Regionally. Investors look to a News Conference this morning from. Ario draghi the European Central bank kept its Interest Rates unchanged and traders and investors are waiting to see if draghi signals a willingness for more quantitative easing. We are one day away from that august labor report. Lets get you started with the five things you need to know this morning. Matt miller is here, watching the markets. I think we ought to begin with the ecb. I mentioned the ecb held steady as expected. Draghi has the opportunity to make news this morning. He will be asked about quantitative easing. Asked about the inflation outlook, about china and global markets. Lets find out from ons nichols what the world expects. Hans i was in frank for yesterday at a big banking conference. Everyone is wondering what is going to happen in terms of quantitative easing. Is mario draghi going to hint it could be longer . September 2016, that is when it is expected to end. When we get these predictions for the Global Outlook for the economy for 2015 and going forward, if we get those in about 30 minutes time and they show that inflation has been disappointing to the downside, that it is not at that. 03 they aghi will be asked about the effectiveness of quantitative easing. I think i am most interested in what he has to say about quantitative easing. He is not going to way too much into china. He is not going to be a market commentator that he could indicate whether or not he thinks they need to tweak quantitative easing. Erik one of the things im wondering is whether he will be asked for some kind of report card on the quantitative easing strategy the ecb pursued over the summer. They frontloaded quantitative easing because they knew trading would be thin going into the month of august, particularly in europe. August turned out to be as volatile as we have seen since 2011. Hans the argument that a lot of traders want at their desks that traders were not at their desks in august was not quite true because we did have unusual august. There will be a report card on quantitative easing. Two weeks ago we got gdp figures. We saw the same old diverse story. We saw some resilience in germany and spain. We had that surprise figure where greece went up. We saw flatlining in france and the question is, is quantitative easing effective . What can draghi do to talk down the euro . Will there be talk of parity once again . In the beginning part of the summer, we were talking euro parity. We are closer to 112, 113. Erik 105 seems a long way away. Hans nichols is in berlin. We will see you in about half an hour. Warning thatn is bank revenue, International Investment bank revenue is down 19 partly because of china. I know mario draghi is not focused solely on rich people in stock markets but that is an important part of what any central bank is looking at. Erik what is number two . Matt the International Monetary fund maintains Global Growth will remain moderate but the Downside Risks have increased. Turmoil. Ce shifts and a further strengthening of the u. S. Dollar in the lower growth in china. Hitting all the right notes ahead of a meeting coming up september 4 and fifth. The fed meeting Christine Lagarde and the imf are hoping to influence more than this. They have come out and said do not raise rates. Erik the imf wants monetary conditions to be as easy as possible in part because it knows that there is almost no willingness outside of china perhaps to undertake fiscal steps to stimulate economies. Matt props to china. I like that. Erik lets move on to number three. Pimco. It once ran the Worlds Largest mutual fund. Total return fund. Assets in the total return fund continue to dwindle. Falling below 100 billion for the first time in more than eight years after almost 100 million one of withdrawals in august leaving pimco with about a third of the money and managed at its 2013 matt 293 billion at its peak. Erik thats when bill gross ran the total returns. Matt 28 consecutive months of outflows. They have been losing money. Erik this is still the bill gross affect. Pimco is an institutional money manager more than it is a retail money manager. Institutional flows are slow to respond to developments like bill gross departure. Many of the reviews that Money Managers were forced to undertake after gross left are just now, over the past few months, resulting in the kinds of decisions to reallocate from pimco to western Asset Management or blackrock or j. P. Morgan Asset Management. Matt time to take action at twitter. In the three months since the Company Started searching for a new ceo, the slot the stock has slid and several executives have left. TheBoard Meeting to discuss results of a search they should have done before dick costolo actually left. Erik will dorsey have shaved for this meeting . Matt i dont believe he will have shaved. The twitter board wants a fully committed ceo. Basically, they do not want jack dorsey running square and twitter. Just because he is young and has a Silicon Valley beard, he cannot run two companies . Sergio runs like 18 company successfully. Been also paypal. The ceo ran both his misses without a problem. Erik converging views from the worlds biggest mining companies. Rio tinto says it is maintaining. N outlook reaffirming its forecast that a week ago, bhp billiton trimmed its forecast. Demand is getting tricky to call. I think blazon berg probably nailed it. Difficult to figure out what is going on in china right now. Lets move to our top stories. Heres vonnie quinn. Vonnie china marks the 70th anniversary of the end of world war ii by announcing the biggest military cuts in a most two desk decades. Thesident says he was 2. 3 million soldiers on duty. Stephen engle is in beijing. Im reporting outside of Tiananmen Square in the heart of beijing where the victory day parade is rolling by. Here we have the tanks and artillery of the Peoples Liberation army as they thlebrate the 70 anniversary of the end of world war ii. This is the president s opportunity to show his grip on the military and to show unity to the chinese people. Bathing thiso parade in nationalistic tone, hes sending a message to the world and the region that china is a unified power and that it will be a force to be reckoned with. Expected toa is overhaul its military and put it under a unified command. The political crisis in guatemala. The president president molina has offered to resign. In aedly involved with bribery scandal. Congressional leaders are meeting in emergency session to discuss the offer. The Republican National committee has issued a challenge , apparently aimed at donald trump. Our reports the rnc has asked the republican candidates to promise they would not run as a thirdparty candidate. Last month, trump threatened to launch a thirdparty bid if you does not win the nomination. The county clerk from kentucky who refuses to issue marriage licenses to samesex couples will be in federal court today. Kim davis could face contempt of court charges. Davis argues that her faith will not permit her to issue licenses. Serena williams is one step closer to her goal of winning all four grand slam events in one year. Her secondround match. She struggled before winning. Seconden seed won his match. Dance with ang a fan out of the stands. Erik thank you very much. Is the fed going to hike rates on september 17 . You will get different opinions, just usually not inside the same firm. That is what we find at deutsche bank. The team is calling for a september mood move. sis is bill Murray Ghostbusters you. Cats and dogs living together. s global head of rates research. Dominic good morning. Erik are you the cat or the dog . Dominic im not sure which. We are not as far apart as you might think. What is most top of mind for janet yellen and colleagues