>> they are grappling with how quickly to get back to neutral. >> it is all about the fed's mandate. >> the fed is playing catch-up. >> this is bloomberg surveillance with tom keene, jonathan ferro and we saw brahma wicks. -- lisa abramowicz. jonathan: this is bloomberg surveillance live. futures up half of 1%. a meeting next week. tom: watching the news out of ukraine. we will do that. what a friday, just a frame, where we are right now, deep into 2022. jonathan: we heard from lloyd austin already, his words echoing much of what we saw yesterday. he sees more russian forces moving to the border as the

russians deny plans to invade ukraine. tom: the nuances of the headlines, paragraph to paragraph, i love what greg published moments ago, it is almost like the u.s. knows what the russians are thinking. that is food for thought, on the intelligence differential, this time around. jonathan: two things. the headline around ukraine and we will hear from williams and brainard. i think that is important. lisa: i agree. here is my big question, of the week and the day, our markets pricing in hikes? you are seeing some strain. if this is as much financial straining as you are going to see, is that really going to be enough to cramp inflation the way federal officials would like? jonathan: everybody gets a

voice. president mr. is saying -- mester is saying backlog. this will be intense. lisa: they are conceding they don't understand the past inflation. some are saying let's get ahead of it. other people are saying since we don't understand it, let's see what happens. those are the two camps and i don't know how they will be brought together. jonathan: we will keep you up to speed. futures, positive for tenths of 1%. that is on the s&p. -- 4/10 of 1% on the s&p. tom, also down on the week, you will talk about this, crude had the worst week of 2022. tom: really good at the quantitative analysis, it is like a jump ball in basketball. basketball is an american sport, you might be familiar with it. it is a jump ball and that we

don't know which way it will cut. to the surprise of many, oil cut lower this week. jonathan: you were deadly serious. down $2.50. lisa: it is a conundrum. as we get ongoing reports about some of the tightness, the fact that inventories are getting drawn down, the secured conference in munich is getting kicked off. antony blinken and kamala harris and olaf scholz, are all expected to participate. this was expected to be a broad ranging conversation about climate change and other big issues. now, everyone wants to hear whether they will increase the troop buildup in eastern europe in response to the russia-ukraine threat. what the cohesion is among the allies. we are getting a slew of fed speakers and they will all be talking about the same thing,

which is how do we address past inflation? how do we understand it? we have leo brainard and john williams. they are more of the leadership. we have heard so much. i was looking at the fed going higher, basically taking a look at some of the weakness, as well as mortgage rates, which have risen to the highest rates since one 2019 -- since 2019. how much lower do you have to go? i will be looking at the tightness in the labor market, to see whether supply is the story or demand is the story. jonathan: one of us is a fashion expert. it is not you, it's not me, it is tom keene. these headlines coming from

amazon, no strategy to boost growth to unnecessary price hikes. they have production constraints linked to labor. this is a fascinating one. tom: i know the story very well. it harkens back centuries. the family decided -- they did this in france and worldwide -- to set up small pods of labor in different, smaller cities. it works great. this is where the leather that you are buying every friday comes from. it hit a massive constraint. jonathan: $9,000 burke and bags -- burkin bags? jonathan: i did in article once on jane birkin.

the chief excise -- chief fx strategist joins us. they are planning mandatory covid mass testing for hong kong. they are trying to avoid a lockdown. we have zero covid in china. the stage is set for this inflation story to fade into the back half of this year, if we can reopen the world. we are thinking about china. you think we can reopen the world? >> i think we will be able to reopen the world. it will reopen in a confusing sort of way. i think we will reopen a lot of the emerging markets properly and that will be a big story until the middle second half of the year. then we will see what happens in china. i would guess they will get there in the end. they will stick to their current policy. they will get there with

vaccinations and get to the place where we are at later. lisa: does it make sense that amid the covid lockdown and some of the weakening we have seen in the chinese economy and amid the expected easing from the pboc that you see the united nations strengthening -- the yen strengthening to the highest levels versus the dollar? >> the exports are really good. tourists have not been spending money abroad much. money has flowed in for the last 12 months. that is still a net positive for the currency.

