>> the hallmark of the fed is they talk a lot tougher than their actions. >> what is clear is powell is very data dependent on the right path. >> we have not had the balance sheet and qt to contend with, so history is missing that ingredient. >> inflation is the thing they are aiming at right now. >> they are not going to hike enough to slow inflation. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. jonathan: the cat lobby is so powerful. just to be clear, i really like them. it is tom that is a little bit scared of them. have we cleared that up? i think we have. from new york city this morning,

good morning. the equity market down 1% on the s&p. on the nasdaq 100, down 0.8%. with kailey leinz and lisa abramowicz, i'm jonathan ferro. get back to the fundamentals, focus on the earnings. lvmh has become a difficult story even though the numbers are fantastic. lisa: even though you see that 40% gain from prepend of and could now, when you look at some of the revenues, but then you look at apple, the gains fading in of a managed supply chain issues and posted an amazing quarter. jonathan: you caught up with dan ives of wedbush, the big bull on the equity market for names like apple. he said you can frame this quarter. the single names just aren't returning the gains that some of these are looking for in light of the numbers they are delivering. kailey: that is a thing, this is not just a single name. this is apple, the biggest tighten in this u.s. equity market. those shares are higher, but off session highs, and it is still not enough to provide a sentiment lift to the tech sector more broadly, which

brings us back to the question, how much do these fundamentals matter in an environment where we are talking about potentially five federal reserve rate x next year in real yields that keep moving higher? jonathan: it brings us back to rates, and that is why we are looking at the nasdaq year-to-date on 14% into friday, this morning down another 0.8%. at the front end, a clean break of 1.1 to present in the last -- of 1.20% in the last few days. lisa: we have really accelerated when it came to rates, but it relate took a wile for stocks to catch up, and nothing has broken. this is what people keep pointing to for the reason the fed put does not come into play. nothing is broken, even as you see a correction. jonathan: we've got big tech taking a dip, and we look at the banks, i think that is what surprised some people year-to-date. wells fargo still up, but as an industry group, negative on the year, even with the likes of wells fargo saying five hikes in

2022, and that is not just wells. that is now a consensus position of a lot of people in this market. five hikes for the year, and the banks aren't delivering gains. lisa: i think a lot of investors weren't counting on some of the bonuses and compensation costs the banks are having to put out. they also did not count on the idea the yield curve would flattening. they thought it would be steepening. they also didn't know how much lending could really pick up, and it looks like it is going to be tough to get to the levels a lot of people wanted for that revenue. jonathan: are you ready to talk about growth risk? morgan stanley is. lisa: i am always ready. jonathan: i know you are. [laughter] do you think that becomes the consensus view, that we jump across from inflation scaring, the policy response, to it is going to tighten growth and hit growth hard? lisa: this is to your comment about what would your market call be. that is the real question. if you see growth and you expect it to slow down, does it make you more bullish on markets? if using the fed is going to

back away from tightening, does it make you bearish because we are entering into a new cycle? perhaps it is independent of fed policy. jonathan: we are down 0.9% on the s&p. if you look at the fx market, euro-dollar negative for five straight sessions. euro-dollar down again by a little more than 0.1%. off the back of this move in treasury yields, up four basis points on tens, up a similar amount on twos. tens right now, 1.8463%. the fed is ready to go. the ecb, not so much. lisa: we are seeing slowing growth and the idea that inflation isn't necessarily driven by those checks people got because they did not get those, and that is what i think a lot of people are pointing to for the inflation in the u.s. jonathan: saira malik joining us now, chief investment officer at nuveen. you liked the energy story. we talked about it quite a lot through this -- through last year. as a p.m., what do you do now?