at the fed . Dominic that is where i am slightly different from a lot of people. I think yellen is trying to convince us everything is fine because it is all driven by expectations. The biggest fear that she never wants to talk about is that inflation is too low. It will not get to their targets and it could fall. They dont want you to know that because that in itself will feed that outcome. Erik will we get a window into that kind of thinking when we hear from draghi today . Dominic i think so. I think you had a window at jackson hole. Markets. In the they dont want that to get into the economy and he will see more of that. That means if they if the fed does decide to raise rates in the september meeting, they will have to be very careful how they do it. They clearly cant make it appear to be a big policy error. Was yesterday, bill gross out with his monthly Investment Outlook saying too little, too late. If the fed moves toward five basis points, does it matter . The real window of opportunity was earlier in the year. Dominic i dont think there has been an opportunity to raise rates. Unless they try and do this incredible feat of convincing the markets it is a one and done for the perceivable future. Anyone who is lived through tightening by the fed knows to convince markets of one and done erik you have lived through tightening cycles. Are lots of people that not seen the fed tight never. Is they willdanger go in thinking, they have done one and two and not do another one for a long time. Other speculators will test the fed and say, these guys have raised in september, why will they not go in december . Before you know it you have trading off a 50 basis points. Erik are those the bond vigilantes . Dominic some people will test it. Once the fed gets off zero you know theyre in the process of normalizing. Itll be hard to convince markets they are one and done. Erik we will take a break and come back and finish our conversation. Dominic konstam. We will be taking you to frankford where mario draghi will be talking about Monetary Policy. The ecb held steady on its Interest Rates but we want to know what drug he has to say about what draghi have to say about quantitative easing. Stay with us. Rik you are on Market Makers some items you want to put on your calendar. And it shall jobless claims and the Monthly Trade balance will be out. A 30, mario draghi begins his News Conference. Twitter is meeting to discuss the ceo search. Stuck down since the search began. Dominic konstam. He is head of local rates research. At deutsche bank. Gross Investment Outlook came out yesterday. I want to quote from something he said about where to position oneself as a fixed income investor. Bill gross i think feels differently than you do. He says h private equity and hedge related returns cannot long prosper if Global Growth remains any make. Near cash such as one to twoyear Corporate Bonds are my best idea of appropriate risk reward investment o. You feel differently. Dominic i think i agree with the idea that we are going to a difficult period now. I would include longer duration Corporate Bonds. When i think about duration i think about treasuries and long dated treasuries. Erik i should add he has felt that way for some time. He is been at the short end of the curve in corporate and agencies for a while. Dominic in the long run, it does not make sense. Carefulu have to be over the next six months or so if theres any kind of , the marketrisk will rally and we will have a lot of flattening pressure coming through. On a sixmonth view looking for things to change, to be more constant that you can be short duration. Erik what would trigger that slide to quality . Has china yet to be resolved . Is it going to be a devaluation in china markets are not expecting . The fed and whether or not the fed can manage this sort of one off tightening no one cares about or no tightening which would be perhaps better. Allow assets to find some footing. Erik you talk about the risk and risk assets. Do you believe we have seen a widening in Corporate Bond spreads, more so in highyield. Do you believe they will at current spreads remain anchored to the longer end of the Treasury Curve or are they going to widen further . Dominic i would be defensive. Worried they would widen further. The reason is, the tight spreads we have seen in recent past has been based on a valuation metric. It is not based on a fundamental earnings outlook being brilliant. If you get any combination of china and the fed doing the wrong thing, that could deteriorate. You end up having to cheapen them up for that reason. Erik to what degree are developed its in emerging markets in china and outside china influencing the direction of rates globally right now . Clearly the emerging markets are in recession and they have been the biggest part of Global Growth. There is a flight to quality and concern about emerging markets that keeps yields lower. There is a counterforce. Some are worried the selling of a treasuries as part of intervention undermines the treasury market itself. Historically, that is not true. The global liquidity issues dominate. All the stuff these banks are selling, short dated. Erik great having you here. Dominic konstam, head of research at deutsche bank. Coming up, how successful donald trump has really been. The only way to get better is to challenge yourself, and thats what were doing at xfinity. We are challenging ourselves to improve every aspect of your experience. And this includes our commitment to being on time. Every time. Thats why if were ever late for an appointment, well credit your account 20. Its our promise to you. Were doing everything we can to give you the best experience possible. Because we should fit into your life. Not the other way around. Erik you ask Index Futures are pointing to a higher open. Yesterday, recovering much of the ground that we lost earlier this week. Mario draghi, the ecb president against a News Conference at 8 30 this morning. We will be taking you to draghi. In the meantime, i want to talk about donald trump. When asked to name a leader he looks to most for advice on managing his campaign, trump said i look at me. How successful has trump in what it comes to managing people and businesses . Max abelson spent some time with trump and his cohorts in has a view to share with us. Max i was not asking about his campaign. I was asking about managing his company. Erik im saying its important to know those things if you want to evaluate trump. Max i know what you mean. We went in, we dove into his business world. I spent time with these deputies. His former bodyguard is his chief operating officer. He has got his kids. There was a teenage waitress he met who is now the head of marketing. It is this Amazing Group of people. Erik what did you learn . Max to be honest, i think people have two cliches with mythic about donald trump. Erik only two . Max here are the central ones i had. The one extreme is this idea he is a fraud that he plays a businessman on tv but he is not a reallife businessman. Erik and that is not true. Max on the other hand, this idea as the biggest celebration new york city, things that come from biggest developer in new york city. Things that come from him. What was fun for me, hed knowledge is that is true. He talked about how his company has pivoted and it has changed from being a company that puts up skyscrapers to being a landlord and this golf bigwig. Erik trump seems to have learned the same lesson folks like, i do not want to equate them, that Rush Limbaugh learned. The more you say something, even if it is not true, the more people believe it is. Max that is a profound american reality. On the other hand, i will say Rush Limbaugh i was about to say Rush Limbaugh is not a businessman in the same