>> war is a sobering event. >> we need hedges on the back of the russia-ukraine news. >> if there is any small chance of an invasion, that would be very disruptive for the gas markets. >> this is bloomberg surveillance. jonathan: with sawed -- with sawed whipsawed by geopolitics. your equity market is down 2/10 of 10% on the s&p 500. tom: it was in mice move coming up the last two hours and its moment by moment with bloomberg headlines out of russia. frankly, about six or seven other geographies will be the theme today but the market

reaction in the last 45 minutes is constructive. jonathan: for the moment, western stock markets are a measure and how serious we are about stopping russia. is there in improving sentiment in the equity market? tom: i agree they are going on a measured pace and it's important there is a vladimir putin sequence and up biden and other sequins and they are not in alignment. i've got to go away from the stock market and go over to some of the other measures we look at including curve flattening with oil almost to $100. i would focus on the euro-swiss as the european measurement and it's been weak for the last two hours. lisa: very close to triple digit

crude and this comes back to the inflation story. if you see repercussions for the action russia is taking in ukraine, does that feed into the inflationary narrative and what does that mean for central banks? maybe they don't tighten as aggressively or they reinforce inflationary pressures? jonathan: home depot hit the wire with fork -- fourth-quarter eps at 121. net sales coming in at $7.2 billion. they beat on the revenue side. tom: a dividend increase as well. it underscores what we talked about four or five days ago and we are seeing very constructive earnings. the idea that we would see gdp slow down for earnings slow down in the beginning of this year hasn't happened step jonathan: it's down about a half of 1%.

we were negative and in a moment, we were positive on the s&p 500. right now -014%. yields are basically unchanged on 10 to 192. yields are backing up again on the treasuries. wti is close to 95 and brent crude a 19 dollar handle this morning. lisa: until we see triple digit oil, how long will it last? we will watch that today. at 7:15 a.m. eastern time, we will hear from the german chancellor olaf scholz who will meet with his irish counterpart and they will hold a news conference. he is talking about how put in's recognition of the separatists in ukraine violates international law and he says it changes the equation when it comes to nord stream 2.

we will see what other sanctions could be coming out of germany. in terms of sanctions, we expect to hear from the u.k. prime minister expected to announce russia-related sanctions when he speaks to parliament at 7:30 a.m. eastern time. finally, outside the geopolitical realm will be the fed speak later today. 3:30 p.m. eastern, the fed president will speak of virtual moderating panel at duke university. he said all options are on the table when it comes to the march meeting and the data will indicate whether the fed will raise 25 or 50 basis points. that's what we heard over the weekend. they are looking for the data so it will be here to see how they view the data. jonathan: let's pick up on those comments from moments ago.

the latest situation changes things with nord stream 2. tom: it does in that will be one of the backdrops. i thought this was beneath the u.s. radar was the comments of marriott drug who clearly -- mario draghi who distanced themselves -- himself. look at german ppi and look at the comments from the industry lobby. energy is the risk in europe at the moment as prices go higher. they are stuck between a rock and a hard place already. tom: it's a sequential path of what we see from mr. putin and the many sequential paths of the allies as well as much of that will be measured through this tuesday. jonathan: tony joins us now.

what do the events over the weekend mean for us? >> it will remain volatile. we came into the year thinking this would be some year and you throw in the russia-ukraine tensions and every single headline is creating an aggressive move in futures. i think you cannot game that. every single data point for bostick that's coming out will be overly scrutinized as to what it will mean for fed policy and the best part of that is how highly revised the data series is on their initial look so this will be a volatile small choice environment through the first half of the year. tom: more than any other strategist, you do it very respectfully and the focus has

been how to measure recession, how to gauge when a recession would come. how close are we to a recession? >> it's always faced on the curve and credit so there's been a dislocation in corporate credit with a 200 basis point rise in the bloomberg high-yield corporate bond yield index. it is not like all risk assets have been hit stop it has gone from stocks to bonds to crypto, anything that's perceived as risk has been hit because this environment is so uncertain. how close we are to a recession depends on if and when the fed inverts the yield curve. as i look at the bloomberg terminal, nice plug there, i'm looking at 41 basis points on u.s. treasury spread so pretty narrow but once you do that,

