with the stimulus package. if you look at euro-dollar, it shows the angst they had. tom: i thought olivier borchard was brilliant, and what a bombshell. my word for the day is horizon. mario draghi said we will go out beyond the horizon -- he was poetic. toncine: but when it came rates maybe he was less poetic. let's get straight to the bloomberg first word news. nejra: the latest republican presidential debate was missing something -- a name-calling and anger of the previous showdown. front runner donald trump embrace the idea of party unity. >> i think, frankly, the republican establishment, or whatever you want to call it, should embrace what is happening. we are having millions of extra people join. we are going to beat the democrats. we are going to beat hillary or whoever it may be, and we are going to beat them soundly. nejra: trump is favored to win primaries next tuesday in florida and ohio. he is getting a surprise boost. ben carson is expected to endorse him sometime today; meanwhile, ted cruz had hoped to win his endorsement. the united nations warns that the islamic state is expanding its presence in libya since the death of gaddafi in 2011. it has been a failed state controlled by various militias. the u.n. reports that they have exploited the turmoil and increase their foothold. faces a big test on sunday after a campaign focused on her open borders policy for refugees. she is not expected to quit, even if heard party loses all three votes. resistance to the policy would increase. is marking the fifth anniversary of the deadly earthquake and title wave. more than 18,000 people were killed in the disaster on the northeast coast. the catastrophe also caused three nuclear lacker reactors to melt down. the cleanup will take at least 40 years to complete. global news, 24 hours a day, powered by 2400 journalists and 150 news bureaus around the world. you.om: thank let's do a data check -- nicely quieter than what we saw yesterday. i sat on twitter yesterday that in thesuch an odd day markets -- a 10 year yield year 2%, that big advance, right now giving back, nymex crude still elevated into the weekend. , a 10rman two-year yield basis point move, -0.56 with all sorts of curve dynamics. this which is positive, 15 years after a bout of negativity. francine, you have a look. francine: i like your cross asset check. what i chose to focus on was banks and today they are getting 4.4%, driving european stocks up . that an hour ago we had report saying that they inc. the price of oil has gone down because high cost producers were squeezed out. tom: this is before our guest this morning -- thanks to making aorchard for huge effort to join us in our london studios yesterday. here is the euro, the advent of the euro. this is synthetic euro -- this is the deutsche mark inverted. this is the euro back 20 years. up we go through the average for 20 years, and here is the euro weakness we have seen as we try to get to parity. the major theme forhere is the f the euro. me is mariohetic euro draghi shifting from currency war and currency depreciation to what are we going to do about the european economy. francine: we talk to each other and perfectly planned these terminal charts. when i picked is the relationship between euro-dollar chinese.d -- and the this is the daily reference rate by chinese an authorities. what happens when u.s. dollar rallies? this is so far the relationship. as you have probably guessed, mario draghi hit a milestone yesterday. he announced stimulus that could go on for longer than his own 10 tenure. what does this me for other central banks? our guest for the hour is catherine mann. great to have you. you have insight like no other -- are you surprised by the market reaction? and is this mario draghi pushing a panic button, or a carefully thought out plan to put extra pressure on governments to spend? >> i think it represents not a panic button but a very tailored approach. creditue is to get flowing through the banking system to borrowers. that is what is essential. he has done this and by the negative deposit rates. promote it to the borrowers. know and we have always said that he cannot do it alone. he needs the assistance of the fiscal policy. francine: i want to show you a quote by one of our bloomberg columnists. forout fiscal measures poorer countries he is effectively firing blanks and throwing good qe money out. you don't think that is right. you think he has stopped working on euro-dollar. >> has always been a problem with the banking system in europe. there is a lot of work to still be done but he has a mandate to get to 2%. he knows he can't do it off the back of the euro and that is not something that is affected. he has got to start using the other instruments that he has in order to promote the credit. he is not firing blanks; look at the market. also isn't the only one who should be holding the gun. tom: good morning. let's playoff your classic book. is mario draghi's theory sustainable? what an interesting day -- when i saw more than anything was the dissent of germany and the netherlands. it says a lot about core europe, doesn't it? >> you can tell in advance that they were going to dissent from this type of action. i mean, that is no news. on the other hand, they also have to go along with the consensus and i think we are seeing is a growing consensus within the rest of your that the only way we can get back on inck is to grow consistent order to serve its citizens better. we have to have a concerted effort across the board,, not just with monetary policy. i think this message is becoming clearer in brussels and i would hope there would be a little more fiscal spending. tom: the best article i have seen on this -- just blacks article on what happened yesterday, just exquisite. you notice isthat the word horizon. mario draghi has a horizon. , one of theoecd only institutions -- how long is that horizon? how far away is it? > >> to get to a decent rate of growth in europe? tom: is it two years, five years? >> i think a three-year horizon is not at all unreasonable. a lot of this is about the extent to which policymakers can look like they are acting in concert. expectations are important to the extent that you have policymakers speaking with one voice, saying they will take action in a concerted way. this leads to the private sector taking on board the belief that they think the policymakers are going to do this. the issue is not so much the horizon for the private sector to react, it's how long is it going to take as a collective whole? do you think this stimulus package will be enough to blanket a brexit fallout? >> we don't actually have a stimulus package yet. a package represents more than just what he can do. there are a number of different issues having to do with the brexit and one of them is financial market volatility. this package is not designed for that. this package is designed to focus on the real economy through the banking system. i think it is premature to judge whether this is lon large enoug. tom: catherine mann with the oecd. olivier longshore yesterday. hooper,p, peter deutsche bank with his storied career at the imf. peter guber on the ramifications of the announcement yesterday. stay with us. ♪ tom: good morning, everyone. francine lacqua in london; tom keene in new york. let's get right to the business flash. nejra: thanks. apple will introduce new versions of the iphone and ipad later this month, according to a person familiar with the matter. the iphone will have a smaller screen and will come with updated components. there will also be an upgraded version of the ipad. iphone sales are not growing as fast as they used to