>> from the world of politics to the world of business, balance of power with david westin. weekdays, this is bloomberg. >> putin has managed to get everybody's attention in the west. >> all eyes on russia. are they open to diplomacy? >> it is a world altering event. >> this is on the back of the russia-ukraine news. >> if there is any small chance of an invasion, that would be very disruptive. >> this is bloomberg surveillance with tom keene, and lisa abramowicz. tom: jonathan ferro, lisa abramowicz, and john -- tom

keene on a four-day week. we welcome all of you on bloomberg radio and bloomberg television. it's about different nations with different sanctions. jonathan: it a different interpretation of events as well. i call recent russian action and amounting to a renewed russian invasion of the ukraine. will the u.s. use the same language? many people doubt that. the u.k. making their move. is that move proportional to the prime minister moments ago and three high net worth individuals? tom: help me out with a better market. small caps, a little green. the bear market started with a gentleman from germany under the pipeline and the baltic sea. jonathan: there is a turnaround

in the equity market. futures down about .1%. 93.60 w ti on brent. very close to 100 earlier. 99 then backing away. the west is not targeting the three state owned russian banks that really matter for the oil, gas, and other commodity trades. vtb, sberbank, and gazprom bank. and they are not getting close. >> we did see sanctions in the family the three gentlemen mentioned. i know gold is at $1900 announce. we have so much to talk about. i want to do football and i don't mean the speculation that harry k will re-sign for 150 million pounds. which is dry norma's. -- which is ginormous.

jonathan: a massive sponsor the champions league run by uefa. it is said to be held in russia. and a report suggesting out of the u.k. that talks are ongoing. that is the situation we are in. it's a bit awkward having the olympics in beijing given the allegations of genocide in that country. very awkward to hold those finals in russia given what has happened over the long weekend. tom: the russian headline a moment ago, this is a separatist person. we may ask russia for military aid. i thought they were getting military aid, but, you know. kaylee, what is your observation on the morning? >> it raises a question of how much of this was already priced in.

we knew what would happen if vladimir putin did make a move. the market has been in turmoil do to each and every headline we have seen on this crisis. may be a lot of this risk we are seeing born out in the situation this morning, the market was ready for it. tom: ed boris johnson speaking before parliament. -- and boris johnson speaking before parliament. we have a guest to his wonderfully holistic about the dynamics of the market. the last time you were on, you said the real yield is what mattered. explain what you learned of the dynamics of the partial differentials of the visible nominal 10 year yield and the 10-year real yield. what has been that nuance? >> for the last six weeks, the prospect of a stronger-than-expected set, the

market is looking at if the fed is behind the curve in real terms. the only way to make up for that , you need to start to be nominal. if all of the work is going to be done on the nominal, that translates through the dollar, the yield, enter spreads in the credit market, which we need to talk about. that is where the pain points are going to be felt. all of that is far more relevant compared to the geopolitical aspects. >> critically, you say, through the dollar. explain the usability of the fx market as litmus paper right now. or are they so adjusted and clouded by what we have seen in the ukraine? >> if you look at dollar-yen or dollar-swiss, are we seeing the third and buying the swiss banks? not really. these currencies are still

somewhat net short. if you look at fx, it's pretty much a response scenario. to be frank, looking at geography, they don't want to right now. but three basis points, they are giving you the real yield and giving you aggressive tightening. that's what you want to know right now. >> let's go through things one by one. in recent history, that has been tough. crude doesn't last very long. when you start to get to these levels, do you use historical ranges as a point to say that maybe we should fade it? >> it is useful but you have to wait that against volatility. also, volatility reflects the

current market participation. there's just not that much going through rubles right now. if you wanted to liquidate, you probably would have done it a long time ago. we have seen that percentage come off. that was the point to speak ruble strength and ruble holdings. the fx market overall feels ok at this point. >> on the other part, john mentioned oil near $100. >> this strikes at the heart of what central bankers are worried about right now i'm a a d anchor in of inflation expectations. leaving the headlines, they have opened up and already. they've opened their energy bills and said, it's so high.