there is like a 12-18 month lead from when you go into recession. lisa: as we talk about monetary policy and what that will mean for asset prices, what happens in tandem with an energy shock? >> that's part of the tumultuous and us. when you look at what creates an economic shock's availability of money. the market goes in the directions of earnings which is driven by economic activity which is driven by money availability and until recently, money has been readily available. corporate credit new issuance in the first two weeks of january hit a record level. it was extraordinary but now you got these fair monetary policies and the fed is in a box and people don't know what to do so they are just sitting there. jonathan: what we had from the germans is halting the nord stream 2 project i have no idea

how far they pushed this. what would it take for you to change your base case? there seems to be a tail risk for this market. what would make it a base case for you? >> let's put it into practical reality, i have no idea what the base case for russia is. there are indicators that suggest discounting in the market. from the note this morning, even though you've got this massive risk in the market place, but it's not like stocks are trading next to their all-time high stop there's been a good pullback and i think the catastrophic mistake that investors can make in an environment of geopolitical on certainly an economic policy transition, the mistake is

feeding into a rush. when they get into oversold territory, i don't want to be a seller because we are not in a recession or near it. you look to not sell and you don't want to chase when you are in a ramp. sitting there is one of the hardest things we can do in the business. jonathan: as always, thank you. equity features are down about 2/10. chancellor schulz is speaking right now and that headline -- the nord stream 2 certification cannot happen at the moment. tom: i would suggest from what we hear from par minister johnson, we will see this through the day in the allies

individually and collectively regroup off of what we saw this weekend. i look at brent crude off of this not really moving the price. let's remind ourselves that nord stream 2 two is a pipeline underwater from st. petersburg down to the shores of germany. jonathan: futures are down 10 points and we are down. yields are unchanged. from new york city, bloomberg tv and on bloomberg radio, this is bloomberg. ♪ ritika: keeping you up-to-date with news from around the world with first word news. the u.s. has led condemnation of

russia for a cell free -- four possibly invading a self proclaimed republic in the ukraine. u.s. and ukraine say they will put more sanctions on russia and moscow still denies it will invade ukraine. what will the u.s. and its allies define as an invasion? the increase in interest rates could be on the table next month. in hong kong, there will be mandatory hong kong -- coronavirus testing for three months. authorities are trying to stem the out rake there. carrie lam says distancing restrictions will be in place until late april. in china, tech stopped drop for

a third straight session with new concern about beijing's rules. volkswagen has a potential ipo with porsche. the move would help fund record investments and -- and add value for shareholders. that could be valued up to $96 billion. this is bloomberg. ♪

>> united states will impose sanctions on russia for this clear violation of international law step we can, will and must stand united in our calls for russia to withdraw its forces, return to the diplomatic table and work toward peace. jonathan: the u.s. ambassador to the you and from new york city, futures are down about two/10 of 1%. the yield is unchanged 192 30 four, what a start to the week with president putin almost ready to recognize separatist republics in ukraine. it's necessary to go forward so

no certification of the pipeline can happen. without the certification, nord stream 2 cannot go into operation according to the german chancellor. tom: we will have to see that -- what that does to the other allies. right now, or bloomberg washington correspondent. i want to go into the transcript as published by the kremlin over the weekend. i thought it was extraordinary the history lesson perceived by mr. putin. these are two comments from the president of the russian federation -- as a result of the bolshevik policy and this can be called vladimir lenin's ukraine. there a strategic mistakes in the parts of the bolsheviks

leaders in the communist party leadership. when you are reporting in washington, do they believe this is an effort to bring soviet ties to russia? >> it's a revisionist history and an attempt to go back to the future. the transcript from the call last evening at the white house with the senior administration official briefly orders had some interesting takes. there was a lot of questions this morning about where we are going. vladimir putin has his view and the u.s. and allies have different views. as we hear from germany and the u.k., it's interesting to hear from italy as well. it appears that everyone is not on the same page when it comes to sanctions. how do we qualify in invasion? did that not happen last evening? what kind of sanctions will they

follow on today? they want to follow on with sanctions be on the sanctions that were announced yesterday step when you look at this, they say it was a speech to the russian people to justify a war. the official last night said russian troops moving into the dunbas would not be a new step because they have been there for eight years so has anything changed about our roach beyond the local sanctions that have already been announced? tom: what is the relationship in the place of the united states amid the allies and amid nato? >> when you hear mario draghi say sanctions must be sustainable, there are great concerns about energy. one third of european energy comes from russia. olaf scholz making news this hour about nord stream 2 and there is a lot of gas going into europe and i wonder if there is