saira: the three key drivers for energy are still in place. that is tight supply, strong demand, and discipline in terms of being disciplined in volume growth. but let's talk about how we are positioning from a global point of view. it refiners. this is an area that has lagged. refiners lagged because they are more based on barrel growth rather than high oil prices. so i company like bolero is looking interesting to us right now. they just reported the quarter, very good positions, and they are disciplined. they are returning 40% to 50% of cash flow from operations to shareholders. they still have more upside than other energy stocks. part of the strong year-to-date returns, even though it is our number one sector of the year, is due to the russia-ukraine situation. if that starts to settle, that could settle the energy crisis. that does keep us bullish on

energy, but more selective, looking for the laggards for the rest of 2022. lisa: how actively are you managing the energy portfolio given the increase in prices and given the fact that we might have brought forward a lot of the gains? saira: for us it is about remaining overweight energy. we look for the ones that have been laggards at the refiners. it is not about moving in or out of energy as a sector. we think there's going to be a long cycle here. we are long-term investors in that sense, but making sure within the sector we are adding value into those areas. kailey: when we think about finding value, valuations have come down in other areas of the market. we have seen a move in the numerator. when it comes to the e part, what are your expectations about what is going to happen to multiples given that earnings don't seem to matter for the market, but in theory, they make a difference when we talk about how much you have to pay for these companies? saira: our view is that earnings will start to matter more

because that is going to be the key driving markets higher this year. we are not come to none valuations. we think those will be flat to down on the year, but earnings should start to shine through, and we are seeing that was companies like apple today. the other key for the year is what is the fed doing. they are hawkish, but that does not necessarily mean it is the end of the bull market. the economy and strong earnings should be able to shine through. from a portfolio positioning point of view, you need to be selective. look for those companies in the tight supply and demand sectors like energy, and then to dry those earnings, the main lever is going to be pricing power, companies that have the pricing power to overcome inflation will be able to dry those earnings, and they should get rewarded this year. it is not going to be a year of a rising tide lifting all boats. it is going to be a volatile year. overall, we are still moderately bullish based on earnings growth. jonathan: lvmh in the news this morning, negative on the session, positive at the open. last year it had a massive year,

up more than 40%. in some ways, the numbers today validate some of that move. fantastic numbers. can you talk to me about some of those numbers and whether you are positive on that view going forward? saira: we are positive on the luxury names. we think the luxury is driven by consumer balance sheets, which are very strong. one thing we like about global luxury players is it helps you dip your toe into china, which could be bought a mac at this point -- which could be bottoming at this point. these are companies, not only dominant brands with a lot of exposure to the right regions of the world, but you have the backstop of that strong brand name that should continue to do well. lisa: even after their earnings, lvmh has struggled to hold onto gains. we saw apple shares also struggling to hold onto gains, down more than half from the peaks of the intraday session. when do you start to rethink your thesis on where your price

target is, given the fact that the macro backdrop is so dominant? kailey: the macro headwind -- saira: he macro headwind is going to be an issue. the other thing for us is the short-term versus the long-term. this might be what investors are somewhat starting to focus on. they've had blowout growth during covid, with strong iphone sales, ipad sales, macs, but if you look at the long-term growth rate for apple, these products are at much lower growth rates even in the mid-single digits. so how much demand has been pulled forward by these consumers in terms of apple due to covid? i think that is the issue. on the other side, $200 billion tax on the balance sheet, spending over $20 billion just on r&d. we expect their headsets to come out next year, which have an elongated demand cycle. there's a normalization that is going to happen there, and that could be part of what investors are starting to see.

then of course the macro headwind from the fed and the move away from tech stocks they negative for these companies, and that is an issue overhanging the markets. we don't think we are through it yet. jonathan: saira malik of nuveen, wonderful to go through the market with you. thank you very much. a couple of things we need to get through right now. a headline on russia from the pentagon, and then i want to talk about the fx market. let's talk about that line from the pentagon press secretary moments ago. kailey: john kirby on msnbc says some kind of russia invasion could be imminent, and it does seem we are seeing a spike in oil prices on the news. uti now trading at 80 wti now trading at -- wti now trading at $87.74. it seems quite murky, but the press secretary saying indeed, an invasion could be imminent. the question is how imminent is that. are we talking about mid-february, which is what the white house suggested

