decision 40 an ecb five minutes away at 12091. tom: it is a focus for europe and maybe the united kingdom, today the ecp meeting is a focus -- ecb meeting is a focus for america. i have to go to the real yield and i do not know -- i do not mean your platform, i mean the 10 year inflation-adjusted yield. point 005%.ve one look at the german two year that screams disinflation. jonathan: i will take the promo and build on it. we have talked a long time about rates low for longer and we have to talk about financial conditions easier for longer, that has to be the message. focus on our commitments and the duration in this market with metrics -- max flexibility. that will be the story worldwide. tom: i make jokes about it. johnny could not get a beer in frankfurt the first time he did his work on ecb meetings. how close to japan, tokyo is christine lagarde? jonathan: in terms of the bond market and amount they are buying? everything coming out of the beiphery, net issuance, will bought by the ecp. -- ecb. net supply coming out of europe

economist ecb chief now joins us. thank you, as always, for making us a little smarter on the thinking that we should be following through looking at the european central bank. peter: it is important to see that the decision to recalibrate measures has already been taken. what we discussed today will be calibration. about projection. projections is a signal, how the ecb seems the longer-term process. the short term has not been very good with the second wave. the recalibration would be looking at preserving the easy financial conditions you have today in the context of the strong issuance of public debt. the ecb has been buying most of the net issuance of public debt recently since the covid crisis. i think that will continue in the longer-term. probably for an additional six to nine months. on which the ecb will insist very much is the bank lending channel. there is a scheme of funding for lending, a very generous one. enterprisesbiggest covideen lesser than the shock. you know the situation of european banks remain

the ecb story. christine lagarde at the ecb meeting. some sort of verbal intervention on that strong euro. iron ore is on another tear today. up more than 5%. it's the highest level we've seen since they have been traded. this is about insatiable demand for iron ore in china. an commodities. brent crude a little bit higher this morning as well. they are shrugging off the stockpile build we saw in the united states. they are looking to the hopes of the vaccine opening up the economy once again. our top story this morning. there was no deal. you can pry minister and european commission president dined on scallops last night. when it came to brexit, they were unable to reach an agreement. negotiators have until sunday to come up with a deal. for more, we are joined by anna edwards, the duchess of brexit. she knows everything that's going on in brexit. i feel like it is the boy that cried wolf. we've seen these deadlines come and go. how likely does a deal look now to actually happen by sunday? anna: i have another phrase for you. it always

matt: i want to ask you about the ecb. the chance that christine lagarde says something about the euro. it makes eu goods less competitive. flaring --ngs dissen disinflationary influences. will they do something today? mark: they will not do anything real. i think this whole ecb thing is a little bit of a red herring. it's a nonstory. people have to get excited because the ecb is coming up. analysts are paid to be full-time ecb analysts. they are likely to mention it. doy are not likely to anything particularly concrete right now. i don't think it will change the game. i think it will be hard to see the euro on monday trading off anything that the ecb does today. there's a chance that we get a short-term move either way. day traders need to be focused on it. ecbmost macro people, the is not an event today. matt: thanks very much. we get somet, further thoughts on what we can expect today, rescuing the euro zone. the ecb is set to deliver another blast of monetary stimulus to pull the block out of the pandemic crisis. anoth

the ecb is in a position where it is stuck. it has to stick with this policy and it will for a long time. portugal, andly, spain, can you assume that you are -- you are borrowing costs will remain at zero for as far as the eye could see. i canume: as far as the depends onye can see how short or long cited you are. for the next years, absolutely. and this will coincide with a time when your fiscal rules will not be reinstated. to put it simply, the ecb forecast had all of the projections and not assessments and they assert that the returns will be in the third quarter of 2022. so, if only to feel -- fill the todemic hole they need pepp run until that time. what did we get today, a pepp until march of 2022. they keep keep -- they keep taking over with efficiently larger amounts. alix: that is only the pandemic, and then there is the inflation issue. it is not like they had to percent before. -- 2% before. how much more is needed to get that done? guillaume: i do not think it is a question of amounts, as was discussed during the m

this morning, a critical ecb meeting. it is not antietam of 1862, it is not the great galveston hurricane of 1900. it is the one-day pandemic death in america of 3000. good morning, everyone. this is "bloomberg surveillance ." tom keene in new york, francine lacqua in london. the news flow is extraordinary. we didn't mention one word in the last hour on this horrific pandemic. extraordinary in america. what do you see from london on the pandemic in europe?

