling deadline, and a slew of peripheral issues relating to the border wall, daca, and the Affordable Care act. Does this basically ensure that a lot of the larger agenda points, like tax reform, does this remove them from the table . Isaac the only people who were still openly expecting tax reform in 2017 were the big six negotiators when they were giving their talking points in public. To me, this confirms what the market has already expected, in my opinion, which is that the tax reform effort will bleed into 2018 and its not going to be anywhere near as impactful. We will have to expect a more moderated tax package. In my opinion, its going to be rather thants systemic reform. David back to yesterday, looking at the markets something happened that i didnt understand. You saw the u. S. 10 year shoot up for basis points right away. At the same time, the u. S. Dollar came down. There are reports today that the dollar was reacting in north korea and the 10 year it was reacting to the deal in washington. Why are the ethics and markets operating differently from the bond markets . Charles its difficult valentin it can be difficult to explain the intraday action of the different markets, but at the moment looking at the Bigger Picture it is the case that the treasury yields are so low for various reasons. Could be geopolitical risk or the debt ceiling. Could be many of those reasons. One potential reason that could explain how treasuries are persistently low in the face of the potential start of the fed unwinding of the Balance Sheet, at the same time the dollar is so weak, maybe just the trend of Global Recovery is something i have been highlighting of late, the fact being that as global trade continues to recover, big exporting nations are continuing to accumulate reserves and they need to invest those somewhere. Up our treasury yields and liquid alternatives for the dollar. It could explain some of the price action and all in trying to say, really, is that things need not as bad for the dollar as the price action in treasury or the dollar itself, suggesting at the moment that maybe its just a function of the resilience of the Global Economy of late. Whether north korea will be changing any of that, we like to look at geopolitical risks in isolation. Uncertainty is likely to linger. Ok, isaac, valentin, thank you. Oh, hes going to be staying with us. But right now its a privilege to turn it over to alix steel with a special interview. Alix Goldman Sachs, the headline has been the disappointing outlook for their fixed trading business but one point that has shined is their investment taking unit and joining us for an exclusive gregg lemkau. We are going to get into the Growth Potential for Investment Banking and a minute, but goldman, we know that Investment Banking m a, number one, you guys are solid, but whats your role . There are five key components. Investment banking, asset management, and equities. Each were about 20 of revenues. Four of those grew in the first half. The Leadership Team is quite focused on turning things around and we have great confidence they will do it. In terms of how the businesses interrelate, on the Investment Banking side with the m a creating financing opportunities, it drives trading volumes and there is interrelation between the two. The overall firm like focus on clients has been a hallmark of Investment Banking and the securities business, that more of that mindset continues to pervade across the firm with a better chance to return. Lisa if you are with a client alix if you are with a client, do you bring them along with you . Theres separation between securities and our side of the business. Our business creating Equity Securities for clients, bankers do come to be a part of that, but the really is a joint enter between securities and the selling of the business. If there is an ipo or debt offering, our business creates it and that is really where we cooperate for opportunities. Lisa alix are the bank alix are the bankers into that . Are they cool with it . Gregg they are cool with it. We have a great culture of teamwork and partnership and we all recognize that the better we all do as a firm, the better we will do collectively. Alix lets talk about your recent trip to asia. What is the state of out around itsnd asia . Gregg interesting, we have seen a big m aup in the china outbound that has been expansion driven and what we have seen will be different than what we see Going Forward. There is a massive pickup in Outbound Investment from china that was focused on diversifying assets, capital flows and different geographies led by a handful of conglomerates. That has curtailed meaningfully. The way we are likely to see out of china will continue to look more like what we have seen from the rest of the world, the big market leaders in their sectors looking to go out and buy technology in different markets and bring it back to the big market that is china. The growth focus of china and their participation in the landscape will continue. Japan is different, it doesnt get much focus that is still the andest economy in the world are probably more within impetus for outbound m a. Every client meeting i had there were focused on outbound opportunities to grow. When it comes to china, the government wants to crack down on outflow. Aey were going out and buying ton of stuff and now getting cracked down on. How does that prevent you from expanding the way you might want . That might be curtailed, likely to have it at a much more reduced pace. The Biggest Private Enterprises and companies in china, the government has been very supportive on creating market leaders that are global and you will see support from the government to do that. Lots of the capital for those companies is already offshore. Talking about hna, for Due Diligence its hard to get perspective when it is so opaque. Howdy you do that . Gregg probably best not to talk about any specific situation, but with any client we are focused on doing our diligence. The further you get away, the harder it is. We saw similar chart challenges getting clarity around those companies. Hopefully we will be in a position to help those clients in the ones that dont pass the test, we wont be able to work with. I think that any given client will be big enough, but when you are not able to work with certain of them, it makes it difficult. The reason i ask, you need the volume to offset the lower fees. It hasnt really been a struggle, we are right sized and profitably growing, but when you think about the overall Investment Banking side, its critical and relevant for all the clients and the other markets to make sure that you have access around the capital markets. Theyre all quite focused on whats going on. Alix when you were in asia, what were clients saying about north korea . Anxiety, but the markets have been resilient and there isnt much that people can do besides go to work and keep driving ahead. Alix which raises the question that we deal with in the markets, howdy you quantify and price in this kind of geopolitical risk . Its quite fascinating. I would say that the equity and credit markets, broadly, have been reasonably strong throughout the course of the year, there have been a lot of uncertainties and geopolitical uncertainties priced into the markets. Its quite difficult to price into the market. If one of these hopefully low probability circumstances come, you will see a move thats more dramatic. Gregg talking about tax reform in the u. S. , what do they need to see to put money to work . Gregg i think, clarity. They thought that there would be lower Corporate Tax rates with elements of repatriation for those companies, allowing them to grow their businesses with the general view that there would be a much more friendly regulatory regime. You thought you had it ready for a robust m a environment and what they were waiting for was clarity. As the year has gone on and been more muddled, people have been more frustrated with the deals they might have put on hold. You dont know if that business is going to earn money for the taxes you will pay on the proceeds. The mindset has gotten to the point of frustration, being prepared to move on and get back to business. While they would love some clarity, most ceos and boards are tired of waiting for it and are trying to get back to business as usual. Alix is it going to be more on the buy side or the sell side . On theit will be more buy side. Valuations in the market a reasonably high, youve got to find the right strategic transaction and be able to fund it. Alix sectors . Gregg we have seen pretty good activity. The two places i would be most focused on four activity are the tech telecom sector. Technology in particular, the Biggest Companies in the world with massive cash balance, amazon, google, apple, they have largely not participated in big m a. There was an interesting transaction around whole foods and those countries have the ability to go in multiple Strategic Directions with very big transactions happening. On the telecom side, there are probably eight Telecom Cable Wireless Companies in the u. S. Eyeing each other. There are some big transactions that could occur. The other place that has been a bit on hold is pharma. That sector has always been one where there have been Big Companies with existing sales forces taking drugs through the pipeline. You have seen that activity slow , given the lack of clarity around obamacare. Ceosave also seen eight and Pharma Companies turnover and with a change in leadership comes a change in direction. What does that mean for you . What do you see for the Third Quarter . Relativelyas been steady through the course of the year. M a volumes are a little bit up now with a pick up over the last month in terms of activity levels. Levels,wn from record as we get into the Fourth Quarter it feels like there is momentum building in the business with activity that seems to have been put on hold by corporate boards, they seem like they are coming back to the table. Lisa who gets the biz alix who gets the business . Gregg we like to think we get more than our fair share. Alix a lot of the deals have been a small players. If not a lot of the deals are getting done, how does Goldman Sachs continue to get a big piece of that high . We have been number one for years in terms of the number of transactions. I dont think that people recognize that in those transactions go all the way down into the hundreds of millions of dollars. The largest deal of 2017 wouldve been an art ninth largest of 2016, but there have been 400 deals this year that have been participating in deal flow. Alix but you didnt get into that deal. Gregg that transaction hasnt yet happened. Alix we will see how things meaning . Gregg we will see how things play out. But you know, we are working our way into all the deals. Alix the the idea that was that was an enormous deal. By the time that transaction happens, there will be advisors and large banks who are underwriters. Gregg the last prong is principal investing, expanding the companies that you cover. Does that helpow you . How big can that get . Being we shifted from eight or nine years outside the financial crisis, shifting towards the growth mindset with strategic hiring fitting culturally. It will be expanding the coverage footprint where there is real opportunity for us. There is an element of Principal Investment and we have always partnered with equity and debt investment. In certain places out of Investment Banking we have put capital to work on behalf of the clients. Investor inarly uber and spot of five. Finding opportunities and companies likely to be longterm investing not, just personal capital to understand the business but actual capital to leverage returns. Alix its on the margins . Gregg it could be a significant is this. Gets pretty big. Alix its been a great pleasure, gregg. That was gregg lemkau. Avid terrific interview, ali we are coming back with Valentin Marinov and david o n. We are expecting them o wen. We are expecting them to take down inflation estimates some. David the interesting thing for me is how much they revise up gdp number and talks up the eurozone recovery. In terms of what they do with the Inflation Numbers themselves. David at what point does that interfere with recovery . David there are long lags and we are talking about going right in 2019. Ext year at the moment, domestic demand is driving recovery. If that continues and we see resynchronization, thats much more important and that will offset the headwind for the eurozone itself. David quickly, we are just seconds away, how much pressure is there to announce something on the tapering plan, valentin . Valentin there is need for clarity, but i dont think the pressure will be enough for them to change anything on the day. We stick for the calls for detail with the announcements in october, not today. Guys, think you are a much. We are just about 20 seconds away from that cb decision. S p futures, flat. Dax, up slightly. The ftse, up by 4 10 of 1 . The big mover will be in the eurodollar. 