of this will self-correct. >> the big push and pull will be the battle between inflation and the fed response to it. >> you don't want to be tightening so fast that you choke off the recovery. >> they say the fed is going to overreact and pull back and that's exactly what the fed should not do. >> this is bloomberg surveillance. jonathan: retail sales coming up, from new york city for our audience worldwide, good morning, this is bloomberg surveillance live on tv and radio. futures down 18 on the nasdaq, down five on the s&p 500. tom: the market is churning today in the big retail sales numbers are coming up today and it matters. i'm going to u.k. inflation which is now a spike, three point four standard deviations which is a huge deal for the

economy, for the people, for the politicians. jonathan: a conversation about 25 basis points and that's the conversation in america and a similar one in the u.k. tom: i need you to explain what happens in april to the people of the united kingdom when they see a combined energy tax reality. jonathan: it will get very difficult and i think we are already there and a similar story here in america. higher energy costs and high interest rates. what will be interesting to see how this hits the outlook for growth in both economies. tom: we are watching russia with some headlines in the last two hours. jonathan: it seems that the russians are saying one thing and nato and the united states is saying that's good news we haven't seen it yet. lisa: there is concern about cyber attacks ukraine in the meantime. what is it mean to have a true de-escalation? it's not clear that vladimir

putin got what he wants. it was interesting to see president biden talk about this to american people and talk about high gas prices is a necessary consequence standing up for democracy. how will he message the inevitability of this? jonathan: the nato secretary general says russia appears to continue a military buildup. difficult to get an actual read on what's happening on the ground. tom: and the markets show it. it shows we don't know what's going on. i read up on the minsk accords. here's my sophisticated analysis. it's a mess. jonathan: whenever i look at it, it's incredibly confusing. tom: ukraine once.

in two of ukraine and the region to the southeast and russia once a partial sovereignty where the near abroad of ukraine is finally attached somewhat constitutionally to russia. jonathan: lisa has a bunch to get to with retail sales in 10 minutes. yields come in by almost a basis point on the 10 year yield. a conversation in europe today about maybe winding down qe by q3. 93.16 on wti. lisa: i'm interested to see what the 8:30 a.m. read is on retail sales. the expectation is for it to rebound after a deceleration in december. however, how reliable is the

data and look for people to ours just to parse how hot does the auto sales market? how do we strip out inflation and what does it look like? people will try to understand whether retailers or consumers are slowing their purchases because things are getting more expensive on a real basis. housing market index data comes out after that and how much do we consider the acceleration in the housing market when the rent prices have climbed to the highest level since 2008? a huge concern not only for the u.s. but the ecb. it was interesting to hear that they have to start considering price increases in housing in the european region. we will get the federal reserve meeting minutes and this is the highlight of the day. what does the federal reserve say about winding down its balance sheet?

it's a $9 trillion book of assets. the gap between two and 10 year treasury yields has narrowed to about the least going back to the middle of 2020. when did they start reducing the balance sheet as a tool to steepen the yield curve and create more of a free market feel? jonathan: we didn't get massive moves lower the last time around what we did on the minutes. lisa: i think you could have a significant influence there. the 20 year treasury option will be interesting considering the fact the fed will stop buying twenty-year securities in march for the first time. there is not a lot of liquidity there. it's at 1 p.m. and $19 billion. tom: that's what i paid for rose's yesterday. it didn't work out. jonathan: we can't get rid of

him. there was a big conversation about who would hike first, the bank of england or federal reserve. in the end, the bank of england waited and did very little. it was the federal reserve that was almost flying solo. it will be different this time. the head of america's research of fx strategy at hsbc joins us now. how difficult and different will this one he compared to what we saw last time around? >> it's a tricky time for central banks. it's a conundrum in terms of market havey or. -- of market behavior. you've got a real income squeeze and you take greater account of this so it's tricky. we think the fed errs on the side of a basis point move in

march. the effects take away that. the fed call is finally balanced in our view -- is finally - finely balanced in our view. tom: are we going to start to see currency pairs in a junk condition where there is a big figure opportunity? >> i think the fx market is struggling to get its head around this. it's facing that same conundrum. what will be the spin? in the u.k., it will be a very transparent income squeeze coming off of the energy price hikes. we know they are coming but that will have a huge impact on the consumer and consumer sentiment. yesterday, we got wages data

which showed wage growth in that sector growing quicker. so positive real income growth and you are not seeing that in the u.s. or the euro zone. it allows the bank of england to tighten. i just don't see it despite the big inflation upside. lisa: if you look at the yield curve in the u.k., it's only a few basis points away from inversion. with the market pricing in rate cuts possibly next year, what is the consequence for the pound if there is that type backdrop? >> it's very peculiar. some say the tightening is coming in the next 12 months.