another announcement about sanctions, it could come with an announcement about alternate energy sources. it might take some pressure off the european allies to go across -- to go with a broader sanctions package. katie: the biden administration has been relying on the threat of sanctions to deter president putin. they have been consistently pushing for a path of diplomacy. it's -- is there still a diplomatic way forward? >> we are still waiting for an answer if there will be a meeting on thursday as planned between the secretary of state and sergei lavrov. that was supposed to set the stage for a greater meeting potentially of leaders and it's unclear if we will get that far. there is not only the prospect of russia sending peacekeeping troops or peacemaking troops into the region. the russian separatists who lay

claim to that area do not actually control the land around the dunbas. so there is a clear opportunity for military conflict and for this to take on a different contour if fighting starts to take place in those areas. jonathan: can you reconcile what secretary lincoln has said over the past few weeks with what you heard yesterday evening? >> it's difficult, a couple of days ago, secretary mike and said this would be a gross violation of international law. it has already happened and you listen to the members of congress, it's something, they are losing patience. the democratic and republican leaders of the senate foreign relations committee came out with statements calling for statements now, specifically republicans and they are using the word appeasement's. they attacked president biden before he has spoken publicly. jonathan: thank you, looking forward to your coverage.

we were told it would be swift, severe and united so let's focus on the severity. how severe with the sanctions be? tom: there seems to be an immediate partition to more gentle sanctions to wait and see what mr. putin does, a distinctive feature which has been widely out there is they took their troops and tanks into a region they already occupy. do they go to new territory? an expert on guerrilla war nailed it last week when he said the atmel -- the absolute litmus paper is do we see true russian troops into now ukraine territory? we haven't seen that yet. jonathan: that would constitute an invasion and would that

prompt real sanctions? katie: i'm sure we will look for those answers as we hear from western leaders over the course of the day but as far as sanctions go, we have consistently heard warnings. is that what the market is recognizing and that we are way off of the lows when it comes to equity futures? how much is this priced in or is the market say this will not affect anything? jonathan: futures are down nine points on the s&p 500. we were much more negative than now and the nasdaq 100 is only down 6/10 wti was down a little this morning. tom: $99.50 and i say brent

crude at $98.12. jonathan: will the fed raise rates .25 or .50? futures down about two/10 of 1%. this is bloomberg. ♪

jonathan: equity futures are bouncing off the lows. jim b anke says this is a measure of how severe the west will be in its ability to contain russia and so jess and the severest sanctions seem to be on hold for the moment. that's the u.s. story. let's look at the global story. brent crude at 99 very briefly. let's talk about the story from the federal reserve stuff to year yields pushing a little higher.

on friday, president williams of new york suggested that maybe he was interested in a 50 basis point move next month and governor bowman yesterday said the opposite. that door is wide open. we still have one more cpi reading before we get there. tom: the difference in yield between the 10 year and the two-year is roque and down and threatening a 39 handle which is the difference in yield .39%. if we saw 839 handle, that's a big deal. jonathan: yields are unchanged on 10 and higher on 2's. tom: right now, julia coronado, for our greater macro economics.

thank you so much for joining us on this important tuesday. did vladimir putin take 50 beeps off the table? >> it would be one consideration. it would lead to further headline inflation for oil prices and that could go further and the demand is growing inflation. the uncertainty that comes with that would be one reason to lean toward the steadier pace of 25 basis point hikes. it seems like that's the way the leadership is leaning anyway. we heard from president williams and governor brainard at the end of the day friday. both of them seems to suggest that the preferred strategy is a steady pace of 25 basis point rate increases which gives them time to evaluate the incoming data and not look like they are lurching.

