>> there are a lot of dynamics under the hood. it makes sense to start repositioning portfolios. >> we are not getting as much bang for buck with real earnings. >> stocks will be your best inflation hedge. >> our call has been more subdued market returns and more differentiated -- more differentiation within that. >> this is "bloomberg surveillance" with tom keene, and lisa abramowicz. tom: we welcome all of you.

maria tadeo in brussels, and reordered in washington. i think we have to rip things up at the top of the show. everybody died in. i am sick -- everybody dive in. i am seeing huge moves in the two year yield. the markets are the litmus paper of the political debate. jonathan: a monster move on thursday on cpi then we backed away as the geopolitical risk started to bubble away and that we start to build that yield backup, getting back up to 1.55 on my screen. tom: off the bloom earlier this morning, green on the screen. happy valentine's day. the dow now up 31 points. lisa: to me this all highlights how much a lack of conviction there is. if you look at implied volatility, i keep coming back to this.

edward -- it has risen to the highest level since april 2020. is it a geopolitical risk to the downside or an inflationary impulse that could lead the fed to tighten too quickly. tom: the good news is we are not strategists. jonathan: it would be so difficult. imagine being one in europe. you've just started to build in the idea the ecb makes a move. you've started to look at energy prices with the threat they go higher. how does the central bank responded that and how do you break it any forecast for the 10 year yield? tom: let's review the last 30 minutes. the bloomberg lit up like a candle and it was simple. the foreign minister of russia made some statements and the guy sitting to his right or left said i agree. jonathan: he just said all right. what a staged moment to have this long table with russian president on one end and the foreign minister on the other step continue the diplomatic

effort, and the russian president saying all right on russian state tv. things flipped. that is why we have a positive equity market. tom: let's do the data. we can talk ukraine and russia in about 12 minutes. in the bond market, what is the most transient item right now? jonathan: we have a flatter curve, but what is driving it? yields heading back to where they were last week. 1.60 through last week. then we backed away, now we backup again. yields up to about 1.54. that gets my attention. euro-dollar recovers. there is your move lower on crude. 92.23. a look at 95 at one point. now it is down more than 1%. tom: more headlines from russia. i do not know how to translate these. the defense minister telling

vladimir putin of an incident. very important. the drills are ending. this goes to the navy in the black sea, which as i said to maria tadeo, i wonder if that will be one of the focuses. jonathan: very little to go on. the president asking his defense minister to report on the navy and army drill, the defense minister saying some drills are set to end soon. that is the headline. tom: matt brill joins us. how does all of this diplomacy and this geopolitics fold into what invesco is doing to manage the instabilities? matt: good morning. i want to wish my wife a happy valentine's day. jonathan: that was smart. tom: is valentine's day? lisa: did you get her anything?

jonathan: carry-on. if you want extra time, it you take it. tom: was there a bit of a domestic last night? matt: is a very special day and i wanted to get out there and save a little money because things are so expensive. [laughter] as far as what we are trying to do in the portfolio, lisa has been nailing it. telling you it is hard to figure out which way things are going to go. if that means you have to be more defensive, on thursday you think rates will skyrocket to 2.25 on 10, on friday everything is going back to 1.90. you are seeing this risk off, let's be cautious, everyone is talking about the fed needing to be patient but investors also need to be patient. right now it is very difficult. you need to skew more defensively. jonathan: imagine things at the brill household. where are my roses? have you seen the inflation?

jonathan: i have not even checked this year. lisa: that tells you everything you need to know. tom: let's get one more question on the fixed income. jonathan: goldman went underweight credit and overweight cash. can you walk me through what your cash allocation would be given the move at the front end? very fast and very quick. matt: we have a higher cash position than we normally would. we are trying to be in the upper single digits. it is not all cash. what we are starting to find opportunities in is floating-rate investment grade debt which is similar to cash. to meet that is the attractive point. we are seeing a lot of regional interest investment grade floating debt. to me that is the area you can hang out in and get more deals what you're getting still is

euro in cash and more these floating-rate products. 20% of the market has been issued in floating-rate debt and we keep begging the banks for more floaters because that is the place to be for now. lisa: where are we in terms of the selloff we are seeing unicredit? i am at spreads on junk rated bonds at the highest levels back to late 2020. there's a feeling it is just getting started. what is your view? matt: i would describe things as cheap over the near term, not steep over the long term. if we look at 2016 to 2018, a more normalized period, we are still on the tighter end. we think the fundamentals are attractive unless the fed makes a serious policy mistake and they will stay attractive. technicals are challenged and valuations are just ok. i would like to see us get to a cheaper level, i would like to see more clarity from the fed,

