Hurricane irma cause devastation as it rips through the caribbean islands on a path to florida, where its expected to strike this weekend good morning glad to have you on the show once again its thursday, not just any thursday, its ecb day weve been waiting for the first fall meeting of the ecb, whether or not we get a tapering announcement today, that remains to be seen majority of economists expect more details in the month of october, but an update to growth and Inflation Forecasts today. Lets look at how the markets are faring ahead of that theyre not doing much at all. Were a fraction lower on the stoxx 600, roughly an hour and 50 minutes into the trading session. Lets look at the indices one by one. You can see a bit of a mixed picture. Ftse 100 is flat the xetra dax is higher to 0. 2 . The auto sector is doing well. Its been higher for a fifth day in a row we saw a couple upgrades from jpmorgan and Goldman Sachs, so theres renewed interest in the german auto sector the cac 40 is up by 0. 2 some degree of caution ahead of the ecb, even though we have the slight positive buin the markets by the extension of the u. S. Debt limit when it comes to the euro dollar, were tracking higher to the tune of 0. 3 at 1. 1950 the era of cheap money should come to an end, thats despite the strong euro. Thats the message from Deutsche BankCeo John Cryan ahead of the ecb meeting. Speaking at the banking conference, cryan offered his take on Mario Draghis negative rates policy there were lots of criticism about his policy, but i think it achieved a positive effect but no central banker thinks permanent longterm low Interest Rates are permanent. So its time to change now . I think when the market is anticipating t why not give the market a bit, then try a bit more Goldman SachssCeo Lloyd Blankfein said he is worried by some aspects of the market sector he said when yields on Corporate Bonds are lower than dividends on stocks, that unnerves me. He said it did not feel like tulip mania, but theres a feeling that things have been going up for a long time annette, youve been speaking to many of the heavy hitters in frankfurt. Yeah, indeed. We have been speaking to many of the guests here at the banking conference of course the thoughts are the ramifications of the ecb policy, regulation and all these things, im joined by a special guest who can tackle the questions as well, the president of financial watchdog here in germany thank you very much for your time thank you lets talk about what we heard in the studio, that mr. Cryan, the ceo of Deutsche Bank is concerned about the ultra loose mron teonetary policy how concerned are you when it comes to the german banks. We just completed a major survey together with our colleagues from bundesbank on the impact of low interest policies on all german banks the impact is massive and creeping into the Balance Sheets more and more. The longer it continues, the higher the risk for change of Interest Rates is increasing ten years af s after the onsf the financial crisis, how solid is the german banking scene. Its much more solid compared to ten years ago when the crisis broke out. Both the amount as well as the quality of capital has been massively increased, Risk Management procedures have been improved governance procedures have been improved remuneration has been curbed a wide range of things have been do done, but no regulatory system and no Financial Market in the world is unvulnerable. There can be and there will be new crisis coming up in the future one potential crisis coming up from bubbles in the market, and here at the conference people are talking about bubbles in the market. How concerned are you that we are going to see perhaps a massive price correction in the market we are concerned about the possibility of bubbles most notably real estate we see signs of overheating regional markets what we dont see yet, thats a crucial point, is a spillover of asset prices into the Financial System more broadly speaking we are watching it very closely and are grateful that the legislator introduced a couple of macro instruments which would equip us to step in on a macro level in case we think that a real bubble would emerge and would have to be tackled the digital and revolution technologies, and the advent of cryptocurrencies and their meaning for the Financial System what do you think . Has there been action from your side thats a great question its one of the interesting emerging trends we can see we are still in the Research Mode we try to understand whats going on we observe those many, many cryptocurrencies coming up 600 to 800 are around. However we are indeed prohibited one cryptocurrency in the German Market operating without a license. So we not only observe, we act also its a fairly new phenomenon, chinese investors to the system in germgermany when we hear the talk in berlin when it comes to investment in the industry sphere, its no overly welcomed. Im not sure whether that assessment is entirely correct germany is an open economy were probably one of those countries benefiting the most from a global trade and open borders. Fundamentally we welcome Foreign Investors and foreign capital whether its chinese or any other country. However having said that, we have basic rules we observe. So if you take a controlling stake, which we usually define above 10 stock in a particular financial company, we undergo a very extensive owners control procedures and thats sort of basic procedure. If we are not satisfied with the degree of transparency, integrity and validity of investors and owners, we probably wouldnt tolerate it. Let us talk quickly about brexit and where we stand here as well again people say that it will be a great boost for frankfurt, but how long, like really operational would it take for banks to fulfill all the regulatory