sense trump is. He probably has a real company. Donald trump has put up huge buildings. In chicago and las vegas he owned parts of buildings that came up. They both opened in 2008. He has struggled in the last decade when he is put up buildings. Erik he has made some good trades overtime. Max when i was with him erik he has actually made a few good deals. Max there is no way to deny. The fact that he fell so low but he managed he did not go bankrupt. He managed to rise up and transform. Erik what were you able to draw away from the experience you had with him and his people that might give all of us a sense of how he would operate if elected to office . Max the thing that kept coming up time and again is that this guy gets involved in the most minute of details. He runs his organization where people are building up golf courses or resorts and he will go in and pick the marble in the lobby floors and the chandeliers they go up in the golf club. The fountain we drove by. Erik he has an eye for detail. Max i have to say, it is also a kind of management i find hard to a manager how to imagine that hard to imagine how it would translate to the white house. For government, micromanagement is ineffective. Giant earns are susceptible to inquiry. ,hat makes his touch wonderful it is hard to imagine him being able to do, running the largest government on earth. Erik it would be i wonder whether his skills at out inting would play International Diplomatic circumstances. To the wants to think extent that he is a builder he would be able to bring that to the oval office. Erik it is a terrific story. I urge everybody to read it. It is an this week plus bloomberg businessweek. You can find it on bloomberg. Com. It is a 30 this morning in new york city. Vonnie quinn has initial jobless claims. Vonnie coming in just a little higher than forecast. 282,000 people filing for unemployment last week. We are still in that whole area 275,000. Continuing claims, 2. 25 7 million. It just a little higher than what economists were looking for. Erik i am looking at the trade balance as well. It came in narrower than expected. A big revision to the june trade balance. What does it add up to . Vonnie the trade balance for july, coming in at 41. 83 of the deficit. Expected likely affected the strong dollar. We are to see what it amounts to over the longer term. The three month moving average is a deficit of 43. 2 billion dollars. Months were up for the and imports down 1. 1 . Much. Thank you very at that is the latest reading on the u. S. Economy. We will turn our attention to europe momentarily. Ecb president mario draghi is about to begin his News Conference in frankfurt, germany. Ira jersey is here to help draw the connections on both sides of the atlantic before we hear from draghi. Pretty steady as she goes. Ira i think it is important that we had under 300,000 jobless claims so at least the firing side of the equation of the economy is good. Tomorrows number on nonfarm payrolls will be important, particularly with this market volatility behind us. That will sway fed expectations. Rik mario draghi is speaking lets take you to frankford with the ecb president. Mr. Draghi as usual, let me start with the decisions taken. Based on our regular Economic Analysis and in line with our forward guidance, the governing council decided to keep the key Interest Rates and change unchanged. Problemt purchase continues to proceed. Regarding nonstandard Monetary Policy measures, following the announced review of the publics out there publicsector purchase share limit after the purchases, the governing council decided to increase the issue share limit from the initial limit of 25 to 33 , subject to a casebycase verification. This would create a situation whereby the euro system would have a blocked in minority power. The issue share limit would remain at 25 . Our Monetary Policy assessment was a review of recent data. New staff macroEconomic Projections and an evaluation of recent market fluctuations. Information available in the weakerntinued somewhat economic recovery. As lower increasing information weights inflation rates compared with expectations. , the new toy Downside Risks have emerged to the outlook for growth and inflation. However, sharp fluctuations in financial and commodity markets, the governing council judged it premature to conclude on whether these developments could have a Lasting Impact on the outlook of prices and the achievement of a part of inflation toward mediumterm aim or whether this should be considered to be mainly transitory. Accordingly, the governing council will closely monitor all relevant income information. It and the sized its willingness it emphasized its willingness and ability to act if warranted by using all of the instruments available within its mandate. In particular, recourse that the Asset Program provides flexibility in terms of adjusting the size, composition, and duration of the program. In the meantime, we will fully implement our monthly asset purchases of 60 billion euros. These purchases have a favorable impact on the costs and availability of credit for firms and households. They are intended to run until the end of september 2016 or beyond if necessary. See a case, until we sustained adjustment in the part of inflation that is consistent with our aim of achieving inflation rates below the close to 2 over the mediumterm. Let me explain our assessment of the available information in greater detail, starting with the Economic Analysis. Rosegdp in the euro area by 0. 3 in the Second Quarter of 2015. Which was somewhat lower than previously expected. The latest survey indicators point to a broadly similar pace of real gdp growth in the second half of this year. Expect the economic recovery to continue, albeit at somewhat weaker pace than earlier expected. Reflecting, in particular, the slowdown in emerging market economies which is weighing on demandgrowth and foreign for euro area exports. Domestic demand should be further supported by Monetary Policy measures and their favorable impact on financial conditions as well as by the progress made with Fiscal Consolidation and structural reforms. Moreover, the decline in our crisis should provide support real disposable income and corporate profitability. Therefore, private consumption and investment. However, Economic Growth in the euro area is likely to continue to be dampened by the Necessary Balance sheet adjustments in a number of sectors. This assessment is also broadly reflected in the september 2015 ecb Economic Projections for the euro area which foresee annual real gdp increasing by 1. 4 in 2016, and 1. 8 in 2017. 2015 euroith the june system staff macroEconomic Projections, the outlook for real gdp growth has been revised down. Primarily due to lower external growthfollowing weaker in emerging markets. The rest of the euro area Growth Outlook remains on the downside. Theecting in particular heightened uncertainties related to the external environment. , current developments in emerging market economies have the potential to further affect Global Growth adversely, via trade and confidence affects. According to euro staff estimates, euro area annual h in augustion was 0. 2 2015, unchanged from june and july. Compared with the previous markets the previous months, this reflects a decline in Energy Prices inflation, compensated for higher price increases for food and industrial goods. On the basis of the Information Available and current oil future prices, annual h icp inflation rates will remain very low in the near term. Annual hicp inflation is expected to rise toward the end of the year. Also on account of base affects associated with the Falling Oil Prices in late 2014. Inflation rates are foreseen to peek up further during 2016 and 2017, supported by the expected economic recovery. Decline through of past in the Euro Exchange rate and the assumption of somewhat Higher Oil Prices in years ahead as currently reflected in oil futures markets. However, this increase in annual inflation rates is currently expected to materialize somewhat more slowly than anticipated thus far. Assessment is also broadly reflected in that the september 2015 ecb staff macroEconomic Projections for the euro area which foresee annual hicp 1. 