but we are getting to a point where it is able to start nibbling on opportunities. i think underweight credit is probably the right call for the next month, but as you get towards april and may, i think at that point evaluations are cheaper than today, that is your entry point to put more risk on the portfolio. lisa: people have been coming on and saying the fed does not have the same threshold of a put for equity selloff. basically they have allowed equities to go down much more than they have in the past, and yet for credit the story is different. releasing the fed put as much more present for credit and they will come in more aggressively if they see a selloff persist in corporate debt? matt: i think so, but what they will be worried about is a seizing up of the market, meeting the other ability for the corporations to issue debt, which is what we saw in march 2020. basically the plumbing not working. if the fed finds out the plumbing is not working, there is a risk off and the ability to

roll debt is not happening, i think the fed will step forward. right now we are not anywhere close to that. valuations are in the middle of the lower end of the range and corporations are still in good shape. the most important thing for the fed to watch is how easy corporations are able to borrow. the deals have gotten smaller but no deals are getting pulled. we are seeing companies able to borrow, they are not borrowing $5 billion, they are barring $2.5 billion. if that is not a function you will have some sort of fit put. jonathan: i found a florist, one dozen long stemmed roses and a box, $135. one junta $35 for one dozen long stemmed roses in a box. what is your message? matt: it would've been $100 a year ago. we will wait until next year. jonathan: this inflation is not's. matt -- this inflation is nuts. matt brill of invesco.

tom: this is like an annual right with jonathan ferro. jonathan: don't you think they should get in inflation past? lisa: i will not go off on my tirade. there are lots of ways to express your love. it is about the expression. if the issue is the price is too high, you will not have the expression, you can still have the expression in a different way. they become intelligent and you wish your wife a happy valentine's day. jonathan: that is what he did. i thought it was beautiful. you want to do markets? i am happy to do markets. lisa: this is scintillating. jonathan: positive on the s&p and the nasdaq. tom: news flow and the vetting of the headlines we see. we could say that is what turned the market around. lisa: just without a doubt --

jonathan: without a doubt, just a couple of words. all right from the russian president. lisa: a couple of words that are highly staged. we are seeing information from the u.s. government and vitamin are prudent and the market following for it every time because there's nothing else to go with as far as what the path of travel is. jonathan: there's an argument they do not want to validate u.s. intelligence. they continue to deny their preparing for an invasion. the headlines are the foreign minister of russia has proposed to continue diplomatic effort. the russian president has said all right. last 30 minutes sound like de-escalation. that is what it sounds like. the market flips from positive to negative. from new york, this is bloomberg. ritika: the ambassador bridge

that links ontario with the u.s. has reopened after a five-day protest against vaccine mandates up traffic. 30 started clearing demonstrators the past weekend and are working to remove barriers erected at the site. the bridge handles an estimated 25% of trade between the u.s. and canada. the balaton ceo is dismissing the idea that the home fitness group could be put up for sale, saying it is going to increase growth by doubling down and increasing its product portfolio. peloton stock rallied after reports nike and others were evaluating bids. apple is boosting pay for u.s. retail workers as it navigates a tight labor market. it comes after apple revealed plans to offer part-time staff paid vacation for the first time as well as more sick days and child care benefits.

the los angeles rams beat the cincinnati bengals 23-20 two when the super bowl on sunday. the victory gives the rams their second effort super bowl title in their first as a team based in los angeles. the ram scored a touchdown with less than two minutes left in the game to take the lead. the duchess has covid-19 according to the telegraph. the duchess is currently self-isolating. it comes five days after the prince of wales -- guidelines are being followed. 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. ♪

>> clearly it is a significant risk and the uncertainty is elevated, not just on whether there will be any patient but what the western response would be in the impact on energy prices. with energy prices already high, the shocks do pose a risk comment to me it makes sense to be dialing back ones risk positions. jonathan: things have changed in this market. mike bell of j.p. morgan asset management. futures are flat on the s&p. they were down almost 1% earlier. down just 19 on the nasdaq. into the bond market where yields climb higher. a little bit higher on two. let's talk 1.56. in the equity market, we recover

off the back of this headline from the president of russia, "all right." saying all right to the proposal from the russian foreign minister to continue diplomatic efforts. tom: the diplomacy moves forward. red and green on the screen. less enthusiastic than right when the headline came out. before we get to alex, the defense minister for russia in the chair for nine years tells vladimir putin of a summering incident. that is a blip -- a submarine incident. that is a bloomberg headline. then it gets to islands in the pacific. we need to be careful. i wonder of the theater of this along with the politics. jonathan: away from the speculation, let's look at the headline.