the ecb announced last week and a fresh round of policy measures. even three years from now, it is still well short of its inflation goal of just under 2%. during us to discuss some of the financial stability mechanisms is the former ecb vice president. thank you for joining us on surveillance. are investors underestimating the pain which the european economy will have to go through because of companies going bust as we adjust to a new normal? next year, we will face some time,ms, but at the same there is many good news in the forecast. in first place there was of approvale recent final of the deep package of the which, at least in the second half of next year, will start helping the fiscal stimulus in all countries. at the same time, the package from the ecb will help along the terms of supporting any independent decision by havel authorities to inappropriate fiscal stimulus next year, but the same time, helping the credit supply expansion the providing at the very low interest rate, minus one, in order to keep up the credit .upply it is true that

duration more important than size at this point for the ecb? >> i think they're trying to remove risk to keep a bonded deals compressed. they're playing with duration as well as size. i think it is worth pointing out the ecb is a huge player in the bond market. at the end of -- by the end of the year, the ecb should own 40% of the german bund market. they are doing yield curve control without announcing it. they just need to keep costs low for a while. the message to governments is we are egging you on, we are keeping costs low so go ahead and borrow to spend. as things pick up next year, if there is a vaccine, you should get relief. particularly in northern european countries, as they pick up can the ecb back out of this? i don't think it can for the southern european countries which will have less of a bounceback. alix: tenure bonds auctioned at a negative yield so they are going out and spending. marco, how does the ecb navigate that along with what they perceived to be a stronger 2021? >> the focus is on financial conditions. they want to p

now, the ecb has lifted its band strict limits on pale lenders. below 15 percent of accumulated profits for 2019 and 2020, and the ecb supervisory board chairman told bloomberg it is an important opening. vestager: this is important, but we are enabling banks to a pay within a certain threshold, within a supposedly rail, and these will change with respect to where we have been after importantit is an opening, which has been broadly supporting the supervisory board and which recognized that we are slowly back to normal. although we are not hitting normality. >> broadly supported, suggesting not everybody supported it. andrea: no, but broadly supported. dividend allowance that you would allow on a case-by-case basis, a bit stricter than what was announced in the u.k., stricter than what we are seeing in the u.s. is that going to be a problem in the banking sector, as far as competing for investments, staff, and so on? andrea: i do not think so. the important thing is the opening to receive payment, and we also gave forward guidance, basically, we in

we will talk about the ecb. a regular guest on this program pointing out that, given what he expects from the ecb tomorrow, the european central bank next all of thebuy 70% of bond supply that comes from european governments through the entire year. 70%. that is not net supply, either. that number is much higher. here's the story for foreign-exchange. euro-dollar going into that meeting, $1.21 flat. tomorrow the big one for christine lagarde and the governing's counsel -- and the governing council. this year andinto some of the challenges we see in a time of output gap, we spend a lot of time on politics this morning, a lot of time on the dynamics of brexit. how about the markets? we speak with mark mccormick of td global head of foreign-exchange -- of td, global head of foreign-exchange strategy. i want to bring it right over into the great litmus paper of the system which is your world, which is dollar dynamics. what does that due to to foreign-exchange in dollar dynamics? mark: iq. what it -- thank you. what

and we expect the ecb to pretty much cover at least all of it. so now the ecb is bigger than this. and the path has been expanded into the first few months of 2022, but it's a very flexible instrument and can be adjusted according to market conditions. and that's what we expect the ecb pretty much to be in 2021. >> there's also funding coming from the eu. the short program for unemployment and the next skbrerngs for grants and loans. which countries stand to benefit the most from those eu funds, because we finally had an agreement towards the end of last week on the release of those funds. >> i think in terms of how much relief to funding will come, probably in spain, less, but italy, first and foremost, will be probably benefiting the most. i want to be clear about the fact that nb general, we don't expect much relief in funding to come from new sources next year. we expect issues to be in 150 billion, 200 billion, but of this, we expect the release of single government in the eurozone to be about 80 to 90 billion. and this of course depends on how much of these funds are used to

the christine lagarde says the ecb will recalibrate its tools. philip lane calls banks after policy decisions renewing unease about its communication strategy. 6:30 in the city of london. we were supposed to focus on what we are seeing in the bond and thusespite -- spike in treasury yields, dollar weakness. joe biden talks to the new york times and we are potentially back into 2021 with worries about u.s.-china trade concerns given the fact he said he will not make any immediate moves on those 25% tariffs of chinese exports going to the united states. is putting his political stake in the ground in terms of not starting on easy street. iran warning we are not going to roll over. we may stop inspections america does not lift sanctions. you mentioned the bond market. our guests, state street, said he is not expect repricing. it was one of the biggest one-day moves in the bond market this year. state street think it is a run-up and it is very nearly done. my other guest this morning said expect the breakevens -- sorry, the curves to steepen. maybe t

talk aboute will yields and whether the ecb is becoming a eel curve controller. up next, our conversation with jean-claude trichet. i know he will have a thing or two to say about you and euro strength. this is bloomberg. ♪ good morning everyone as we continue to monitor the markets and the stories and right now i would suggest given the historical perspective, our most important interview of the week. jean-claude trichet is a careful observer of the ecb. wonderful to speak to you this morning. want to speak to you from an engineering perspective. you knew years ago the idea of the oil in the engine and you better get it right. you have the european financial cbtem that is coming up by action. is the debt market in europe lost the viscosity, the ability to be fluid in the great financial system? jean-claude: it is a pleasure to be with you. ecb is say what the tong is to help the market be as smooth as possible taking into account the dramatic circumstances where we all are. i would say at least the intention of the ecb is to have a market thatt, conveys the tr