since they are using monetary policies, they have decided they would rather stabilize currency and lower rates. they don't want the headache of currency volatility. we all got it wrong because they didn't tell us what they were going to do. you can make it make sense read what is disturbing is they can -- make it make sense. what is disturbing is they can keep on doing this. lisa: taking a step back, mark mccormick's was talking about -- mark mccormick was talking about how they wanted currency to be weaker. that has shifted over the past six months and you are seeing nations desire more strength to get ahead of inflationary pressures. you see the world that way as well, that a lot of the rate hikes will be aimed at helping patients support their currency going forward? >> i don't mind having a

stronger currency. a stronger currency in domestic terms helps in that regard. it helps to get ahead of inflation and it helps interest rates rising. it does all of those things pretty efficiently. japan just doesn't have any inflation. i'm not sure they want strong currency and they won't raise interest rates. they are living in a different space than the rest of us. jonathan: we heard from the president, talking about back loading rate hikes and we heard from president bullock, talking about front loading rate hikes. what is the strategy you see playing out? >> i more like the front load a simple reason. the economic data in the united states since the first of january has been astonishing.

the retail sales numbers have been consistently strong enough. this isn't all or even mostly about supply chain. the labor market is really tight. there are ships parked outside of los angeles, delivering stuff for americans. it would be better to get it done quickly. that will be the conclusion, particularly the argument. if you need to get to above neutral and you think neutral is somewhere above two, best find out early. jonathan: final one for me, how much do spurs lose by this weekend? >> i don't mind. jonathan: looking forward to the, thank you sir. tom: the incoming mail on this is crushing, do they win by

three or five goals? jonathan: you've lost your last three. tom: it's not just that they have lost, it is the way they have lost. jonathan: they can't hold onto the lead, it's been rough. tom: there is no there there. jonathan: would you like to get to be there there? tom: kit mentioned astana and sing -- astonishing, joe does not change his price on home depot, today. home depot is killing it. jonathan: tom keene, lisa abramowicz and jonathan ferro, futures are down. there is a meeting with lincoln and minister lavrov. from new york city, this is bloomberg. ♪

>> keeping you up to date, i am leanne. sergei lavrov will discuss the crisis in ukraine with antony blinken next week in europe. that was set after president biden warned the chances of russian invasion of ukraine was high. russia has denied it was planning an attack. the president supports tightening policy to fight inflation. roberto said it would be appropriate to raise interest rates next month and speed up the pace if inflation is not moderating. mester said inflation should be above 2% this year and next. carrie lam says the vote will be moved from the 27th of march to the eighth of may.

-- we now have the price for one of the biggest trading debacles of 2020. it will take 4.2 billion dollars due to the collapse of the florida-based hedge funds. there might be more pain to come. global news 24 hours a day, on the air, on quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am leigh-ann gerrans, this is bloomberg. ♪

>> secretary blinken and i have relayed our intent to congress to offer poland the opportunity to acquire 250 m1 battle tanks. -- m1 a1 paddle tanks. it will provide poland with advanced tank capability. jonathan: the latest for next week, secretary blinken, meeting with sergei lavrov. that sets the tone for the markets this morning. we advanced 23 points overnight. the bounce came from that headline. the move lowering crude, down 2.5% on the week, the worst week

for crude so far. tom: a welcome fallback for the by them -- biden administration. california unleaded gas was four dollars 71 cents. a solid dollar higher than the national average. we will monitor economics and financial investment. it is about ukraine, all going on in europe. we are thrilled to bring you elizabeth economy, robert and later on seth jones from csis will brief us and you into the weekend. we begin with emily in washington. what is the agenda today for general austin and for the president, as they look to kiev? >> the general is in europe today and he will speak via phone with his russian counterpart. we will see something similar