5 10 of 1 . What is the marginal downside from the euro, lower or higher . The 10 year yield in germany, 36 basis points. Thats where we are. Marginalsis point with selling and buying coming into the Treasury Curve with crude and aat on the days decision dropping in just one moment. Upstill have the eurodollar , staying down 4 10 of 1 . No change in the main refinancing rate, staying flat at 25 basis points. Ecb, seeing qe running through the end of december or beyond if needed. Qe2 run until inflation paths as sustainably adjusted. Net purchases will be made alongside reinvestments. That it can increase in size and duration, and outlook that is typically what they went up saying if they want to seem a touch more dovish. Of 4 10 of 1 on the eurodollar , coming in at one hundred 1970. An interesting reaction there. In at 45ghi staying minutes time. To recap, we have the deposit facility remaining unchanged. The main refi rate, coming in unchanged at 0 . Ecb saying that it can be increased in size and duration if outlook worsens and they want to see sustainability in the inflation path. Joining us still, david owens and Valentin Marinov. Conference is obviously important. What is your initial takeaway . David nothing really changes. One thing to highlight, its important what the ecb publishes in the next two weeks. You get speeches from peter pratt, the chief economist and we will be looking out for those. Producedical papers over the next month or so, in the press conference we will be seeing how much he talks up eurozone recovery. How much does it resign revise up the gdp forecast and what you say with questions about the euro. Running until the end of december if needed, does that give the timing where december will be the meeting really get specifics . We believe that october is still the one where we are going to see more details about the upcoming taper. The ecb they want to be vague, but not that vague. View, thepoint of change in the policy outlook is coming, but really, others are saying that it will drip feed information to the market, effectively trying to discourage further aggressive purchases of the euro as much as possible. That said, the best they could hope for at this stage is to slow down the trend appreciation we will be seeing in the currency from here. We will need to listen to the News Conference to get much flesh on these bones. Standing pat, maybe a bit dovish. Let me make you a journalist, if you will forgive me. What is the one question you want to ask mario draghi . They have revised down the core inflation forecast in particular, they havent moving further away. How much confidence do they have outation ever getting back of the german bond over the next few months . These questions are relevant. What they will see over the policy rates in the shortterm, there are a lot of questions you can ask. As a practical matter, what effect does growth have on the euro as opposed to the inflation rate . Valentin that is definitely an interesting question. It is the case, its a somewhat easy decision for the ecb to make. If anything, it is a choice, many banks have to make it, focused on inflation and growth from here. As a matter of fact, one important trait that is taking shape in the fx market is the global the virgin straight with long currencies improving Growth Outlook and investors betting on Central Banks increasingly ignoring the somewhat disappointing inflation outlook. That said for the ecb at the moment, inflation will continue to play a role, if only because of the credibility of the program they have introduced to restore expectations and the outlook, and if inflation is heading lower from here tapering qe, why on earth are they introduce it in the first lace if its not going to go up anytime soon . Its a fine decision with a prime balancing act for the president. Hes done that before. Im sure hes going to find a way to communicate it to the market. The objective is not to derail, but it is to slow down the pace of depreciation so that we do not see the Inflation Numbers coming under in the next six to 12 months. Bea can we expect it to less oppressive when it is included in the statement that the ecb will keep the Bond Buying Program in place until they see sustained and jet sustained adjustment . Thats the dovish part . Mario draghi can be more aggressive on the euro . Lets bets david clear, theres more of an upside to the recovery building legs. Giving it a reason to invest in new labor and so forth. In a sense, the currency of is importance. Ondary the other thing i would highlight is that we have a key Federal Reserve decision coming up this month and obviously the ecb will be hoping that the fed moves to shrink the Balance Sheet and the fed itself will risingalling against the dollar. That is what they hope will happen. Getting to the october meeting, maybe the euro will be weaker against the dollar. Up, we will be ringing you Mario Draghis News Conference, live following the Rate Decision we just heard about. Live from new york, this is bloomberg. To recap, no change in asset purchases on the ecb Rate Decisions. Run withlike it will no substantive change. We did we will hear from mario draghi in about 35 minutes. How aggressive will he be in that euro move . We are seeing fair reaction from the market off the highs of the session and nonetheless still maintaining that strong followthrough. David, weve talked a lot about how the eurodollar is going to spread in the ecb, but what is the role of the fed in that . Into next year that represents tightening policy in it will, the ecb hopes lead to a stronger dollar against the euro. The euro system it will be a major force for reinvesting the massive fixed income. Tapering, thatts will obviously have a bearing as well on u. S. Treasury yields and spreads, globally. It may again lead to a stronger dollar Going Forward. Matching up, not is there more action to read ranked . Getting a fed thats progressive . Valentin from here we do believe that it is going to play an increasing role. That said, as a driver of the currency, there are other drivers as well highlighting that, if anything, the big reasons for the euro rally since have been elections the consistent inflow with policy outlook that is important. Ultimately it is the asset pressure with improving asset quality that will continue to attract the influence into the eurozone, keeping the eurodollar ultimately supported. Really appreciate that, guys. Coming up next, sky grids capital sky bridge capitals senior Portfolio Manager will join us as we are about 35 minutes away from mario draghi taking the stage. I love it. This is bloomberg. Alix no surprises, the ecb keeps its stimulus settings unchanged as officials are cautiously sketching out the future of their program. Kicking the can and dealing with democrats, President Trump stuns republicans by striking a shortterm deal on the debt limit and funding the government , setting up for a major showdown in december. The category five storm barrels towards florida after battering puerto rico and the caribbean islands with winds topping 180 miles per hour. To bloomberge daybreak, im david westin alongside alix steel. What are the what are the markets doing with all this news . Alix we will see what happens at the press conference at 8 30. S p futures flat on the day. Euro stoxx also flat. The dax off the highs of the session but still up by one percentage point. The asset class everyone will be watching is whats happening with eurodollar. Up about five tens of 1 . Pretty much where we were before the Rate Decision. Yields go nowhere in germany. Yields lower here by about two basis points. You wonder if any of that is because of Hurricane Irma and you have crewed up by 4 10 of 1 . We will will we see demand drop because of the irma situation . Ecb president mario draghi will speak at his News Conference which will be taking in its entirety life here on bloomberg tv. Also at 8 30 we will get job claims. Jobless claims. Mester talking in pittsburgh, new york fed president bill dudley and Esther George will be speaking events later today and all day long there will be flights in around a florida. In the meantime less than 30 minutes from now we will bring you Mario Draghis News Conference. Coming with the announcement of the ecb is leaving rates unchanged. Joining us for a preview is our ecb reporter, welcome back. It turned out the announcement pretty much the way predicted it. What we looking forward to . Now that we know this hasnt changed come all the focus will be on what he will say about the discussions they have in the governing council today. They have been tapering plans for a protest 2018. Will we get a hint of what road they will take . Will they keep silent and reassure the ecb if they remove stimulus will do so in a prudent and patient way, we will have to see. David is there anyway mario draghi can avoid specifically talking about the euro. The last time he said i dont want to talk about it. Then you had the minutes come out from the meeting they had just before where they said we are concerned about it. Doesnt the committee have to address it somehow . It will definitely be asked. They will have to Say Something about it. On this subject the standard line is the euro is not a policy target, but it is what matters for him. Will you speak to this line or give some signal the ecb or could become a comparable level if it were to continue to rise. We will see at the press conference. Alix thank you so much. Im used to seeing you in the conference. Its a bummer not to hear you asked that question. Vice chairman Stanley Fischer announcing his resignation citing personal reasons. He will step down in midoctober. The 73yearold was appointed by president obama in 2014 