a, thethat was andrea enri ecb supervisory board chairman. minutes from the open, up next, your stocks to watch. the french lender is taking a $1.1 billion on its right down on its italian unit. -- write down on its italian unit. this is bloomberg. ♪ anna: six minutes of the start of cash equity trading with futures pointing to the upside. u.s. futures fairly flat. dani burger is here with a rundown with the banking sector. dani: credit agricole-like lead to move lower today, writing the $1.1 billion to reflect impact of low interest rates. it did say this will not affect underlying earnings, solvency or liquidity, but this is as a french bank tries to expand business in italy. price offer is a 30% premium from the prior offer. 24% increase in yesterday's price. for a rally. they are clearing way for this deal to take lace. one shareholder was opposed to this. they opened an investigation. that investigation has been dropped. biontech had a rally over the past few months, 30% since october because of the vaccine. securedpharmaceuticals 100

first up, we are watching what is going on with the ecb. a bunch of things here. that actually needs updating. the first one is great bloomberg reporting suggesting the ecb is considering an extension to its bond buying program of up to 12 month. the market was expecting six months. we've also heard over the last half-hour as well that a key regulator is thinking about maybe suggesting that we actually do need to see a six-month extension or an extension to the balance of dividends being paid. we are watching what is going on with poland and hungary, rejecting an eu budget copper mise. this is going to be one of the stories we are that budget compromise. this is going to be one of the stories we are focusing on -- eu budget copper mise. this is going budget compromise. -- eu budget compromise. that is going to be one of the stories we are focusing on next week. brexit talks are a difficult place, according to one u.k. official. we will watch carefully that story over the weekend. we will see what happens monday morning. aroundare higher, up by 0.4%. the payrolls s

the ecb, an extra 500 billion euros of qe. this is bloomberg. ♪ karina: president trump's campaign has asked to join a texas lawsuit challenging the resident's election defeat. 17 other states have filed in support of the case that has been called a publicity stunt. texas is trying to prevent electors from four swing states from taking part in the electoral college vote. business priced his long-awaited ipo above market range to raise $3.5 billion. airbnb has a market value of about $47 billion. shares begin trading today. companies have raised a record $163 billion on u.s. exchanges. coming up on bloomberg markets, airbnb's ceo and cofounder at 10:00 a.m. in new york, 3:00 p.m. in london. thead sciences will buy maker of a drug in europe despite a rare form of hepatitis. they will pay $1.4 billion for nyr. hepatitis drug could be submitted to u.s. regulators in the second half of the year. elon musk is looking at the fireballde of spacex's in texas. everything in the seven minute flight went smoothly onto the landing. press

coming up later today, we bring you full coverage of that ecb meeting. of course we have a look at what exactly means for euro. christine lagarde later on, of course in that news conference. we will see what it means for the structural euro and if leaders can agree on something in the eu recovery fund. this is bloomberg. ♪ s is bloomberg. ♪ francine: economics, finance, politics. this is "bloomberg surveillance." i'm francine lacqua, here in london. let's get to bloomberg first word news with leigh-ann gerrans. leigh-ann: facebook is being sued by u.s. antitrust officials and a coalition of states who want to break up the company. they are accusing it of a legally crushing competition and want to unwind its purchases of instagram and whatsapp. the complaint is revisionist history. have liftedpoland their veto over the use of a landmark stimulus package. that is in exchange for a delay in the sanctioning process that could strip them of the funds. the two countries opposed tying sections cannot be triggered before the european court of justice has the

the ecb is a huge factor. tom: no question. to get your head around it is impossible to do because this is not in the textbooks. this is -- this has been an extraordinary 2020. years buckley over the with immense perspective on europe. this moment speaks of the oddities of bond purchases. i go back six and seven years to the imf. -- tryingblanche are to figure out how to reflate. hard proposed is what we are trying to do now. as blanchardlate tried to tell us to do? george: first of all, let me say happy birthday to you. to answer the question, i think it is very difficult. first of all it is unlikely inflation will end. economists forecast horizons at levels the ecb will be happy with. .5%re talking about levels below where they would like inflation to be. some sort of reflation is required. this is the second tricky point. it is difficult when you've maxed out most of your policies. this is why next year's strategy will be very important. it will look into new techniques and tools they can use. it will see how they can make t

the ecb will have to take a look at it. unfortunately division that the e.u. and the u.k. will make will be on sunday. we still expect the e.u. to expand their quantitative easing when they meet later today. we're expecting the ecb's pandemic emergency purchase program will be expanded by 500 billion euros. that is priced by the market. the ecb, they will probably signal they will take away -- regarding what happens between the e.u. in the u.k., and they will react appropriately. if it does begin to affect their outlook. are you seeing some green shoots and economic momentum or even elsewhere as you going to 2021? you have looked at the data. where would you say the market is underestimating the strength of the economic recovery? >> we're seeing that clearly in china. the data is stronger particularly in the export numbers, 20% year on year. is seeing a very clear recovery from the pandemic. if we switch to europe and the u.s. as well, we forget the trade deal to the u.k. in the e.u. at the same time we get fiscal stimulus and the u.s., that would help growth rebound. we t