from antony blinken, who will be speaking with sergei lavrov, having a meeting with them next week. you are hearing biden say the diplomacy is so open, that is the channel they want to use, that is what they want to continue as. you are hearing this dual messaging. biden talking about diplomacy. possibly a real or fake chemical weapons attack in russia that will be used as their explanation to attack in ukraine. tom: general austin out of west point began with the third infantry in europe, arguably the most prestigious infantry group we have in the united states army. his fabric, from his very beginning, is just what he has mentioned, tanks and poland. we will see more of that, aren't we? emily: the u.s. is very much willing to help its allies in europe. that has been the central tenant of the biden administration.

troops have been sent over there. the big question is what happens with ukraine. it is not a part of nato. this u.s. has held back on committing troops there. biden said russian soldiers and u.s. soldiers is the equation for another world war. it gives into biden's thinking about how he is looking at the area and where americans are and are not going to be involved. lisa: there was a discussion under president trump about a fair share of troops in europe. is that still a discussion or has that gone by the wayside? should that become necessary as part of the nato alliance? emily: i think president biden understands americans are understood -- are tired of fighting in forever wars and not having a clear path forward on where the power needs to be. if you look at president biden's own agenda, where he wants to be

right now is focused on beijing, china, that area of the world. this buildup on the border has forced his hand into focusing on this particular area. it is interesting to see what is going on in congress right now. you had democrats and republicans, they were going to put forward a strong statement and put forward sanctions on fulton and moscow. that has not happened -- putin and moscow. that has not happened. they could not get a resolution passed through the senate because of various holdups. washington and biden are trying to put forward this strong message. at the same point, there are these undercurrents that are preventing them from getting as involved in the situation as they could have. lisa: i feel like this is an evergreen question but is anything actually getting done in washington, d.c., amid all of the rhetoric? emily: they passed a continuing budget. the government will not shut down for a few more weeks. even then, they are continuing

funding that was put in place by the trump administration, something democrats are not happy about. the unique thing about this spending package is it contains these individual earmarks that lawmakers have requested for specific projects in their home districts. that cannot move forward until they get an agreement. you are right to point out, the build back better plan has stalled, voting rights has stalled. we don't know what the path forward is going to be with this u.s.-china competition bill. it will be interesting to see what president biden talks about in his upcoming state of the union address on march 1, whether he charges a new path for -- has a new path for congress to follow or touts the accomplishments of the past year that his administration can claim. jonathan: looking forward to it, thank you. elizabeth economy, coming up shortly.

i am looking forward to this. let me mention china, this was under the radar. moving some staff out of hong kong to singapore, this is something you have raised again and again, repeatedly over the past couple of months. tom: you come out of hong kong a first time and there is something in the vicinity of 20 and its. singapore is not next door. i can't emphasize that enough. it is a tangible thing that -- to move people down to singapore. it is not routine. jonathan: xi jinping on the handling of the pandemic in hong kong as cases have picked up in a material way. lisa: we heard about mass testing, mandatory mass testing as a concession to what he has requested, which is a zero covid policy. people are wondering when will

that take effect? when you have surging caseloads and people waiting in line, you could be incubated for more problems. at what point does xi jinping have to tweak the zero covid policy? jonathan: when we think about mandatory testing for all, can we pause on this? that is 7.5 million people. it's not a small town. that is 7.5 million people. tom: it is very unique and i am as guilty of this as anything. it is not four blocks around the mandarin hotel. it is a huge, huge island nation. very complex. every single pro we have talked to, including at john hopkins, said they are doing this wrong. jonathan: carrie lam has said we need to expand isolation facilities. this is going the wrong direction. elizabeth economy is joining us shortly. the nasdaq is up 7/10 of 1%. geopolitics is front and center.