in the headlines are only going to be higher. and to get back ahead of the curve to manage household inflation and dictations will be the big challenge and what happens with monetary policy. >> you say it will take eight to 10 hikes to get fed policy to neutral. why is the market not there? >> we need to make a big decision between what the determining rate is. if we add 200 basis points or more compared to where we are at right now, you get to arrange between 2.5 or even three. the way i look at it, you want to look at where nominal gdp is, at where potential growth is and where inflation target is. the market is saying that just in the u.s. but across the board, the more you do right now, the more the economy will be up ahead and the more unlikely you will satisfy the

hikes for next year and beyond. they are about to hike market that i don't think they can get to 2.6% which is one of the highest terminal rates right now. the economy will slow aggressively for this year. forget about tightening for this year and beyond. tom: one of the great vets forward is the bat on the pacific rim as general statement. do you buy that we will see real gdp and productivity pop in the pacific rim? >> this is where you get the great impetus. china is an anchoring situation right now.

i think that much has been signaled already. and we are going to see more positive headlines coming through. and i think there is value in certain sectors with the chinese equity markets. that's what you want to be risk on. but the real boost is unlocking that $200 billion china deficit which can lift the global economy. it will generate some supply issues, but i think that is a problem that we can welcome at this point. i don't think china is going to move away from that dynamic. i think that is a missing element. some parts have not captured the growth for the time being. korea in particular. more to come from other countries. jonathan: good to catch up. inconceivable for a major international sporting event to happen in russia. tom: and inconceivable that the

talks were winning. that was quite a turnaround, even for someone that doesn't understand the beautiful game. jonathan: i think the word that you used in a text over the weekend was epic. tom: i liked the guy from sweden. i flagged him early in the game with my best knowledge. he looks like you out there. >> not quite. i can't quite run like that anymore. tom: full disclosure, i never ran like that, ever. jonathan: really strongly was from the prime minister this morning. the russian action amounts to a renewed invasion of the ukraine. the actions and the sanctions, proportional. do we have the same language from the u.s. a little bit later? they are the questions we need to be asking. from new york, this is bloomberg.

>> keeping you up-to-date with news around the world, i'm laura wright. there is fallout from vladimir putin's latest move. the u.k. is imposing sanctions on five russian banks and three high net worth individuals. that comes a day after putin officially recognized the self-proclaimed republics in the eastern ukraine. he also ordered what he called peacekeeping troops to go to the region. in hong kong, there will be mandatory coronavirus testing for residents within three months. authorities are trying to claim a growing outbreak. most restrictions will be in place until mid-to-late april. macy's posting sales that beat estimates. the department store chain also forecast earnings for the full year, better than expected. home depot is forecasting a

deceleration and profit growth this year. that is a sign that spending on home improvement is starting to fade. the fourth quarter profit and comparable sales beat estimates. increasingly posting jobs in texas and georgia, more than four and 10 with higher educators at tech companies, facing california, oregon, and washington outside of the region according to the conference. texas is by far the top state destination. global news 24 hours a day on air and on quicktake powered by more than 2700 journalists and analysts in more than 120 countries. i'm laura wright. this is bloomberg. ♪

>> the kremlin only respects u.s. boots on the ground. what they said today, it may sound politically incorrect, but it's nothing new. he has been pursuing this narrative since 2013. it will require sanctions. jonathan: the former eu ambassador to russia. from new york city with tom keene, i'm jonathan ferro. it futures down about .25%. well off the session lows. a single basis point, 193. 2.9% and quickly here, we had some strong language from the british prime minister about an