from the ecb's perspective, they are using very heavily. there's nothing they can do on the deposit rate side. at the last ecb meeting, qe was a very well priced in. that's about it. it's not like the ecb is going to intervene anytime soon. if you listen carefully to what the ecb and the european officials are saying, they are focusing more and more on the rollout of their ease recovery fund. reading between the recovery fund and these banking tenders we will see next year, i think the ecb has accepted they are likely to see a modest increase to the dollar. consequently, it is about stimulative the domestic economy and not worrying about the euro zone. manus: what are the moderately acceptable appreciations? i need to get the yuan in. we've got two minutes. what is a moderate acceptable appreciation? peter: the ecb rating looks concerned about the pace of your appreciation rather than the level. we are seeing the dollar trading above levels of $1.60 and the ecb did not intervene that. it is the speed of the moves they are worried about. we

the ecb is an original invention. if we get there, what are the tools that lagarde will have available to force the dollar to reverse strength? unfortunately, tom, i think they have run out of tools. the one big tool they had is negative rates. if you think back to the decline from 1.40 down to 1.10, that is when the ecb went negative while the rest of the world still had positive rates. now everyone has joined them. the ecb is very close to the lower bound, and what they could try to do is cut rates a bit further. if they are -50, maybe they could take them to -50 or -60. if they do that, the euro could end up rallying. the market will realize -- it will not be very productive. tom: this is so important what we are listening to with mr. george saravelos, because he is clearly drinking the folkerts-landau kool-aid. a good friend talked about ken rogoff, courageous on this as well. how do you affect the magnitude you are speaking to have a greater negative interest rate and keep commercial banking in europe alive? thin

of england, why is the ecb so much more cautious? what are they worried about? solvency? or is it much worse? jonathan: i think the p aro is is lucky.he pro in europe, you have quite a few banks that are not quite as well-capitalized. surpriseds are not that the banks are the biggest where in this world because they were profitable, we were expecting a higher payout than is going to be the case. but you have quite a sanguine reaction because i don't think this is entirely kilter with what the bank of england has done. there are banks with weaker systems. and the ecb or the overarching body has to have a reasonably measured approach. francine: they're thinking is that what they want the dividends to do is making sure thesehey were making banks much more sustainable. but do they worry about the impact that a delay to the vaccine or anything like that could have on their solvency? jonathan: what they have said is that visibility is much better now. provided you can prove that they have decent capital and a good profitability trajectory,

approach, theate ecb lifts its ban on strict dividends. we hear from the chair of the supervisory board. , 10:00 a.m. london in the doc. joined again for one day. reunited on the day that the dividends -- you missed me, didn't you? pay out some dividends but it's nowhere near as much as the bank of england but it will be good news for the banks on the open. good morning. >> i have missed you. the same this morning when it comes to the bank. could this be something that's going to happen at 8:00 a.m.? of the show, ind was thinking today, we should have her back on. do you think she is willing now to finally buy banks or do we need to pay her to pick up financials? manus: that's the classic line from her. there not at -- believer. it's about bonuses. equityholders might get a dividend. they are urging restraint on the bonuses. i know you will get the humor of this. with the movie, a long time ago, the life of brian, you need to go and google that and then have a look at it because there is one of those wonderful moments where he turns around

this is exceptional and down to the ecb. one more thing to note, the way that policy works, it works on an premise -- if we have gap, what the central bank must do is set the policy rate level below the economy equilibrium rate which is depressed at the moment in the euro zone through double-digit negative gdp growth through the shock of the pandemic through the capital destruction we have seen. it will remain depressed even as we go through. get to levels of 2019 for two years. anna: thank you very much. lena komileva, managing partner / chief economist, g plus economics, writing for bloomberg opinion. up next, shall barnier sounds upbeat on the prospects for a deal. ♪ matt: welcome back to the european open. we are 30 minutes into the trading day, looking at stocks europe 600, the broader benchmark, barely treading .05%. up let's get the first word news with laura wright. joe biden is now officially the president-elect of the electoral college -- after the electoral college puts him over the 270 votes. needed to win. . h

when is this a problem for ecb? the euro isi mean, still undervalued as a currency, so in an absolute sense, this is hardly a strong currency choking off recovery in the euro zone. and a lot of eurozone traders ishin the euro zone, so it for a lot of the transactions that go on between the different countries of the euro area. the ecb has always signaled that it is more focused on the speed of the currency moves, so you get a very sudden moves in the currency, that can be quite disruptive to businesses and because some short-term problems. so i think the ecb should be more focused on the speed. the level at these levels is absolutely not a problem. i mean, the euro has been undervalued for quite some time. it should not be a problem, but it is gradually drifting back in the direction of fair value. francine: paul, bitcoin started to record highs right now, i right now.0 scott minerd of guggenheim says it has way ways to go. here he had is -- here he is. scott: we made the decision to the coin when it was at $10 and