yesterday? jonathan: when it comes to u.s. rates, that is the second headline i want to talk about. we talk a lot about the dollar index, heavily weighted towards the single currency. the more broadly weighted dollar index, the bloomberg dollar index, the highest since july 2020. it has been building through this week. lisa: if you start to get four, now five rate hikes priced into the market, that will give you some strength. how much we are pricing in and how much strength it has to go i think is a lot of what analysts are talking about now. jonathan: the bloomberg dollar index highest since 2020. on the s&p 500, down by 0.9 percent right now. from new york, up next, dan flax, senior research analyst at neuberger berman. this is bloomberg. ♪ ritika: with the first word news, i'm ritika gupta. russian foreign minister sergei lavrov said he saw some

rational elements in the u.s. response to russian demands. president biden warned ukraine's president that a russian attack was possible next month. they also discussed ways the u.s. could help ukraine's economy. president biden says he will fulfill his campaign promise to know make the first black woman to the supreme court. the president says he will announce his choice by the end of february. justice stephen breyer has formally told the president he will retire in june or july, assuming a successor has been confirmed. in london, and acrimonious court battle over claims of false accounting has come to an end. the founder of autonomy corporation lost his fight with hewlett-packard. hp accused him of inflating the value of autonomy prior to hp's $11 billion takeover in 2011. hp is seeking $5 billion in damages. he faces four charges in the u.s. caterpillar reported fourth

quarter earnings that beat estimates. increased demand and higher prices offset the impact of rising costs. analysts expect orders to keep improving after years of low investment by that industry. shares of apple are higher today. fiscal fourth quarter sales and profit beat expectations, seen as a victory over the supply chain crunch. meanwhile, apple forecast sales would grow by a double-digit percent in the march quarter. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm ritika gupta. this is bloomberg. ♪

♪ >> apple really flexed their muscles, not just when it came to the supply chain, but overall demand. apple is at the head of the line. they have a great view, probably better than anyone else. the fact that it is moderating going into the march quarter, those are words that are going to be heard around the world from the street perspective. bullish for tech, and this was a golden quarter for apple. jonathan: dan ives, wedbush senior research analyst come on apple. we are down 0.8% on the s&p. we are just off session lows. in the bond market, up three basis points on tens. a flatter curve has been the story through much of this year,

but the whole curve shifting higher. two lines from bank of america. here's the first. "buy zero capitulation in equity positioning and buy the humiliation." seems to be the story. [laughter] i just got off with messaging from bank of america on how many hikes they have for 2022. 25 basis points at each of the next seven meetings. this is what they call a nimble central bank, and this is what a nimble central bank does. lisa: this is the key issue, how much they can frontload something given the fact that there is so much uncertainty about the back half of the year. but the consensus now is almost five rate hikes in 2022 from just a couple back last year. jonathan: speaking of calls, we are just getting a readout of that call between the russian and french leaders. kailey: vladimir putin and

emmanuel macron speak earlier this morning, and spend the -- and apparently told macron russia will study that u.s. response earlier this week, but said they ignored a key issue. we will look for details on what that was. they also talked about specific russia-french issues like energy cooperation, but a lot of diplomatic branches being reached out. the question is, are we getting any closer to a resolution as tensions seem to be escalating? jonathan: apple up by a little more than 2%. let's talk with dan flax, senior research and licks at neuberger berman. can we talk about the earnings? you tell me what you were surprised by, and the reaction in the equity market. dan: earnings were solid across the board. i think what we are seeing is continued innovation, very strong execution across product cycles, and this broadening of the revenue drivers. we see a healthy franchise and

the iphone. services is very strong, and the wearables is just getting going. so a lot to like here. clearly over the next year, growth will moderate given how strong it has been over the past year, and the supply chain is still going to be an issue for apple. lisa: although they showed they can manage the supply chain disruptions a lot better than many people expected, and even their own forecasts seems to indicate six month ago. do we have a sense of what they have done so well or differently, and how long that will be a buffer for them going forward? daniel: it is something the company has historically been very effective at that. tim cook and many of the leaders have been doing this cycle after cycle through all sorts of environments. we have had trade friction, which has also impacted how apple has been thinking about supply, but i think what is important is that it is difficult for apple or any other company to outrun it, but if you