1 tion at 0. 1 in 2015, in 2016, and 1. 7 in 2017. 2015mparison with the june euro system stock market for economic projection stock macroeconomic projection, the revised down largely owing to oil prices. Taking into account the most recent developments in oil prices and Exchange Rates that are Downside Risks. In this context, the governing council will closely monitor the rest of the outlook for price developments over the mediumterm. We will focus in particular on the passthrough of Monetary Policy measures as well as on Global Economic financial, commodity price, and Exchange Rate development. Turning to the Monetary Analysis, recently it confirmed robust growth. The annual growth rate of m3 was 5. 3 in july compared with 4. 9 in june. Annual growth in m3 continues to be increasingly supported by its mostly best its most liquid components with a narrow aggregate and one growing at an annual rate of 12. 1 in july compared with 11. 7 in june. Loan dynamics continue to improve. The annual rate of change of loans to nonfinancial corporations increased to 0. 9 in june. Up from 0. 2 continuing its gradual recovery since the beginning of 2014. Despite these improvements, but i never of loans to nonfinancial corporations remain subdued. They continue to reflect the relationship with the business cycle, credit risk, credit supply factors, and the ongoing adjustment of financial and nonfinancial sector balance sheets. The annual growth rate of loans to households increased by 1. 9 in june. After 1. 7 the Monetary Policy measures we have put in place since june 2014 provide clear support for improvements both in borrowing conditions for firms and households and in creative flows across the euro area. To sum up, a cross check of the outlook of the month of Economic Analysis with signals coming from the Monetary Analysis indicate the need to further implement the governing council s Monetary Policy decisions and to monitor closely, all relevant incumbent information as concerns their impact on the mediumterm outlook for price stability. Monetary policy is focused on maintaining price stability over the mediumterm and its accommodative stance continues to support economic activity. However, in order to rip reap the full benefits of our Monetary Policy measures, other policy areas must contribute sizable he. Structuralnued high unemployment and low potential outlook growth in the euro area, the ongoing cyclical recovery should be supported by effective structural policies. Further product and labor market reforms and particularly actions to improve the business environment, including an adequate public infrastructure, are vital to increase productive investment, boost job creation, and raise productivity. And effective implementation of these reforms in an environment of accommodative Monetary Policy will not only lead to higher sustainable Economic Growth in the euro area but will also raise expectations of permanently higher incomes and accelerate the benefits of reforms, thereby making the euro area more resilient to global shocks. Fiscal policies should support economic recoveries while remaining in compliance with the consistent in limitation of the pact is crucial for confident in our framework. We are now at your disposal for questions. Erik a Quick Reaction before we get to the q a. Ira global easy money is still around and might extend beyond what we originally thought. The question becomes erik Equity Investors love it. Ira it is throwing more fuel on the fire. We will see if the fed is going to delay. September is probably off the table. Everyone keeps saying on the fomc, october is a real meeting. Erik mario draghi did not use the word deflation. The ecbs expectations for inflation as he said had to be downgraded. Ira that is a key to their thinking and one of the reasons they are worried about what is the impulse that is going on. How are oil and Commodity Prices and the autonomies faltering . Hows that going to play into the market . Erik he is taking questions in frankford. The governing council tends to think these are transitory effects mostly due to oil price affects. As i said before, we will monitor all incoming information. The governing council wanted to emphasize in discussion we had today its willingness to act, its readiness to act, and its capacity to act. Special limits to the possibilities that the ecb has in gearing up Monetary Policy. We havese, the decision taken today in changing what are the parameters to ensure this move of full implementation of the program is a sign. I notice that you slipped into your opening remarks your willingness to carry out purchases in september 2016. You are not willing or beyond if necessary. Should we take that as a sign that any stronger qe package would involve a longer timeline or would you consider buying more bonds in the shorter term or exchanging extending the range of assets . That it isments premature whether to conclude what weve seen in recent weeks will pass through in the mediumterm, what sort of things will you be looking at in the coming months to judge whether there is a risk of it passing through to inflation . Mr. Draghi thank you. Repeat, perhaps say differently. I started saying the economic recovery is expected to continue. At a somewhat slower pace. Reflecting the slowdown in emerging market economy primarily. I said it is premature to conclude whether this developments these developers could have a Lasting Impact on output inflation. Downside risks have increased and emergingmarket economies challenges are unlikely to be quickly reversed. Let me add that the cutoff date of these projections was august 12. The events that took lace since then are a Downside Risk to the projections themselves. Furthermore, financing conditions, especially in the. Ast two weeks have tightened lower Commodity Prices, stronger euro, a somewhat lower growth, have increased the part of inflation toward 2 . On the other hand, monetary conditions remain supportive. Convergedsion today on an assessment that the Downside Risk to output inflation have increased. We will monitor the risk to the outlook. Emphasizedng council the willingness and ability to act if warranted by using all the instruments available within its mandate. In particular, regarding the asset purchase problem that provides sufficient flexibility as far as the horizon, the size, and the parameters, as weve seen today. Thank you. Brian blackstone with the wall street journal. You mentioned the stronger euro. The euro is up in the last few weeks but it is down considerably if you look over the last year. Are you making too much out of this recent strengthening of the euro . Is there a risk that Central Banks around the world focus too much on the Exchange Rate . Thereond question is, seems to be a lot of anxiety around the world about developed. Ountries getting 2 inflation given what is going on, demographics, technological change, is it possible major Central Banks are aiming at the wrong target . Maybe 2 inflation is not the appropriate target in this current environment and you are printing all of this money to achieve a target that is not really attainable or appropriate anymore . Mr. Draghi thank you. On the first question, i have said several times, the Exchange Rate is very important for growth for price stability. It is not