it looks like the communication is we are moving steadily as far as we need to go we are not panicking. tom: i go back to lawrence myers'book which had the battle of governor meyer and at the time chairman greenspan. what is the decision process that chairman powell uses that has been underreported? >> chairman powell learned from chair yellen who is very effective at building consensus. that starts with our long phone calls with each of the members, each of the participants of the fmo see to explain where he is and see where they are. that's step number one and that goes a long way for when they walk into that room, they all know what each other is thinking

and in general, the chair will get his weight barring some radical conflict in views and that would only lead to dissent which chair powell is open. if you don't feel you can support 25 basis points, i would fully expect them to stand by president bullard who prefers a faster strategy. that's a healthy degree of dissent. at the end of the day, the committee will back chair powell especially at a moment that so delicate and important that the fed get its communication rate and guidance right as well as the policy. katie: has the fomc abandoned the idea that inflation will come down by itself? >> i don't thinkno, think that

was ever the view. a number of factors will work toward moderating inflation. one of those is improving supply chain operations. that is still expected to be a force that will lead to better competition in the car markets and other consumer goods. that is expected to be a tailwind for them but not a quick one. it's one that will steadily be improving and we can already see some signs of that may be starting to happen. the other thing that will pull inflation down is the fading fiscal impulse. consumers will lose about $1 trillion in transporting this year. the job market is healthy and wage gains have been solid but doesn't fully offset the loss of what has been a gigantic fiscal or stuff that's another force that will work on the left side of the ledger of moderating inflation stop consumers are likely to get a bit more

price-sensitive as the cash fades and the other important force is that there is a wider set of consumption possibilities for consumers. they are not just sitting at home buying goods. they are in a going on vacation and that will improve as the spring and summer unfolds and that means more competition for the consumer dollar. then of course monetary policy, the shift has been they now understand that they are an important part of that mix. they are not doing all of the heavy lifting but they have to do a significant part of it in bringing down these inflation pressures. katie: on the consumer and inflation pressures, one of those is that the guest,. when we think about the geopolitical implications, the potential impact on commodity prices and the american consumer, is that likely to lead to more aggressive policy

because it fuels inflation? >> in general, it's been i new environment so we have to watch the data carefully. what we've normally seen as something like energy prices or food prices, when we get spikes, it tends to dampen demand, not add to inflationary pressures but we are in an inflationary environment so it will depend on how the consumer unfolds. one thing we need to be centering in these conversations is how well the demand holds up. the fed does not think neutral is very far away. we were still in a world of low growth and low interest rates. it doesn't take much to get where they need to go.

how well is the economy holding up? are there signs that the higher prices are starting to hurt demand? it's the ultimate leading indicator, consumer demand and particular. consumers will do best -- invest into higher demand. will that be an important ingredient evaluating the situation and navigating it in the months ahead? tom: we are looking at headlines coming in here. they are moment by moment. you seen these streams and chairman powell in his office has a bloomberg so how will what we have seen or see this week, how does it change a meeting that borders on 20 days away? >> it's a very live situation. it's unlikely to resolve quickly. tom: this is critical. their solution is to wait always

given uncertainty, right? >> yes but that does not mean going ahead and signaling a steady diet of 25 basis point rate hikes so the dot plot will be important for communication. then they go 25 basis and they will tell us we've got six or seven rate hikes on schedule for this year if everything goes well. if something doesn't, they can always back off. if we see in him -- a bigger impact of a war on oil prices, on the globally economy, than they can always skip one down the road if that's the right response. jonathan: thank you as always. we are waiting for sanctions

with another round coming from the eu and the united states. reports suggest we will get the sanctions later to day and the wall street journal indicates that eu diplomats said there is issuance of russian banks. the eu proposed an asset freeze of three key russian banks limited to eastern ukraine. the eu officials expect to agree to e-cig -- to a sanctions package later today. tom: i'm looking forward to seeing what prime minister johnson does. i believe we will see that at 12 noon in london. what does this mean for the oligarchs that own the fancy was football teams? jonathan: that will be a big issue. how far prime minister johnson actually wants to push this and health are he wants to push for the city and how far chancellor

schultz wants to push it as well. chancellor schultz put things on ice. he might want to abandon the nord stream 2 project altogether. tom: the language is important but we are seeing what's incremental. it is a hugely sequential tuesday whether from washington for the many voices in europe. jonathan: we will hear from the british prime minister in 50 minutes time at 7:30 a.m. eastern. from new york with futures down half a percent on the s&p 500, this is bloomberg. ♪ lee anne: keeping you up-to-date with news from around the world. in germany, fallout from

russia's latest news is the nord stream 2 pipeline may be put on hold according to the german chancellor. boris johnson will speak on the pandemic despite warnings. he said the country must learn to live with the coronavirus as he ended restrictions right here in england. he has laid out a plan to lift requirements. prime minister justin trudeau in canada will retain emergency power for at least a few more days and they have cleared all blockades across the country. there is concerned that demonstrators are prepared to stage more protest.