hour ago. >> the white house principal deputy national security advisor is speaking and says, i am calling it an invasion. he says an invasion is an invasion and that is what is underway. some characterization over what it is classified as. he says there will be a severe response by the u.s. today with additional sanctions. we will wait to hear more from the biden administration about what form that will take. >> we will see immediacy from the biden administration. we struggled to bring you the best and brightest. peter joined us a few days ago, and daniel tannenbaum with oliver wyman and sanctions moments ago. director of u.s. and americas program at chatham house, it

barely describes her impact on explaining america to those in london and those in europe. thank you so much for joining us. how do you explain the united states? capitol hill can't even come up with some declaration. how do you explain that to people in london? >> right now, we are seeing a quite good response. the western countries working together because the threat seems so ominous. but we are seeing unusual things coming out of america like certain members of the republican party saying, why do we care about russia? why not worry about ukraine? but the biden administration has a very clear and very strong response to the current crisis. >> how effective is the biden response by the trump 10 of four

years? >> i think the trump tenure was very damaging. for reasons we never really fully understood, president trump had such a fondness for putin and was unwilling to push hard. but remember even during those years, congress had a much stronger view, wanting to take a much stronger position against russia. u.s. policy was quite clear. now we have an administration with bipartisanship, for the most part with a few notable exceptions on this issue. but more importantly is a question of western unity. we see germany on board. the u.k. talking about sanctions. the eu looking ahead to sanctions. so whether that coordination will maintain itself and if the west will remain united, this is an absolutely critical question as we look to the hours, days, and weeks ahead.

>> another difference is the push for diplomacy. to comfort diplomatic resolutions. has diplomacy failed? >> this is a really tricky question. you have to think about the u.s. response on multiple fronts. we are looking at sanctions and ongoing diplomacy, working with allies and partners. it is a multipronged approach. diplomacy is not over but i think it's very clear that putin has not heated diplomatic efforts. this is a man that has very strong ambitions when it comes to ukraine. it is very unclear there was ever going to be a deterrent. the big question is how great the ambitions are. but diplomacy is an absolutely essential part of the calculation. >> just to stick with vladimir putin, we heard from him

yesterday with a very interesting tune -- tone and ukraine being a bolshevik creation and not identifying it as a state. is he a rational actor? >> he has very strong views on ukraine, that it is a core part of russia upon sovereignty. -- of russia upon -- russia's sovereignty. he has been very clear about that for a decade. it appears to be the case that the answer is no. >> you were at chatham house with duncan allen who seems to be incredibly experienced with all of this involving the ukraine, russia, and the rest. the question goes back to archie george kennan, can we contain what we witnessed this morning? >> and whether putin will push

beyond. and the trick is, putin seems to be very clever at using the language of the west, peacekeepers, and recognition to slowly chip away at ukraine's sovereignty. can we contain it? it comes down to if there will be ongoing robust unity and if sanctions will be strong enough. right now, i think there is a reluctance to take even stronger measures. the kleptocracy problem will be critical in responding to the challenge. the reality that the u.s. is not willing to take extraordinary measures to deter russia, something that putin is very well aware of and factors into his calculations. this is a clear violation of sovereignty in other cases that would have mattered. when you talk about russia, a

nuclear power, it's not someone the u.s. once to get involved with directly. jonathan: thanks for being with us. here is a quote for you, tom from the russian federation dmitry medvedev. on twitter, in english. >> german chancellor olaf scholz has been in the process of certifying the pipeline where europeans will soon pay 2000 euros for 1000 cubic meters of gas. tom: and in german as well, medvedev does not tweet often. that's very important. jonathan: that line is just unreal. no ahead with this. you will be paying more. >> and the biden administration has tried to address this as well and hedge against it, talking to other countries that could provide natural gas to

europe in the cases of a russian shortfall. can you make up that entire shortfall? >> on energy, coming up very shortly from energy aspects and new york city, this is bloomberg. ♪

jonathan: this is quite a turnaround. positive up one point as well. all over the place. 19425 on tens. in the commodity market, 2.9% higher on crude. 99 briefly and backing away. 94 briefly, then backing away. here is the quote that really gets your attention. it comes from dmitry medvedev who many of you will remember the former prime minister of russia. german chancellor olaf scholz has issued an order to halt the process of certifying the north stream gas line. welcome to the brave new world.