requirements to shift the hub to the country the challenge is massive. All large banks, whether it be british, american, german, japanese banks have established very complex platforms in london, which now have to be split in a way to secure eu 27 passporting rights going forward. Thats a massive operational challenge which imply a certain degree of risk i doubt whether that task can be entirely performed until march 2019 we have a high interest. Of course both the Senior Management of any particular bank, but we supervisors as well to mitigate Operational Risk as much as possible by the same token, we are supervisors, we are not a marketing agency, so we believe germany or frankfurt in particular are very, very valid places to do business. But thats not our primary concern. Were spelling out conditions under which Financial Institutions are doing business in germany thats what we do very openly. But we engage heavily with all institutions which must make changes. And try to be in a way a good partner from the regulatory side of things. Thank you very much for your time have a good time here. So you see it will be a complicated process. Were talking about brexit, but also new challenges to the banking scene, talking about cryptocurrencies, the new ecb tapering around the corner i think there will be a whole wave of new challenges for the industry with that, back to you very much so. Annette, thank you very much for that interview lets turn our attention back to home uk home prices hit an eightmonth high in august house prices rose 1. 1 from july, and 2. 6 from a year earlier. Last week the bank of england indicated mortgage approvals were much higher than expected and bovis lowered its growth targets after posting declining first half profits the British Housing company now expects to build around 4,000 new homes per year compared to a previous estimate of 5,000 to 6,000. Bovis was subject to two failed takeover bids after issuing a profit warning last december, but investors liked the news this morning shares up 7 on the ftse and this really made headlines overnight. Nordea is moving its head tlins finland to avoid regulatory rules. The move could save the bank around 1 billion euros expect extra costs in the shortterm. In finland, nordea will fall under the supervision of the European Central bank. And Imperial Brands announced it sold 13. 3 million shares of logista. It will continue to own 80 million shares in the Company Following the sale. We will go for a quick break. Coming up, light at the end of the tunnel for greece. Why things may be looking up in europe our exclusive interview is coming up after this short break. Whuuuuuat . Rtgage offer from the bank today. You never just get one offer. Go to lendingtree. Com and shop multiple loan offers for free free . Yeah. Could save thousands. You should probably buy me dinner. No. Go to lendingtree. Com for a new home loan or refinance. Receive up to five free offers and choose the loan thats right for you. Our average customer could lower their monthly bills by over three hundred dollars. Go to lendingtree. Com right now. Investors confident in europes economy recovery are hoping to see clues from ecb president mario draghi that the central bank could begin to wind down its asset purchase program. Annette spoke to the finance minister and asked for his outlook on European Growth gladly agree that we are now in the good times for europe the growth is back and even against many predictions, even only a year ago, europe looks set for a durable, Sustainable Growth for years to come. You have to use the good times to do the reforms. The greek crisis is not finish the, but we have found an agreement on a third bailout program, and this program is being adhered to by greece we see the end of the tunnel what we need to do now in europe is make the european monetary union, the common currency in the eurozone work better and also have stability and growth simplified. I agree with the commissioner, this is the right time do it let us look at concrete proposals on the table, to create a joint treasury and a joint finance minister how likely do you think well see such a big shift in the next four years well, the goals that you have mentioned, a common treasury, a common finance minister, certainly are goals of the medium and longterm we must pave the way and find solutions to step by step approach and so its good to have ambition, but lets also make sure what we have today, the stability and growth is being implemented and abided to by all countries. We are on the right track for that second, lets make sure that we have less risks amongst ourselves. Because if you want to have more solidarity amongst the eurozone countries, the risks must be reduced. Greece was a very good example where the risks were high, and we are now reducing those risks, as are many other countries where issues are nonperforming loan issues. We need to reduce the risks. We are on track to do that, also with the Banking Union but theres still some way to go thats a good example but where do you see the risks in the eurozone currently if you stress that these need to be kind of tackled before we can integrate further . Well, probably things can be done in the parallel manner. At the same time as you reduce risks, you can discuss how to increase solidarity. Nonperforming loans is a critical issue, abiding to the eu stability and growth pack, making sure deficits are under control, creating buffers at European Union 1 1, putting money aside for bad times. Quite a few ideas on the table how we could do that for the eurozone minister for the time being, the setup that we have is that you have one of the 19 finance ministers who is then chairing it. If you want to go to the direction of having an independent one, you have to ask yourself what means does this