pandemic feel spending on home improvement is starting to fade and home depots first quarter profits beat estimates. the boat that caught fire last week because the automaker $155 million. the estimate assumes all cars were lost in the fire. among the cars on board were a number of lamborghinis and bentleys and porsches. this is bloomberg. ♪

>> they are in fact getting prepared for a major attack on ukraine. so we will not close the door

and diplomacy. we will go the extra mile on diplomacy but we are also prepared with our allies and partners to respond decisively. jonathan: the u.s. national security advisor, from new york city, futures are down one/three of 1% on the s&p 500 and the nasdaq is down three quarters of 1% with wti up 3%. a 99 handle early this morning on brent crude step from ian bremmer on twitter -- putin has to live with the most terrifying speech politically of the 21st century. just to frame the moment, the fact that this headline is even crossing the wires worldwide, reports from russia that couldn't says he has no plans to restore russian empire orders.

does that even need to be said. tom: we don't need a history lesson particularly with error guest in all that he is lived in lithuania. i read every word of the speech and it was extraordinary. none of this has been lost in translation. we have the former european ambassador to russia but beyond that, he has lived in lithuania and joins us this morning knowing that its 223 miles across lithuania to russia. thank you for joining us. robert kagan in the washington post last night simply said the baltic states are the most at risk by mr. putin's perception of his russian empire, whatever that may be. how at risk this morning is

estonia, latvia and york lithuania? -- and your lithuania? >> we cannot be complacent. the cold war was rejected in the borders in the 21st century are being rewritten rudely with force, there is no way to be complacent. that's why the u.s. should station permanent troops in the baltic states. tom: from this weekend, the question has to be the application of nato troops and united states troops. do you need to see more active summoning of those troops to

your lithuania? >> we appreciate support but the united states is demonstrating. the kremlin respects only boots on the ground and i know that from our experience and that's what we expect and request for the u.s., to come to the rescue and prevent any kind of engagement. katie: is it force it ultimately will make a difference to vladimir putin? >> i think it will require strategic stamina and western result -- resolve to recognize what's going on. what putin said yesterday is nothing new. he's been pursuing this

narrative of aggressiveness since 2013. he said he does not consider ukraine to be even a state, he says it's part of russia. read writing brutally the orders with no respect to basic rules will require political stamina and troops on the ground, diplomacy but also tanks as well. katie: speaking of diplomacy, are the minsk accords now dead? >> putin said it's over. how can that be rewritten? i think they are gone. they've been abandoned by the kremlin but how will the rest of the world react?

it will require sanctions that are more severe. that will require a greater support to ukraine because it's all about independence and sovereignty of free nations. the west needs to bring in membership plans for ukraine. that's how this has to be handled alongside arms-control which is part of the much more complex problem and litmus test we are witnessing. it's the most profound in history. tom: the financial times says

it's not appeasement but there needs to be a diplomatic negotiation. can you imagine part of a nato diplomacy and germany, france and russia diplomacy that we would generate a strip of land from russia across to kal iningrad? would we have to give that up? >> i'm sure that is not what's being considered in paris, berlin or washington. we trust in assurances. george w bush said any minute -- anyone who makes an enemy of that area will make an enemy in

the united states. jonathan: thank you for being on the show this morning. futures are down 2/1 on the s&p 5000 step chancellor schulz said he would for the certification of the nord stream 2 pipeline and now we wait for the next effort from eu diplomats, especially sanctions against more than 360 russians this morning. tom: the partition that putin made early in the speech between lenin who he described his strength from the empire and going back to catherine the great, the czarist russian empire and the divide was 1924 and onto stalin who changed things. it was shocking language which ian bremmer highlighted this

morning. jonathan: lisa will be back tomorrow, i'm told. futures are down 2/1 from new york0, this is bloomberg,. ♪

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>> putin has managed to get everybody's attention in the west. >> they are vocally open to diplomacy. >> war is an altering event. >> we will see more demand for hedges on the back of the russia-ukraine news. >> if there is any small chance of an invasion, that would be very disruptive to the gas markets. >> this is bloomberg surveillance. jonathan: what a weekend, wall street getting back to work, from new york city, good morning. this is bloomberg surveillance live on tv and radio. futures are down about a third of 1% and vladimir putin making his move and the world reacts. tom: it's coming headline by headline. the nord str