the market is saying we are going to tighten but it should not stick. that reflects what we are seeing with inflation and the economy. it will squeeze consumers and businesses. it's a pretty toxic mix. jonathan: that's the framework for thinking about the respective, means and what the conviction trade is. >> even this morning, we were recommending buying euro sterling. you get 75 basis points of tightening over the next two quarters.

conviction is still there in terms of modest strengthening. i think it will be pretty relentless so a dollar boom. jonathan: thank you so much, looking for weakness for sterling. we heard from the hiding can ceo -- from the heineken ceo. if this doesn't capture the inflation story, i don't know what will. tom does not drink beer but we know what you drink. there's a man worried about the consumer pushing back and that was not the story of last year. lisa: when you get consumer pushback, you know things are rough when people are pushing back on their consumption because of higher prices but it sees what you are seeing.

farmers have to by pesticides and the prices have skyrocketed. there is a story in the wall street journal about how visiting people in their weddings will be problematic. jonathan: why is it so expensive to be a guest at a wedding? i'm ready to go. tom: i am saving every day. it will cost me a fortune. jonathan: we did not get an invite. tom: i'm just really upset .it's like 700 people. i don't know. jonathan: from new york, this is

bloomberg. ritika: with the first word news, president biden says the threat to ukraine has not ended. a russian invasion still possible the because they are still in a threatening position. the u.s. is not verified the claim that some troops have been withdrawn. russia denied that it's planning an invasion. inflation unexpectedly speeded up in the u.k. for the fourth month in a road which is adding pressure on the bank of england. annual prices rose to 5.5% which is a 30 year high. the banking committee republicans blocked president biden's picks for the federal reserve. sarah bloom raskin is the nominee for vice chair. republican say she has not adequately address the question about her role as a board member

of a fintech company. they will reschedule the vote stop china's president has ordered hong kong to get the coronavirus outbreak under control by all necessary means. that's unusual intervention that could lead to stricter measures and possibly a border lockdown. carrie lam said the outbreak had overwhelmed the government. this is bloomberg. ♪

>> we are ready to respond decisively to a russian attack on ukraine which is still a possibility. russian defense reported today that some military units are leaving their positions near ukraine. that would be good but we have not yet verified that stop jonathan: the president of the united states on the same page as the secretary general. good morning. your equity markets are slightly softer, down one/10 of 1%. we settled down on the bond market. later this morning, retail sales at 8:30 a.m. eastern. after that, the fed minutes. tom: it seems to be a quieter

morning in ukraine but it's perhaps not true. in 2014, 370 miles south east of kyiv, the territory was taken by separatists, separate from ukraine, maybe they were separate from russia, and we answer the -- and we ended up in belarus with the minsk accords. there is a sequence to this which is beyond confusing. what it comes down to is this is a unique look russia-ukrainian-france, germany agreement. how does the united states insert itself into the dialogue if that's what mr. putin wants? >> he said that yesterday and he

continues to say that ukraine is not implementing the minsk accord but they interpret it differently. the united states is not part of this group. angela merkel did a lot in 2015 and we should note that the reason for the accords was to stop the bloodiest of the fighting in this region. so far, the minsk accords have basically not been implemented because the two main parties, russia and ukraine, don't agree on what this accord actually means. tom: the word russia is not even in the accord stop it's a remarkably complex diplomacy. kissinger wrote about this in his book. complexity leads to nothing getting done. is that how you perceive this? >> i do because they are still