can plan ahead, work very closely with partners and suppliers around the world, which is what apple is continuing to do effectively, they are able to get more products into customers' hans, -- customers' hands. but i think over the next year, we will see improvement. the key in my view is the innovation and the product cycle. if they can execute on that, that will be most important driving additional shareholder value over the next one to two years. lisa: this all sounds great, and it is a stock that has done very well over the past five years. it is down 10% year to date. this morning, after earlier posting gains, the gains have eroded to 1.7% ahead of the open after delivering some of the earnings. are you surprised by this? what do you think it will take to catalyze people to understand defund mental story as you see it, if the earnings picture was not enough? daniel: in terms of the price action this morning, the market

looks to be set for a lower open, and apple has come off its highs in the after hours. i think what is likely to play out over the next year is that apple will continue to demonstrate quarter after quarter that it can bring new products to market, execute on the product ramps, and that will drive growth. i think that is what we are going to need to see to drive share price outperformance. if they are able to do that even in the face of higher interest rates, which of course are very low historically, if they are able to do that i do expect shares to outperform over the next one to two years. kailey: do you think fundamentals will matter more than the risk of a rising rate environment? daniel: i do because if you look historically, even for rising rates over the past 10 years, apple has been able to innovate and grow, and clearly delivered value for its customers and

ultimately its shareholders. even where the tenure to be at 3%, that is still very low in terms of the historical context. what we have seen from apple is this ability to innovate, to delight customers, to reinvent itself. this reinvention is really key to driving value for customers and ultimately shareholders as well. jonathan: dan flax, awesome, and great to catch up with you. i know you are super busy after apple reports earnings. i want to turn back to that call from bank of america because since we talked about it on this network, i've had a ton of feedback. they see 25 basis point hikes at each of the next seven meetings. they say this is what a nimble central bank does. that is the call from bank of america. we had a call for five hikes from wells fargo. sarah house and the team delivering that in the last 24 hours. we got back to the barclays

question that came out in the last 24 hours. are we near the point of maximum hawkish this and policy mistake fear? can you do much more than the seven hikes that the likes of bank of america are talking about? lisa: how do you price in the balance sheet reduction? frankly, how do you even game this out when you don't have the economic data and you don't have forward guidance because forward guidance hinges on said economic data? jonathan: to lisa's point, on the balance sheet reduction, we still need some clarity on the start. we still need clarity on the impact. we have no idea. kailey: did you see the note out of credit suisse, talking about it is not just enough to run it off? if the fed really wants to target specific parts of the yield curve, they have to sell assets. this a conversation we had with john ryding brean capital -- john ryding at brean capital. jonathan: google had that conversation next with torsten

slok -- it is a conversation we will have next with torsten slok. lisa says he will need to look at the employment cost index. we will do that with mike mckee, just around the corner. on tv and radio, this is bloomberg. ♪

jonathan: chairman powell has brought some added importance to one data point. we are seconds away from the release of the employment cost index and a host of other data points. futures down .3% on the nasdaq. yields a little bit higher, up on tens to 1.84. michael: here we come with the employment cost index for the fourth quarter. eci rises 1%. compensation up 4% for the 12 month period overall. wages and salaries up 4.5%. it was 4.2% in the third quarter and that is what jay powell said was the two by four that hit the vet over the head with regards

they might need to get going with tightening. for private industry they are up 5%. we are seeing accelerated wage pressures in the economy. the other data out, personal income and spending which also includes the pce cost index. that is the inflation measure the fed follows. that is up .4% on the month which is bang on with expectations. on a year-over-year basis it is up 5.8%. that is higher than it was the prior month. the court is up for quite -- .5%, it is up 4.9% on a year on year basis, .2% higher than the prior month. significant wage and inflation pressures in the economy as of december. the other numbers out this morning, personal income up .3%, down from a .5% gain in november