the issue might be the difference for the ecb because they are unofficially in this targeting mode. however, they just told us what they were going to do at least until 2022. we have a measure from the quantum policy support we are given. and where inflation is. francine: yesterday, we had a very important call from mario draghi that we need to do everything we can to avert the global solvency crisis. how dangerous do you think this could be? gilles: that is going to be on everyone's mind from 2022 on. support if wency have it in those countries. support,e monetary solvency issues can be put on the back burner. theave the focus of opposite of solvency issue. this is goings, to be a big issue. i think there are some things we could do. one, precisely because we have the solvency issue, i don't think monetary policy can afford to normalize quickly anywhere in the world. the necessity to maintain some level of debt stability conditions will be one of the reasons -- maybe where inflation is, monetary policy would be very accommodative. weould not be surprised if started to take a creati

course, puts a lot of pressure on the ecb to continue to buy government bonds. since the start of corona, the net purchases of the ecb in terms of government bonds is roughly as high as the net issuance. that means the ecb entirely finances budget deficits. this is likely to continue next year. this is very difficult for the ecb to normalize this kind of policy, because due to the high economically tied to carotid. -- corona. matt: i want to ask you about brexit. there is a lot of talk about the effects in no deal would have on the u.k. come -- economy. so many are optimistic that we will reach a deal over the weekend. i wonder how the german economy would be affected if no deal were reached. how difficult would it be for the german economy? well, first of all, which should not put all the blame on the u.k. in this discussion. the u.k. is an old democracy. if they decide to leave, this is not only an issue of the u.k. but raises questions as far as the european union is concerned. i have to say that the u.k. together with france, china, and 7%-8%s. all roughly h

year coming0 negative today ahead of the ecb. this is bloomberg. ♪ guy: european stocks wrapping up the day. percent,oxx 600 up .2 just shy of 400. 393 is where we are trading. in terms of what we are seeing across europe today, i think there are some interesting narratives worth telling. most of the main equity markets around europe going nowhere in a hurry. that is a similar story. i know we pitched port session highs but there has not been a great deal of excitement at index level. below the surface there have been interesting stories. let me show you what is been happening more broadly. let me start with the pound. the role -- the news the controversial -- will be taken out of the internal market has been taken positively. the pound is still down. it is interesting. you're going to see expiring at the end of the week. that is correlated to cable rather than eurosterling. portugal has a negative yield. today was the day it happened ahead of the ecb. the ecb thursday is expected to deliver more on stimulus. christine lagarde

ecb is abouty the to continue in the months ahead. however, across the atlantic is a different story. you have inflation rates climbing, a treasury curve which is steepening, and it looks like we may get bouts of declines in treasuries going into the first half of 2021, as we have seen in recent weeks. unds told expect b outperform treasuries over the first half. anna: briefly, your thoughts on the question of the day -- how dollar weaknesses hit other assets. >> this is bound to be a photo of emerging market assets. they are some of the less idiosyncratic markets such as south korea, taiwan, the philippines that are bound to benefit from a weaker dollar. also, the commodity currencies such as the australian and new zealand dollars. dollar is a boon for gold. ask about theto pound, but it is retreating a little. the18 is where retrade pound down now as we wait for further brexit news. stay tuned. surveillance is up next. this is bloomberg. ♪ in a land not so far away, people are saving hundreds on the most reliable network with xfin

what can the ecb do to address the euro at 1.21? ther: if it is there for right reason, that is not bad. in this sense, i think the ecb is right to not take the euro up here. i agree with mohammed. are at the, they lower bound regarding interest-rate policy. if the euro continues as a credible currency, one which has rates that are unlikely to go much lower, it is the real rate differential that will allow the euro to appreciate a lot in the first half of next year. that globalns investors are going to be looking at european assets and doing the comparison thinking -- we buy the currency story. look at the relative value. thatat the multiple european banks are trading at compared to u.s. banks. and do that sector by sector. and if you do that, europe looks extremely cheap. looking at 2021, a return to where, and environment value will outperform coming you can do that on steroids by investing on the value sectors in europe because europe itself is a valued currency. ecb's active inertia .s mohammed puts it where does this leave cred

is it going to be a problem for the ecb? we have a cable rate that went through 1.35, may be optimization -- maybe optimism surrounding the brexit talks. we are up nearly 1% today. bond yields moving lower. prices moving higher at the moment, which seems against the grain in terms of what we are seeing. broad moves in the data not fully reflected. certainly the data we saw today, the climbing case count we are seeing stateside. nevertheless, but numbers tomorrow, friday payroll date in the united states. individual market throughout europe, the ftse 100 is up considering the pound is up. 6480 seven is where we are trading there. the dax giving up a little bit. the periphery trading -- let show you what the ryanair share price is doing. dayair has had a less good in terms of the share prices we have seen comparative bowing. -- compared to boeing. ryanair still up 2.66%. the travel sector getting a boost from the transaction today and the delta outlook, very positive. ryanair benefiting from both. the sector trading up. rolls-