fighting in this region and you have a russian buildup of troops surrounding ukraine. the president said the troops are 150,000 if you include the troops in belarus circling ukraine even though the u.s. got the message from the defense minister of russia that they were pulling back all stop vladimir putin certainly interprets the minsk accord to be implemented. it would create a trojan horse within ukraine. it's not like the territory would be given to russia. they would almost have veto power on the policies happening. that would be a potential joining of nato or joining the european union. lisa: what have we learned yesterday from what president biden said about responding if

u.s. soldiers were attacked? it was specific language put out there. what we learned in terms of the threshold for the u.s. getting more aggressive here? >> the u.s. said it would not send troops to ukraine. the present brought up nato and article five and they said they would defend that and we have seen the u.s. move troops to the eastern flank in the baltic countries, most notably poland. that's about 80 kilometers from the polish border to the western part of ukraine. in the present speech yesterday, he pivoted to what this would mean for everyday americans and consumers. this is where our and policy intersects with what he is focused on domestically. it's the global oil market and what it means for gas prices. lisa: we're talking about the sacrifice of higher oil prices.

is this an admission that they cannot do much to bring down gas prices into the midterm election? >> they said they would try and some senators are trying to get rid of the gas tax and have a holiday for it. i think the president was being frank that they don't have a ton of control on things like geopolitical risk. in the oil market, they were talking about the fact that there is a one million barrel differential between supply and demand and opec is not meeting targets. you add in with the present was talking out, if there is an increase in geopolitical risk or a russian invasion, you are certainly going to see oil prices spike. jonathan: there's been complaints about the way the present handles foreign policy. we are not hearing those complaints on this particular occasion. it seems like they support the effort on this issue. >> certainly, they so poor

giving their backing to what the administration is doing. the polls over the weekend doesn't show a lot of support from the public in terms of wanting to be involved. republicans think the white house is doing a good job. the one issue now is getting the sanctions package over the hill. two senators came out with a republican version and i want to tell you what it's named, the never yielding european act known as the nyet act. jonathan: thank you. the republicans are fighting over the fed picks from this white house. tom: this is a big deal. this is what happens when you have a track record and a past. most institutional selections

have an advantage of there is no past. sarah bloom raskin has a past. jonathan: the article she wrote in last for years got a lot of attention. the senate banking committee would like to have a boat and all the picks at the same time and rejected the idea that sarah loomed raskin will get a separate vote and republicans are focused on making that happen. lisa: at one point does it shift the blame to the republicans? at one point does a go back to the democrats for not being willing to get through the confirmation? how does this play in the midterms? we have some any absences on the federal reserve and they need to function. jonathan: some real tension over this. we talked about it yesterday morning and it gets trickier because of the inflation numbers

we have seen more recently. lisa: how do they target that and determined there is not much anyone can do in the short term? jonathan: retail sales are two hours away. this is bloomberg. ♪

jonathan: futures are down just a little bit. a similar move on the nasdaq. we bounced back from yesterday's session with a little pullback this morning. retail sales is coming up later this morning. we breached 160 in the last week and a pullback since then. from the u.s. to europe to the u.k., we've got a lineup for the month of march. we've got the bank of england, the fed coming up this month.

cable is 135.68. it should be an interesting month ahead. for the ecb, the governor of the ecb talking about winding up q e by q3. tom: in the currency market, it's really ambivalent right now. i was surprised that sterling did not move more. jonathan: it's just the limitation here. higher inflation starts to put the brakes on growth. we know the story shifted but what shifted is the pace of the

rate hiking cycle. what hasn't changed is the endpoint, the destination. tom: we will have to see. william lee is with us from the milken institute. at the bottom of your note, i've got to go to the chronology for china and what it means for our viewers and our listeners and economic markets worldwide stop that is the small matter of a 20th party congress in china this year. some say this is very important. tell us why we should focus on the leader of china and his party congress. >> president xi is not assured is desired to be leader for life. we have to keep in mind that

russia-ukraine and china-taiwan are similar but different. china-taiwan will have a huge impact because taiwan is the center of semiconductor production and distribution which is the heart of our global supply chain. the key for xi jinping is how i tell my audience that i got control which china has been obsessed with and taiwan is china and how do we make that happen? that's what we will have to watch for. he is doing a nice hat trick with the other hand with taiwan. tom: the tension is between the

chinese military and the politics of china. do we have any idea of that relationship? >> the emperor is in beijing. that's the attitude in china. the military piece of this is the supreme and that's what xi jinping made it clear he's head of the red army. the taiwan issue is overwhelmingly strong especially with the diplomacy that china has implemented an china is focused on domestic goals for a modern day socialist country and they want that to spread to taiwan and certainly hong kong . when lisa: lisa: does a health crisis force his hand? carrie lam in hong kong said they are not doing lockdowns and jean jinping said yes you are.