response from the president said some of the drills are about to end soon, that feeds into the idea things have de-escalated. whether you can say that with any conviction is difficult to do. we are going up three or four headlines from russian reliever. jonathan: the market -- tom: the market is doing that with the big swing. alex, we are thrilled to have you with us, practicing out of eurasia group. truly an authority. what is the diplomatic construction if we choose to contain a vladimir putin and if we choose to allow him some form of saving face in the coming hours in the coming days, what does the west need to do? alex: i think the package of diplomatic efforts has to include addressing a number of the issues that vladimir putin has brought forward, that

includes tough issues like ukraine's membership in nato. the comments from the foreign minister today and vladimir putin are good signs negotiations continue, but it has been clear in the last week there has been not much change for vladimir putin on what issues matter. since the nato ukraine dynamic will still be very important. ultimately they have to have some sort of agreement or understanding on that. that is hard to do. the diplomatic breakthroughs have gone down in the last few days. tom: as we stagger from yalta to the history of 1991 and now to a new affirmation of what data will be, what do you and ian bremmer perceive the new data -- the new nato will look like? alex: one of the interesting aspects of what has happened so far is that because of the

threat posed ukraine we have seen more cohesion and unity in nato than we have seen in a long time. a lot of that has been directed at countering what has been coming from the russian government. i think the diplomatic efforts in the u.s. has made towards the european countries and nato members has been notable. we are seeing a fairly dynamic response. the question is does that pressure then lead to some level of concession on the part of moscow. the problem is you've not seen that coming from vladimir putin. jonathan: what have the russians achieved over the last few weeks? alex: they have brought the west the table on issues that have mattered a lot of vladimir putin over the years that includes ukraine's foreign policy orientation and includes the issue of nato's presence on russia's western border. vladimir putin has noted he

thinks the pressure that has been brought to bear since november has led to that result. i think for vladimir putin he is still looking for some type of diplomatic wind. that is probably going to involve something more than getting everyone to the table. it will involve some level of concession and that is what the problem is with diplomacy. lisa: what is his main motivation? i'm talking about his domestic agenda versus his international agenda? alex: there are a number of security concerns vladimir putin perceives need to be addressed. i would question some of the underlying motivations. we have heard some of it in the press conference with emmanuel macron. i think he does think russia faces a direct security threat coming from nato and he is trying to address that. ukraine is the focal point for that. he has talked a lot about his views of ukraine and its link to russia. the security matters that come

through in the last couple of months in his rhetoric. jonathan: before we let you go, there is a lot of diplomacy over the next 24 hours. what are the kind of language you are looking for that would indicate de-escalation or perhaps the opposite from chancellor -- from olaf scholz or anyone else from that matter over the next day or so? alex: one of the words we have heard is basis. is there a basis for having concrete discussions on european security? if we start to get signals like that that would be a good sign. in recent days the indication is that is not where we are. jonathan: alex brideau of eurasia group, thank you, particular for that final comment. this equity market turns positive a little bit. considering where we were on the nasdaq when we were down 1% we have recovered two unchanged on the day. that feels like in up day considering where we were this morning. tom: i'm looking at four things.

euro swissie has pulled back a little bit. this is what i love when we talk to actual authorities, away from the spin. alex brideau flat out says things have gone backwards diplomatically. jonathan: is there a basis to continue diplomatic conversations for the next couple of days, maybe longer than that? tom: i don't know. the germans have to do their tour. who will be after that? is boris johnson do swing through? jonathan: i believe the british prime minister is speaking to the u.s. president. that is where boris is at. tom: within the history of the continent, emmanuel macron makes a tour, olaf scholz has a tour, by definition boris johnson has to make a tour. jonathan: ps some problems at home. he will be catching the prime ministers questions with tension in parliament. futures recover. yields are higher.