the ecb yesterday did increase their support. they increased the pandemic emergency purchase program. they extended other measures. i think that is positive. terms ofntioned, in the eu budget, that has been agreed. that was a major headwind that i think is now a relief now that they can release the european recovery as well. i see it all is very positive. at the moment we have seen an the 10-year.ut to i think the market views that is very positive and viewing that as taking away some of the remaining political risk we may have been pricing in an terms of european countries struggling in the euro area. we have seen a lot of positive steps. as you say, the economy will still be heavily impacted by the containment measures to keep the virus under control. that will continue to impact economic growth. when we saw the new forecast yesterday from the ecb, inflation is expected to remain low for a long time. 2023 it will remain well below its target. in terms of yield it is hard to see them back up. we could see them grind a little low

programme finally making progress in the european institutions and to see it on the same day as the ecb announces an increase to its own recovery efforts is really encouraging sign and contrast with the us where you still have this rancour over a similar package and you have the us bank pleading with the government to get moving and markets will be pleased that one key part of the global economy has coordinated fiscal and monetary stimulus to provide the best possible boost for the struggling economies. hopefully this is the beginning of something a lot more concrete in terms of getting the economy back on the right track. as we heard, there is the boosted bond buying plan from the european central bank but how much of a difference will it make in terms of the affordability of credit in the region? the bond buying programme is like pushing a string because the ecb programme has been around for awhile and it was crucial early in the year to provide the confidence and i'm not sure how much it changes dial too much because the ecb have been saying for a long while that there is a limit to

that is when pressure builds on the ecb. tom: i want to frame this out. $1.19 up to ao, $1.21 stronger euro. euro is a power for squishy number. disagreed on what would be the effect of that on the nations. i just don't buy it. i am more of a traditionalist back to the 1980's, where it might really suggest that some point along the path from one and onto21 to $1.24 $1.30, you will see some angst in europe. ,ight now, the bond dynamic kathy jones joins us now with schwab and their center for financial research. we are seeing the bond move. i think the bloomberg barclays total return index is up, up. it doesn't compare to the equity markets, but it has still been a next ordinary two-year run for bonds. when do bonds breathe and we see price down and yield up? kathy: i think we are starting to see it in the long and now. seeing the steepness of the car with the 10 year treasury pushing up against that 1%. we are looking for further steepening where the fed is anchored. short-term rates near zero, long-term rates to try to edge

there is no doubt the ecb wants to do more. the problem is they do not have that much room in terms of policy maneuver from here. what you get by getting rates more negative? what you get with more quantitative easing? what europe needs is easier fiscal policy. they do not have the magic bullet they had in 2014 of let's by all the bonds and cut rates to negative so you have to put your money somewhere else. that is not available. they will push back and resist and they will come out with more accommodation of some kind. lisa: this is exactly where wanted to go, the question of the efficacy of central bank policy on fx moves. have central banks and their policies lost the same efficacy for manipulating -- i do not want to use that word -- for affecting fx rates, or are we looking at the economy determining where we are seeing currencies valued? kit: i think we are going back to a world where if we all have zero interest rates, and let's call them zero bond yields, all countries with big parentheses will end up with overvalued cu

guy: is there anything the ecb can do about it? will the ecb try to do something in regards to any new administration coming from the biden adminstration? alan: they can't and won't intervene directly. they can obviously use verbal intervention. i think, yes, it could have an impact on a one-day basis, but that is not important in the grand scheme of things. ,rom a central-bank standpoint i think they have to take a couple of things into consideration. this is not a euro move. secondly, euro trade-weighted index, when you look at a 20 year average, really, there's nothing terribly special about where you're sitting on a real trade-weighted basis. thirdly, and probably most important, the dollar weakness is partly coming through risk optimism. that is a great thing for the euro economy as well. the vaccine kicks in, global growth kicks in. even if that means a weaker dollar and a stronger euro, that is ultimately a good problem to have as far as the ecb is concerned. alix: what other payers need to rerate even more for a weaker doll

the ecb are not a meaningful impediment to euro-dollar appreciation. forarie: thank you so much that ahead of next week's meeting. us thisor joining thursday morning. coming up, it may have been a bumpy november for equity markets but active managers struggle to keep up. we talk returns, next. this is bloomberg. ♪ manus: this is bloomberg daybreak europe. annmarie hordern alongside me at london hq. run for global equity markets on record, active managers couldn't keep up. large cap managers posted their third worst month since 1991. those bonuses could be skinny. what are the details? was billed as a fantastic month and fantastic time for stock pickers. you have this wider dispersion, correlations coming down the market, and this rotation. if you pick the right stocks, you could've capitalize. the issue for these large cap managers, they hung onto old habits. those habits being buying and holding on to large-cap tech. that worked so well in the beginning of the year. rotation,d this value a large amount of managers missing out. look at those large-ca