and spending fell 5.6% -- fell by .6% during the month. i will see with the breakdown between services and goods are. spending down 1% when you adjust for inflation. not a good month, december, for spending or inflation or the fed, but now they are on the job. jonathan: yield still higher on the 10 year, 1.84. we are off the lows come the s&p down .25%. lisa: is it because there was a disappointment that inflation was not running as hot as people expected when it comes to eci or does it have to do with the feeling there will be strength? core pce is the inflation metric the fed looks at and it is now

the highest level since 1983 on a year-over-year basis. that is what the new dynamic has illuminated. jonathan: in the market the question you're asking yourself is here we are set up for the fed to make a move. i'm hearing the likes of bank of america throughout maybe seven, and i'm wondering where the upside surprises coming from through 2022. kailey: it is an excellent question. i am not sure i have the answer but i think the wage numbers will be important. as the vet thinks about inflation and its dual mandate coinciding with the labor market with stubbornly low participation, companies having to pay more to get people in the door. those wage numbers will have a particular importance. jonathan: michael mckee, have you got a final word? michael: we are seeing a major change in wages. benefits were up .9% during the month but not as much as the wage pressure. it is coming on the pocketbook

side into the economy, although businesses have to make up those costs somehow. we expect that is one reason they're raising prices. jonathan: thank you. torsten slok joins us now. let's start with a big question. how does this fed engineer a soft landing? torsten: what the data is telling us -- omicron has probably put more pressure on wages and inflation. the big picture is as inflation continues to be elevated it is critical market is beginning to price in so many hikes. if the market does price five or six hikes the likelihood we will get that soft landing the fed is trying to engineer goes down. lisa: why do you say that? we have seen the selloff with respect to equity markets but it has not been completely uncontrollable and there has not

been any sign of malfunctioning into the underlying mechanics of the market. torsten: that is correct. remember, what is the goal for the fed? the goal is to try to cool down growth and that also includes to try to cool down revenue growth in corporate america and that is very important when we think about it from equity perspective that the fed's goal is to try to cool down aggregate demand. once you do that with more aggressive rate hikes it does raise the risk -- such as housing, or psychology plays an important role. it does become more difficult to micromanage the soft landing they are trying to achieve. lisa: george ceballos put out a note talking about trying to micromanage -- trying to manage expectations -- people are expecting the rate hikes to be kicked in and very slow growth after that. he is saying the best thing that could happen is for inflation to materially slow down, the labor

market to improve and growth to pick up, otherwise we could be hiking into a week cycle. what is your opinion on that? torsten: that is a risk. the bottom line is growth -- you heard jay powell a few days ago -- he did not seem to worry about a slow down. when omicron begins to subside we will have stronger growth and consumption, stronger growth in capex, more people traveling and going to restaurants. all that should be generating more growth. from the fed perspective, it is clear they do not see a worry in terms of the slow down. kailey: we also have to keep in mind we are getting more data later with consumer confidence at 10:00 eastern time. when we think about the consumer and their propensity to spend and fuel the american economy, are we going to see demand erosion because of reduced sentiment because of inflationary pressures that are

not keeping up and therefore some of the work will have already been done? torsten: this is very important. there is a big question in how main street looks at inflation and the impact, whereas how wall street and markets look at inflation. if you look at inflation expectations and breakevens, they have stabilized. if you look at the university of michigan consumer sentiment, that is at the lowest level in 10 years. it is because people worry about houses becoming unaffordable, car prices becoming unaffordable. you are right that at least when it comes to the consumer, high inflation is at risk of being more contractionary. there are different ways inflation is feeding in, but it looks also at the new york fed survey of households is what inflation will be in one year or three year. the answer to that is inflation

in three years will be 4% in one year it will be 6%. those numbers tell you main street has estimates of inflation above the fed target. there is a difference in how inflation impacts consumers. the risk is it could begin to become more contractionary and that is why the fed is going, because they do not want inflation to become contractionary. kailey: we have been talking a lot about the fed put, if the fed really cares about turmoil in the equity market, but also to consumers that is real wealth that is being lost. how does that factor in? torsten: this is also very important. let's say the fed begins to back off. then the fear would be inflation would ultimately run higher. and for inflation does run higher the risk would be inflation or -- consumer confidence goes down more. that is why the data is very