minister have . What ambition . What goals does he have . Its probably a bit early to give the answers to all these questions. Lets get back to the main story. The ecb is the main act for markets. The central bank will make its latest policy decision as investors await the thoughts of president mario draghi theres been debate about whether mario draghi is caught in a euro trap Inflation Expectations are still on an upward trajectory, on a trade weighted basis most analysts say the euro looks much more moderately valued and should not derail the taper train . A reuters poll of over 60 investment banks shows 70 believe it will be october not december before mario draghi announces adjustments to the asset purchase plan. Nearly a quarter believe it may be at todays meeting. As for the end of qe, most respondents believe it will be in the Third Quarter of next year. The banking index also paints an interesting picture. These are the best performing bank stocks in europe this year. There is a major representation from peripheral nations like italy and spain. The index itself is up nearly 10 in 2017 and could possibly indicate a play on the economic recovery across the region i should say that banking stocks over the last couple trading days have been weaker in part because the market is pricing in a soft tapering. Lets talk more about the outlook for the ecb and the bond markets with david zhan from franklin temple. I should point out to viewers, you are in the minority. You expect tapering to be announced today. Why . I think the ecb will put out the new forecast for growth and inflation. I dont think theyll get more data between now and then, so it will happen now or october so we need to focus on the pace of the ecb taper i think he will say we will be tapering next year, but itaper gradual. If they do it today that would give another shot to the euro, thats something that the ecb would want to avoid now. Were already trading close to 2 1 2 year highs against the u. S. Dollar. Many ecb members have been saying at 1. 18, 1. 19, its not that much of a problem and theres a disconnect between what the euro is telling us and what the bond market is telling us remember the euro is made up of the euro and the dollar, and the dollar has been weak against many currencies. Its not just a pure euro argument, its a bit of both much has been to the underwhelming performance of the dollar over the last couple months because of the absence of reforms by the Trump Administration and the slower pace of the fed. I want to come back to the disconnect you talk about between the fixed income and the currency market. It seems like the euro dollar is priced for perfection when it comes to tapering. Not so much the european bond markets. Why do you think that is i think people in the bond market are waiting to see what will happen, seeing the actual result everybody is pushing for yield in the bond market and keep extending duration and extend nothing riskier asset classes. That will continue until they know for sure theres a change happening. Once you see that change, you will see a modest selloff but the ecb will be accommodative for a long time. Its not like youre heading into a tightening cycle. So were not looking at a taper tantrum akin to the fed a couple years ago were not going to see a huge telloff, bunds selling off by 30 basis points when it comes to yields i guess maybe 30 basis points, yes, but i wouldnt say thats huge. What is huge in your view . Could bund yelleds g yields o 1 in the past year . Yes. Thats moderate in the grand scheme of things what do you want to buy in the space . Were looking at tapering and none of the bond market plays look attractive. Where do you go in the fixed income space one thing weve done is become defensive we probably have the shortest duration in portfolios that weve had for a long time. We still have some european credit, we think that Investment Grade credit will be one of the last things they taper thats been effective at bringing down lending rates across europe. So i think they will focus on tapering the governments but still continue to buy in the corporate space. Its interesting, we heard comments from the ceo of Goldman Sachs, he said what makes him uneasy is the fact that yields and Corporate Bonds are lore than yields and dividend stocks. You are concerned with that mismatch i think weve been in that arena for quite some time. I dont think im that concerned about it now i think there are opportunities there. It comes down to company by company as opposed to a generalization all right when tapering is announced, most likely in october, even though if youre in the right that might happen today, what will it look like . When do we see an end . Do we see an end date from the ecb . I think the ecb will not give an end date. They will bring us down to 40 in the first half of 2018, 40 billion per month. Then see how that works. Theyll gradually bring it down. I wouldnt be surprised that we still have qe being done into 2019 also remember, theyll continue to reinvest all the maturities the bigger maturity block starts in 2019. It could fit nicely that you finish tapering almost in 2017 a bit into 19 and then maturities pick up to keep that yield lower. All right reinvestment pretty important too. Yes thank you very much for that. David zahn from franklin templeton. Decision time, well bring you the latest from the ecb. Expect analysis and Market Reaction starting at 13 30 cet with the decision at 13 45 cet. During the show, well have an interview with the managing director of lazard, thats jorjorg Jorg Asmussen and well bring you live coverage of Mario Draghis press conference from 14 30 cet. See you in two. Hello. Welcome back to street signs. Im carolin roth these are your hud lines President Trump makes a surprise deal with democrats to rai