up two to three basis points on 10, and crude backs away from the highs overnight to 92.60, down .5%. tom mentioned euro swissie, that was -.5%. now negative just one third of 1%. from new york, this is bloomberg. ♪

jonathan: equity futures up .1%. good morning. with bramo and tom keene i'm jonathan ferro. we recover off the back of encouraging headlines out of russia, encouraging relative to 24 hours ago. the russian president saying all right to a proposal from his foreign minister to contender -- to continue diplomatic conversations. a gentleman called branigan says roses in economic terms appreciate in value, deliver volatile returns, and seek to always be in backwardation when i happened to buy them. i love that last line. how true is that. [laughter] lisa: not a response. tom: that face does not

translate on radio. do you want to convey how you feel to the people that only listen? i forgot it was valentine's day. jonathan: has misses jean message cute -- has mrs. keene messaged you at all? lisa: how many women still care about valentine's day. a corporate holiday. jonathan: you can talk for the whole population. lisa will bail you out. lisa: go home, tell her you love her. jonathan: did mrs. keene hear that? tom: i don't know if she is watching. lisa: that tells you over thing you need to know. tom: the good news is jonathan has a couch the size of rhode island. jonathan: is a big one. tom: should we move on? we are focused with maria tadeo in brussels all that is going

on, the turn in the market we have seen. let's have a quiet and rational discussion on rates. michael schumacher joins, head of rates and wealth strategy at wells fargo. what is the change in the wells fargo strategy of what rates, what price in yield tells us in the market? michael: we have been bearish for a long time and the move has been incredible. i think it has been too fast. with the market pricing 165 basis points from the fed, that seems too quick. the fed may get there eventually but this is been awfully fast. i would say the front end backs up, yields fall come you get a curve steepen or. longer perhaps a flatter curve. tom: on a 10 year yield, where is neutrality? michael: i would say probably

taking ukraine out of the equation, if that calms down, 2.25, somewhere around there. lisa: there's a lot of fed speak coming up, there has been a lot of fed speak. james bullard is speaking on cnbc and people are talking about which beneficial should you be watching. who should be listening to? michael: what you rather listen to bullard on cnbc or michael schumacher on bloomberg? lisa: schumacher, obviously. who will signal the best when you have mary daly sounding relaxed and others coming out with more histrionic comments? michael: is a tough time for the fed because you have so many empty seats. it needs to be from jay powell or maybe from lael brainard. if it is one of those two opening the door to 50 basis points next month or an aggressive tightening cycle, you

have to listen and focus on that. if it is bullard, it is interesting, if it is george come it is interesting, but it does not carry the weight of the big two. lisa: meanwhile you have bullard repeating the idea of the 100 basis point rate hike. what data are they looking at? if you look at data it can justify everything you wanted to justify? michael: the first couple of rate hikes are not going to impact inflation for a long time. maybe in six months, nine months, 12 months. the initial couple hikes, the intention is to send a signal to the markets and say we are serious. 25-25-25 for the next three meetings or 50 and 225, the inflationary impact will be seen. in terms of the date of the fed will look at the speed of the drop in inflation, but i cannot link that to the early moves. tom: we are happy to report james bullard and michael

schumacher defer to the chair, they both agree on that. what is so important to me is this mystery of how chairman powell comes to a decision, how he takes consensus and leads into a key decision. we knew that with greenspan, maybe we knew it with ben bernanke. do you have an understanding of how chairman powell acts as he moves towards key decisions? michael: the mechanics in terms of jay powell or a mystery to me. what i will tell you is when the fed does that first rate hike i expect a unanimous call. powell will round up everybody and somehow form consensus. after a couple of moves you may get some dissent. we have not had a dissent at the governor level in 15 years, but the regional president's might dissent. not for the first one. tom: one of the problems we have as a measure of inflation, we

spent a lot of times on friday on the cleveland, taking out 8% of this, taking out 8% of higher inflation. how does inflation full into your forecast? michael: our economics team has a run rate for core cpi or pce well above 3% at the end of the year. looking at those numbers and thinking about a decent amount of -- on either side, that is too much for the fed. the fed cannot tolerate having core inflation 3% plus and declare victory. tom: lisa, when you are away. it is so important to understand the heart of the matter is the year end rate of inflation. as mike says, can they have a normal policy with above 3% inflation? the answer is no. michael: what is the -- lisa: what is the message from the

yield curve? i would question whether the signal is relevant or signaling the fed cannot do as much as people think without breaking the economy. michael: is interesting. if you go back pretty financial crisis, we are told recession. since 2008 that link has not worked. you have central banks active with her bond portfolio. there's been a very weak connection. are we super concerned about the flattening curve telling us the economy is going off a cliff? no. it is a negative signal cannot near the dangerously know it would have been 15 years ago. lisa: there was an interview with esther george who was talking about using the balance sheet and possibly expediting a rollup in order to prevent the yield curve from flattening so much. you think this will become an ongoing conversation we will hear more about -- we'll hear more about on wednesday during the fed meeting minutes. michael: the balance sheet