important and very interesting because this becomes very relevant. how are consumers going to react if inflation continues so high? the mainstream media is also reporting as the first news item, inflation. it shows you how critical inflation and inflation expectations are. the fed does not have the luxury of doing a fed put in saying all markets are of little bit. the way the fed looks at this is to look at financial conditions. if i look at my bloomberg financial conditions index, it still has not tightened that much. it is still accommodative and supporting gdp. the conclusion in my view is financial conditions have not tightened enough. that is what jay powell was saying earlier this week. jonathan: what tells us where the neutral rate is? is it the market or is it the economy? torsten: this is little bit of a tangent here question, but if you think at how it is

calculated, the models that calculate do not have the stock market. when the fed talks about financial conditions, they would like to tighten financial conditions, there slowing down growth in the economy and slowing down corporate earnings. the way we calculate what the rate would be does not include those parts of the real world. the answer to your question is the best guidance from the terminal rate, which is 2.5% of the fed funds rate. that is a good guess at the moment. if inflation does take off to the upside, we could deal with a high number. jonathan: the word calculation implies a scientific effort and the word gas is closer to the truth -- the word guess is closer to the truth. remember the line from chariman powell and 2018, i think we are a long way from neutral. i think we are there. lisa: maybe not. jonathan: the more you talk

about in markets, the more you talk about the federal reserve doing 5, 6, seven, the less achievable it becomes because the market does the talking. lisa: i keep going back to credit and credit not necessarily being a leading indicator. if credit does selloff the fed will have more of a put for credit. that is a compelling idea that we've not seen them price in seven rate hikes in the credit world. jonathan: coming up in about an hour, a fascinating conversation. top down with mohamed el-erian, bloomberg opinion columnist and gramercy funds chairman, alongside robert cummings burke. if you want to hear about ef, we will do that in about an hour. new york city, this is bloomberg. ritika: the u.s. is bracing for

a powerful snowstorm. boston and new england are expected to take the brunt of it, getting up to 16 inches of snow. washington, the new jersey coast, new york city -- travel is likely to be amassed. the storm is thought to intense so rapidly it could become a bomb cyclone. pandemic restrictions are taking a toll on confidence and there are growing fears germany is heading for its second recession since the crisis began. germany's output fell .7%. it is more than twice what economists had expected. in the u.k. government investigation into pandemic parties in boris johnson's office -- police are conducting their own investigation. a watered-down probe would be helpful for johnson. he is trying to convince his

conservative colleagues not to a leadership challenge. -- if there is an attack on ukraine. sanctions would drastically cut technology and financial transfers for gas facilities. there was a disappointing set of fourth-quarter profits at chevron. the oil giant failed to take it vantage of energy prices. chevron says the upstream business and refining network fell short of expectations. the company is expectedly -- especially vulnerable to gyrations in the market. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i am ritika gupta. this is bloomberg. ♪

>> there are no actual sanctions right now, but the potential for sanctions, there is a lot they

can do to muck up the energy situation was is quite tight. if they cut russia off from the system, europe will essentially be cut off from natural gas because they will not be able to pay for. lisa: brilliant perspective from ellen wald speaking earlier. we see oil prices climbing to session highs. crude on the nymex now $88.21. it markets you can see whippy action. the nasdaq now positive after a downside surprised. the cost index was a key feature the fed was looking at. the s&p still lower .1%. volatility is dramatic at a time of such little uncertainty with respect to fed policy. right now uncertainty on international relations with the conflict between russia, the u.s., the alliance between u.s.