to a term that would extend next june. His departure may give president on resaving leadership of the central bank sooner than expected. Gayeski ands troy shahab jalinoos. Then we have the potential for december to be taken off the table if Stanley Fischer is not voting. How do you reconcile in the fx market . Whether the draghi really discusses reform or talks on that issue. I think the reason this is important is because the market realizes that it doesnt really take much for draghi at this point to stop the euro rallying. That doesnt mean you can change the trend. All this needs to suggest is an ever higher euro is something that they would consider when they look at Monetary Policy which until now has not been on the table and the euro rally for stocks. The market knows the absence of such a statement is effectively a green light for it to go up. Alix do you need to look for centralbank convergence . If the ecb gets a more dovish vice chair . I feel the focus on what the u. S. Is doing, what the fed is doing that the what the market is thinking about when it tries to work out what the ecb might do in my view is misplaced. Spending too much time to u. S. Policy will be what turns the innd in the u. S. Euro rates my view was not the right way to go. There was great hope over the course of the year that trumpflation would take the dollar. I think the committee need to focus on matters at hand and its own ideas for the euro. Yours have a favorite chart. I have a favorite chart today. This illustrates exactly what he was saying. If you look this chart, this is what the euro is doing against the dollar going back to july 1. The yellow areas where mario draghi did not say anything. The second one was a jackson hole. The blue area is when the notes came out. They did say they were concerned and the euro went to guess went down. Basically he said it doesnt talk about it, the euro will go up. Troy the elephant in the room is the strength of the euro and how that impacts inflation. Standpoint, we dont have any risk on there, but there is massive speculative language in the euro versus the dollar. Its the most crowded trade on the planet. To your point if he comes out and starts talking about it in terms of inflation and to ultimately growth, then we do expect a significant weakening of the euro, at least in the short term. The biggest picture for investors, the european continent has strengthened dramatically. We seen the healthiest growth and there were stolen skeptics, but we see that followthrough and we think Going Forward its ardently the best relative Investment Opportunity in europe now since 2005 or 2006. Its been a long time, we went for a long time of malaise and contraction. We are at a point where europe can compete with Major Economies Going Forward. 1. 20 on the dollar doesnt scare you when investing in european equities . Do you bifurcate your Investment Strategy in europe . Troy obviously a striking euro could lead to less tapering over time, which would be poor for the banks and for direct german investments. Our point is that when you step , youand look at valuations can look back at fun flows of finally turned positive and the factor of a steady trickle of the we are assessing over euro at 1. 91 or 1. 21, its not enough to dramatically change investments. If we saw growth faltered dramatically, then of course. Alix you have the trade weighted index of 4 for the going to bes something material when it comes to inflation and potentially for growth. How do you view it . Shahab ultimately its a global cycle until the demand is growing. That ultimately has a bigger effect on euro area exports the just the value of the currency. I think as long as the ecb is confident the Global Economy is robust, it will not worry too much about valuations. I think your point on inflation is more important from their perspective because if we get to and thewhere the staff forecast materially have to lower the longerterm inflation outlook because of euro strength than that directly challenges their intentions to meet the inflation target. That something they cant get away with so easily. As weve seen with other central and has been very direct in looking at currency inflation outlook, it is not something you can parse to easily when you have an inflation target the way the ecb does. Troy it wasnt too long ago the euro was 1. 40. We had a dramatic depreciation and always done is referred a bid to pass perhaps excessive levels. Cant to some extent, you if youre going to grow the economy robustly, the euro will strengthen. The strength in emerging markets in particular is more beneficial to europe than the u. S. Furthermore, Lower Energy Prices is more beneficial to the eurozone quarried eurozone. Here,r it flat lines from it shouldnt dramatically change trajectory of the eurozone growth. Alix we have been debating this all at 8 30 of the mario draghi press conference. Both of you will be sticking with us. Here is the update on Hurricane Irma. This shows the project or he of the storm. We are looking at potential connection with orlando on monday and hitting miami sometime on sunday. The storm is a completely just completely wiped up puerto rico. The pictures are really staggering with windows 180 miles per hour. To 180 miles per hour. We are hearing from companies continuing to update on their flight schedules. American airlines canceling 2100 flights through tuesday. The last miami outbound flight is going to be afternoon on friday. They are saying the last orlando flight around the weekend as well. We are continuing to your companies update on what they are doing for the storm. A legendary hurricane. David right after harvey. And there is an old one out there there is another one out there. We will bring you Mario Draghis News Conference live following the ecb Rate Decision coming up at 8 30. Live from new york, this is bloomberg. We had a great meeting with chuck schumer, nancy pelosi and the whole Republican Leadership group. We walked out of there, mitch and paul and everybody and we walked out and everyone was happy. David that was President Trump in north dakota after surprising washington in the markets with the announcement he had done a deal with democrats to extend the debt ceiling until december and to fund Hurricane Relief all in one fell swoop. This after House Speaker paul ryan had called the deal ridiculous. Here to take us through what this all means is margaret, senior white house correspondent. We just heard the president saying everybody was happy. Is everybody happy . Margaret chuck and nancy were happy and President Trump is happy. The House Speaker, paul ryan in the Senate Majority leader, Mitch Mcconnell both got blindsided by this. There is a third republican im going to mention. House of the trump white who did not see this coming, the treasury secretary, Steve Mnuchin who also wasnt in on the plan. Doingresident trump is isnt entirely clear yet. Is he ushering in a new era of cooperation with democrats . Could that help them get big ambitious deals on tax reform or infrastructure . Or is he trying to send a message the Establishment Republicans that he is not going to coordinate everything with them that they have talked him down so many times that he is done working it out with them. He will do what feels right in the moment. If not clear yet. The answer could complicate potential prospects to get stuff done with the next three months that President Trump is bought himself. David an important part of that was tax reform. We thought we would get tax reform, now we will show up in december and have to address the debt ceiling again and funding the government and tax reform. Did what the president do yesterday make it more or less likely to get tax reform . The thinking right now out of the conventional wisdom is that this probably complicated that effort. A thiseen such past eight months, it will take a little bit of doing to see where this goes. Here are the parties that always need to be corralled. There are the republican establishment, democrats, a few could theoretically be on a couple of tax things depending on the state they represent and their orientation. There is the House Freedom caucus, the conservative or very conservative republicans in there. There is a split between everyone who thinks everything has to be paid for or say it how will you get all these warring republican camp together . Now you got the potential to bring in more democrats if the president possible messaging on ever thing else holds. It is now within the Republican Party, how much of a step ward, a risk of leadership is leadership going to take. David thank you so much margaret joining us from washington. Alix after the announcement and President Trump announcing his deal, markets did react. Equities were lifted higher by the surprise decision rebounding from that risk off sentiment we saw a earlier in the day. Still with us to discuss is troy gayeski and shahab a la news shahab jalinoos. What does this tell you about what we saw . Tells me the market doesnt know how to interpret the situation. There does go different ways of looking at it depending on your leaning or your preference. I think the big issue is if you go back to when president was elected, the market felt now you have clear government potential, you of a president who is republican, a republican congress. They can push through a transparent agenda and those ideas that were very tangible on the table. Now you have a situation where we have to toss through different tea leaves on way what may or may not be as be possible. It is not something i would say is a comforting factor, this development, it is just more of the same in creating confusion. Alix the equity market did not mind the potential confusion. Goldman sachs said people are fed up with this happening in d. C. , they are just putting the money to work. Troy coming out of the election you had a massive trump inflation going on. Than wety surge faster are thought and a lot of that is been unwound over time. Investors decided the probability of massive structural reform has gone down. We give back we get that from a political standpoint. There is some upside to a trump did. He sent a warning shot across the about euro publicans and said you wasted six months on health care and got nothing done , obviously tax reform is crucial for future Economic Growth. Its another policy plank that is very important. The executive branch can only do Regulatory Reform on its own. Reform and do tax infrastructure, you need republicans to coalesce and if we can get some democrats involved, that is good as well. Everything big is been done in a bipartisan way. Maybe this is trumps way of saying you cant get it done on your own, we are going bipartisan from here. David how do you invest in that situation . Do you think its more likely we get the progrowth agenda or less . Troy you cant read too much into this 13month extension. Obviously it was done in a way during one disaster and one potential upcoming disaster for the country. That being said, we always think you want to be positioned in things that can benefit from policy reforms you can count on, particularly regulatory relief and then we have upside surprise if you get tax reform and infrastructure. One area we still like is the Regional Community banks which is one of the areas the administration has been focused on to reduce the regulatory