and ipad sales are in decline. there is a meyer wants to keep her job running yahoo!, even if it changes hands. they are considering slitting off their core internet business. she hopes there is a place for her. >> i would like to be running yahoo!. i have a strategic plan and can see how that will work. but i think it's about our as fast as they used to and ipad sales are in decline. there is a meyer wants to keep her job running yahoo!, even if it changesusers, about our e. what's happening with all of them. i certainly hope that our services are here year from now, and that they run even better. that should easily be the outcome. nejra: you can watch all of that interview with marissa mayer, tonight on "charlie rose," here on bloomberg tv. the international energy agency says the price of oil may have bottomed out. i predict that shrinking supply outside opec and disruptions inside the group will erode the global oil surplus. that is your bloomberg business flash. francine, you have more on this report. francine: i do. it's an interesting report, that oil prices may have bottomed, and oil prices. are squeezed out. more, we are joined by will kennedy. how much should we read into this? they say that oil prices may have passed their lowest point. we believe them. this is a huge statement. >> it is. it joins a growing course of people who are seeing a bottom. expects prices to rise in the second quarter, will kennedy. how much should we read into this? and the reason is that they are seeing barrels come out of the market faster than they predicted. francine: so when this news broke, i have the regional finance minister onset, and i thought this was great news. but she was very shy, because she is concerned about further volatility. let's have a listen. >> norway will still remain an important oil and gas producer for decades to come, that we need to restructure the sector. we need to make sure we invest in other economies. we need to make sure we have growth. francine: she was saying that she is restructuring, and she doesn't want to say bottom in case it is not. how much do we understand about market dynamics? >> i think they are overshooting. the downside was an overshoot. it's at a bit of an equilibrium because of the high price coming back in. in that a range now, give somebody like norway or other producers an opportunity to look at that in the longer term. to structure the economy is based between 30 and 60, and that is a good range to think about. tom: others who have a lower opinion -- not that we want to predict what oil will do -- tell us about demand as we see oil the down from 100 to 60, rationalization down to the ugly 21. as you say, a bit of a bid. tell me of the demand overlay for hydrocarbons. >> well, yesterday, we were here in london want to get a report from the oecd on environmental .tringency standards i can do a promo for that. if we are looking at cop21, the commitments the countries have made through cop21, the underlying for hydrocarbons is not so good. we have mark carney talking about stranded assets and how balance sheets of banks should be reflected of the valuation of forward, andgoing that puts a further hit on banks , at least in the medium-term. you put that all together and at some cap and what oil prices will do in the medium-term. plus you have frack is out there whose capacity to come into the market is flexible. some people don't think they will because they won't get financing, but financers will have at most a six-month cap and what oil prices will do in the medium-term. memory of who was there, and they will be plenty happy to come back, especially when we are looking at this type of price. it has a peak and the floor on the price of oil. tom: catherine mann, as we look at hydrocarbons. francine, i think it's fascinating to see where it is in six months. i'll be honest, i have no clue. francine: i have no clue. but i'm going to ask catherine mann whether the correlation we saw driven by the oil price is now broken. that's in a couple minutes. this is my teaser. tom: will kennedy, thank you so much. greatly appreciated. book that is getting a very nice notch. lawrence lindsey, former federal reserve governor and economic advisor under president bush, will be with us in our next hour. ♪ francine: this is the picture of london -- it's a little bit sunny. we still have four months of campaigning. it is time for my morning must-read. i picked out something from our guest host -- catherine mann it.ed if you are outside the eu trying to decide where to invest, where are you going to go? to the one that is big, or the one that has less? the problem with looking at the brexit debate is that the uncertainty -- it's for month of uncertainty. how much do they risk jeopardizing it? >> that's a very valid question. i think we are looking at -- four months is not all that long when we are talking about businesses making a long-term investment decision. at challenge we are looking is an exchange rates, which could make it healthier. i think the financial market uncertainty is the direction we ought to be looking at for concerns in the marketplace. francine: are you concerned that brexit will happen? unlesst talk politics you are you can politician, but people also need to understand the potential fallout. >> gets costly. there's no doubt that brexit will be costly. also costly for europe in the global economy. this is not a decision that is anybody's interest. the ecb is very clear. it is also a decision that has to be made by the british electorate. i'm hoping that they will be well-informed. tom: that was political. if you are sitting in your class had to talk about cultural economics, the heritage of the united kingdom, this island nation off of europe, explained to me why the british should stay with this experiment with the thousand regulations that have been foisted out of brussels. it is an overregulated environment, right? >> the regulations are different depending on what the country is and how they are interpreted and reflected. it does differ across the various countries within the euro. you are being a little strong in your language. i know it is early in the morning, but i think how regulations percolate through the economy are very complex and it differs tremendously by country. even under the exact same regulatory environment, the u.k. would be different because of the diversity of the population that is living here, the way the country is differently cited. it would be different than in france or germany. the same regulations in a different environment look different. francine: very fair point. catherine mann. coming up, james foley will join us. this is what the euro is doing right now. we will ask about whether markets are focusing too much on your-dollar. they should probably focus on credit after what mario draghi said yesterday. ♪ tom: i put out on twitter yesterday that it was on all day yesterday. today we have some clarity, with markets update, dow futures up, yields higher. todayis a bit of the risk with west texas really breaking out. on may get a 40 print on wti monday. we have francine lacqua in london. catherine mann and peter guber are with us. right now we have the first word with nejra cehic. nejra: thanks. the u.s. army says newly obtained islamic state files could help authorities crack down on the militant's foreign network. german police says it has documents containing personal data. reports say they have information on how foreign fighters were recruited. it is a new role for enda kenny, now the country's caretaker prime minister. he lost his term in parliament and his coalition lost big in the last election. still, he is favored to eventually be reelected. the embattled president of brazil is once again struggling to stay in office. the latest pressure has to do with the predecessor and mentor. prosecutors want to place him under arrest as part of a widespread corruption investigation which led to fresh accusations. 