crude, again, on the back burner, down by 2.6%. good morning to you all as we close out the trading week. this is bloomberg. ♪

jonathan: a meeting announced between secretary blinken and sergei lavrov. for the nasdaq, the biggest one-day loss in about a week, down three quarters of 1%, up three quarters of 1%, rather. the nasdaq 100 was down hard yesterday. we will build on that. i can't do this twice. lisa: [laughter] jonathan: did you say maryland, tom? tom: you have a pronunciation class at 11:00 a.m. this morning. i'm american. jonathan: in the last week or so, north of 1.60 on twos.

a real move lower on twos, when you think about where we have been in the past week or so. really interesting conversation point yvonne between president bullard, and president -- of conversation between president bullard and president mester. i can't keep up with a commodity market. crude is having its worst week of the year so far. down by almost four percentage points. tom: i haven't done the work, john. we have existing home sales coming out later this morning, same thing. jonathan: yellow lori, yellow lori, you repeat that all the time. what is the other practice?

do you do that in the morning? tom: i just can't say darby. jonathan: that's easy. tom: we will leave it there. we begin with three guests wanting to help you get through the weekend and this momentous, historic event in europe. part of that is the adjacency of china. i have a summer reading list. but, with the events going on, you need a late winter and spring reading list read it is simple, i should say. you need to read angela stent and elizabeth economy. putin's world and the widely anticipated, the world according to china. her books have been definitive for decades. dr. economy joins us with the hoover institute. congratulations. after the old liv-ex, after ukraine, you talk about the

china reset. what is the reset toward the party congress? elizabeth: the 20 ton -- the congress is coming this fall, perhaps in november. geez jinping will likely be reluctant for his third term for the communist party. he has routed out his political enemies, whether in the communist party or the broader civil society. say something against xi jinping and you will disappear for four years or 18 years. this will mark the beginning of the third term for xi jinping, the third five-year term. he has an ambitious agenda ahead of him. doubling per capita gdp by 2035. tom: that is all great.

to be honest, you have been original in saying he is more fragile domestically then we perceive, do you stand by that? elizabeth: absolutely. we can look just back to the first month -- second month after the covid pandemic broke out in china and look at what happened on the internet. we had a week or so of freedom on the internet and you had millions of people calling for freedom of speech and criticizing the government. i think we have to be sort of a tune to the fact that just because you can mass institutional authority, we don't have the legitimacy that you would have if you have an electoral system. china is as polarized, maybe more so than the united states

breed along gender and ethnic lines. you have the battles between entrepreneurs like jack ma and the bureaucrats. you have a gap in terms of income inequality. we tend to focus on what geez jinping says and his grand vision of china on the global stage. you are right to point to what is going on inside china and these kinds of challenges. lisa: is xi jinping's predominance over the entire region guaranteed and it just matters how hard he will clamp down? elizabeth: i think it does matter. it doesn't matter in the sense that -- i'm not saying you will have mass protests on the chinese streets. but where it matters is if you have enough tension in a slowing chinese economy, the international pressure is coming

to bear on china's currency. he has created so many of his own problems. for example, in europe or in parts of asia. you could have people in the chinese elite, other leaders who are not happy about this direction in which china is moving for country. he cracked down on the fintech sector. popular sentiment could feed into the other leaders claims that something needs to change and xi jinping needs to take a step back. i'm not predicting a force change but we have to remain aware of the possibility. lisa: we are looking at the mounting rush of the ukrainian conflict. on the heels of this, you get a tightening relationship between vladimir putin and xi jinping. if russia is cut off from the western world, geez jinping

could come to his -- g jinping -- xi jinping could come to his rescue. elizabeth: russia and china have had a long history of working together, really since 2014, we have seen the relationship become closer. trade has increased slowly. russia remains a major arms supplier to china. they have joint military exercises. when xi jinping gave a speech in moscow, he said putin was his best friend in the international community. they had a joint statement in the olympics where they called for a new world order. i think the relationship is close. that doesn't mean that there are not problems. it bears noting that china's ambassador to ukraine said china supported ukrainian sovereignty.