burden, which should lead them warm more lending growth which will be good for small businesses. Alix some confusion about what it means for the fx markets, could we say at least provides a floor for the dollar . Shahab not necessarily. Long as other countries and economies are posting positive environmentsoved than the dollar will continue to lag. It is as simple as that. We need to turn this around and start to see at least give some impression that you might go back to the way the market was anticipating when President Trump was first elected. There is not enough in what weve seen to make us make that call. Both you both of you will be staying with us as we get ready for that mario draghi News Conference. The News Conference will be at 8 30 this morning eastern time. This is bloomberg. , we will bedraghi joining his press conference about seven minutes time. A lot of questions about what he will say about the stronger euro. For more perspective is paul gordon, he is the western european Central Banks team leader. What would be your number one question for mario draghi . Paul do you discuss tapering of bond purchases. Counciltement from the was completely unchanged from the previous meeting in july. If you didnt know better you would think everything is moving along at the same kind of pace, but we do know behind the scenes documents have been circulating for next years bond purchase. Duration andes of different paces on a monthly basis and potentially some tapering in their. That is what the investors want to hear. Alix typically he says we havent talked about it. That is not going to fly this time around. Paul i mean, time is running out. You cant really escape the factory of less than four months before the current qe program is supposedly set to expire. It you do decide to continue bond into 2018, on the one hand you want to give markets some notice. You also need to work out how far you can go given the potential scarcity and shortages of bonds that are out there and certainly you need to decide how far you should go to avoid overcooking the economy. David is this something where they will notice it no something in 30 days or 60 days or is it rather just putting off the inevitable . Which when they start tapering will have a stronger euro. Paul potentially very obviously the euro is half the equation. It depends on what happens elsewhere. The general trend seems to be the euro goes higher. That is something draghi may address today. Economists inspecting to talk about it, whether he expresses concern or not remains unclear. He had opportunities to do that and he did not do so. You wait until october, you have a few things out of the way. You have an election that may or may not matter. The fed decision on what it does with its own Balance Sheet and of course another months round of Economic Data including inflation from the euro area. David thank you so much, that is Bloomberg Paul gordon from germany. Shahab, is it likely the euro will move significantly one way or the other based on what mario draghi says . I think we come into around 10 annualized which is not very high by historical standards. Having said that, if he makes a transparent comment about the value of the euro being a potential being high a potential problem, i think we outperform what it suggesting at this point. We will see a significant drop in the euro. I would expect buyers to come in at that point, because ultimately the market knows that if the central bank is heading onards the exits unconventional easing, the currency will want to go higher so i think it will be a buying opportunity for the market. There are some shortterm players that could get squeezed out. Wehe says nothing i think could easily test one 120. This is a hurdle for the market. The possibility the draghi will say summit about the euro. Way,he gets it out of the wont be much to worry about for some time. David he is going to have to admit theres a relationship between the euro and growth. Troy one would think. He doesnt have to, but he is more than likely to have some statement. Back to what we discussed before with all the speculative language out there, the fact he is avoided comment so far, we expected some more price action than if he comes out in directly reference the fact the euro is getting too hot. The probability of them ending qe at the end of this year is zero. The question is how fast they taper. We encourage investors to think big picture, dont get too carried away by any shortterm moves in the euro and look more at the enduring organic strength of the euro zone economy, which is been a long time coming. Do theyo what extent have at least a peripheral vision of whats going on with the fed . Do we hear more dovish talk that maybe its more not so likely. Shahab i doubt very much they spent too much time worrying about the changes of the fed. David im talking above the fed saying they might not go up in december. Shahab it is something from my perspective that would be a. Istake to focus too much i think ultimately what they can see is their own actions have held the euro irrespective of that. I long as that the case, think they can manage it on their own. Interesting question to paul gordon was why are they not mentioning it, is it because they want to wait and see . Or they just dont know. Whats the probability they dont actually have a plan to taper because they are working it out . Shahab its entirely possible. You would imagine there are plenty there is plenty of time. Honestly its a complex once because they realize the cat is out of the bag, its hard to get it back in again. Thats why they include the comments about being able to resume policies if the economy dictate the need for that. I think ultimately a dont want to paint in a corner. They cant changes retain some flexibility. Thats why taken so long even to get to this point. The euro strength is a warning they are doing the right thing. From 120 to 105 on the idea some in my happening, want to make it clear these the trajectory is think is why i as high as it is. For what is your base case how qe involves in 2008 in 2018 . Shahab economists believe in october we will get an on a plan more transparent than what we have now. No cliff edge type behavior. We has an ego data in the u. S. A big increase in the week before and from expectations. Also picking up one half percent. Unit labor costs moving a lot lower. Now just up by 2 10 of 1 . Weve been hearing this story quite a bit that there is a labor shortage. Therefore companies are trying to increase productivity in order to help offset any wage gains they might pass on. You have a unit labor costs up to 2 10 of 1 . This gets back to the question of what they dont know. What they continue to not know is why wage growth has been so low. Why inflation remained so low below expectations. That is the conundrum. The labor markets heighten dramatically. You have meaningful wage gains but not as high as they would expect. Until you get meaningful wage gains, its hard to see inflation picking back up. They have been below trend as well the ecb has been below trend as well. They say whats the rush to remove policy when you are still running well below not only expectations, but in terms of labor and a peripheral countries. Troy and shahab joining us there. Now we are looking at live pictures of mario draghi taking his seat, a lot of questions will remain as you wind up having the euro trading at 119 against the dollar. What will mario draghi say about inflation . So far the statement meant nothing. Basically no change across the board. It did say qe will run at 60 billion euros per month until the end of december or beyond and if any case until the governing council seized sustained adjustments in the pattern of inflation considering consistent with the plane. Its a dovish three from the statement. We question will be the impact of the euro on inflation. Lets go to mario draghi speaking now. Im very pleased to welcome you to the press conference. We will now report on the outcome of todays meeting of the governing council. Based on our regular economic and Monetary Analysis, we decided to keep the key ecb Interest Rates unchanged. We expect them to remain at their present levels for an extended amount of time. Horizon ofst the asset purchases. Regarding nonstandard Monetary Policy measures, we confer that are purchases at the current monthly pace are intended to run 2017 the end of december or beyond if necessary. If any case the governing council sees a sustained adjustment in the path of inflation, consistent with inflation aim, the net purchases are made along reinvestments of the greek debt principal payments from maturing securities purchased on desk under the Asset Purchase Program. Information including our new protections confirms the broad unchanged mediumterm outlook for the euro area Economic Growth and inflation. The economic expansion which accelerated more than expected in the first half of 2017 continues to be solid and broadbased across countries and sectors. At the same time, the recent volatility in the Exchange Rate represents a source of uncertainty, which requires monitoring with regards to its possible implications for the mediumterm outlook for price ability. While the ongoing economic expansion provides confidence that inflation will gradually head to levels in line with our aim, it has yet to translate sufficiently in stronger inflation dynamics. Inflationf underlying have picked up slightly in recent months, but overall remain at subdued levels. Therefore, a very substantial degree of monitoring accommodation is still needed for underlying information pressures to gradually build up and support headline inflation development. In the mediumterm. If the output becomes less favorable or if the conditions become inconsistent with further progress toward sustainable adjustment in the path of inflation. We are ready to increase Asset Purchase Program in potential size and duration. We will decide on the calibration of our policy instruments beyond the end of the year. Taking into account the expected path of inflation and the financial conditions needed for a sustained internal inflation rate may death rates towards. Evels that are below let me explain in greater detail euro area gdp increased by 0. 6 after 0. 5 in the first quarter. To continuedoints broadbased growth in the period ahead. Our monitor policy measures are supporting domestic demand and have facilitated though the process. Private consumption is underpinned by employment gains. Which are also benefiting from labor market reforms and by increasing household wealth. The recovery in investment continues to benefit from very favorable financial conditions and improvement in profitability. Moreover, the broadbased Global Recovery will support euro area exports. Reflected innt is the september 2017 ecb macroeconomic projections for the euro area. These projections proceed annual 2017,r increasing in in1. 8 in 2018 and by 1. 8 2019. Compared with the june 2017 euro system macroeconomic projections, the outlook for real gdp growth has been revised up for 2017. Reflecting the recent stronger growth momentum and is broadly unchanged thereafter. Area surrounding euro remained broadly balanced. On one hand, the current cyclical momentum increases the chances of a stronger than expected economic upswing. Hand, Downside Risk continues to exist primarily relating to Global Factors and developments in Foreign Exchange markets. Euro area annual hi cb inflation was 1. 