♪ >> right now, it seems have -- it seems as if inflation has nowhere to go but up. >> we've got a hot mess here. >> inflation is a front and center problem. >> the last thing the fed wants to do is to reach policy to aggressively, flatten out the curve and lead to a recession. >> this is bloomberg surveillance. jonathan: there is a big bounce in this market, from new york city, good morning, this is bloomberg surveillance live on tv and radio. at one point, 5% on the s&p 500 and the nasdaq up as well. tom: it's a perception shift. we will monitor headlines as we

look at moscow. the major message is an improvement in the last 60 minutes, staggering our to our and that's a good news hour. jonathan: sergei lavrov perhaps validating that, saying troops are partially returning as drills have been completed. we want to see a little bit more of that in the next few days, months. tom: we are getting lots of adverbs today. scholz has not spoken yet and that's what we are looking for. all the different news organizations seem to have a different treatment of the ebb and flow of russian action in the last hours in the market on the bloomberg terminal -- terminal, equities, bonds, oil lower is all good news. jonathan: this seems to be in line with the conclusion of market participants. it's cautious optimism.

i think you when i would lean toward the caution part. tom: what's important is the nicety of the black sea. that's a hugely symbolic deal. romania's late entrance to nato and not bumping up against ukraine but nevertheless, the head of nato is in romania in recent days and that's a signal to mr. putin. jonathan: the german chancellor meeting with vladimir right now. lisa: things seem optimistic for markets right now and i wonder how long it will be until people worry about inflation again. there is a sigh of relief and yields are picking up and you are seeing tech stocks pick up.

you are wondering about these risks out there and how they factor in. jonathan: do you like to put one worry to the side? tom: what's amazing is you can link moscow into the 20 year auction coming up. jonathan: up by one .5% on the s&p 500. the nasdaq is up 2.5%. we unlock high yields. crude oil is heading south, down 3.5%. lisa: the degree of volatility in oil rises is notable given how much things have shifted over the last few months. we'll rises are down nearly 4% after rising to the highest levels since 2014. olaf scholz is meeting in moscow with vladimir putin. it's the first in person

meeting. how much does the outlook for oil bifurcate and depend on the outcome of this meeting and other meetings happening this week? alan wald is -- ellen wald is joining us a little later on. 8:30 a.m., how does this feed into inflation? do we see a peak in inflation? we get this as some of the inflation expectations over the next two years start to come down a little bit. when you spoke earlier about how important every inflationary read is, i couldn't agree more. it's a jumpy market. the treasury market is rising to the highest level since march, 2020. the banking committee will vote on moving forward the confirmation of jay powell as fed chair.

sarah bloom raskin is highly controversial and lisa cook and philip jefferson for the board of governors. how much pressure when joe manchin is leading the charge and pointing a finger at the federal reserve to tackle inflation head on? we all have a responsibility that all is possible to manage our debt and he talks about economic pain stemming from the federal reserve waiting. how much does this affect how much they should -- who they should vote on? jonathan: from the nato secretary general, the first headline sites moscow for cautious optimism and that's reflected in the equity market step no concrete signs of de-escalation yet, no concrete signs yet from the nato secretary-general. tom: we will bring you the

headlines from moscow. the curve is steepening over the last 24 hours, even 39 basis points. gabriella sanchez joins us now. she writes one of the clearest, most detailed notes on the street with a sense of international affairs. thank you for joining us. what is the new blueprint that matters? >> good to see you. i think that's what we are trying to figure out this year as investors. the market is pricing in what will be a transition year for the economy from pandemic recovery to post pandemic expansion. we have more optimism about growth but we are also more

concerned about inflation. it means a different withdrawal than we had post financial crisis. we need to figure out what the new blueprint is. i don't think investors have a clear read on that and neither do policymakers. they are trying to figure that out in real time and there is so many permutations they can come up with in terms of balance sheets and timing. ultimately, we think volatility will stay higher for longer and that means outside bets are really difficult this year. tom: i know you speak eight languages but the answer is you are speaking greek. you say within investment and finance, alpha matters. what is it matter now? >> beta is the kind of return you can get invested in the