a policy target but diverging effect of recovery paths across the major jurisdictions and the effect of diverging monetary policies across the major jurisdictions. It is also the effect of what the Market Expectations are about future growth rates, future monetary policies and Interest Rates. That, all countries in the g 20 have several times reaffirmed their commitment to the Exchange Rate policies. These policies not being used in a competitive fashion. You know the statement of the g 20. Describe a situation where the Exchange Rate has produced a description of what is happened. Rate, this ison 10,e should not forget maybe 13 years ago, a similar discussion was taking place whether we should look at the core inflation, the headline inflation. We decided to look at the headline inflation as our meantive, which does not we are excluding all other definitions of inflation. In our analysis, we use both concepts. Our mandate is defined in terms of headline inflation. Said whether this is the 2 as an objective is still reasonable or not. We have not discussed that. In a sense, it would test our credibility if we were to change targets when it is taking more effort to achieve that target. There has not been discussion about changing the target of inflation. Let me focus on greece. Is it accurate that in the eurogroup the ecb insisted on excluding a depositor for greece . Is the scenario still on the table . Is, now thatstion greece has completed the first set of prior actions, when will the ecb be in a position to reinstate the waiver for greek collateral . Will this make greek bonds a problem . One comment about the decision ecbdraghi it is true, the insisted to exclude any baling of depositors for the greek banks. The ecb deemed any such measure to be counterproductive for the economic recovery and harmful for the greek economy. Not onlyhave hit several thousand savers but also smes and corporations. The ecb viewpoint was accepted by the eurogroup. Similar considerations were deemed not to be applicable to senior bondholders. As far as the measure is concerned, it has been excluded and will stay excluded. The second point is about a waiver. , the countrywaiver has to be in a program for financial assistance, has to so, has to it and show strong ownership and consistent and significant implementation. There will be some milestones that will be judged and assessed in the weeks ahead. Based on that assessment, the governing council will take a decision. Place, isver is in this enough to start purchasing bonds . We will have to look at other conditions. Is the bond purchases that bond purchases cannot take place while a review is ongoing. Second, there are timing limits. Andnd, there are issue issuers limits. That have to be respected. Finally, there has to be a debt sustainability analysis of the governing council. Seen wela, you have have open communication. Discovered were not by your investigative capacities. They were normally published. Termse one word about the of our communication as far as the future is concerned. The governing Council Agreed in principle that in the future, a National Central bank could, together with requests for nonobjection regarding ela, seek approval from the governing council to communicate related elements, including the outcome of ela if it sees the benefit in doing so from a Financial Stability now, this would apply in particular if ela would address systemic issues. Thats what i was saying last time. If ela is extended to a large part of a banking system. Of this principle would be discussed further in the governing council in due course. Bank thatal central asks for the nonobjection will present will communicate the decision based on accumulation that is agreed by the governing council. For systemicly issues. A question concerning mr. Draghi even in this case, the ela number was gathered by eu capacities because it came out before we could announce it. That is ok. Next time, we will announce it. Thank you. Another question on the oil price and its impact on the recovery. It has gone down considerably this year. There has been some rebound this week. Is a boost for the euro area economy. Or, because they are reflecting lower global demand, they are like a burden. A little Oil Price May be lower because of demand and or because of supply affects. In this present situation, it is lower because of supply affects and demand from china and other emerging market economies is lower. If its because of supply affects, the consequence of the lower prices of oil are positive. Positive if there are no secondround effects which can come from Financial Stability considerations or secondround effects that simply these Lower Oil Prices are being transmitted and lower inflation rate or known energy components. Now, when oil prices are lower because of demand affects, we the to consider also negative impact that lower growth in emerging market economies might have on the growth of the euro area. Mr. Black . Mr. Black good afternoon. Just black from Bloomberg News. Just black from bloomberg black from Bloomberg News. Could you perhaps give us a few more details on the instruments you will choose if you do see the need would you take as a First Priority the duration of the program or the size of it in the monthly purchases or what your thinking is behind the way that that would operate . I second question is about the change in the issue limit could you give us a few more details on the reasoning behind that . Was it necessary for you to be able to achieve your objectives . Mr. Draghi thank you. Your first question was not discussed. We are not there yet. , as iecond question is think i said in the introductory statement, a review up to six months was scheduled. Couldnd out that the ecb actually by more than 25 limit in some cases where there would be no blocking minority by the ecb. Thats why come in those cases, the limit was pushed from 25 to 33 . Theas meant to ensure carrying on of the program. That is the main reason. It shows the readiness of the governing council to use the flexibility of the program so as to make sure the program will carry out in a smooth way. Smooth and completed, a complete way. That technical aspects will not stop the poland limitation and full commitment full implementation and full commitment of the program. [indiscernible] see at thiswe dont point in time concerns coming from that decision. Iti said, we will look at issue by issue and transaction by transaction. Erik ecb president mario draghi speaking at a News Conference in frankfurt. The ecb held firm on Interest Rates today. News and movedde markets, the euro weakening by a full percentage point. European stocks rising by almost a full percentage point on clear signs that the ecb is willing, ready and has the capacity to beeneyond what has already undertaken. Our international correspondent, hans nichols is live in berlin. A Quick Reaction from ira jersey. Said that the Ecbs Governing Council has to get to the point of debating what it would do if he needed to when it comes to extending qe beyond its current parameters. Ira mario draghi is leaving all options open. The fact that he mentioned that they may go beyond the september off date for connotative easing is probably the syntel most important thing that he said in his opening statement. Quantitative easing is probably the single most important thing that he said in his opening statement. He said what people are expecting but maybe went beyond that. That is what the market is showing you today. Erik mario draghi dropped a few small bombs in the course of his comments. The one that stuck out for me, the ecbs forecast concerning gdp growth and inflation cut off on august 12. Since then, market volatility has tightened monetary conditions. Worse, if you will, if you care about stoking inflation. Ns he talked about considerable Downside Risks because of this market volatility. What i really heard there was an acknowledgment that quantitative easing has not had its intended effect in terms of inflation. You look at their Inflation Expectations for the rest of 2015, they are saying 0. 