, ecb is effectively doing the control. curve is not good for banks and it could be with us for quite some time. but you do have some positive politics over here that you don't necessarily have in the united states in terms of approving stimulus. after that huge marathon all-night session in brussels last night, the european union approved that stimulus package after the block resolved hungary and poland who were threatening to use a veto over plans to use a sort of democratic standard that would be applied to, to some of this money being dispersed. the center for european reform director joins us now to give us his take on all of this. charles, i have watched these developments over the last few days with a great deal of interest. two things happened last night, one of which being we got the budget and stimulus package over the line and the eu environmental standards over the line. but the reports from in the room where that even on the latter, central european countries like poland and hungary were still causing problems

mario draghi and the ecb cut the value. ofhed european investors out assets and weakened their currency. now everybody has done it and we have to put up with a currency that is maybe 130 over a dollar. we will get there eventually. it is the speed of the adjustment that can cause the problem. demande have pretty good from china that will help countries like germany. you get the fiscal package in terms of recovery fund. in the u.s. we can't even get it together to get anything past, maybe we are looking at $500 billion in the next round of stimulus. is there a case to be made for a more sustained move for the euro and the longer dollar? >> i would like to see the growth numbers. the u.s. may continue to grow faster than europe. in a sense, that is not the point. we need to find a level of the currency where capital outflows and inflows are in balance. the big challenge for the europeans is that what would be difficult is the euro-dollar heading toward 1.30 over the next year or so if the u.n. was kept in check. so the euro i

haslinda: the ecb did exactly what was expected. it added more stimulus to the virus battered economy. is it enough? kathleen: i think the ecb is telling us how much is going to be enough may have to do with vaccine distribution. they did boost their support. they may not need to use it all. 500 billion euros were added. a nine-month extension for their bond buying program. we are going to play you a clip of christine lagarde speaking at the meeting today. she said maybe we will not need to spend a dull if favorable financing conditions remain and she also talked about how the vaccine is going to enter into it. >> if favorable financing conditions can be maintained with asset purchase flows that do not exhaust the envelope over the net purchase horizon, the envelope need not be used in full. the envelope can be recalibrated if required to maintain favorable financing conditions to counter the negative pandemic shot toward the path of inflation. ecb's extension of their bond buying program according to bloomberg news and their conver

the ecb will be happy with the. if we get there in six or eight weeks, then we will have a problem, the ecb will absolutely talk it down. pace much more important than levels. tom: where is the overplay now? where is the over bet where you have got all your radar up? at this angle, asia is still at one point where evaluations will have to come into play. i am looking at the cnh very clearly right now. the key phrase from the pboc, fairly valued. these two words. valued. renminbis stump strengthening dutch stopped strengthening -- renminbi stopped strengthening. tom: this is really important. the one-way bet has been stronger pacific rim, led by china. you are saying, as we saw back to plaza accord, there is a point where countries will say no, we are not going to do it. >> the point at which that happens is when the pboc believes they are going to be at fairly valued, not overvalued. last time, they allowed to go overvalued. when you unwind an overvalued currency, it becomes very volatile. i am watching that. tom: t

what did they do today and why did they do it at the ecb? , we need first of all both monetary stimulus and fiscal stimulus. was christine lagarde said the health situation and the financial and economic situation remains uncertain and quite serious. there is no question about it. ecb did not come out and say "whatever it takes," but that is what they are doing. extending the time horizon to 2023. extending to 1.8 5 trillion euros, that is the monetary side. she left the door open for more, although she said it need not all be used up. that was essentially leaving the door open for more. fiscal side, hungary and poland look like they will get letters which will allow them to go along with the package that was agreed in july. that is also a 1.8 trillion package. 750 billion borrowing for the first time from the eu and the rest in other forms of stimulus through the european budget. is we do notem know how bad the situation is, and to go back to what your colleague was saying earlier about the u.s., here christmas is canceled. people will not

we have an ecb meeting coming up next week. there is a lot of talk about what the ecb needs to do. have some deflation pressures. i just saw a piece about spain. there's a lot of concern there. the euro is pretty strong, so do they have some room for maneuvering? interesting -- with ecb counseling members over the past few weeks. one thing that is clear is they are struggling with the short-term and longer-term. they are in the second wave of lockdowns and there is a second wave of support now needed. some message that there is going to be a last dose of covid you need other things down the road. longer-term, we know from the last few months that the economy can bounce back quickly. is it really the case that the ecb needs to be giving a lot of support beyond the next six month or so? that is much more of a debate. are beingial markets distorted by having these supershort rates. i think we are getting a healthy debate about that. which goes to this position we are in where we are almost out of the covid world but not quite. david: we have been talking about the possibility of an ai

leader summit kicking off on thursday, and the ecb meeting on thursday. is there a chance we see the ecb hold back when it comes to their fire power in an effort to encourage eu leaders to agree a deal on the fiscal front >> no, i doubt it. in all honesty this would be a very risky game. too risky to put the pressure on politicians here the president at the october meeting really put the bar very high actually for the first time in a long while. ecb president pre-committing to action in december the only question is what they will do, not if they want to do something. we will see a recall bra re-calibration like christine la guard called it. i think the ecb clearly determined to an extent its very accommodate i have military stimulus or stance at least until the end of 2021. and then we hope european leaders will also get their act together and finally get the green light on the recovery fund >> a lot to watch out for, and if that wasn't enough, we're eyeing developments in washington in terms of a deal coming together there. if we do see congress agree o