5 in august. Looking ahead on the basis of oil for likely to temporarily decline towards the turn of the year. A fact inecting energy prices. An effect in energy prices. Measures of underlying inflation in recentderately months, but have yet to show convincing signs of a sustained upward trend. Domestic costs pressures, notably from labor markets, are subdued. In the euronflation area is expected to rise gradually over the mediumterm, supported by our Monetary Policy measures to continue economic ofansion, the corresponding economic slack and rising wages. Also broadlynt is reflected in the september 2017 ecb staff macroeconomic projections for the euro area. Which foresee annual inflation 20185 in 2017, 1. 2 in and 1. 5 in 2019. 2017red with the june macroeconomic projections, the outlook for headline hicb inflation has been revised down slightly. Mainly reflecting the reason depreciation of the euro Exchange Rate. Analysiso the monetary , broad money and despite some monthly volatility, continue to with ant a robust pace annual rate of growth of 4. 5 in july 2017 after 5 in june. As in previous months, growth and m3 was mainly supported by its most liquid components, with a narrow monetary aggregate and one expanding annual rate of down fromly 2017, 9. 7 in june. The recovery in the growth of loans to the private sector, observed since the beginning of 20 2014, is proceeding. The annual growth rate of loans to nonfinancial corporations increased to 2. 4 in july 2017, up from 2 in june. While the annual growth rate of most households remain stable at 2. 6 . Passthrough of the Monetary Policy measures put in place since june of 2014 continues to significantly support borrowing firms and and households. Access to financing, notably Mediumsize Enterprises and credit flows across the euro area. Up, the first check of the outcome of the economic values where the signals coming from the Monetary Analysis confirmed the need for a continued, very substantial degree of monetary accommodation to secure a sustained return of reflation rates towards levels that are low, but close to 2 . Read the full benefits from a Monetary Policy measures, other policy areas must contribute size it would to strengthening the longerterm Growth Potential and reducing vulnerabilities. The implementation of structure on reforms needs to be substantially stepped up to increase resilience, reduce structural unemployment, and boost euro area Growth Potential and productivity. , allding fiscal policies countries would benefit from intensifying efforts towards achieving a more growth friendly composition of finances. A full, transparent, and consistent implementation and of the macroeconomic procedure of time and across country remains essential to bolster the resilience of the euro area economy. Strengthening economic and Monetary Union remains a priority. Welcomes the ongoing discussions on further enhancing the institution of architecture over our economic and Monetary Union. We are now at your disposal for questions. You said the governing Council Plans to discuss the calibration. Measures, did you have a preliminary discussion . Did you discuss options for the future of qe. You mentioned the volatility of the Exchange Rate, is there an economic concern, do you think at its current level the euro is a problem. Do you think it affects the fundamentals of the european debt euro zone economy . I will respond to both your questions. Clearly all members of the council speaking on as far as the Economic Situation is concerned, they spoke on three topics. Growth, inflation and the Exchange Rate. Generalh, there was a recognition of the progress made by the eurozone recovery. Robust, it is broadbased and it was recalled 6 million jobs were created since 2015. This recovery is really the base for a confidence that inflation will eventually converge, but also in a moment that patience is needed. That is why the introductory therefore a very substantial degree of monetary accommodation is still needed for underlying inflation pressures to gradually build up and support headline inflation developments in the mediumterm. On inflation as an introductory statement, the revision mostly ,iewed to the Exchange Rate there was a certain broad dissatisfaction with inflation. Though noting as i said in introductory statement, the core inflation is doing slightly better. There was a broad dissatisfaction tempered by the confidence that inflation will eventually converge to our objective and this conference is andd on the good conditions the improving and broadening conditions of the economy. I will say at the moment how even looking at growth how this recovery remains dependence on our Monetary Policy. Which basically the look of the drivers of the economy, you see that can that consumption is doing well and consumption is doing well because of disposable income, which is increasing because of employment gains. Wealth ise households increasing as well. All of this hinges on Interest Rates and low Interest Rates. Investment is doing very well because Corporate Properties are good and because Interest Rates are low. Exports are also doing well although clearly we should expect consequences from the appreciation of the Exchange Rate. Aboutis leads me to talk to report to you what the conversation was about the Exchange Rate. You would not be surprised to me that the Exchange Rate is not a policy target, but it is important fory growth and inflation. It is so important the mediumterm outlook for inflation was revised downward mainly due to the appreciation of the Exchange Rate. Which means that we will have to take into account this element in our Information Set in our future policy decisions. In the last month there were concerns expressed by a few, these concerns were now related by most members at this meeting. Of course one issue that was discussed was how much of the appreciation is due to completely factors, how much is the natural outcome of the improved Economic Conditions in the euro area. Diverged, but there was by and large consensus on the fact that the Interest Rate introductory statement on the fact that the recent volatility in Exchange Rates represents a source of uncertainty, which requires monitoring, which requires monitoring with regard to its possible implications for the mediumterm outlook for price stability. The other topic we discussed was basically the color calibration of policies in the next year. What was not discussed. What was not discussed was the sequence. So Interest Rates as it strengthen here, Interest Rates will remain at their present level for the for an extended amount of time and well past the horizon. What was not discussed was changes in issue of limits. What was discussed was various scenarios, i should say just before you ask the other questions, the discussion was very preliminary and was meant to ask questions about the difference in areas and the transmission channels of difference in the areas flaws. Rather than expressing policy options or policy preferences. The discussions about different scenarios concern the length of the program, the size of the a very holds and it was preliminary discussion. Mostly geared to ask questions. The pros and the cons of different scenarios were discussed. , thed large on this point going will ask for we want to see is the work by the committees that were tasked to continue working on that. So that we will have more information. Clear, the bottom line is that Interest Rates will stay at the present levels for an extended amount of time and will have the asset purchases. Does questions. The first one, you said the further appreciation of the volatility of the Exchange Rate are monitoring. Should we think you mentioned it was in your account that this could lead to excessive tightening of itoring conditions monetary conditions. Are we at that they are ready when it comes to tightening of monetary conditions . That is my first question. Commit thatght now we would know the decision about the future of the qe program, we will find out about it in october . Or it will be even further until the december meeting . Followingind it the recent decision of the euro, financial conditions unquestionably tightened in the euro area. They remain broadly supportive the known financial Nonfinancial Companies and enterprises. The second question is about the date. We had a brief exchange on that. Asverning council is you might have seen, we move into this fall on when these decisions will be taken because ,he decisions are many, complex and always one of the naturally things about may materialize in the coming weeks or months. So that is the caution about specifying the date. Of thesethe bulk decisions will be taken in october. Thank you very much. , when you decide about the future of your program, what are what of your personal preference . Would you communicate a roadmap or at the next step ahead . For example, in the past you said youve reduced the monthly purchases by 20 billion. For the next six months. Then you will brief us again a couple months later, or would you say expect to reduce it by 20 months for 20 billion now and then again after a few months by another 20 billion . I was asking what your personal preferences, if you have one. Mr. Draghi i dont. Ok. The second question is there seems to be when people discuss the future of your program, very often the potential scarcity is mentioned. People think you might exit not because the inflation is ready, but because there is nothing left to buy. Have you discussed at all changing the rules of the program just to convince markets you can do more if you want to, just to dispel these once and for all . Mr. Draghi we have not discussed really the scarcity issue because so far we have ween plenty of evidence that are never by the way these programs were present at the very beginning of our program and we have consistently shown we have been able to cope with this issue quite successfully. Remember, the change allowing the purchases below the dfr and facility rate and below the oneyear maturity considerably expands the eligible universe of our program , giving it more flexibility. Im pretty confident that when the policy decisions time comes, who is going to be able to exploit all the communities in the program has in its construction. Some scientists wonder if the ecb runs the risk of falling behind curve because markets have been expecting a deficient for some time now, is it your task to clarify the road ahead and to stabilize expectations rather than to leave it until the very last second . Expectations are not destabilize it all in my view. In any event i think policy decisions that have many dimensions are complex, and they need time to be taken any reasonable consensus to be , fallaken and as i said of the date that is been announced and as i said before, probably unless a risk that is not seen today materializes, we should be ready to take the bulk of this decision in october. Thank you. My first question is, do you take national or member state political situations into consideration when you are concerning what to announce . When to announce a policy like the taper . Mr. Draghi my program is a program that is been designed in order to pursue, in order to implement our mandate. Our mandate is the pursuing of price stability for the