200 cases of the zika virus have been reported in the u.s.. all of them have been traced to travel abroad. health officials are asking congress for $1.9 billion to fight the virus in latin america and keep it from spreading. obama and senate republicans ramped up the rhetoric over the supreme court vacancy. the president said republicans threatened the vacancy of the court by planning to obstruct whoever he nominates. charles grassley accused the democrats of playing politics. francine: let's take a look at the ecb mayion -- finally turning its nose up at currency wars. joining us from our london office is jane. when you look at euro-dollar, it was tracking mario draghi's every word. is the bigger story what happened on the back of the week dollar? >> i do think this is all about the euro right now, and the foreign exchange market -- the fact that he said there would be no more interest rate cuts -- does that mean that the euro cannot go down any further? the bigger picture, maybe the ecb was trying to come away from currency wars and instead look at the real economy. if that is the case, then this should be perhaps a positive for the global economy. francine: so what happens from now on? does europe continue rallying? >> i'm not sure if it will continue rallying, but the downside potential is more limited. of course, we need to see whether this can be successful and you they can be quite skeptical. but there are central bank that will be quite relieved it didn't go down further; those are the ones being embroiled in the currency wars. tom: the hills are alive with the sound of music. tell me how the swiss national banks will react to this talk. bring up the chart. i want to know, with this keyword of verizon -- can he see the swiss alps? will he do something to staunch strengthorma's switch -- this indoo enormous swiss strength? >> the best case scenario for the swiss would be a vibrant euro zone economy. there is a need for people to buy. that would be the best case scenario, but we all know we are a long way away from that. if they didn't stimulate the real economy, that would be great. it would mean it would be good for swiss exporters. meanwhile, the euro doesn't go down any further, and it doesn t relinquish some of the pressure in the currency war, and that helps the central bank. tom: to borrow from our esteemed guest this morning, there is a little bit of codependency going on here. if there is this function, what aftere swiss do yesterday's historic moment? well, there was some speculation in the market yesterday that when euro-dollar dropped there could have been some intervention although we don't know that for sure. of course now that we see euro-dollar balance significantly higher, they can cite a breath of relief. perhaps they don't need well, te speculation in the market yesterday that when euro-dollar to worry quite so much. i think if euro-dollar had continued to plummet, that could have been a different story. that could have forced another rate cut. likeine: overall, it feels it's risk on. we saw yen weakening -- i have a chart showing the relationship between euro-dollar and what the chinese date in terms of islamic fixing. >> well, i think perhaps the chinese did that for more market volatility. we do see a relationship between how far they pushed it and market volatility. ironically, if we do see more risk on environments, the euro-dollar is probably likely to go down. it does have safe haven characteristics, so that could push euro-dollar low. but are central banks further away and if so what does that mean for the currency war? i would coming to the end of the beggar thy neighbor policies? francine: is it the end of currency wars? this is a time when we saw mario draghi not focusing on currency. >> id. don't think mario draghi ever focused on the currency as his principal channel. with this package of efforts he has put into place, he is trying to balance and focus on the bond markets. them to develop a more vibrant bond market in the euro area so that he has more instruments to work with going forward. in terms of currency wars, most of the central banks that have used negative interest rates -- you can only go so low before people start pulling cash out and putting it into wells fargo trucks. you think the negative interest rates start to make businesses talk to the politicians and say, you know, we can't do this any longer, we can't sit in the middle between a central bank with negative interest rates and an economy that is not moving forward. it puts pressure on the politicians and policymakers who hold the hands of the other instruments -- fiscal and structural -- to get in gear. tom: within your public service, the pressures he faced -- what are those institutions that will have to come to the rescue? i would suggest that it is not oecd; it is not imf. it has to be the adults in the room, and they dissented yesterday. dissented from additional activity to the central bank, that you could say that that raises the ante for them to act like adults in the other room in which they play a role, and that is brussels. certainly no tit for tat in terms of what is going to happen, but if you are going to dissent from the monetary policy tool, and it is the only one being used out there, then you have to implicitly say something more is going to be done, either on fiscal and on structural -- both of those things have more to be done in europe and more to be done through brussels. tom: that's the most important thing we have done in the last three days. if you will dissent, you better do something. mann, she will continue with us. jane foley, as always, thank you, thank you, thank you. yesterday's historic hour. coming up, peter guber with deutsche bank. on.re thrilled to have them this is fun. francine lacqua, tom keene, bloomberg "surveillance." ♪ i refuse to translate from fahrenheit to centigrade on a friday. the average march temperature is 48 degrees. it has been spectacular in new york, 76 yesterday, 67 degrees today. that would be fahrenheit, francine. fahrenheit. francine: talk to the hand. it's about 16. 16 degrees. tom: refuse to translate from fahrenheit to centigrade on a friday. the average march temperature is 48 degrees. i am so inept.ctacular right now, let's get to the bloomberg business flash. nejra: thanks. intercontinentalexchange has decided to keep the london stock exchange. that is according to people familia familiar with the matte. it keeps the london exchange. and i have an easier time with british regulators. bank of america has fired at least 15 senior bankers in its investment banking unit, according to people familiar with the matter. they also cut junior positions. investment banks around the world have been cutting jobs because of market turmoil and a slowing chinese economy. deutsche bank employees are paying the price for the company's rising legal expenses. 