and europe. joining us is professor of international relations of the london school of economics. i have to say, i am looking at all the noise we keep getting out of both sides. what does vladimir putin want? peter: good to be with you. i see this is a classic russian move designed to improve its geopolitical position by sewing division and the west and shoring up domestic legitimacy. soviet leaders play this card often during the cold war. little international success. the question is why now. the answer is because the west is in a bit of a funk. key western leaders are in political trouble. biden's approval numbers are lousy. forrest johnson is underwater, facing a possible no-confidence

vote. emmanuel macron is up for election in april with shaky prospects, and the new german government is internally divided on foreign policy matters, including how to deal with russia. vladimir putin is betting this is an opportune moment to get greater influence over ukraine, stoke divisions within nato, and weaken america's position in europe. i think that is what it is about. lisa: does he seem to be winning? peter: the first move was strong and over-the-top. much depends on how he responds to the moral response he received from biden and nato earlier this week -- the oral response he received from biden and nato earlier this week for his demand for carte blanche security dealings. he could respond by ratcheting up diplomatic pressure.

there's a lot of chatter about this. cyber warfare in ukraine, or worse, use the troops. the new york times is pointing there about 130,000 troops along the border. if he does that, i think it is likely to backfire because it is likely to unite rather than divide america and its european allies and make it very difficult for western leaders to back down. in some cases i think it would be politically advantageous to stand tall. this is why the situation is so fraught. both sides, if they can get themselves boxed in, biden has to be careful, putin has to be careful. kailey: let's talk about president biden. how has he played his hand so far? peter: he has played a difficult

hand reasonably well. there has been a hiccup along the way. he has been careful not to box in vladimir putin or himself. he has remained open to negotiating with vladimir putin even while he has rejected demands and put contingency plans you been reporting about, economic sanctions and so forth, in place in case the situation rapidly deteriorates. meanwhile he has consulted widely with americans, germany, and its allies. this is a far cry from what has happened in afghanistan. he has managed to avoid looking too weak or too belligerent. so far he has found the sweet spot between that. there is some harping by the republicans, but from my london perch they look too internally

divided and as a result a pretty -- the ball is in vladimir putin's court. we will have to see how biden and the allies handle what will be a rough surf. kailey: how do you think china is watching us all of this plays out? peter: watching very carefully. i am sure they are spending time sizing up the u.s., the german response, the british response and what it might mean in the ancient theater. in some ways they are in the catbird seat with this because they watched vladimir putin do all of the dirty work with respect to trying to divide the western alliance. they are able to sit back and

got his back, presumably. i think they are in a position, they probably do not want vladimir putin to do this in the middle of the olympics, although he has a record of doing stuff around the olympics, as he has done before. in general they are watching this play out. they are at a position where they get to play the honest, or trying to play the honest broker. lisa: peter trubowitz of the london school of economics on the situation as it evolves. oil prices surging past $88, the highest levels we have seen in the u.s. and europe going back to 2014 as this conflagration or potential conflagration continues to escalate. kailey, i want to go back to what we saw in terms of the

economic data. the employment cost index, this is what triggers the pivot we fell from the federal reserve in december that the surging cost for employment were indicating something different under the surface. they came in less than expected it seems as though this is one area people are pointing to for a bit of a rebound, and in just as much time that rebound seems to have faded. kailey: fluctuation is the name of the game this week. he saw more of a readthrough into the bond market and the fx market which seems to be sticking. the dollar hit its highest level since july of 2020. it has given back all of those gains. these look like markets that cannot make up their mind as they assess the outlook for federal reserve policy. lisa:'s forward guidance dead and what will act as forward guidance as we look at a new inflationary environment? coming up, university of michigan sentiment data, and on wall street week stephanie

flanders of bloomberg economics along with christina uber of invesco, barbara and bernard. discussing the tumultuous weeks in the nasdaq and the s&p. from new york, this is bloomberg surveillance. ♪

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jonathan: cell the hubris, by the humiliation.

the countdown to the open starts right now. >> everything you need to get set for the start of u.s. trading. this is "bloomberg: the open" with jonathan ferro. jonathan: we begin with the big issue. wrapping up a volatile week. >> you have to brace for volatility. >> we are seeing historic intraday volatilities. >> the question we have to ask is what are the underlying storylines? >> where are the turning points. >> inflation is too high for comfort. >> global central banks across to loved markets are tightening more and mor