discussion will be interesting and we think that will be the most telling item out of the minutes -- how does the fed intend to go about the balance sheet effort? is it simply going to be run off? we can do that in treasuries, not so much mortgages. these are great questions. it will be an ongoing battle from the fed to sort this out. tom: with bullard speaking in the idea of the headline that says he needs to convince his colleagues, to meet is almost communication run amok. i had important conversation with richard brenner about this at morgan stanley. is there too much chat whether it is bullard or someone else? is there just too much fed navelgazing? michael: that is a great call. i think there is too much chatter out of the fed. it would be better, special around a big turning point if they dial down the volume. everyone looks at the bloomberg

calendar and says who is coming up on the fit of the next few days, is this person major, minor, the middle? it will be better for the markets to have less of that sort of thing. jonathan: congratulations on an awesome call on the front end of the two year, you said let's get to 1.50 in the middle of the year and it felt like maybe we would get there, then we got there really quick. mike schumacher of wells fargo. thank you very much. fed is the function of the bloomberg. on the events 10 we have neel kashkari on the 16th, the 17th bullard, on the 18th evans, williams. 20 seconds, bostick, master, they are all speaking. tom: the way greenspan did it was maybe not constructive. lawrence minor had a wonderful book on this. maybe there is an in between where we need to head.

it is not that i'm exhausted by it. i always find it stimulating. is it beneficial in the long run? i'm not sure. jonathan: when original fed president speech they show a narrative beyond the core of the fed. the problem is were not hearing much from the court the fed. richard clarida is gone. chairman powell, when was last time he has speech outside of the schedule? tom: i will go back to 1907 in 1912 where you have a definition of presidents, the president and the governors are not the same. it is important as the chairman comes to some form of opinion, particularly a decisive point, who is he listening to? jonathan: we need to hear from the chairman. march 16 is when the fed makes their decision. march 16 feels like quite a while away. yields in on two to the break of 40. a 39 handle on the 2-10 curve

because of the front end we are out by eight basis points. getting back towards 1.60, just short of 1.58. tom: we are moving in a little bit. bullard is talking balance sheets. lisa touched on an earlier. away from ukraine, there is a lot to talk about as we go to retail sales. jonathan: tons to talk about. tens back towards 2%. two getting back towards 1.60. 1.58. we will discuss all this with oksana aronoff. looking forward to that conversation in about 18 minutes. from new york, this is bloomberg. ritika: russian president vladimir putin is signaling there could be more talks with u.s. and its allies considering

its demand for security guarantees. sergei lavrov proposed continuing talks, to which vladimir putin responded "all right." it suggest the kremlin will extend diplomatic solutions to the current tensions. australian court has since the leader of a hacking gang to 14 years in prison. the man claims to have help the country security service during a presidential campaign. a russian investigation did not confirm his lengths. swiss voters have enacted a ballot measure to protect children and young adults from tobacco advertising. switzerland lags behind most wealthy nations in restricting tobacco advertising. that situation wildly -- that situation widely blamed on lobbying from some of the world's biggest tobacco companies. hsbc holdings plans to as much as double bonuses to some of its

junior investment bankers and traders. it is to catch up with rivals on compensation. the lender reportedly wants to keep from losing its junior staff to others who have been upping their pay scale. the senior employees are in line for hikes of at least 10%. -- after the company announced it was investigating allegations by internal whistleblowers that they manipulated -- 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. ♪

>> the comments from the foreign minister and prudence assent are

good signs -- and vladimir putin's assent are good signs, but it is clear there has not been much change for vladimir putin on what issues matter. tom: our team tries to get the best and brightest and on ukraine that is alex brideau of eurasia group working with ian bremmer. we spoke to him about our top risks very early in the year. those risks are upon us. we think rhea taddeo for her work out of brussels and we continue to month -- we thank maria tadeo for her work out of brussels and we continue to monitor the many headlines out of washington and across europe to moscow. of the jim bullard headlines, may be a recapitulation of what he said to steve matthews on cnbc. one stunning headline is on growth and growth being the debate today. on james bullard of st. louis, a clearing of covid, and 3.5% to 4% wrote real gdp for this year,

that is quite a number. lisa: it is quite a number. this is for the bulls. they see support for this kind of idea. also interesting to see him talk about the balance sheet which is what people are tried to get information on, saying it could be used to steepen the yield curve. what we heard from esther george on friday. how much we going to start to see the federal reserve pair back there $9 trillion balance sheet in order to avoid this yield curve conversion that semi people are worried about? jonathan: the markets -- tom: the markets moving from 31 down to 28. futures a -16, dow futures -96. we have gone from deep red to green and we have come back to red and green on the screen. i want to point out curve flattening with its explosive two year yield. some of the things i look out, this is the bramo worry board. lisa: pulled on.