market but alpha the kind of excess return you can generate by focusing on the type of companies you invest in. for the last 15 years, it's been the cycle of data --beta that focuses on a return of indices. going forward, because the market has recovered already so ugly post-pandemic shot, the only beta returns are three for 4% annualized -- 3.4% annualized. you are starting to see a turn in hedge alpha and that could be a sign that this is the dawn of alpha. there is a lot of valuation below the surface and a lot of valuation to add. lisa: how much of the alpha come from china? >> china is an important piece

of this puzzle. you can add alpha in chinese markets and you can improve the portfolio by adding chinese onshore assets. both stocks and bonds, we project for china to have the highest returns over the next decade. it'll be double u.s. shares. there is a lot of improvement that can happen on returns by adding chinese assets and we will get a diversification kicker from those markets. they beat to their own drum and you are seeing that in action this year. tom: thank you so much. we are talking about nato and further headlines. stoltenberg is waiting to hear

from moscow as well. jonathan: this is what we want to see. we have not seen any signs of reduced military presence. we need to see some substance. when the russian foreign minister says were getting some kind of troop withdrawal with troops returning partially from drills, we want to see concrete signs of de-escalation and the nato secretary-general would like to see the reduced military presence and says he has not seen any signs of it yet. tom: this is not crimea step it was by mail or by post, three weeks away in 1856. anger now immediate. it happens within seconds. i don't understand how you do diplomacy given the speed of news. jonathan: you've got the foreign

policy effort and you got the domestic issues and they are hard to reconcile. on the foreign policy front, anything could happen higher energy prices at home and domestically. this came from the washington post -- the white house and top democratic lawmakers are beginning to weigh a new push for a federal gas tax holiday. that's the headline. tom: off the top of my head, it's $.18 a gallon. if we pop $100 per barrel, i'm not sure what that does. jonathan: futures are up by 1.6 percent on the s&p 500 and the nasdaq up i more than two percentage points and crude is down. this is bloomberg. ♪

ritika: some russian troops are laying back after completing their drills. the u.s. has warned of an russian invasion and the kremlin says it has no plans for attack. olaf scholz is in moscow to meet with vladimir putin at the world war ii memorial. two major border crossings in western canada have been halted due to protests on coronavirus vaccinations. commercial traffic to the u.s. has been blocked by semi trailers and farm equipment. the european top democrat -- top diplomat agrees an agreement with iran is insight. they want to reach a compromise

around the foreign minister warning the u.s. and western powers to show their true intentions by removing sanctions on the iranian economy. substantial consolidation among suppliers posed a threat to national security according to the to the defense department. global news, 24 hours a day on air and on bloomberg quicktake, powered by 2700 journalists in more than 120 countries. this is bloomberg. ♪

♪ >> if we can impose some very heavy sanctions as i believe we are planning to do on the russians with regards to international banking, but most importantly, with regards to nord stream 2 and their ability to distribute fuel, there will be some consequences to that. jonathan: leon panetta there, the former u.s. secretary of defense. futures are up 2% on the nasdaq and 1.6 on the s&p 500.

crude oil, 90 two and about $.10 negative -- 92.10 cents. there is a new push for a federal gas tax holiday potentially causing a combat on rising prices. that's the lead story on the washington post. tom: the industrial measurement of inflation with some big numbers. some of those sub indices on ppi we will be watching. the vix is down to about 26. washington awaking from what we

hear from stoltenberg from nato. maria, let me get to your reporting on what you see. what is the single think you are trying to learn in your european afternoon? >> the big question europe is whether or not things are moving back. that no russia and russian tactics say that russia does one thing but then it doesn't materialize. they really want to see the proof and see the troops moving backwards sustainably. they say they don't believe it. tom: i'm fascinated by the nato visit to romania a of days ago. stoltenberg of norway spoke out but the fact is, nato is acting

off of 2014 crimea and i guess nato is acting off of what they see now. can you suggest that nato will entrench in romania on the black sea as one of the actions out of this mess? >> it's funny you mention that because stoltenberg told me a week ago that he is not leaving nato at any time. where nato goes and they stationed the troops is an open question. they have moved into romania and poland and all of the baltics. it depends on what russia does next. this is not about de-escalation. what russia is trying to do is change the narrative and say there's been no invasion.