whole of the eurozone. Whatis sense, that is determines the size, the design, the composition of our program. Not national and specific national interest. One can actually explained very clearly that whenever one has sort of appeared, when people seem to say you bought more bonds. It is happen because of temporary technical factors that have been corrected in the subsequent months and weeks. It is due to liquidity considerations and the Investment Program. So the answer is no. I was thinking more about the german election in a couple of weeks. You would like to take the money from the maturing the bond use that in buying program. Will it be used exclusively for that . Mr. Draghi we said that we foresee a reInvestment Program, more andwill become more sizable, of course, as our qe program has continued now for years, so the Investment Program will become sizable and will continue. , we will use it for that purpose to reinvest in bing bon in bonds. First of all, congratulations for your birthday, belated. I hope you had a nice sunday. Two questions. Ting with one on the looking at the capital key, for august, it says you have over proportionately italian and french bonds. Buy the otherso that were under proportion a lot more in the coming months . On second question would be what we have heard from a couple of thing ceos, supplying they were warning of potential bubbles in markets. How concerned are you about them . They were attributing those bubbles to the Monetary Policy stance worldwide. Thank you. Mr. Draghi on your first question, as i said, there are temporary deviations. There have always been temporary deviations from the capital key. Sometimes countries do not participate in the qe program, greece and cyprus. There is no surprise there. There will always be deviations from the p from the capital key. You have tight liquidity conditions in one market, you just slow down purchases. Times ofre are natural the year, like august and a again in december, so it is when you slow down with purchases. So these dvd is should and so these deviations do not indicate that. On the potential Financial Stability risk stemming from monetary policies that are very accommodative for a long time, it certainly is a danger. Now . O we see that no, we do not see systemic danger coming from bubbles. There are various markets, stock market, bond market, prime commercial real estate is the only area where you actually see stretched evaluations come a but even in residential real estate, you see situations where prices have been going up pretty fast in some large cities and some large countries, but not on average, not on other cities in the same countries or in other countries at the same speed. Having said that, if these bubbles another important consideration to make is even though we see stretched valuations in some markets, as i mentioned with the commercial and real estate market, we do not see another component of a thele which accompanied crisis, precrisis times, mainly an increase in leverage. We see that credit remains pretty subdued across the board. Also, one has to consider that where we are to see such beuations, the answer should ando prudential instruments not changes in Monetary Policy. As far as the issues have been raised in this conference. Thank you. Is it possible that at some point in the future, you could widen the type of assets that you buy under your program, even as you pare it back . Second question, on the question of Global Investment banks wanting to come to places like frankfurt after britain leaves the european union, what steps do you think supervisors need to take to ensure that they are under close supervision . Of course, big investment banks bring big risks. Mr. Draghi the first question was not discussed, so i am not in position to comment on that. , i willecond question let my colleague answer. It is very simple. Mechanismupervisory is prepared to deal with those type of institutions. That already exists in the euro area. Specifically from that development. He mr. President , if t whatnge rate is uncertain, can you really do about it if it continues and if there are overshootings . And how it relates to that, the ecb is in a period of high uncertainty about its Monetary Policy. Other Central Banks, for example in norway or sweden, try to reqs uncertainty by publishing also forecast on recuset rates try to uncertainty by publishing forecasts on Interest Rates. Why dont you . Mr. Draghi recent volatility in the Exchange Rate prisons is worse of uncertainty which requires monitoring with regard to possible implications for the mediumterm outlook for price stability. Another sentence says this autumn, we will decide on the calibration of our policies beyond the end of the year, taking into account the financial conditions needed for a sustained return of inflation rates towards levels that are below but close to 2 . That says all. On the second point, i do not think we are in a period of high uncertainty. I think we are in a period where we are starting on what to do next year. Let me add that these changes published are not new. They were made several years ago, as a matter of fact. If they have been very successful in helping the central bank to get out of the uncertainty. If the uncertainty is the element and the metrics, sometimes they have been successful, sometimes judged not as successful. So we have to be extremely cautious. Projections are produced, the way they are ourunicated all communication is the result of many, many years and the work of many, many people. From our history, from our experience, from other central bank examples, as well. But it is not something you can go lightly with trying experiments. This issue, by the way, had been discussed by my predecessor, the one human to and about, bank of sweden, bank of norway, at that time the one you mentioned about, the bank of sweden, the bank of norway, at that time. President , as president of the ecb, you cannot say which is the current level of the Exchange Rate. Rateask when the exchange can become a problem, what is your answer . Mr. Draghi i will not comment on levels of the Exchange Rate. Left University Many years ago, more than i want to remember. I am with a french newspaper. What is the Exchange Rate you t ook for these projections, for the protections . Also, quickly explain why you to announce the bulk of the decisions or to take the bulk of the decisions in october and why not in december since you may have new hindsight on growth and inflection rejections then . Mr. Draghi the answer to the second question is really we will announce when we are ready. We think we will be ready for much of what we have to decide by october. But as i said, the council is kind of reluctant to commit to a precise date. Ready ins we should be october, but if we are not, we postponed the sense is we should be ready in october, but if we are not, we postpone. Right now, judging from the way the work is going, we should be ready when i said. Rate that was used in the 1. 18 withs is around the u. S. Dollar. Know, the exchange treated in the projections all the time as a constant. And the cut off date of the projections is the one that is inserted and considered again in projections. Thank you. Seems toi, the euro still be trading above the rate which you just referenced, the 1. 18 rate, just by your comments. Does that concern you at all . For my second question, there seems to be a little bit of a change in the way people are perceiving the ecbs reaction and chances are increasingly better that you will leave Interest Rates unchanged until 2019. One of the reasons that there are concerns that you will run out of assets to buy and that on buying is more something you do to fight deflation and boost growth, rather than fully return conditions to normal. I guess my second question is, would you broadly agree with interestssment, that rates become the prime retool . Mr. Draghi i am not in the position to say that because we have not discussed the first part, the actual numbers for with the app program is going to be next year. We one thing i said is that expect the Interest Rates to remain at their present levels of timextended period and will past the horizon of our net asset purchases. I agree with that. About the interest look, the Exchange Rate, were talking around 1. 18,oughly and it was august 14. We will have to see. I am told it is 1. 20. I do not comment on those levels anyway. [laughter] two questions. You mentioned the reform of the eurozone, but there are many ideas about this, especially about the ministry of finance. Theyre a very different ideas from france or from germany there are very different ideas from france, from germany, about the power in the Balance Sheets of the countries and if they should be a budget for growth and so on. There are many ideas about reform. What is your idea about the eurozone and how it should be . There is astion is discussion among economists about the risk of a low inflation era, because the growth is robust, unemployment is going down, and there is much liquidity in the markets, but still, the inflation is very weak. About ae be prepared low inflation era . Mr. Draghi no, the important aspect of the current discussion, first question, the european Monetary Union, the Member States have realized how incomplete our Monetary Union is at the present time and how such incompleteness has made the crisis that we are just coming it of more serious than would have otherwise been. To be welcome, the fact that the Member States you see, the task to discuss and design, the reform of the Monetary Union, it is not the ecbs task, it is the Member States task. But it is welcome that they start this discussion. It is going to be a complex discussion that will take place in the coming months. Readyb, of course, stands to help in this discussion, but were not party of this. The second question, should we be resigned to lowinflation . The answer is absolutely no. That inflationes is now will eventually convert. What makes us confident that this happens . Two factors. First, the fact that we keep in place the very accommodative or the extraordinary degree of monetary accommodation. And the second is the broad, robust, solid recovery that we see across countries and across sectors now. This recovery is having a profound effect on the labor market. I mentioned before the number of jobs being created since 2015, 6 million. There are many other indicators i have given on other occasions showing the strength of this recovery that also now touch upon investment and the strength of consumption. This recovery gradually will close, is actually closing the output gap. It will gradually close the labor markets lack. Market lack is turning out to be bigger than was previous estimated. And nominal wages, the primary driver of inflation, are also lagging behind what one would have expected from such strong recovery across the board. They are lagging behind for a variety of reasons. I have discussed this on another occasion, and some of you were there when i gave a speech on that. Negotiationswith and the trade union strategy, mostly about stabilizing the job, rather than going for wage increases, but other factors that the global value chain and supplier factors. There are lots of these factors. Some of these factors will disappear quickly. First. Ll disappear some others will stay for a longer time. But there is no question that the ongoing recovery, in the end, the inflation rate will converge in the way we want, mainly in a durable fashion and based on a selfsustained path where there is no need for our Monetary Policy any longer. So confidence, patience, because we have to be patient for that, and persistence, however, that is very important. Not change the definition because we do not reach the target or lose confidence in our Monetary Policy. That is the answer. Estonia is a euros and country. A eurozone the Monetary Policy think about the currency . Currencyt a parallel could be introduced as a tax credit. What is your opinion . Not commenti will on the italian intention, but i will comment on the estonian decision. No member state can introduce its own currency. The currency of the eurozone is the euro. Thank you. Eurozone might enjoy a growth rate this year of 2. 