11%, theon this is by latest move by the ceo trying to increase capital levels and profitability. and that is your bloomberg business flash. francine, you are sticking with banks, right? francine: we are. let's bring in our chief economist. let's take a step back. let's look at negative rates. what was announced yesterday from mario draghi -- lenders were down, but now have gains. this is because he hinted at the fact that they won't be negative for a lot longer. he wouldn't cut too much deeper. >> right. negative rates are bad for the banks, so any end in sight is good. you saw the banks talking about making adjustments to this new world, changing some of their pricing, changing some of the fees they charge. they are doing their best to adapt to what is a tough environment. francine: how difficult is it to understand the side effects longer-term? we heard from the bank of international settlements, saying it may crush banks, goalie have been assured by the ecb that they were looking into it, that they wouldn't do anything to hurt them. >> one of the pieces of yesterday's announcement was -- they are effectively balancing the negative interest rates on one of the negative borrowing rate, so you pass that to a borrower and you get a spread off of that. you can use it to enhance profitability. that is an effort to use two lovers at the same time and get online lending to the banking system. it's very, very fine-tuning. we don't know exactly how it will play out. tom: help michael moore out. -- yesterday, olivier blun blunt- -european banks have not cleared out their lousy loans. catalyst to get the european banks to be more like united states banks? >> banking union? that is a key element. or the prospect for the banking union going forward, getting the deal. ifwould also be helpful there was a clear indication from brussels on how treatment of bad loans is treated from the aide.oint of that was resolved once in favor of the italian approach, but it took a long time for them to get corporate permission to do that. that would be a clarification. it would also be very helpful if there is clarification on how to treat the valuation of assets if to an asset be sold management agency, how the losses might be treated on the banks p&l statement. there are a number of pieces of it, but if there was some clarity on the fact that we wanted to have npl's reduced in the banking to an asset system, and announcement of that, and put the pieces in place to make it happen, i think you would see it quite a bit -- tom: michael moore, you can go home. [laughter] tom: i have banks in the united states with a very weak first-quarter. the european banks -- are they giving us a clue? >> you saw it this morning with deutsche bank. not only did they say that the first quarter has been rough, but training for the whole year is likely to be down. you can somewhat back into that. if you have a bad first-quarter, the first quarter is usually the biggest of the year, then it will be a tough year. but deutsche bank coming out and saying 2016 as a whole is likely to be down -- i think that is part of the reason you are seeing pay down. francine: we heard that the bonus pool was cut. then we also heard what you are mentioning -- that they expect the industry's revenue to decline this year. this is no surprise, right? john cryan on bonuses and trading revenue -- he has said this in the past. >> yes. as in this january if ever i came around with so much volatility, it looks like it would be a tough year. the bonus issue is not as bad as some would fear. late in the year, some of the bankers had reports of cutting 30%. instead the investment bank was down much more. maybe not astra akoni in, but certainly he had said that we will be paying less than some of our peers. tom: have a great weekend in london. two more and they won't know you went to duke university. michael moore. we continue with catherine mann. we have to talk to her about her historic work on china. in the 7:00 hour -- this is important -- a conversation with mohamed el-erian. this is bloomberg "surveillance." ♪ tom: thank you for your many comments on our coverage yesterday. a wild 48 hours for international economics. we are thrilled to have catherine mann with us, of the oecd in paris. codependencyphrase and economics. that has to do with china. before we get to central-bank divergence, let's look at the codependency of germany. i didn't realize how interesting this chart was. this is german exports believing -- ballooning as a percentage of gdp in that going flat. to desperate is mario draghi keep the german export machine going? >> i don't think mario draghi is thinking about the german export machine. germany is running a 7% current-account surplus; it's not as if the export machine could be kept in high gear. tom: if that is the case, how do central bankers act when you look at trade flows that will be coming up? >> central bankers -- at least in the ecb -- their objective is a 2% inflation target. ,he channel from trade flows you treat them the same way as you would treat other economic activity. the exchange rate plays a role, but one of the things we have been noticing recently when we do our work is that trade flows in general have been less elastic for a number of different reasons. at this point in time, over the last 18 months to two years, tree flows have been affected by the demand side of the marketplace. tom: this is a big mistake that we in the media make every day. we look at the different atamics and some pros look that massive german surplus. francine: right. you talk about the media making mistakes. catherine, i wanted to go back to whether you think mario to convinceiling the markets because they threw the kitchen sink at it. of seem to have an approach they were trying to find tune it , and that some of their measures counteracted each other . >> what is the problem here? one problem is we have a very bank dependent system in europe and if you don't get credit, can you are not going to be successful in getting to your 2% target. there are complementary issues with a bank independent system -- if there is not enough equity to use your asset channel, if there are not enough bonds -- some of the things they are doing -- and this is a horizon -- they are looking forward to a situation where there is banking union and a much more well-developed equity market and bond market culture here. it is a long way away, but you want to set up now for a strategy to get there. by incorporates is one of them. then what will they use it for? maybe for their equity purchases. francine: if i am governor kuroda in japan, how do i look at what mario draghi did ?esterday > he seemed to suggest a negative territory. >> japan has the issue that they one and twoing arrows the not so much on the third. they have reconfigured it to focus on specific issues, on women in the marketplace, caregiving and so forth. --an is a different issue they have the same problems they have had all along and negative interest rates will not help them get through what is a very significant structural problem. in the united states, we are looking at an economy that had pretty good job growth. reserve has to pay attention to what's growing on, but they are on a pretty good situation for the u.s. it could be better, but it is one that she should be pretty happy about. tom: very quickly, hackable janet yellen respond to what we saw? >> in terms of talking about it? she will say that mario draghi has engaged with a set of instruments that are appropriate for the european ,tructure and financial system and the extent to which he has partnership and help to the other this was structural instruments. he has done the right thing for his objectives and we have a different structure. then she has a different job to do. paris.e oecd in coming up, we continue our discussion on what you witnessed yesterday in the markets, in economics. peter cooper joins us. -- peter cooper joins us. ♪ druggie bets all in the search for economic growth. there is no showing -- draghi that's all in the search for economic growth. there is no shangri-la. hooper ofour, peter