they are saying we are not the bad guys. a lot of this is about the narrative. lisa: we did get the reporting in the washington post about the gas tax holiday in the u.s. how connected are the conflicts between russia and ukraine and the timing of the gas tax holiday? >> this is something that was proposed about a week ago by two senators considered at great risk of losing their seats, mark kelly of arizona and maggie hassan of new hampshire. there is a direct connection as long as crude oil prices hold near these highs. the national averages just south of $3.50 per gallon. what happens to the federal highway trust fund already underfunded as more people drive ev's and what do progressives say about that?

they will not love the idea of incentivizing the buying of fossil fuels. this may be a proposal for now and we will see if it sees the light of day. lisa: the gas tax has not changed since 1993, 18.4 cents per gallon. it won't really bring down the prices so it goes to the question of how much gas prices are holding certain policymakers hostage when dealing with difficult geopolitical issues. >> if we are talking about $100 per barrel crude, this will remain a conversation in washington. releasing the supplies from the spr did not do a lot either. it's more about politics thing we did everything we could like a failed tax holiday makes a lot of sense. it doesn't increase spending, it front loads it.

we also have a reopening story. they want people to get out on the roads and go on vacation this year. jonathan: how bad are the polls for this white house? >> they are near the lows of this presidency, near 40. that is exactly what is feeding this conversation about gas prices. jonathan: thank you very much as always. whenever we work through headlines like this, there are the optics and what people are saying and there is the substance which is what people do. you have to separate what people say and from what they do. the nato secretary general is saying signs from moscow indicate cautious optimism and says we have not seen any signs of reduced military presence.

tom: he is working through this in concert with nato. it's a new nato. i'm trying to get smarter but what's fascinating here is where we are heading to once the debate is over. i take an issue with not mentioning china this morning. i wonder about a tribe polar nature of u.s.-russia-china when we are done with this. jonathan: we have had several discussions on china that it's ok, we are not offended. you are not in the same room as us, it's ok. tom: you can come in here under

one circumstance. you have to bring the ab ramo-cam. jonathan: futures are up 1.6 on the s&p 500 step this is bloomberg. ♪

jonathan: the optics improved, we will take it. can we see that on the ground? the nato secretary-general hasn't seen that yet. this market waits for no one. futures up by 1.6%, and the nasdaq up by more than 2%. how long before we start to see how you'll start to take equities lower again? that is what rambo is very, very focused on. get to the bond market. you should see that, t.k..

you are in trouble, are you? yields higher at about 31 basis points. to finish on this just to wrap up, to capture the tone of the market this morning, we look like this. equities up, yield up, crude up. tom: we are watching all this. i have to mention goldie's down $20. $18 -- gold is down $20. $18. jonathan: let's get you some single names and say hello to kailey leinz. kailey: you talked about how oil is moving lower. a lot of oil and energy stocks are under pressure in premarket trading. resources down 4.5%. marathon oil down 3.5%. one group of stocks moving to the upside is anything tied to

cryptocurrencies but as you have big gains for crypto. there are some earnings stories out there as well. one was reported after the bell yesterday, really bullish outlook topping analyst's forecasts with analysts quick to raise their price target as a result. that is up 10%. this is a 13 story. buying into the electric trust maker. after a 6.5% gain yesterday it is higher by 5.5 percent this morning. and finally a russian e-commerce company in the u.s. now 25% year-to-date. really under pressure in recent weeks along with russian equities broadly due to geopolitical tensions regarding ukraine. with better headlines this morning some relief is coming into that stock which is higher by more than 10% before the bell. tom: thank you.