i think china will probably come in to help out. but i don't think there is support for russian military action in ukraine by the chinese. tom: i want to go back to angela's work and your work as well. angela talks about the risks that we go back to a tri-polar international relation, where it is about america, russia and a nation china -- and china. those china want a new yalta, where it is a triangulation and that's it? elizabeth: i don't think so. i think china views its rise on the global stage, it's hope is to surpass the united states. i think they look at russia as a

jr. partner in all of this. russia's economy is about 1/10 the size of china. in many respects, i don't think china looks at russia as a completely equal partner. i think xi jinping has focused squarely on the future of china and china's efforts to claim neutrality on the global stage. they are looking to push the united states out as the regional hegemon. to the extent that russia supports china in the effort and bolsters china's efforts, i think china welcomes russia's support. i don't think it looks out at the world and think they will be three equals, russia, china and the united states. jonathan: elizabeth economy of the hoover institute. futures are down by half of 1% on the s&p. late yesterday evening, a

meeting scheduled between sergei lavrov and secretary blinken. the nasdaq 100, up 7/10 of 1%. yields up a single basis point. that is the market story this morning, tom. here is some of the research out there at the moment. michael of bank of america said the next six months of great shock morphed into a recession shot. tom: i think there is a huge separation that happens to be on this friday, between larger strategists looking at recession and the bigger picture, and the sell side looking at individual corporations and saying it is not as bad as we thought. that he -- that is a huge demarcation right now. jonathan: anything about the calls coming out of that bank right now, market banner, saying

one trillion dollars on the balance sheet this year and $1 trillion next year. lisa: if this is something the markets can handle, your equity call can be sank would -- is the market accurately pricing in those rate hikes or are they saying it's not going to happen? a lot of people are saying that's the case. then, perhaps markets are in for a rude awakening. jonathan: futures up 23. i am jonathan ferro, for our audience worldwide, this is bloomberg. ♪ >> keeping you up-to-date, i am leigh-ann gerrans.

the u.s. has wrapped up warnings over russia's possible attack of ukraine. president biden -- russian officials say no invasion is planned. antony blinken will meet sergei lavrov in europe next week. the biden administration is warning that covid cash is drying up and is telling congress the u.s. does not have enough money on hand to deal with further variance, stockpiles or vaccines and develop new technology. the departing of housing and human services is asking for $30 billion to prepare for a new wave of the virus. the irs is adding a search team to expand its capacity to protest u.s. tax returns. this comes after criticism from members of congress who say taxpayers have been waiting for months to get their refunds. the irs's outsourcing some functions.

a big transaction in the chemical industry. the deal includes the global production efforts of 29 facilities. shares are falling today. the french goods maker reported lower revenue and could not keep up demands for their products. normally they get half of their revenues from birkin bags. global news 24 hours a day, on the air, on quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. ♪

>> our information indicates clearly that these forces, including ground troops,

aircrafts, shifts -- ships, are preparing to launch an attack against ukraine in the coming days. jonathan: secretary blinken with some strong words for russia, the russians continue to deny any plans to invade ukraine. the headlines continue. with tom keene and lisa abramowicz, i am jonathan ferro. on the back of headlines overnight, secretary blinken will meet with former minister lavrov. that is enough to lift sentiment for now. we bounced back five or 6/10 of 1% on nasdaq read yield is unchanged at 1.97. -- nasdaq. yield is unchanged at 1.97%. tom: we go to four digits. that's what we do. what we are doing on a friday is we have home data coming out later. look for the real yield this

afternoon, which will be timely. we move from elizabeth economy of hoover, seth jones joins us in a bit. right now, we are honored to bring you robert. his work with various republican and democratic administrations. he is tarred and feathered as a member of the clinton plan. what you don't know is he has 11,200 pages, 5.6 linear feet in the gerald ford library from his work with president ford years ago. we are thrilled he could join us this morning. i look at your work overtime, and i want to go back to you as a newly minted freshman at tufts university. there was a small matter of the cuban missile crisis only years before. we allowed khrushchev to save face.