gub torture bank. good morning, everyone -- this is bloomberg surveillance, live from our world headquarters in new york. i'm tom keene. with francine lacqua. civility in the debate last night. they almost acted like adults. it was a miracle. francine: in u.s. politics, they are acting a little bit more like adults. the markets are getting a second look at mario draghi. today they are acting more luck -- more like -- let's get to bloomberg first word news with nay rich a hit. >> the name-calling and anger of the previous showdown was missing. donald trump embrace the idea of party unity and said his campaign has been a positive force. trump: i think frankly the republican establishment should embrace what's happening. we are having millions of extra people join. we are going to be the democrats. we are going to beat hillary or and we they may be, will be them soundly. nejra: former candidate ben carson has agreed to endorse him. challenger takers hopes to win the carson endorsement. the united nations warns islam x state is expanding its presence in libya. muammare death of gaddafi in 2011, libya has been a failed state controlled by militias. german chancellor angela merkel faces a big test on sunday after a campaign focused on her open border policy for refugees. three german states will hold elections. merkel is not expected to quit even if her democratic party loses all three votes. but resistance to the refugee policy would increase. japan is marking the fifth anniversary of a deadly earthquake and title wave. more than 18,000 people were killed in the disaster on japan's northeast coast. three nuclear reactors at the fukushima power plant melted down. the cleanup continues. the japanese government estimates it will take at least 40 years to complete. global news 24 hours a day, powered by 2400 journalists in more than 150 news bureaus around the world, i'm nejra cehic. tom? feel.t is a risk-on after we saw the oddest of days yesterday. futures up big, dow futures up 161, 17,000 61. 110 --ng to called 1.1086. stronger, really beginning to break out. news this morning -- on to the next screen. the vix, 18.05. to negativeear goes 0.46. that shows you how much work mario draghi has. fran? after yesterday's selloff, you can see banks are going 4.2%. there are still analysts out there that say mario draghi through too much -- threw too much at it, everything but the kitchen sink. he is not trying to play out anything on euro-dollar with the 1.10. he is focusing on credit. tom: let's go to the bloomberg right now. , back toynthetic euro million years. this is the george mark, -- this is the deutsche mark, inverted. here is the average of the euro, back 23 years. down we go, the weaker euro, nowhere near parity, but it goes to the historical backdrop that we saw yesterday. francine, what do you have? francine: the implications we saw on euro-dollar yesterday are huge. i want to show you this chart. the blue line is the fixing for the daily reference rate. the red light is euro-dollar. is a significant move that also impacted the yen. tom: showing the interdependencies of the global system. we are thrilled to have this morning after the wonderful coverage before mario draghi and during mario draghi, thank you, olivier blunt chart for your stash olivia plan chart for your -- olivier blanchard, for your input yesterday. i'm surprised i did not get a phone call. i have to talk to deutsche bank clients worldwide. what did you say to your clients yesterday at about 9:00? >> i was initially quite impressed. it. at first i thought mario draghi had pulled a rabbit out of a hat without significant depreciation of the euro, but the real meat in this program is that t ltro 2, which adds a lot more stimulus to the general increase in credit creation for the european area. tom: has he become the de facto finance minister for 148 nations in europe? peter: the ecb is the only real unifying macro policy organization there. things, think said some again to put a little pressure. we need more from the fiscal authorities, more structural reform. there is only so far we can go, but, yes, he is in demand. francine: would it take so much for the markets to understand what he was trying to do? yesterday we saw a selloff, and today we see again. peter: there is a feeling that central banks are scraping the bottom of the barrel. we do not have a lot further to go here. he did pull out a lot. upside ined to the the amount that he did get done, and i am not surprised to see some retracement this morning. francine: mark gilbert wrote in "bloomberg view" the following -- this is the train of thought that maybe 20% of people we speak to think. you disagree with that totally? peter: i do. certainly the ecb's action is having a significant impact in terms of credit creation and what we are seeing in the way of growth. tom: my operative were this morning is what i heard from mario draghi -- horizon. getting out in front of asset repurchases. what should be the appropriate horizon for all institutions as struggle forrope economic growth? is it five years, 10 years? goes out fourro years. what mario draghi is doing in buying time is to get on with it, to start to get some of these structural measures that are needed. tom: what is the exhaustion a shot that could get in the way of him buying time? he does not have a free -- what that couldenous shot get in the way of him buying time? peter: we looking at increasing uncertainty driven by a number of geopolitical events. that is going to be the challenge. francine: we also learned he is expecting inflation and inflationary pressures to be maybe much more than we were expecting a couple of months ago? seer: you are starting to some turn in the oil markets. we know we are going to begin to see an adjustment in the supply/demand balance there, which is going to be helpful. the continued positive growth and tightening of the european labor market over time will be helpful. but this is going to be a slow process. francine: in terms of the biggest risks out there, brexit is one. we know from comments made in wait a that people do lot more than they let on. will this be a safety blanket? peter: i think it helps. mario draghi pulling out all stops, trying to get things moving here, certainly is a plus. tom: olivia blanchard yesterday was adamant -- you have been a global economic optimist as well. i saw ireland with pretty good numbers yesterday. will you explain to the average public why we are doing all this if there is no fire in the house yet we are seeing good economic numbers from ireland, from the united states, etc. peter: a number of countries are above average, implementing a lot of -- made a lot of progress in the right direction. but the overall area is still hurting. you are just barely above the growth level you need to be at to run the unemployment rate down to begin to get inflation up. the inflation problem is driving the ecb. they have been hurt i what is having -- by what is happening globally with oil prices, etc. tom: we have been trying to do this recently, paring smart people for insight. peter guber will be joined by jim mccaughan, the principal at global investors. this will be very good for the dynamics of europe and america. ♪ beforesterday or the day was the umpteenth anniversary of the purchase of louisiana by mr. jefferson. the library of congress nestled there behind the nations capital. the louisiana purchase is nestled there in a file down on floor three in the subbasement. this is "bloomberg surveillance london, from new york as well with a beautiful shot of washington. here is nejra cehic. technology turned down and $18 billion takeover. ceo