i learn every time when you talk to me about the index. thank you. kailey leinz is here early in the morning getting our day started. it is like internet games. lisa: and something else. jonathan: what is it? i'm not going to pretend like i know. lisa: it is a search engine. you are saying it is the russian google? lisa: she is coming back on and nodding. kailey: i walked off the set too early. it is like google, it is a search engine, but there is also a ride-hailing component so it is also uber. it is a very big company that is trading here. there is some knowledge for you, tom. sorry. tom: stay right there.

the global head of foreign-exchange strategies joins us this morning. i look at the continuum and it seems like it is a mccormick seachange off of your wonderful call off of dollar resiliency. are you ready to make a regime change call in the land of mccormick? >> i think we are getting closer to the top of the dollar in broad terms. i do think what is interesting is there is still some more dollar resiliency ahead. i know there's a big shift in the market in terms of how much expectations are going on the euro but i still think they will trade on the downside. we are thinking about av-shaped bounce. we have seen moves towards 112 and then we are off to the races looking for revisit around 120 for the end of 2022. tom: you do a great job on the currency wars. they are usually described to a

race to the bottom. weaker currencies boost exports. you take it a different way. what do next year's currency wars look like? mark: we are living in it now, a race to the top. policymakers prefer currency strength to limit inflationary pressures. that is a clear story that the central bank s&p has allowed a little more currency strength then people would have anticipated. it has been stronger than people would have expected in this environment of lower yields because they are allowing the currency to do some of the work for them. stronger currency and lower inflation. now all policymakers are looking for stronger currencies. they aren't saying that but you can see it based on their actions. the preference is for a stronger currency, and that is helping to work off some of the inflationary pressures. lisa: in the past decade we have talked about rate hikes or rate cuts dictating the moves that

we've seen and currency markets and that has shifted over the past year to a growth outlook. over the next 12 months do you think that it will primarily be driven by growth and not necessarily rate moves? i point to china for example where you see the yuan strengthening despite potential rate cuts coming up? mark: most important is currencies are multidimensional. we are focused on central banks in geopolitics now but if you look at what factors have been making money it is value, growth, and trade. i do think that growth is the most important factor through periods of time, and it is one that will matter the most, especially with covid reopening. we are moving in a world where we have synchronized policies that are allowing everyone to reopen. growth will matter and we will see growth divergent. when we think about central bank growth and commodity in terms of trade and value, one of the most

important things is equity. on the rate decide where we are going is about terminal rate pricing. it is like the first ones in our at a big disadvantage. if you look at the canadian dollar when the boc started to move last year it is one of the least exciting currencies in the central bank trade. there's a moment of time in the next three to six months when we think about terminal rate also figuring out who is the highest will help the currency, but if we step back from that growth in trade and commodity exposure, value is the key driver of currencies this year and next year. lisa: if we connect this idea to the currency wars that you are talking about where nations what to see stronger currencies to fight inflation, how does it factor in to the fed's calculus? does it encourage them to be more hesitant to raise rates will be more aggressive to allow, ironically, the dollar to strengthen more because it will increase growth prospects? mark: part of it is they want to

-- i wouldn't use the word shock markets, but what they want to do is get ahead of expectations. with the u.s. is worried about more so than any other country is that wage prices are raising faster. the future about your diffusion indicators for inflation. in europe they are focused on energy. they are starting to see expectations around longer-term projections of inflation starting to rise to uncomfortable levels. i think there is a component that with the fed is trying to do is that they got too far behind the curve and are trying to get aggressively in front of the curve. they are also wary that growth is slowing. they have a moment in time where they can hike aggressively because they might be hiking into what is a slowdown in the economy next year. i think that they are trying to get ahead of things and anger longer-term inflation expectations. tom: you have to revisit the swiss franc. 105 would be a weaker swiss franc. we aren't there yet.