8 , the highest growth rate we since 2007. I would say the situation today is much better than 2007, better than 2010 or 2012, but still, the Monetary Policy is more loose than during the financial crisis. That is hard to understand. Maybe you can try to explain it to me. Mr. Draghi yeah, first of all, basedve a growth recovery where growth is solid and robust across countries and sectors. Still a big labor market slack the needs to be filled. We do not have a dual mandate like the fed where we can look at conditions of unemployment and the labor market. We only have one mandate, price stability. Price stability for us is defined as a level of inflation that is close but below 2 , which should be reached in a selfsustained and durable fashion. We are not there yet. The governing council wants to get there. And there is nothing that will derail its will to get there. Way, this anxiety should be also based on facts because, so far, everybody has benefited greatly from this Monetary Policy, all countries. Angst, banks, so this so far, has no evidence that could justify it. Thank you. Questions, one on the qe. The minutes of the last meeting, there was an interesting sentence saying it was suggested that there was slow effects of asset purchases to be considered. Was this discussed today . And what doesnt mean when the level of Monetary Policy stance mean stake what does it when the level of Monetary Policy stance is at stake . Stoxx and slow fx could maybe have importance. France and the macron presidency, aiming to liberalize the labor market. Created, butjobs they could be lowpaid. This reform [indiscernible] important at good for any country in the eurozone, but that means maybe macron will make this reform in case the to makes it much harder achieve than it is already did what do you think . Mr. Draghi the first question, we did not have discussion of lows. S versus f on the second question, we have full confidence of the french government knows what to do to undertake the needed structural reforms. And a mixed and amongst the targets and reforms the labor market had, whether they achieve that are not is another issue, but there is the elimination of dualism and the labor market. One lesson we learned from the jobss was that all the ated in some countries disappeared with the crisis, and they were the first jobs to disappear. In early 2000s, some jobs created or passed legislation which allowed the new entrance ifthe labor markets only they were based on labor contracts that were very, very flexible with respect to the ones that were already in the market, the alreadyemployed. This way, between 2000 and 2006, millions of jobs are created in some of these countries. And by 2008, most of these jobs had gone. The crisis destroyed all of them. The way, the flex ability introduced failed disproportionately on the young sectors of the working population. So i think this is being well understood by everybody, and all responsible labor markets should aim at decreasing or even emanating this dualism or eliminating this dualism. Thank you. My first question on inflation onlyd 2019, you will publish protection projections for 2020 in december. Erm and priceium tu stability definition does not just mean two years. Can you give us your expectations for 2020 . Will it be higher than 1. 5 . We expect an announcement on the Balance Sheet reduction from the fed at its next meeting. Do you see a risk that if the fed reduces the Balance Sheet . Or 2018, you taper some mr. Draghi with respect to the second question, really, we do , our mandate is defined on the business of our jurisdiction. So what other jurisdictions, especially large jurisdictions, it is certainly part of our Information Set, but it does not affect our Monetary Policy strategies other than a source of information. Also, we have to see what this will imply for Interest Rates and for financing conditions in general. Then, if anything, that may be part of our Information Set that defines our Monetary Policy. But i would be sort of cautious that we playng strategic games between us. My expectation, of course, in inflation rate will converge to our objective, but we did not discuss it today. Thank you. Jack ewing, new york times. You mentioned that there was a discussion about whether the currency fell until it is due to exogenous factors for internal. Actors i wanted to get some flavor of that discussion, if there was any consensus on how much is temporary geopolitical factors and how much might be sort of permanent euro zone fundamentals . Second question is you said that most of the decisions will probably be taken in october i am paraphrasing you. That suggests that you have in your head a certain set of decisions that have to be made. I wonder if you could just give us a little bit of detail on what those decisions are. Thank you. Been listening to ecb president mario draghi and frankfurt. I am related to welcome a man who knows the ecb and frankfurt ,ell, bloombergs matt miller all the way from berlin. Matt pleasured to be here, especially on such an exciting day for the ecb meeting and also globally as assets are moving around for a number of reasons. We are moments away from the bell. Opened. , it has already lets look at the live trade and go down to Abigail Doolittle. Abigail looking at very small gains for major averages. Rebound,r yesterdays the big pullback we had on tuesday. Netnet on the week, were looking at declines on the major averages. So much that investors are trying to contend with, geopolitical tensions, d. C. , central bankers, and hurricanes. Overall, looking at weekly declines. Right now just small gains. I mentioned hurricanes. We have some movers on the open on both Hurricane Harvey and Hurricane Irma. Avis and hurts are trading higher. Are tradinghertz higher. Says this is based on better demand for rental cars , and we are to see tighter fleets and better for pricing. We could see more of that dynamic. About. 75 . Is down they are not writing new policies for cars in certain counties in florida ahead of the devastatingof effects from the hurricane. We will be watching insurance companies, those affected by both Hurricane Harvey and irma. 1958, a year to date chart. It is the stoxx 600 if you bought in euros versus if you bought and dollars. The strength of the euro is making that decline less. If you bought and dollars, you are looking at an 18 return. Interesting that the dollar weakness is helping the returns for european stock buying. David thank you. It is hard to know where to start with so much news. By aore, were joined European Equity strategist at j. P. Morgan in london. In minneapolis, jim paulsen. Right here in new york, oliver renick. Jim, react some to the ecb. We just watched this News Conference. Mario draghi seemed to be dovish, but he warned that he is concerned about some things. What is the message the markets took away from what he had to say . Jim a couple thoughts i have to throw out. I think the approach that the ecb has will be similar to the fed in this regard. Going through the 2008 crisis, having a secondary recession in thinkrozone after that, i they landed on something that has worked. I think odds are they are going to stay with that longer, rather than a short of period of time. The fed still has a crisis policy in place in the United States, even though we have not had a prices for a long time. I think the eurozone will stay longer, as well. He talks about the effect the ecb does not have a double mandate, like the fed, just focused on price stability, but i think in reality, they certainly do have a double mandate. They are very concerned, whether that is official or not, about the elevated levels of employment. I think they will continue to unlessles Inflation Inflation gets wildly out of control. On the currency, it has gotten a lot of attention, breaking 1. 20, but for me, i do not know if there is much policy illegals can do about this. I think this move in the currency is more about the reestablishment of growth in the world, particularly in the eurozone, relative to the United States. The u. S. Is only growing in the world, the currency accelerates lateral to everyone else, but you cannot continue to price the euro close to parity with the dollar when the eurozone is not going as much as the United States here it so i do not know if you change Monetary Policy. I do not know if it affects it much. I think the euro is correcting for a change and growth rates that is reestablished in the eurozone. En, you are in europe. What is the likely effect in europe for investors and the equity markets . Think the take away from this press Conference Today speaking in europe, and that is what we want to be focused on. Yes, the currency has been sort of a headwind, especially for domestic investors, not so much for u. S. Investors. But we believe this is just a reflection of this trend. Mr. Draghi pointed to that today. We do not feel the press conference necessarily change anything. We think european equities are still a great place to be at this point, especially because of the earnings we have seen. It is almost second to none globally. Yes, the currency has been a headwind, but we think it is justified with the domestic strength of the economy and Global Growth in general, which remains supportive. Matt it has been great, obviously, european stocks have been great for u. S. Investors because of the strength of the euro, but they have been really lackluster and have fallen, probably due to the strength of the euro. Do you expect that to continue . Julien i think we just went through a phase of adjustment. The market was not really ready to see the euro rallying that much. Going forward, the adjustment will probably be much more muted. Investors will realize that we are not seeing any sort of impact on the actual economy. Mr. Draghi said the indicator we have, there is no sort of impact on demand for eurozone companies. So we are back to the fundamentals. Goefully we are going to back into an environment where european equities can start , in locals well currency. Matt we have seen dollar weakness, oliver. It continues today here at does that mean for the euro, europe stocks, relationship . Oliver i think it is some interest in a trade that involves money coming back into the u. S. Stock if the dollar gets strength. While you might have a lot of strategist talking about how the can benefit a lot of these companies, i think investors want to see upward trajectory for rates in the u. S. And upward trajectory for the economy, and that will