gregory hayes may look at the aerospace them a fire or security sectors. he spoke at a conference in new york to investors. for bp and involving the gulf of mexico oil spill. a court has ruled that bp will take lawsuits by energy companies. ap has already paid out $55 billion in damages from the spill. the international energy agency says the price of oil may have bottomed out. the iaea prints shrinking supplies outside opec and disruptions inside the group will euro the global oil surplus could oil prices have risen 50% from the 12 year lows in january. that is your bloomberg business flash. francine: over 1/5 of the german population will vote in regional state election sunday. the outcome could mean support -- could mean weakening support for angela merkel. hans nichols, let's kick it off with you. angela merkel is probably the most popular politician in europe right now. some say she is holding the whole project together. is she going to lose badly on sunday? to losee was going provider not know to what extent how badly it will be. she is not the most popular politician in germany. her popularity rating has taken a big hit. a moreg schauble is in popular position. there is no indication wolfgang schauble wants to challenge merkel, and there is no indication merkel is going to change her position on refugees and migration because it is unpopular. in some ways we are set for a collision course. we will have a regional election, and the most important thing to look at is how well they do. the reason why it is important, they have a 10% unemployment rate there. the former east german state. they had a 4% unemployment rate. i'm interested to see if it crosses the 20% threshold. francine: how much of the newspapers talk about the refugee crisis? is there a way out front to deal with the crisis, how it will have to change? hans: that is probably what some people in her party are urging her to do. that is what the cfu is urging her to do, her sister party. merkel has indicated clearly, privately, publicly that she is not going to change and it would be unconstitutional to change, and it would violate a variety of geneva conventions if she changed. so merkel, whether or not she suffers at the polls, is locked into this position. are looking at live images from the macedonia-greece border, to the north of greece. one of the tension points -- hans nichols, i do not mean to be rude or cruel given the human suffering, but what is the marginal refugee dynamic for the mood in your germany? if it is 20,000 a day coming in, where are we monday? where are we wednesday? where are we a week from today? gets to the question of whether or not germany can absorb the refugees. let me go back to the messy aboard -- on the go back to the macedonia border. with the fighting among eastern european countries, that is making her job easier because the slow -- the flow is slowing down. whether or not germany itself millionrb another immigrant asylum applications this year, most people say yes. the question is where do you get beyond that? how do you apportion them within the population? some serious are -- some cities are more capable of absorbing the infrastructure, others are not. we should not discount it, because especially in the former east, there are a lot of incidents of arson, refugee attacks, pretty ugly stuff taking place. to give that any more oxygen. that is one of the challenges merkel has. regardless of her popularity, how that she tamped down the ugliness? tom: with us is peter guber of deutsche bank. -- as -- with is is peter hooper i want you to a dress how your team has adjusted to the economic forecast because of migrants, because of refugees, and immigration dynamics in europe. how does that fold into a spreadsheet does? peter: there is a plus and a minus here. there is an inflow of new resource that is going to be raising europe's potential growth over time. the minus is the adjustment cost during this transition, which has political implications, as we are hearing. we would like to see your making progress on the structural front. mario draghi is buying all this time, but we have political events intervening that are a bit of a drag on the whole process. i know it is difficult to focus too much on political things, but angela merkel is really the savior when it comes to a lot of the periphery countries. sidestepped, if she is the chancellor because of the refugee crisis in 12 months, how much damage will that be for the eurozone? that is clearly a negative. angela merkel is important. process at this point. i would not want to try to quantify it, but clearly it is a negative. tom: coming up later this morning on "bloomberg ," mohamed el-erian of alley ons -- of allianz. we continue with peter hooper on bloomberg surveillance. ♪ tom: good morning, everyone. talking with peter hooper of deutsche bank. francie likewise with us as well from london. ,et's migrate away from draghi from economics. let's migrate to the train wreck known as yahoo! their chief executive officer, marissa mayer, came through the door of charlie rose studio. she talked about the idea of her pass over the coming months and years. let's listen. i think the people there are terrific. i love our user base, and the products we get to work on is really exciting and i would love to see it through. to get the most value, so i would hope that they have a place for me. that said, we will obviously honor our commitment to our shareholders. here,ome background news in addition to the yahoo! board -- francine, how does this play in london? rationalization on what they are doing -- how does it play across the ocean? francine: it plays every day because we all have links to yahoo!, so marissa mayer, as you know, she has attracted a huge investor concern. i want to show you the share price. we look at it and we think as a ceo, if i were in her shoes, what would i do? tom: nice chart. francine: you like my chart? i work so hard for you, tom. she is supposed to do what is best for her shareholders, but these are tough times. you have to question where yahoo! fits in this kind of proxy game. tom: i think it is fluid, to say the least, and that goes across much of technology as well. peter hooper at deutsche bank, quickly, the arch issues of politicians that they address is that these companies do not employ a lot of people, do that? this is not ford, gm, ge, is it? future of but the technological advancement is centered a lot in these small companies. productivity growth has been dismal in the u.s. for the last five years. the hope is that spending on r&d , spearheaded by a number of these kinds of companies, is going to give us the wherewithal to begin to pull people out of that. tom: are we missing the accountability that ms. meyer and others have on the economy? peter: know, we are not. as soon as we get rid of a number of uncertainties holding us back, we will be able to implement some changes that will bring productivity out. tom: what is the deutsche bank call on u.s. economic growth? peter: we have been on the low side of consensus, something less than 1.5%. tom: really? peter: consumers are doing well. we have pretty good numbers for consumer spending. what holds us back is a lot of drag from exports because of past depreciation from the dollar, and we are on the cusp is a significant inventory correction. tom: we will continue our discussion. look for the interview with marissa mayer tonight on "charlie rose." ♪ francine: bank stocks leading the rebound here i, european stocks trimming. banking stocks getting by 4%. euro-dollar, 1.1086. tom: very good. there we are with the data check. right now, let's get to news. our first