paying a lot more for gas. >> there it is. and joining us to give perspective, founder and director of research and energy. aspects on must say she is just fabulous that the dynamics of supply, demand, and energy. i don't spend enough time talking about natural gas. what can mr. putin and mr. medvedev do to change the dialogue of natural gas. >> i think it has been very prominent, these features. particularly with putin coming out a few hours ago saying that gas supplies will be uninterrupted. and i think that has been one of the big fears in the market, either because of western sanctions, but they have never

done that before, including during the cold war. i think russia is not going to be the one acting on that and using energy as a weapon. but we have seen the headlines. that was one of the things we were expecting, should the tensions escalate. tom: john emailed me sunday morning about 5:00 a.m. the netherlands natural gas code, the bottom line is it was cheap and did it -- and then it became expensive. who is managing the price of natural gas in europe right now? >> the reason that natural gas prices have managed to come down is thanks to asia because asia had bought a whole lot of lng. this winter, the prior winter was very short.

the weather was fairly mild and they had some excess which they managed to send over to europe. that is what has helped gas prices come off. fundamentally, we saw a record high etf prices last year. those fundamentals haven't changed. and regardless of what is going on geopolitically with russia, supplies to europe has remained very low. we didn't expect them to come online in november of this year anyway so it is still a very tight market. jonathan: are they putting it on ice or are they killing it? >> the west has to be seen to be doing something. there will not be sanctions on energy supplies.

you have any gas russia. especially with crude close to $100. they need to be doing something, but it will be around technology sanctions. this was something that is so further down the pipeline. it ignored streamflow's under that category. >> will try to work out where we will be. the chief executive officer at vtol group said on the demand side, 100 million barrels number is going to be exceeded this year. this is on crude. he went on to say demand is going to surgeon the second half. we understand how tight things

are now. how tight will things be by the end of 2022? >> a couple of things where we get extra supplies, iran is one of them. and you can get the oil out of the second half of the year. they are still being very disciplined, but you can potentially eke out a little bit more. we have been talking about this for months now. it there is a lot of pent-up demand and demand will be rising. particularly in asia. asia hasn't been able to come out like the west over the last two years because of covid restrictions. they are wanting to get back to a normal life. there is a lot of demand we will see in the summer. the way that you get incremental supplies is through high prices.

>> is the above $100 oil sustainable? >> can back to 2008, oil prices need to be 30% higher now than in 2008 if you want to have the same impact on demand. it could go significantly higher before you start having an impact on demand. tomo like this because it talks about elasticity. governments are handing out a lot more checks which mean income is stronger. you don't see the slowdown that you've seen in the past. given the numbers, oil demand is already above 100 million barrels a day. we will surpass the 2019 levels in the second half of this year and we will be effectively growing by 3 million barrels. >> when does supply and demand come back into balance?

how long is it going to take? >> i think we have been calling for 100 plus for a while and it is precisely because this isn't a short-term phenomenon. geopolitical risks aside, this is ultimately about underinvestment. we have had years of underinvestment and it is getting much worse due to energy transition. demand is rising quicker than anyone has expected. there is a huge policy mismatch where governments are talking about the end of the field without actually doing anything to reduce demand. tom: amrita shows up and i have ratios in my head. that was brilliant on the responsiveness given the higher income. at what barrel size do we click in demand angst?