how do we allow putin to save face? >> i think if there is a way that putin can save face, it is to recognize that the russian officials have a deep historical affinity for ukraine. it is close -- a lot of russian and ukrainian history is tied up with one another. russia perceives it has a right to have an influence if not control over ukraine. it is part of russia's notion of having expanded influence in the new area, just as the soviet union did in that region decades ago. i think that the thing he wants probably the most is a very clear indication, if not a firm commitment, that ukraine will not join nato. tom: how do we do that when the

secretary says we want an open door policy? robert: i think you can do it in the middle east -- the way we did it in the middle east. that is you are not definitive about it. you say there are no plans and no immediate plans and note medium-term plans for ukraine joining nato, without giving up the right of the ukrainians and of nato to bring ukraine into nato. you don't bring -- make a definitive commitment not to have ukraine in nato but you make it clear that there are no plans in the immediate future to do so. ukrainians have more or less said the and nato has more or less said that. that enables him to go back to his people and say look, this is not going to happen anytime soon. don't worry about it. it's probably not going to happen at all without us giving

up the right to have them join if it wants to. lisa: does it make sense to you that there is relative complacency in the oil markets? robert: no, it does not. if there is any small chance of an invasion, antony blinken has said there was a high probability, that would be very disruptive of the oil and gas markets, both. russia is a major supplier. one of the two pipelines would be shut down. the notion that we would sell oil or gas to western europe in an inflationary environment already in the united states shouldn't be a big enough concern to be wary of what oil prices would do in the event of war. lisa: there is this argument that russia does not want that. that russia wants to maintain

its dominance over oil supply and gas supply to europe. how much does that become an overly factored aspect at a time where vladimir putin has a point he wants to make? robert: that is one of the dilemmas russia has. russia clearly wants to be a major supplier of gas and oil to europe. and a war would disrupt that, disrupt that quite severely. so, went to and makes his calculations about whether there should be a war, he will have to look at the russian economy, which is in no great shape at this point. and recognize that the oil market, which is key to the russian economy in the gas market is key. that would be disrupted and that would send a negative flow to the russian economy, which he wants to bolster.

he can't really have it both ways. he will have to suffer severe economic consequences if he wants to have a war. jonathan: tremendous to have you on the show with us, as always. getting some headlines for the organization and security corporation. -- that number is 169 to 190,000 personnel, near the ukrainian border. personnel includes troops, the national guard and separatists as well. according to the u.s. envoy, that number has gone from 100,000 to between one hundred 69000 and 190,000. -- 169,000 and 190,000. tom: the drills this weekend

were mr. putin will attend or view also include the black sea forces. the black sea navy. it is an overview of what you said in terms of personnel. in the weekend, what we will see , in terms of missiles and also the black sea. jonathan: at the same time, we have all of these headlines about troop buildup and all of these headlines for the potential for an imminent invasion. the russians continue to deny any plans whatsoever to do any of the above. lisa: that is why i wonder the u.s. keeps having more sensitivity with the --saying don't trust them. tom: lisa, we have to ask an important question. i can say this to you with respect. jonathan, have you ever shoveled

snow in a driveway? jonathan: of course i have. tom: there is six inches of snow in ireland. pharaoh -- jonathan ferro has never done that. jonathan: i've broken a few shovels too, getting too aggressive. lisa: that shocking. ♪

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♪ >> things up -- the fed does want to speed things up in a meaningful fashion. >> what the federal reserve is trying to grapple with is how quickly to get back to neutral. >> it is all about the fed mandate. >> the fed has made it clear they are playing catch-up. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. jonathan: one more day. we are almost there. long weekend in america coming up. futures up 0.4%. for new york city this morning, good morning. whipsawed by headlines over the last couple of days. the latest headline driving this equity market, it meeting next week doing secretary blinken and mr. lavrov. tom: in the last hour, i really do think we got to get back to