this morning -- hold on. this morning has been instructive about the dual risks. you have the global geopolitical risks and the potential easing of tensions, and then the fed at the other side. both of them can be negative in different ways and they're playing off each other and it highlights how difficult it is to maneuver for traders and investors. tom: we will have to see with the 210 spread, that is something cameron crise looks at doing microstrategy. what gives you the most information this morning? cameron: you have to look at the short end. as soon as there is a moderately positive headline on this russia ukraine business, short indeed yields jama higher, which was august lead the big story last week, particularly on thursday.

that reversed on friday given some of the geopolitical stuff. it tells you, as soon as you remove a little bit of the weight of those concerns, the short end yield complex wants to keep pushing higher. lisa: you have geopolitical risks people fear could dampen growth globally, then you have the idea the economy in the united states is so robust and going gangbusters to the degree the federal reserve will be forced to act more than the economy can handle. which is the bigger concern for you? cameron: the latter by a wide margin. geopolitical stuff, it is one of those things everyone likes to worry about because there are very few real experts on this. it is this amorphous bogeyman in the closet. i think the tangible impact of

these sorts of concerns is generally overstated. if i can use an example from my own career, i think it was 2006 i had a long position in the israeli shekel. back then there was a brief shooting conflict between israel and lebanon. the lesson i learned is as soon as it started i got out of my position. the shekel was stronger the day before the shooting ended that it was a day before it started. this taught me an important lesson about how seminal some of these concerns are, even if the tensions matured -- how ephemeral some of these concerns are. lisa: one thing that is not a favorable has been the price of oil and it is continuing to climb out of concerns of russia

ukraine or that we are not pumping it to the resources -- pumping enough into the resources people still rely on. i what point do we say this matters and will cause a weaker economy? cameron: i think we are still some ways away. the economy energy intensity has been declining for decades, and that process has continued. in real terms oil is still less than half of where it into 2008. that has led to a recession. there are things that contributed. in real terms, oil prices are still nowhere near any sort of peak that has put their economy into recession. tom: president bullard finishes up his conversation over on the death star with a stunning headline, that he would project

u.s. unemployment perhaps under 3%. this is with his missouri at 3.3%. what to the markets to come and particularly the linkage of rate markets to inflation with the fully employed america with a 2.9% unemployment rate? cameron: to some extent that depends what the full employment implies for wages. if it implies more robust wage growth than we have seen already it is facing multi-decade highs, then the market has to contemplate the return of the dreaded wage price spiral, where wages go up, which increases purchasing power, so prices go up, which then leads to higher wages. tom: thank you. cameron crise, too short a visit. red and green on the screen.

small caps giving life to the markets this morning. lisa, i do not think anyone is saying 2.9% unemployment rate. i do not think anyone frames what the president of the st. louis fed just suggested. lisa: we have also not framed a modern employment market where it is 2.9% but the participation rate is the lowest it has been since the pandemic era, going back in u.s. history. how do you look at a market where it is unclear what the slack is, how may workers will come back in. tom: it is new territory and something everyone will have to recalibrate. lisa: if you take a look, remember bank of america ethan harris calling for seven rate hikes everyone freaking out? this is now consensus. if you look at the interest rate probability it is now pricing in nearly seven rate hikes by the federal reserve. tom: it will be interesting to see. the parsing of the data is

already important. you've may have heard that noise, that is jonathan ferro looking at the cost of three dozen roses delivered in the island of manhattan. i did not know this. spiritual valentine's day. on bloomberg, on radio, on television. ♪

jonathan: the tone shifts in a big way. your equity market recovers,

down .2% on the s&p. "the countdowns 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: from new york city, we begin with the big issue. geopolitics grip financial markets. >> ukraine russia tension. >> we do not know how far that goes. >> the russia ukraine headlines. >> will affect the markets near-term. >> nervousness in markets. >> increased uncertainty and volatility. >> there is not enough conviction, not enough hedging ability. >> this will be what happens to energy prices. >> around