$130 a barrel? >> i don't think we know the answer quite yet simply because the amount of income and savings in the economy. it is probably around the number you talked about, maybe even slightly higher. >> thank you very much. i got a statement from the press secretary, tom. the president made clear that if russia invaded ukraine, we would act with germany. we have been in close consultation with germany and welcome their announcement. we will be following up with our own measures today. that is from jen psaki just moments ago. tom: i have 4:30 p.m. in moscow and you wonder what the response will be. what we haven't heard from yet is russia. jonathan: we haven't heard from russia but we've heard a lot from them over the last days. they don't believe they are

preparing for an invasion at all. what we heard from the british prime minister over the last hour is they are calling this a renewed invasion of the ukraine. the u.s. administration use that same kind of language. >> we heard from john feiner on cnn, using the word invasion is what is happening here. what is the response now and what are they saving down the line? you mentioned with the harsh language coming from the prime minister, they sanction five banks have three individuals. boris johnson saying more could be coming. jonathan: one of the high net worth individuals has been on the u.s. sanctions list. this is where we are struggling, isn't it? let's go through things one by one. the actions by russia over the last three days. the british prime minister says the action of the russians and out -- amounts to a renewed invasion of the ukraine.

are the actions, what we are seeing, are they proportional to the language being used? five banks, three high net worth individuals? you have to ask that question. do the actions constitute an invasion? if they respond with sanctions, are those sanctions proportional to what we are seeing in the language? tom: to me, it is a sequence of responses by the allies had by each country separate, but far more within that was the strength of the language of the putin statement over the weekend. i think ian bremmer highlighted it. the language he used to go back 100 years and even back further than that was just stunning. he took it back to his statement on the russian empire. jonathan: and to be clear, he

wasn't just necessarily talking about those two separatist territories. tom: absolutely not. jonathan: he was talking about the whole nation. tom: robert king drilled right down to the baltic states as being the most vulnerable right now. john, these are profound mismatches between little financial sanctions and the tone of the statement from mr. putin. jonathan: you and i are on exactly the same page. let's call it 195. from new york city and our audience worldwide, this is bloomberg. ♪ >> keeping you up-to-date with news around the world. vladimir putin says he has no

plans to restore the borders of the russian empire according to the russian news agency. putin spoke a day after he recognized suffolk and republics on the eastern ukraine and ordered peacekeeping troops to go into the region. the u.k. responded by imposing sanctions on five russian banks. the u.s. is likely to impose sanctions. boris johnson is seeking to turn the page from the pandemic despite warnings from his economic advisors. the prime minister says the country must live with the coronavirus at the end of restrictions. he has laid out plans to lift all legal curves. he says they will be replaced by common sense at a personal response ability. justin trudeau will retain emergency powers through the next few days. police have cleared blockades across the country but trudeau says there is concern that demonstrators opposing the vaccine mandates are prepared.

tech stocks dropped for a third straight session. there are concerns about the regulatory plan for the sector. a bloomberg report said another round of checks with the fintech business unit. the cargo ship carrying missiles that caught fire last week because the automaker $155 million. that's according to a risk modeling company. among the cars on board, a number of lamborghinis, bentleys, and porsches. global news 24 hours a day, on air and at bloomberg quicktake powered by 2700 journalists and analysts in more than 120 countries. this is bloomberg. ♪

>> there are a number of factors that are going to work toward moderating inflation. there is a wider set of

consumption possibilities for consumers now. they are not just sitting at home buying goods. they are going on vacation. that will improve as the spring and summer unfolds and that means more competition for the consumers dollars. tom: julia cronan there on the end of the pandemic and the idea that we are all getting out there. headlines are out. >> we get headlines from marriott vacations, raising their quarterly dividend. it was $.54 a share and now 62 since a share. from marriott vacation sticker, the ceo we are about to speak to. tom: we are joined on your vacation plans and i know you can't get a room anywhere. i know you know the drill. i went to hispania to price points, up to $500 a night.

kaylee has legitimate questions. stopping the world on friday with a storm in london. and the next day, from the roof of a marriott or yard in heathrow. tell us about how you run the big jet tv. was it like having a courtyard franchise at a lower price point? >> it is one of the things i love about our portfolio. i get questions all the time. do you have too many brands? the breath of price points with 160 billion loyalty members, we feel good about the ability to offer that. >> let's go to ritz-carlton in moscow. how do you see and perceive your business in russia given all that's going on.