1 . That is from our corporate before, it was 0. 3 . That is remarkable. No inflation for all of 2015 after quantitative easing has been in place for nine months. You do the math. That is half a trillion altidore and Inflation Expectations that are lower and Economic Growth that is lower. Half a trillion out the door. One quick followup on greece. There was speculation that they would live to the waiver that would allow the ecb to buy the debt from greece. Snap up some greek bonds. Does not look like that will happen. Greece needs to stay in their program for quite some time, continue to abide by it. They would not be trying to purchase greek debt through the qe program anytime soon. Erik we have to assume the fed sees what draghi sees. Ira absolutely. They would like to hike. They really want to hike. They have set it for 18 months that they intend on hiking this year. Can they with all of these this they can. Issues the markets would not be expecting the hike at this point. ,ost of the markets we look at its suggesting they are not going toike. If they would, that would be a big surprise right now. They are not priced for it. Erik do you think janet yellen feels the way drug he said he does about Oil Mario Draghi said he does about oil . Whether opec maintaining quotas or the continued increase in shale in america if its all about supply, thats a good thing. If its about demand, its a bad thing . Bank,f you are a central are you the central bank of the world or the central bank of your home domicile . Answer for the fed, we look at the world, but we have to do whats right for the United States of america. Ultimately, they look at that. The second order affect, lower Commodity Prices, that impacts inflation in the u. S. That is where the fed will ultimately come down on the sensei its not quite ready come down on this and say its not quite ready. Erik if the jobs number tomorrow comes in well below take ations, does that september move off the table . Ira i think it would. Thank you for sticking around. I rangers the of Oppenheimer Funds and hans nichols in berlin. We need to bring you up to speed on whats happening outside Financial Markets and the ecb. first time Unemployment Benefits rose the start of the new school year may lead to a period of volatility in the jobs data. Employers are holding onto employees. The august jobs report comes out tomorrow. U. S. Trade deficit imports of mobile phones down. Exports were little changed. They are expected to fall in coming months because of the stronger dollar. Nineine is dead and of this hurt during a training exercise. Nine others hurt during a training exercise. The cause of the accident is under investigation. The Republican National challenging donald trump. To rnc has asked trump promise he will not run as a thirdparty candidate. Last month, trump threatened to launch a thirdparty bid if he does not get the nomination. We are already into the 9 00 hour here on Market Makers. Thats what futures look like right now. Mario draghi stoking unit of appetite. A bit of appetite. A quick break and then we are back. Erik ecb president mario draghi moving markets this morning, holding a press conference in frankfurt, making clear that the ecb sees a Downside Risk to inflation and the outlook for Economic Growth. The euro weakened a full percentage point and we saw a meaningful move upward and european stocks. Not so much u. S. Equities. U. S. Shall producers are about to have a fire sale. The wild swings in crude prices this week alone and the winding have left them with few options. Brad olson has been crunching some numbers for us. What did the data show . Rad t data showing there are a number of companies that will be in trouble. One of the metrics you look at to find out what companies are struggling is how much they are paying an interest given the revenues. There are at least more than 10 companies out of 60 that we know about in shale that are at 20 . They are paying 1 5 of all the revenue for interest and expenses. The debt is seeking a leading for them and putting em in a diicult posion as go forward with low prices. Erik difficuland pontially unsustainable. Brad that is correct. A lot of the companys are facing hard choices. The main thing they have to think about is what they are willing to do. Will they sell assets or look at valuable properties that they like and let them go to stay afloat or sell themselves as a company or consider restructuring . Those are the stark choices these countries are facing. One of the problems they face is because of the fixed costs, its true or drop. They have to keep drilling even if the low oil prices they have to generate cash flow. Brad that is exactly right. They stopped killing, they cannot have the cash to meet their Interest Payments if they stop drilling, they cannot have the cash to meet their Interest Payments. That is a lifeline that will go away. Reevaluating how much debt they are willing to give these companies. They are likely to cut the debt available to them in a lot of cases. The liquidity problems are going to intensify for a number of companies as well. Erik is it possible that something could change . There were many predictions back in january or february that the credit markets would cut off the small independent oil and Gas Producers but they have stayed alive for the last seven months. Is there anything on the horizon that may allow that may restore appetite for this kind of oil and gas exposure from Credit Investors . Brad they already got a bailout. 40 billion in the first half of the year. For that to happen, it would in prices, recovery maybe 260 and that would have to hold for some time. 60. Ybe to they thought there would be a rebound soon and they got burned. Any investors that bought equity or debt in the last six months probably did not do well when oil fell to below 40 last six weeks. Erik i like the way you put it in your reporting. They have lost their swagger. Brad olson with us from texas. Pressure is mounting on twitter the stock has dropped 22 . Several other Senior Executives left. The board is meeting today to discuss the results of its search thus far. Tom it is a key Board Meeting for twitter. Tom absolutely. They need to come out of this Board Meeting and update the market in some way. Twitter needs to communicate we are making progress here, this is our thinking. The problem with twitters ceo search ceo searches take time. Twitter thatith makes it unique is they announced that the cost low was leaving without having a new person in place. Was leavingolo without having a person in place. It is very public and they are under a lot of pressure. Erik we understand some of the candidates. Pat from cisco, jim from cbs bain frome and adam twitter. Those are just some of the executives. Tom the leading candidate is jack dorsey, one of the cofounders. He is the interim ceo at the moment. There do seem to be a lot of signs pointing at him. He is also the ceo of square. This other company on the way to an ipo. Gaining in popularity, gaining companya hot newish that he is also dedicated to. You cannot just take them off the board of that company when they have put out their document and they said this is the guy who is going to lead the company as we head into an ipo. If he comes out of that, you have to rewrite your s1 documents and recommunicate to shareholders, ok, there has been a management change, things have changed since we filed of those documents, its a bit different now. It is not simple to pull him off of that or let him run to companies at the same time. Erik an intensely complicated situation because these three key members of twitters pastor are on thed past board. We spoke to Marc Andreessen about this. I want to play an excerpt. Im in favor of founders running these companies whenever possible. That would be great. Erik how much influence does Marc Andreessen have over twitters board . Tom hes a very influential guy and they will listen to what hes has. Erik tom giles on the search for a new ceo and twitter. We are taking a quick break. We will bring you up to speed on the top headlines when we return. V unicreditonnie considering cutting 10,000 jobs. Unicredit considering cutting 10,000 jobs. It came out with a Strategic Review last year. Most of these cuts will take place in italy, some in journey in some some in germany and some in austria. Some of them, most of them will come through early retirements. Erik thank you very much. Breaking news on unicredit. 