that will be the case for the fed, the ecb, and bank of japan. it becomes a game of emerging-market economies where you have the potential for them to run hot. those may be the ones that have room to tinker with policy. joe: in terms of lessons from this crisis, something that fascinates me, we saw some em's did forms of qe, some of them we saw do aggressive physical expansion. -- fiscal expansion. have we learned some countries have more power to run countercyclical fiscal policies than during crises of the past? emily: i think so. it has been an amazing time for monitoring fiscal policies to see how well we can respond to crises when needed. wethe emerging-markets side, have seen more easing both on the monetary side and more companies and on the fiscal side than we have ever seen in reaction to other crises. there is more room to potentially even venture into spaces like quantitative easing, asset purchase programs, which were embraced by a lot of emerging markets. this is a net positive. there are mutuals that can be used in the em space. rom

first up, we are watching what is going on with the ecb. a bunch of things here. that actually needs updating. the first one is great bloomberg reporting suggesting the ecb is considering an extension to its bond buying program of up to 12 month. the market was expecting six months. we've also heard over the last half-hour as well that a key regulator is thinking about maybe suggesting that we actually do need to see a six-month extension or an extension to the balance of dividends being paid. we are watching what is going on with poland and hungary, rejecting an eu budget copper mise. this is going to be one of the stories we are that budget compromise. this is going to be one of the stories we are focusing on

that is going to greater problem for the ecb and boj. inflation is well below their targets and falling towards zero if not negative. longer-term, if there is a general trend of weakness for the dollar, what does it mean for other asset classes? let's look longer-term. how will that dynamic change? nouriel: if the dollar is weakening in part because we are in risk on and global economic underperforming, and if you invest into dollar assets with the dollar weakening, you could have potential capital loss in your own local currency. the weakness of the dollar globally implies the dollar price of commodities is going to be higher. that is good for oil, industrial metal, and precious metals. gradual weakness of the u.s. dollar is good because we are running huge current account deficits. in the u.s. 2.6%. at least 40% of the earnings of the s&p come from foreign operations. weaker dollar helps the stock market in addition to improving the trade imbalance. trade want to reduce tensions between the u.s. and china and europe, that implies the w

it is over 120 and is start to get dicey for the ecb and how it impacts inflation. vonnie: we are at 120.95. thank you so much for joining, vincent cignarella. flat.e the s&p 500 back the nasdaq down about 25%. -- 25%. -- .25%. this is bloomberg. ♪ . . . mark: i am mark crumpton with bloomberg's first word news. fed chair powell has urged congress to approve additional spending as the covid crisis ramps up rated speaking before the house committee, he said it should focus on aid for unemployed workers, small businesses, and state and local governments. >> there are many sectors that could use help. i would start with the labor market. despite the rapid progress getting people to work, there are still 10 million people out of work because of the pandemic. mark: chair powell has been advocating for more government stimulus, noting monetary policy can only do so much. governor cuomo said delivery of the first vaccine for new york is expected to be enough for 170,000 residents. regulators,by u.s. the doses are expected to arrive december 15. european union regulators

next year into the market by european governments is basically going to be largely absorbed by the ecb. think there are opportunities elsewhere, which offer greater upside in my opinion. francine: what are you liking at the moment, david? european bank capital instruments in particular, bonds,additional tier-1 yielding 4%. theuro terms, and some of national champions, up to 5% on those months, getting it -- banks are a cyclical asset, so in a sustained economic recovery, turning around asset quality, declined earnings outlook start to improve. i think we have come through this crisis pretty well. it has been a pretty severe stress test, and i think it is highlighted just how much stronger the credit fundamentals of banks actually are. i think that is a good place for investors to play both for rotation from growth to value, from defensive to cyclical assets, where i think there is some meaningful mispricing. lisa: so let's take a step back from the capital bonds because see -- these are some of the riskier of riskiest bonds because they are the first to be wiped out should banks go bel

what can the ecb do in order to try and cushion the blow? carsten: let's start with the ecb. we had the big december meeting, lagarde and the ecb made clear they will kind of flood the european economy. they will offer cheap liquidity, cheap loans to banks, lowered liquidity, at least until march 2022. this is the best i can do, unless you can get another speculation about eurozone crisis. but for the economy, i think that's more what the ecb can do. and you can definitely argue whether an extension of the vat reduction is the right way forward. yes, sure, you can argue about it. but there should not be a discussion that there's more fiscal stimulus needed. we discussed the u.s. bill on fiscal stimulus in the u.s. i think erupted well in spring and summer. it will also depend on government in europe to really decide on more stimulus in the first half of 2021. but don't forget, this european recovery fund will now finally start, will only pay out money in the second half of 2021. so, we need to bridge at least six months, and this has to come from national governments. all of