you have been doing this for years, watching the swiss national bank. we talk about balance sheet dynamics in america will stop they own a truck load of apple, starbucks, and selected equity shares. what is their vulnerability as they make a pot load of money in apple shares? i don't understand. mark: it is interesting. it goes around with the global growth momentum story. if you think about a big driver moving markets around u.s. equities are underperforming because they are highly leveraged to grow. growth is highly leveraged to real rates. not only are u.s. real rates rising but global real rates. the concern is that they will be owning underperforming assets. what is very interesting as when we think about the growth to value rotation, which i think will occur next week, the sequencing is to trick to trade out because ultimately we need higher real rates.

the concern for that moment for swiss franc is that the euro offers a tremendous amount more value than the swiss franc. and then if you again about the performance of the balance sheet or having performance to the equity markets, the equity markets are underperforming over the next six to 12 months. this is where euro-swiss will be interesting. swiss was allowed to control inflation from the euro. you also got the balance sheets leveraging the global growth stocks that are leveraged to real rates. the value in the equity is in the euro and not the swiss franc. jonathan: i will ask you a question and if you don't want to answer you can pretend like you can't hear me. what on earth is going on in canada right now? mark: the central bank is going great. [laughter] jonathan: that is exactly where i was going.

we spoke before this interview started. mark knew what i meant by that. i used to spend a lot of time catching up with the swiss national bank in they never liked talking about this. if you go through the holdings of apple and break it down very quickly number 25 the swiss national bank. all of these ethics numbers, the majority of it is in bonds. about a quarter of it historically in the recent history anyway has been in equities and it is amazing to see. tom: it is a profit-making machine. i know that you have three or four accounts so you probably get a distribution too. jonathan: in switzerland? tom: i wish that lunch wasn't $40. jonathan: the yields are in. higher now by four basis points, 2.02%. the equity market is up by one point five. from new york, this is

bloomberg. >> keeping you up-to-date with news from around the world. russia has announced that some of those troops involved in drills have started returning to their bases. the military exercises have raised concern about a possible attack on ukraine. the kremlin has denied planning any attack. the white house is considering a federal gasoline tax holiday. top of aquatic lawmakers are also weighing the move, pausing fees at the pump would be part of a broader campaign to fight rising fuel prices. overwhelmed by the growing omicron outbreak but no plans to bring the number of cases back in 20 with lockdown. shares of galactica are jumping. ticket sales will start tomorrow. the price is $450,000.

commercial selling will begin later this year. it is owned by millionaire richard branson. elon musk gay 5.7 billion dollars of tesla shares to charity in november. the donation was one of the biggest ever. the name of the charity wasn't in the filing. a large charitable donation would reduce what elon musk said would be the largest tax bill in u.s. history. global news, 24 hours a day on-air and on quicktake, powered by more than 2,700 journalists and analysts in more than 120 countries. this is bloomberg. ♪ this is bloomberg. ♪

>> in terms of the commodity price outlook as we said this

morning we do expect that we have a billion ton plus year ahead for chinese steel production, but at the end of the day i and ore price will be determined by supply and demand. given the strong outlook that we see for the demand side of the equation we think that that will provide a measure of support to pricing. jonathan: the bhp group ceo. from new york with lisa abramowicz and jonathan kane, i am jonathan ferro. -- jonatha -- with lisa abramowicz and tom keene, i am jonathan ferro. a bounce in germany, yield higher, crude lower by 3.3%, t.k.. tom: the bounce across 24 hours, what i will say in the last 20 minutes for pros glued to this across equities, bonds,

currencies, commodities this devolves off of headlines and i'm looking at rush out right now. they are literally coming out in real time and we are reacting to this. ukraine recognizing russia violates -- that gets you going. jonathan: and then the reaction from boris johnson, some of the headlines from him reacting to the last couple of days, looking closer at ownership of russian companies, the uk's the epicenter of some of that discussion. we think that russia is prepared to move at any time. we've heard that from the administration over the last few weeks. seeing russian openness to conversations. the final headline seems to be what is driving things at the moment. the optics, the style, the approach seems to be improving. i think what we would like to see his substance going forward. tom: we'll wait for germany and