10,000 jobs. This is the time of day where we do that three things you need to be watching on this trading day. Tracy alloway is here and am delighted to welcome the chief investment strategist at bank of America Merrill lynch. What is number one . Tracy we were going to talk about australia. A certain euro zone central bank has stolen australias thunder. Lets take a look at the euro this morning, which is down look at that drop. What do you get the central banker who has everything on his birthday . There were go come a weaker euro for mario draghi. This raises questions about competitive devaluation and market volatility. Mario draghi said Everyone Needs to get ready for higher market volatility. He seems to not like it so much now that its here. Hes talking about taking financial conditions. An interesting ecb presser, for sure. It is pretty surprising that they will come out and lower gdp growth because a lot of mental data weve had lately, the euro has been on the upside. You are starting somethingthat we have to monitor. Stabilization of emerging markets will relieve a lot of the spears a lot of those fears. I have not really heard anything substantial about how much of the tempering has impacted the data in china. Nobody has put hard numbers on that, which adds a lot to this guessing game of what real underlying growth is. Erik there is a spill over as far as expectations for september 17 fed move. We started the day with a 33 chance of a move on september 17. Those expectations declined to 20 . 28 . People are listening to mario draghi for a sign of what janet yellen is thinking. Dan right now, the Economic Data in the u. S. Is very supportive of a fed rate hike in september. Pointe one more key data tomorrow. After that, its up to the markets. The fed says it is not really focused on the markets. The last four or five tightening cycles it has never tightened when the mix has been this high. Vix has been deciphered if we dont get the market rebounding close to that two dozen range, its hard to see if the fed will go in september. That 2000 range. If you can get some call, that is all the fed needs. U. S. For most purposes is a closed economy. The impact of china is not that big. You can see it in the data. China has been slowing for a while, we withstood the european recession. Erik what is number two . Talk about the importance the exchanges have open for business. The s p 500 up seven points. Tracy i wanted to take a look at what happened on tuesday when we had another big market selloff. Stocks in the s p 500 there are 502 stocks. On tuesday. Fell how there were only three up or neutral. These are the 10 best performers on that day. We talk about market threats. We will have to see if that volatility continues. Dan weve been seeing for a while, its not just in the last couple weeks, that breath of the market has been narrowing quite a bit. The only remaining winners in the market, people who have crowded into those. You are starting to see cracks in this winners and those winners there is no leadership. We are a bit encouraged by the increasing volatility in the change of leadership we are seeing. Spikes inee volatility, you almost always see change in leadership. Change in leadership is something weve been calling for for a while now. Its not going to be the winners of the last five years. It will be a new set of winners, higherquality companies, better balance sheets, global cyclicality which is a bit of a risk given the mental slowdown in Global Growth, but that will turn out to be a tailwind. Given the incremental slowdown in Global Growth. Tracy how much does that leadership matter . Dan this is the type of market you see when leadership is changing. When you look at historical periods when there is no market leadership and the breath is narrow, thats what happens when you get changes in leadership. There is a lot of volatility but then you get new leadership arising from the ashes. Erik the leaders today on a sector basis, health care, energy and industrials. Opportunity for us to go to number three. Tracy i will take any excuse to talk about Corporate Bonds. Today, there is a great Bloomberg News story about the Corporate Bond allocation process and the idea that european regulators are looking at how new bonds are doled out to investors. We know that companies have been selling bonds like nothing for the past five or six years. These are euro denominations record issuance levels. Is there preferential treatment for their favorite investors . Erik the same questions during the. Co dot com era. Tracy this is the kind of stuff you see in a massive bull market. Using sketchy behavior like this because Everyone Wants the same things and there is favorite ism that comes in. Dan i am focused more on the u. S. Equity markets. The key concern for investors in this massive wave of pot issuance bond issuance, is there signs of too much leverage in the system . If you look at most measures, it is still really low. We dont see this massive issue with the amount of leverage out there. Theres a lot of talk about lever buybacks and whatnot. Buybacks have slowed. The peak was early 2014. While we were singing bit of a comeback, we are well below those levels. This is not a big a story as people like to hype it up to be. Erik if Corporate Bond issuance we have seenand highyielding investment grades widened, that does make it more difficult for the pace of buybacks. Think a lot of the buybacks have been funded with debt. There are certain examples where that is the case. It is being funded with cash. We have massive cash flow on the balance sheet. Erik you have to issue debt to free up your cash. Dan the main issue would comes to a response is lower quality types of companies. Smaller companies that have more levered balance sheet. That is a bigger issue for smaller cap stocks. One of the reasons we like largecap. Tracy all those euro denominated liabilities are looking a bit better today after the presser. Erik thank you very much. Alloway,i and tracy you are staying with us. We would take you out to matt miller for an update on whats happening in u. S. Equity trading. Matt you have me interested. I will stay and watch. We have a bit of a rally this morning. The Dow Jones Industrial average adding 80 points. Which brings the gains over the last couple of days to almost 400. Some of theng back 500 points that we lost on monday. The s p gaining have a percent right now. 5 right now. Everyone is thrilled to hear about more spiking of the punch bowl in europe and hoping that qe madness continues around the globe. The nasdaq gaining as well. Let me show you a stock getting hit hard today. They are down 16 . Joy global said quarterly profit fell 37 . It is a Global Mining equipment and services company. A lot