be reflected in the rates of the dollar, as well. There has also been a pretty dramatic outflow from u. S. Equities into equities around the world as investors try to shape perceived value. The idea that they could potentially come back is interesting. However, given what we have seen today from draghi and what we have heard from the ecb, that it will be standing pat for the time being, that could probably keep valuations lofty for the for seeable future. Autumn line, as long as you have bondbuying happening around the world bottom line, as long as you have bondbuying happening around the world, it keeps rates low. This tells the story, this is the yield on the earnings for s p, which is in the white, moving downward as valuations move higher. And here is the dividend in the yellow. As soon as the seat closer, the value added being the equity market is hard to turn down, whether looking at earnings yield or dividend yields. David how do you see the close between the equity markets in the u. K. In europe and United States . Where is it going . I think they are an interesting part of the market on both sides of the atlantic. Be for european equities right now for us. But in the u. S. Market, if we get back into the idea of discussing potential or form and things like that, the u. S. Market remains strong in terms , very stable, and that is something investors may the paying attention to. See moderation. But the position is interesting for us, the technology sector, and that is where you get most of the exposure if you look across the world. Slightly different for european equities, but we are not shying away from the u. S. Market where we do believe we could see a potential surprise into next year. Matt Julien Lafargue of jpmorgan, thank you. Oliver renick here on set. ,im paulsen of Leuthold Group youre going to stay with us. I want to look at some of the big asset moves we have seen during draghis speech and then after. 7 . Ee the euro move up it is really dramatic if you look at the oneday chart of any of these. A gain also for the pound as we see dollar weakness for the sixth day in a row. And we are looking at some of the u. S. Stocks and harver eyirma movers. The s p in the green. Orange juice futures were down 3 this morning but now are up 3 . There is concern about damage coming to florida from irma. Gas up right now, futures gaining a little bit. They got hit so hard because of concern of lack of demand for the ac business in florida. 1342. 06ight dollars, a troy ounce. This is bloomberg. Taylor this is bloomberg daybreak. Fusco, shouldk haneer Energy Chairman and ceo. David first, donald trump made us apprised it would democrats yesterday for Hurricane Relief bill. The move undercuts yield he leaders in the president s treasury secretary Steve Mnuchin. Joining us with more on Congress Reaction is Bloomberg News chief washington. Orrespondent Kevin Cirilli this was news yesterday at how did republicans react to what the president had to say. Kevin i spoke with mark meadows , who is in route to the white house right now to meet with the president s top policy advisers in order to discuss what he described as a deal with democrat fingerprints all over it. Listen to what he had to tell me. Sets up in december, right before christmas, which is certainly not good. But it does show, and you always look for a silver lining, in this article or thing, it shows that the president is myopically on tax reform. Kevin we spoke with other members of the Freedom Caucus earlier this morning, and they went on to raise questions about Republican Leadership and whether or not they are best policyto deal with these agenda items that they campaigned on. David is this new bipartisanship breaking out all over washington . Kevin when you look at where this is headed, there will be a lot of political fireworks in december in terms of debt limit, and passing a government funding bill. Look for the wall to be tied with daca. David you can see his full interview at the top of the next hour on bloomberg markets. The thing that triggered the surprising deal President Trump made with democrats was the need to get relief to those affected by Hurricane Harvey s quickly as possible. Ason kelly is down in houston welcome back, jason. Jason we have been running around houston here, and housing is on the minds of everyone, in part because there are still some houses that have feet of water in them. But the rest of the city is trying to get back to business, trying to figure out if they can get back into their homes or if they are going to have to find new places to live. I spoke yesterday with the ceo the largestne of Apartment Developers here, and he talked about how harvey really changed his business dramatically, almost overnight. We use the dynamic pricing model that is based on supply and demand dynamics, and we basically had to turn it off. When you have a massive influx supply,d and limited the price spikes, and it definitely spiked are medically. So we turned it off and froze all of our prices for everything, renewals and new leases, at preharvey pricing. Jason david, that is a pretty dramatic move by a housing developer, as you can imagine. There was a big concern the pricing would spike and people would have trouble affording a new place to live, so that is a big move in houston. Matt jason, matt miller here in the studio. I wonder what youre hearing from people as two ideas they have for the money that will be coming shortly from congress. And also about any concerns that that will have to flow over to florida now in case irma hits in a bad way there. Those are the two biggest concerns that you just hit on, matt. In terms of where the money will go, a lot of the focus is on the west side of town, sort of way he high me here, where the water is still standing. So there is a lot of rescue that has toelief happen out that way, partly due to the release of some reservoirs so that the dams would not break and further flood the city. Hugeecond concern is a one. I spoke to a Harris County judge yesterday, and he is worried about what irma could mean for divers and of resources and attention here and texas. Matt jason kelly, bloomberg tv executive editor down in houston. Thank you. Were back with jim paulsen, Leuthold Groups chief investment strategist. Jim, it is always difficult to talk about these tragedies because of the high human cost in the same breath as investment because it seems callous, but we see asset price movements here. Where do you go when you see Something Like harvey hitting and then irma coming in three other hurricanes coming up . Jim yeah, matt, it is worrisome, no doubt. I do think we will see what happens with the other ones coming. Is as far as harvey concerned, certainly we will see the data hit. We are already seeing it this morning with the unemployment claims numbers surging, a lot coming from texas. I think the market will largely get through that though, because we will have a ton of money coming here very soon, directed to rebuild efforts, almost like a fiscal stimulus. As you go into next year, that will be a netnet positive. I think the more important thing , which i think people should focus on more, is how much stimulus is being dumped on the economy, not from relief efforts. In other words, what we have done here since yearend, and we have accelerated it since harvey, is we have had a significant Economic Policy stimulus in the form of a lower dollar and a 50 to 60 basis point drop in longterm yields. That is some powerful stimulus we are continuing to bring to the economy that i think will lead to a neck seller asian and growth in the United States, despite the fact that we have some negatives coming from the Economic Impact of these hurricanes. I think the surprising effect could be that Economic Growth and inflation pressures even intensify over the next six to nine months as a result of the stimulus from the dollar and lower yields. Matt i want to show bloomberg users a function on the, checking the hurricanes. You see irma approaching florida, and then you see jose next to it. And katia at the gulf of mexico. News, ae have breaking nomination for vice chair of banking supervision at the fed, advancing from the senate committee. It will go to the full sun that now for approval. This is not a huge shock. People agree he is wellqualified to serve. This is the day after Stanley Fischer announced he is stepping down. To watch us online, look at charts and graphics, and interact with us directly. This is bloomberg. David we have breaking news. The fed, and in the administration is one step forward in filling once locked by Randy Quarles. He was voted out of committee, 706. It will go to the full senate. We heard that moisture Stanley Fischer will leave in midoctober we heard that vice chair Stanley Fischer will leave in midoctober. Our to sort this out is bloomberg fed reporter. Matt here we are back from summer vacation, and stuff is finally moving. We have Randy Quarles now advancing through the Senate Confirmation process. Stanley fischer stepping down is sooner than most expected, but he was probably going to be gone by june of next year anyway. And we have the news about gary cohn now unlikely to succeed janet yellen as fed chair. David we have one report, so we do not know if that is right. Matt corrects. It was a wall street journal report. Don if it is accurate, we not know if president trouble change his mind down the road. We probably have three months in the apprenticestyle drama. Matt who else would be in the running . B this is the interesting thing about this story. The other names being floated are these conservative, traditional republican economists. On the other hand, i think there is a strong presumption the President Trump probably want to go with someone more dovish because he has made comments about how he is like a weak dollar, low Interest Rates kind of person. It is quite dramatic at the moment. To have to wonder, you know, the extent that there are conservative economists on the staff and the white house kind of directing this process, at what point does President Trump stepped in and get more involved and we see some the different . David is an gary cohn largely directing the process . B he is right there in the mix. That is another good point. Matt getting vetted and getting confirmed, that is difficult. Are evolving relationships between the president and the republicans on the hill after yesterday. Thanks for being here. Matt lets get a quick check on markets. This is the currency. After the ecbd meeting, even though mario draghi appeared to be a little bit dovish. Stocks gaining for a second day but not huge gains. That is it for daybreak. This is bloomberg. P. M. In london, 10 p. M. In hong kong. Mark welcome to bloomberg. Kets julie here are the top stories were covering from the bloomberg and around the world. Euro draghi says volatility is a source of uncertainty as he opens the door to start winding down qe. What do traders think of this somewhat dovish sign . President trump sized with democrats on a shortterm debt deal. What are the further points on getting significant legislation through . Mark meadows ways in. And Hurricane Irma has already hit the caribbean and its on his way to florida. We will look at the potential impact on everything from insurers to commodities like orange juice. 30 minutes into the trading day and Abigail Doolittle is here