treat it as it's the most important thing and we are risking the potential social uproar. what is the likely consequence 4g zheng paying? can he win this and get what is looking for in hong kong? >> hong kong is a shadow of its international past. it used to be the international center for china. the president of china is treating the covid policy as stamp it out and make it happen fast. that's his way of exerting control over the democratic movement going on in hong kong but throughout the world and china. the present of jenna's telling his international audience that china is in control. lisa: there doesn't seem to be a

concern for investors. even as the pboc contemplations just contemplates easing policy, they are strengthening to the highest level. do all of the measures she zheng paying -- teaching pang -- president xi has put in, are they having an effect? >> you guys the great article about how american brands are no longer in favor because of the shift in attitude toward the west. it's not looked at as favorably as before. i think the western partnership is not as valuable to china as it was in the past.

jonathan: how on earth do they satisfy a progressive base like in america? do they have to choose? for a long time, they sat on the fence. some u.s. corporations, they have led to china perhaps more than the united states. do they have to start choosing? >> it's clear that policy toward china has created policy over principles. their human rights record is important more so now than ever before. jonathan: thank you so much. the issue is becoming a bigger and bigger issue. nationalism in china has dethroned nike. lisa: at what point is china

making the decision for them? they are out of favor because they are from the united states? every investor who comes on this show still thinks china is a fantastic investment and they want to put their dollars there and we see that in terms of the value of the currency rising to the strongest in four years. how much are people looking past the political issues and the idea that they have the potential to emerge first at a time when there is so much uncertainty globally. jonathan: let's talk about carrie lam and the chinese president. we have no plans to impose a lockdown in the chinese leader said hong kong's government must take up the responsibility to stabilize and control the pandemic as soon as possible as a mission that overrides everything. really strong words from the chinese president for carrie lam. tom: every day we are seeing

stories from our team in hong kong in the pacific rim. the micro adjustments is what i'm watching. jonathan: 10 years ago, could you imagine something like this? tom: one year ago, the shift is profound. i'm looking at micro decisions made by corporations of all different kinds because hong kong is dominant. jonathan: we are down about one/10 of 1% on the nasdaq. going into retail sales in about an hour and 50 minutes. tom: there is a strong swiss franc. , excuse me weaker swiss franc and stronger euro. it's simply waiting for

outliers. lisa: what you are seeing is a lot of volatility but it's still staying at that sticky placement higher than many people would like to see. ellen wald said if you take away the ukrainian tensions, it might get into the 80's but it will not go that much lower. that's a high and uncomfortable range for this election coming up. jonathan: the polls are getting uncomfortable for the white house. lisa: it's not pretty and i don't get the fact that the gas holiday they were talking about is getting a lot of traction. $.18 off your gallon price will not move the needle but it's a

massive issue when you have real wages lagging behind the price of inflation. tom: aaa unleaded, your prices different. that's not an explosion but a nice lift in pricing of the $.18 of the gas tax. i am eyeballing your $.13 at the beginning of february. jonathan: coming up at 7:30 a.m. eastern time, michael collins getting his thoughts on what's happening in the broader market and and treasuries. from new york, this is bloomberg. ♪ ritika: investors get fresh clues today on the federal reserve's next move, minutes from last month policy meeting

will be released and there is speculation the fed may have to act more aggressively to get inflation under control. the former alaska governor sarah pal and has lost her defamation case against the new york times for a second time step the judge said he would throw out the case due to weak evidence. she has not said if she will appeal the decision. erickson may have to make payments to a terror organization. the money may have been used to gain access to certain transport routes in iraqi. there is an investigation into it. the biggest fundraiser in the u.s. is not harvard.