of revenue from oil. It is taking a big hit. Ebay got an upgrade. It can be a hold. It is neutral. It used to be underweight after the spinoff of paypal. Gene munster likes the stock. There is a trend today, upgrading the stock, lowering your price target. Gene munster had a price target of 50, now 30. They took out paypal. It used to be a 60 stock and they spun off paypal. It is an upgrade of two dollars. Not a huge upgrade. Let me talk about tesla. He musk was tweeting again last night. He will deliver the first model x sitomer tournament. You can almost already place your order for the 35,000 model 3. First model x september 29. , the oldeste return woman on wall street just turned 100 years old. Still working, still manage money. Just dont call her able. A bull. Erik you are watching Market Makers. Im erik schatzker. Long before the era of megabanks, wall street was a different place. Families ran american finance. Left are not many people to remember what it was like when every Securities Firm was a partnership and investors did not have to find algorithms. Some of the who does or, she is something special. Have a look. This is irene berkman. She is the oldest woman on wall street. In 1942 irene i started in 1942. She just turned 100. She has been working at the same firm since 1973. She still manages money for clients. She covers everything. She would not have it any other way. Irene my type of clients are very enduring. Theyve grown old with me. In a bear market, they will be better off. Erik how would you describe yourself . Irene a super conservative investor. Erik age and experience, she about every fad,r and go. Era, thatp in another is before anyone heard of a dot com. Come and go. Irene i was born in berlin, daughter of a private banker. We lived very well. Erik a carefree life ofoun a terrible end with the rise of hitler and the not toos. Nazis. We fled on a portuguese boat. Erik she began working as a secretary, 15 years later, she caught a break, landing a job as an investment advisor. In 1957, there were not many women in my job. Erik she sits on the investment committee. She stopped going to the office a few months ago after an illness. Now, she works out of her antiquet, surrounded by furniture her family stored during the war. Colleagues say she exudes a rare patience and discipline. She will not say anything while anyone else is arguing and all of a sudden, incisively, she will speak and cut right to the heart of the issue. That shets recognize is not always easy, she will tell it like it is whether the client wants to hear it or not. Sometimes, but thats what they ultimately respected. Erik she never thought she would live to 100, let alone be working at this age. She still has one or get. This regret. I always wanted to be a trader. Nobody ever offered me the job. Erik the incomparable irene berkman. What do you make of that unique lady . Thingsthere are so many i like about that story. What an amazing woman and what an amazing tale. Weve had two weeks of talking about highfrequency trading. And systematic strategies. Its nice to see an oldschool investor. Erik this is a woman who was born in the teens, grew up during the era of hyperinflation in germany, who saw the outbreak azism. See hi oldschool. E when you talk to her about investing, she says everybody these days wants to get rich quick. Is buy and hold like you can imagine. She still holds the Texas Instruments shares she bought in 1953. That kind of discipline is rare among investors. The temptation to buy into a bull market is massive and the discipline you need to sit that out is amazing. There is one in philosophy she advises everyone to pursue. Always have some cash. Things are in freefall, at least you have some money to spend and when its time to buy, you have liquidity. Im sure that paid off for her clients. Wasnt she supposed to bring the opening bell . Erik we wanted to recognize the conservation she has made, the fact that she turned 100. She is feeling better. Im looking forward to seeing irene. Great to have you with me. Time for some of the most recent headlines. a train from hungarys capital is stopped. It haslway company says stopped direct trains to the west for security reasons. 3000 migrants are camped outside the station. Many of them from wartorn syria. China is cutting military personnel. Chinas military is shifting from Traditional Land units to more advanced sea and air forces. Three Australian Children are already using they were the first to open the new star wars toys. Seven hits theaters just before christmas. I know you will be getting the light saber, erik. Erik i already have a closet full of light sabers. Apple and its impact on the dow. Analysis says it sends us a clear signal. What signal . We find out when we come back. , aols ceog up later Tim Armstrong will be on to talk about the deal a wellmade today aoluy millennium media made today to buy millennial media. If you are a professional investor who can easily trade out of positions commence time to buy. If you are an individual, dont even think about it. Milton, it is great having you. You have made extraordinary calls. How do you feel about the market right now . Milton the market is way overvalued. The individual investors should sit on their cash and wait for the final opportunity to buy stocks. This is not yet the opportunity for the individual investor. We had panic selling. Erik thats what you saw on tuesday. Milton the day before yesterday, we saw it. The panic came at a higher level secondary panic selling above the previous low. We had a 1501 ratio. You did not see that last monday. There is more selling pressure. Suggesting now is the time to buy. The lows will hold. Erik you are looking for singles. Or looking for patterns. Couple oft along a charts that help illustrate this point. You are looking at a logarithmic scale of the Dow Jones Industrials adjusted for inflation. What does this show us . Milton commodities never make money on a real basis. They are flat. They reach a peak and come back down and reach the same peak and come back out. Stocks on the other hand i retained earnings. Have retained earnings. We took a chart of the dow jones and adjusted for inflation. Found there is a certain we are ata peak the same level now in 2015. The dow jones is at a level that historically has led to about a 50 decline in real terms. Erik 50 . Not nominal, but inflation. Now, the second chart, which is even more genetic. With thefiddled composition of the dow industrials over the past 15 years. Which is even more dramatic. Built in its a manmade construct. Apple was not entered a dental 2015. Until 2015. Youve substituted apple for ibm. Milton lets see what the dow looks like if apple had been in the dow in 1999. It is the second most overvalued in history. If apple would have been in the dow for the last 15 years. Construct, weuman and replace apple for ibm its now as overpriced as was in 1999. Erik milton berg. Sit tight on your cash. If you are a professional, by now. The outlook is grim. We will be covering august you was implement data unemployment data tomorrow. Rivkin is with us. I will see you tomorrow. This is the bloomberg market day. Good morning, everyone. I am olivia sterns. We have got mario draghi moving markets. Ust wrapped up a press, rents the European Central bank indicating he will support the economy more if it is warranted. In the meantime, we have breaking Economic News coming out of the u. S. I want to get to matt miller. Matt it looks like janet yellen has another reason to put off in august. Nonmanufacturing index falling to a reading of 59 from 60. 3 in the previous month. This was better than investors had anticipated, or economists we had surveyed. We got a 59 and anything above 50, obviously indicates an expansion