quick's we have 30 hotels in russia as we sit here today with a handful of deals. we are about safety and security for our guests and our associates. as we have watched the recovery from the pandemic, that has largely been fueled by steady improvements in consumer and traveler confidence. political instability as we have seen over the last 48 hours. we are watching it closely. quick's let's tie those stories together in terms of the geopolitical front and what we are seeing from the consumer. if we have repercussions on russia it will discuss energy flows. how does that translate to the discretionary spending of the u.s. consumer? will they be spending as much on travel and leisure in the face of these inflationary pressures?

>> right before i came on, i heard your prior speaker talk about competition for consumer discretionary spending and more and more folks that have been effectively locked down for the last two years, thinking about spending on travel and tourism. we washed fuel prices, particularly for leisure travel in the u.s. but even last summer, despite variability in fuel prices, we did not see any meaningful dilution of the velocity of leisured recovery. >> how much further do we have to go? tony: we talked about the fact that globally, revenue per available room was 19% behind where we were fourth-quarter 2019. that was a 40-point improvement from what we saw in the first order of last year. so we are seeing slow and steady improvement.

the acronym was only down 11%. we did see a bit of a hick up from the omicron variant. tom: everybody i see, if it's good numbers it's at the top of the press released and not so good numbers are down. which ratio matters? tony: i think margins matter and unit growth matters. tom: because of time, go to margins. tony: we had to make tough decisions to the pandemic and above property we covered about 30% of our costs. we have seen several hundred basis point improvements. as we see pricing power return, we think we can preserve the vast majority of those margins.

>>, it is labor? >> see demand has recovered most quickly. we see some wage pressure as you might expect. and we are seeing pricing power the strongest. and we think even with wage inflation, some of the efficiencies we have identified, we can preserve the vast majority of those margins. tom: i can report on this 24/7, they are stupid, crazy, busy for the summer. what is the summer going to be like? >> i think it is an all-time record. leisure demand has not slowed a bit since the start of the recovery. so much of that recovery around the world has been affected by domestic travel. and we have whole new segments of leisure travelers that will be traveling across the board.

tom: i wanted to go to paris and i had to book in leon. that is a joke. that is far away. is this going to be a boom summer? >> it absolutely is. for more importantly, tony kept you out of there on the distance of courtyard to the ritz-carlton as well. haley, i've been so busy with tony that i've hardly looked at the headlines. >> we haven't gotten anything. we are waiting for more from the biden administration. jen psaki said they will be announcing their own measures and retaliations. we don't know yet what those measures will ultimately look like. we are still waiting to hear from the president. tom: just out, andrea dudek and flying across jackson with the heart of the matter of the

morning. thank you for this. is it a russian invasion? many western leaders say not yet. this is the debate this morning. >> boris johnson says this is an invasion. administration officials are classifying it as an invasion. we will have to see if the president himself and other western leaders follow suit. is the sanctions response proportionate? it is something jon ferro has been raising for the last several hours. tom: i will get that out on twitter as i can. there's a lot going on. a little less stress to the market. the vix 29.33. an important conversation.

richard haass out an hour ago on twitter on sovereignty. ambassador hoss on the council of foreign relations. look for that at the 12 noon hour. stay with us to the morning on bloomberg radio and bloomberg television. good morning. ♪

>> this market>> is all over the place, from -2% to -.2%.

the countdown to the open starts now. >> everything you need to get set for the start of u.s. trading. this is bloomberg: the open with jonathan ferro. jonathan: live from new york, we begin with geopolitics. >> the russia and ukraine situation. >> russia and ukraine. >> the arnie it is if geopolitical tensions go up -- irony is if geopolitical tensions go up oil goes up a lot faster. >> this is putting the world in a different direction. >> markets do not like uncertainty. >> this is a big air pocket of uncertainty. >> i