stanford and harvard were the two biggest fundraisers in the u.s. face coverings will become optional for inoculated individuals in indoor and outdoor locations at disney world. global news, 24 hours a day and on bloomberg take, powered by more than 2700 journalists in more than 120 countries. this is bloomberg. ♪

>> would put forward proposals about the negotiation process. jonathan: vladimir putin with his german counterpart. it's a price auction -- it's a price action down a single date of -- basis point. retail sales are just around the corner. looking at the input into gdp, 1.2% is the estimate for january after a softer than expected month in december. tom: the consumer is 60 or 70% of the economy but now we pay

attention to it. jonathan: you've seen what happens with the consumer confidence numbers. the heineken ceo says you start to get more pushback as prices go higher. tom: it was made real clear that the growth vector into the middle and end of the euro be critical. we continue on china. i look at the great work in the financial times on per capita cases. it is shocking how good the news is in hong kong and in china. there are issues about accountability but it's stunning how well they are doing. why all the angst in hong kong and china over hospitalizations and deaths? >> first of all, we are now at

the beginning of a major surge that appears to be exponential and we have a good proportion of the over 80's who are under vaccinated. there are concerns over the vulnerable citizens. secondly, the hospitals are arguing not because everyone needs to go to hospital but if you are confected, there's a good chance the government will send you to hospital but at the moment, they are allowing some asymptomatic patients in but the dragnet is sending people to the hospital. the overall caseload in hong kong is low. we are just starting this now. china is under control for now.

they are worried it will leak in -- leak across the border. tom: his hong kong just another chinese city now? >> all indications are that the central government is increasingly putting its stamp on the running of hank -- the running of hong kong. we know the back story about the erosion of civil liberties. we are seeing it increasingly on the administrative side of things. the chinese government has intervened forcefully. he says hong kong needs to get this under control. china is absolutely in the center of the operation of hong

kong. lisa: does the job of carrie lam depend on her willingness to engage in the lockdown that the president of china is requesting? >> that will come up next month. carrie lam knows this outbreak is coming at a critical time. they have been doing quite well up to this time. in january, it seems china has not been shattered so when you see the intervention and how the mainland government is, you have to save there is a lot of pressure on hong kong authorities to get this right. lisa: economic data showed

inflation slowed more than expected in china, leading to speculation that that pboc would have a greater ability to loosen up policy and cut rates further, what is your sense of how that pboc is planning to manage this given the fact they have been trying to deleverage and they are being rewarded for going in the opposite direction? >> they have a window now. consumer prices came in below 1% because food prices are falling and china is not seeing the energy surge that other parts of the world are seeing step prices for commodities are going up stop there is not an inflation story for chinese ortiz -- authorities. we know the real estate sector is under pressure and manufacturing is expected to slow down. how long will that window last? the fed could go off on rate

hikes this year and what will it mean for the chinese currency? a lot of economist was a there is a window now. maybe the second half of the year, that might get more complicated. jonathan: awesome to catch up with you. china has a different story. tom: i have said this before. betting against the pacific rim, business energy, if you will, trade energy. betting against the pacific rim is hazardous to your pocketbook. jonathan: global synchronized

growth for 2022 and you need to see some real reopening take lace in china. we are not exactly talking about that. we are talking about dynamic zero covid and on the mainland. tom: it's the delayed omicron and they will figure it out. i'm not sure i trust the statistics but they are what they are. jonathan: futures are down 1/10 on the s&p. the yields come down about a basis point. go to cash. tom: i am already in cash.

jonathan: coming up, i will tell you why this show is going to belgium very soon. lisa: we are? that is so cool. jonathan: i will tell you why in 10 minutes time when the break is over. from new york, this is bloomberg. ♪

♪ >> u.s. is starting to see expectations around longer-term expectations of inflation starting to rise at uncomfortable levels. >> we just don't know how much of this will self-correct. >> the big push and pull is going to be a battle between inflation and the fed response to it. >> you don't want to be tightening so fast that you choke off the recovery. >> the fear is that the fed is going to overcorrect and pull back, and that is exactly what the fed should not do. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. jonathan: we are moving to belgium. from new york city, for our audience worldwide, good morning. alongside tom keene and lisa abramowicz, i'm jonathan ferro. tk, did you see the news? belgium giving workers the option of a four-day workweek. still got to work your hours,

but i