word news with caroline hyde. caroline: the u.s. army says newly attained -- newly obtained -- german police say it has islam and state documents containing personal data. media reports indicate the files have information on foreigners fighting for the group and how they were recruited. , can he lost the bid in parliament for a new --m, throwing ireland into --rival is looking to gain kenny is favorite to be reelected. the embattled president of brazil is struggling to stay in office. pressure on dilma rousseff has to do with her predecessor, lula da silva. prosecutors want to put him under arrest after first accusations -- after fresh accusations. almost 200 cases of this give virus been reported in the united states, all of them traced to travel abroad. health officials are asking congress for $1.9 billion to fight the virus in latin america and keep it from spreading to the united states. president obama and senate -- senate judiciary chairman charles grassley accuses democrats of playing politics when it comes to nominating a new supreme court justice. tom: good morning, everyone. global news 24 hours a day, powered by 2400 journalists in more than 150 news bureaus around the world, i am caroline hyde. tom: we are thrilled to bring in jim mccall had -- jim mccal aughan. it was so nice to give mr. druggie something to talk about. economists -- how do you adapt and adjust to the shock of yesterday? jim: i do not think it was really a shock. i think he did all he could to keep the european economy ticking along, to keep it positive. the problem, i feel, is that monetary policy is not the only answer. there are problems with fiscal policies, which are tight across the eurozone and uncoordinated. you have a set of structural problems including the fact that adequatelynks are capitalized. i am subdued in my outlook for europe, even though yesterday was a positive step. tom: wander over here, anthony. this is one of the equations of inertial force, which is how economists like peter hooper take newtonian physics and mechanics and bring it over to the world. the fact that europe has a complexity with these divisions -- with these equations do not work. moving parts,many and that is the challenge that draghi has. peter: absolutely. one aspect is slow growth. but the ecb is focused on inflation, and you have to throw into the equation what is happening globally, which has been working against them, the drop in oil prices and the fixed commodity prices. that is a plus for growth but it is clearly negative for inflation. so important. i know francine wants to jump in here. it is so important, the complexity that druggie has to work with -- that draghi has to work with. jim: you have human behavior, and human behavior is very complex. in europe you have not won fiscal policy but many, and some of it good effects and some of it bad effects. are pretty france flat. remember, the last three or big economies. i would suggest it needs a real good kick to get the eurozone moving. i think yesterday was positive, but it probably needs to get back on the sort of 1% or 2% growth they really want. mathematic love that equation. a little bit early in the morning. hooperis is what peter learns. this is psychology. youou are mario draghi, do say negative rates -- do you need the confidence, to give confidence to consumers that you are there? that you are there and you will it?ort jim: mr. druggie is doing everything he can, but when -- draghi -- the last part about the labor market is why you have buoyant employment in germany and in britain, but you have quite bad unemployment italy, andance, spain. spain is taking steps in the right direction, but there is not much going on with respect to france and italy. do whatre france you you can and advocate something more constructive elsewhere. if you are janet yellen how do you respond? of thethink the strength euro and the yen against the dollar, the fact that upward pressure has gone off the dollar, takes some of the pressure away from the u.s. economy. for u.s. domestic condition, maybe the fed funds rate at the end of the year should be 75 basis points. strong dollar,e it could not. peter: two things. one, the negative reaction to yesterday's backed by mario draghi is overdone. tro2 is an important extension of what he is doing, which is raising credit growth for the european economy, and that has been a significant plus. the fact that he has been able to do this without a significant depreciation of euro is a plus , giving the fed room to move later this year. francine: we just had some breaking news out of the pboc. on their website, the latest figures in terms of the new loans. china's february new loans came in significantly below expectations, 726 billion instead of the number we were expecting. china, away from currency devaluation and the at theat they have -- end of the day this huge pile of debt could impact financials, are you confident that they are trying to rein in, that the , and are being reined in that authorities have a good handle on how to monitor -- how to manage this economy? peter: there is plenty of room for further monetary and fiscal expansion. we are now actually seeing on the plus side, fiscal spending. we are seeing the property market pickup, and that will be supporting investment near-term. but there are challenges down the road, and this bad loan situation is one of them. tom: let's continue with peter huber of deutsche bank and jim: -- peter hooper of deutsche bank and jim mccaughan. coming up, we will catch up on what we do on international relations. we continue on economics, finance, and investment. "bloomberg surveillance." ♪ francine: live pictures coming in from london. ,oris johnson, the london mayor is speaking about why he has decided to vote for brexit. on the back of what we heard from draghi, we have to look at the brexit debate. let's get straight to the bloomberg business flash with caroline hyde. carolina: deutsche bank says the revenue will fall this year in the investment banking sector. deutsche bank said clients will refrain from doing deals and meanwhile, deutsche bank has cut bonuses by 11%. the iphone will have a smaller screen and come with updated components. there will also be an upgraded version of the ipad. ipad sales are in decline. therade is now targeting health club crowd. it has gone digital. according to "the wall street journal," the sports drink owned by pepsi is coming out with a smart bottle that has a microchip and a sweat patch. update customers on how much they should be drinking. tom: how about the first sentence of larry lindsey's -- "thel effort american public is angry." this is percolating for republicans and democrats. it is about inequality but much, much more. it is lawrence lindsey's primal scream about the elites. we welcome larry lindsey, working with reagan, bush 1, bush 2, and bush 3 did not work out. what happened with him yak of you are the expert. larry: jet was caught up in the times. he did not understand public anger. one example is what he did with the common core curriculum. the ruling class are people who think they know better than the public, and that is part of the problem. the common core idea was yet another test so the bureaucracy could measure schools. that is not what the public wants. they know perfectly well whether their schools are good or bad, so i think he signaled in a number of ways that although he was a good reform-minded conservative, and in another era may have been a great president. tom: let's go with a quote from the book here. he sets out his agenda. tom: when does the threatening start, larry? larry: well, i think the public has