russia to meet in moscow. lisa: let's talk about the volatility in the crude markets. it is kinda presumptuous to think that a lot of what is happening in crude is just related to russia. we have been talking about this tug-of-war between the geopolitical premium into brent crude prices or is this underlying demand pushing prices higher and higher? it is a culmination of both. crude volatility going back for about a year you see a steady incline from about july to november. this massive jump in volatility in november when you got the 20% air market triggered alongside the black friday selloff in november. since the start of the year that incline has become much steeper. part of that is the geopolitical tensions and part of it is also potential supply coming from the iran nuclear deal. this is not something that gets enough attention, the idea that in exchange for potentially iran

pulling back some of its nuclear advancements and abilities it could bring about more supply to the market. the holdup seems to be what that support -- what's that supply contribution looks like in line with russia, saudi arabia, and some of the other oil members. it is that tug-of-war in addition to the risk sentiment and the inflationary dynamics in the underlying economy that is making the crude market less and less of an indicator or economic proxy than it traditionally would be. tom: we move on in oil and we have to do the ukrainian headline just coming out. i don't know if you have that in front of you as we juggle, but ukraine making important statements. it sounds like star wars, but it's not. these are very important headlines. ukraine recognition of rebel republics has no legal merits. we will have that coming out

moment by moment. the senior fellow at the atlantic council, you have a sentence in your important research note that stopped me. the united states imports 138,000 barrels from russia? the united states takes in russian oil, is that true? >> absolutely. the russian crude and product shipments to the united states accounted for 11% of total u.s. imports between january and october of 2021. that is according to the eia. we have seen imports to decrease a little in 2022, but the year is young. we are an importer of russian oral -- russian oil and russian oil products. we also import russian lng at times. there was highly publicized news of russian lng that came into new england during cold snaps in

previous years because of bottlenecks getting american natural gas. lisa: you talked about how the geopolitical tensions dramatically affected the price in fair value of oil. without these you could see prices going back to the $80 level more significantly. with more tensions you could see it above $100 per barrel. could you give us a sense of your calculus? ellen: i think that the chart really highlights this and the incredible volatility that we are seeing. as a result. you have seen a lot of volatility because of these geopolitical risks. we have seen oil climbing on news from russia, we have seen it declined slightly on news coming out of iran. that is also a very important geopolitical risk factor right now, though i do think that perhaps the likelihood of a deal and more oil coming from iran is

a little oversold, maybe, by the iran analysts. there has been some talk that perhaps if we do get an iran deal, say next month, that they will put more oil on the market, sanctions are relaxed, i think that we will see a big jump in oil at the beginning because iran does have a lot in storage that it can put directly on the market. then it will be a slightly slower ramp up and perhaps iran thinks that it is able to do, but it could bring oil prices down by maybe seven dollars a barrel if we see that. and then we have the geopolitical tensions that are ratcheting prices up. part of that is also that no one really knows what the sanctions could be. no one knows if russia is actually going to attack or not, despite the headlines.

that uncertainty is also raising prices. tom: we have to leave it there. it is wonderful to catch up with you. we want to return to the headlines, the recognition of rebel republics has no legal impact. these are important headlines, recognizing rebel republics with russia may violate immense packed -- the pact. pushing for the russian president to recognize separatist movements. there are two key regions. the ultimate push from the russian assembly is to get the president t recognize them -- the president to recognize them as breakaway republics. tom: the confusion over the pact is it is a number of protocols and pacts involved. it is about territory and geography and that is something

we haven't heard from the diplomats, it is about land at the end of the day. jonathan: the equity market up 1.6 percent. from new york city with tom and lisa abramowicz and jonathan ferro from new york, this is bloomberg. ♪

>> look, the economy is so strong. we look at the leading indicators. they are still positive. >> cash flow is still quite strong. >> the fundamental backdrop to me still >> >> seems pretty good. this is bloomberg surveillance with tom keene, jonathan ferro, and lisa abramowicz. tom: good morning. our studios in new york, we welcome you on radio and television and we continue to monitor what we see in moscow, what we