understood that, and perhaps the ruling classes feeling threatened right now. that is true in both parties. sanders phenomenon on the democratic party is a sign of things on that side of the aisle, as much as the danger on theestablishment republican side. they feel threatened. they still think they are going to win. tom: does 3.2% gdp solve everything? larry: i think there are two pieces to it. not only have they done a bad running the country, but more importantly, people are angry that they are being treated like children. the ruling class thinks they know better how to run your life than you do, and there is a lot of that going on. the attitude is a tough thing to hide, and that is what people have really gotten angry about. incompetence is one thing, but incompetence and arrogance are a difficult combination to put up with. francine: does fiscal policy need to be doing more in the u.s.? larry: one of the problems we have had with the way we have been run is we focus too much on quantity -- quantitative easing, quantitative fiscal policy. we are not doing well with the money we are spending. i point out in the book that the government, which should have economy when it comes to more per footds of road than we do on our driveways. and better schools -- we spend about 30% more on our schools than they do typically in europe, and yet the united states is three quarters of the way down the lead table in the way students perform. the worst case is inequality. everyone is talking about inequality. no one has ever run on favoring more inequality, and yet we now of personal income on transfer payments, payments to people -- that is one dollar in six and it is not working. francine: a lot of people in europe are saying this has been a side effect of monetary policy. given that, do you agree? is it time for the fed to substantially normalize? managedell, the fed has to dig itself a huge hole, as have other central banks. they have done it for good reasons. stealing -- onep a step-by-step dealing with a crisis, that is what was done. i think it is going to be very difficult to get out. i think my preference would be to sell off assets before you raise rates, but there are different ways of doing it. but we have dug ourselves a deep hole and i will be tough to get out of. -- and that will be tough to get out of. tom: here is jim a coffin with ughan with a question. jim: education is really the key , and we haveility spent a lot of money on education, both in the u.s. and in europe, but we have not gotten very good results. do you have good ideas on how we might repair that and get education working better for social mobility? larry: education in the u.s. is not run the way every other business is -- i.e., there is no customer. monopoly, aially a monopoly that is about as good as the post office. the post office actually does a better job now. they treat people like they are captives. you have to go to the local public school, for example. so when you have a highly unionized public sector monopoly, no doubt about it, you're going to create a bad product. what i think the answer is going to be is that the customers -- in this case, the parents -- really need to be empowered. i do not think people will rush away from the local public schools, but i think the public school is going to begin to treat the parent like a customer and not simply as a captive in the way of generating money. tom: we have to get you back on to talk about the republican donnybrook at some point as well. we will continue with dr. on radio as well. everybody should read this -- "conspiracies and the ruling class." larry lindsey is always getting people to think. peter hooper and jim mccaughan are with us to discuss economics. we do that within risk-on. dow futures up 141. , 1.1092. this is "bloomberg surveillance." ♪ tom: mario draghi looking for a lost horizon, the euro, 1.1097. that is the foreign exchange report for this morning. francine? francine: forex and negative rates coming up shortly on "bloomberg ." stephanie, you have two great guests on the show, talking about the power of negative rates. the note: and maybe d so strong power. mohamed el-erian be talking about unconventional monetary policy following yesterday passed ecb announcement, the ecb stepping into buy corporate bonds. who better to counter that argument? pimco is now buying government bonds. and the ecb is buying corporate. guess what -- if we do not see a real reaction out of the ecb carryings mario draghi a bazooka or a water gun? these gentle men are going to weigh in. francine: the bazooka -- we had a great guest on monday saying they were carrying a bazooka. stephanie ruhle with "bloomberg " shortly. tom: jim, i want to go quickly to you before francine brings in dr. hooper. i do not hear much discussion ramifications if britain exits. do you stay off at night worrying about your scotland? jim: i do not stay up worrying about it, but i am increasingly concerned about the economic impact of this kind of disintegration. i think a lot of the wealth of the western world was achieved on trade, and i think anything gets in the -- i think anything that gets in the way of free trade like rex it is very bad. having said that, the sentiment on brexit, it is like larry lindsey was talking about, it is anger at the elite, which is highly understandable. but if you go beyond that and have a brexit, you and up with a period of difficult relations on trade, which could quite -- which could cause quite severe economic damage. i am concerned about the anti-elite, the anti--trade thing going on. sanders campaigns have the same idea behind them as the brexit campaign. sure if it is not going to be a shock. our money markets going to be frozen? no matter what the u.k. public decides will survive. peter: we have talked about it quite a while. we have seen this as a close call all the way. if it happens, it is clearly a negative for the u.k. economy, for the euro area all along. the potential for opening the door to other departures down the road, i think we see this as a significant hit to gdp growth for the u.k. and europe. tom: is what we saw yesterday, peter hooper, more than a primal scream about austerity? is that really what mario draghi did yesterday? mario draghi is dealing with a number of factors. the political discontent in europe is a risk to the overall enterprises there, but i think, as we noted earlier, a number of global factors holding down inflation, which is the ecb's primary objective coming to play. tom: jim, i have only 20 seconds. if britain leaves the european union, do you change your offices to some unknown city in europe? jim: i doubt it, but that depends on how the ability to do market activities from london changes. the e.u., the remaining e.u. could put up the barriers. it is to be hoped and their interest that they do not. tom: jim a coffin -- jim mccall uahgan and peter hooper, thank you so much. " with"bloomberg mohamed el-erian. monday, richard haass on the council on foreign relations. this is "bloomberg surveillance." ♪ stocks up european after the ecb's dramatic expansion of its stimulus program. we will be asking our very special guest. turn of tone. republicans hold a subdued debate days ahead of one of the biggest primaries of the campaign season. and deutsche bank, not so subdued, blasting its opponents by 10%. is it enough to boost profitability? stephanie: welcome to "bloomberg ruhle with stephanie jon ferro and david westin. a massive week we have had. david: the day after. stephanie: you wake up today the ecb, oil up in a big way, pushing goal down. the markets do not give us a rest. jon: if i told you the ecb was going to