minimize the pain for allies. this has been the scene. the key issue is, can they counteract russia's aggression with me that don't inflict pain in the biggest economy. can we do that right now? the markets are suggesting no. jonathan: they think it is going to be pressure at home, political support at home, and then this will play out. tom: our job is not to do opinions on sanctions, but jon, it is real simple, sanctions get you only so far. we had general hodges yesterday. jonathan: on the nasdaq, we are down .6%. what a turnaround to yesterday's section, the s&p from negative to positive 1.5%, almost unchanged on the doubt. -- the dow.

tom: i love doug's phrase he uses, gamma shift, but basically, jon, there is a massive emotional bet on way, and you lose and gowe spring ye. >> negative just a 10th of 1%. >> all eyes are on further developments today. i find it remarkable that we have critical volatility. a: 30 a.m. and we have u.s. personal income and spending data for january. based on the retail data we had earlier. the expectation is for an upside surprise. people are spending plenty even with inflation. and it brings me to another thing officials are saying that this will not materially change their view.

chris waller came out. they said that we should signal that we are moving to a neutral and fast-paced, a 50 base point hike will do that if data and job stay hot. also, at 9:00 a.m. we have the nato emergency extraordinary summit with joe biden, and then christine lagarde speaks in a separate meeting with the euro group including with the french finance minister. how much do we hear about further actions and the ecb going in the opposite direction. at 10:00 a.m. u.s. university of michigan a february sentiment survey. we saw -- sought fall to the lowest levels going back to 2011 and how will this be affected despite the fact that gas prices

cannot come down with summer zervos leases. obviously the volatility in oil prices and a lot of analysts expect that going forward. jonathan: did you see the line from the governor " my government sent me a text saying the cost of living -- of living is out of control, do something." it seems to be lining up a move. tom: they are data-dependent and the am not going to mince words. part of the dependency. jonathan: emily wilkins is down -- down in brussels. the agenda for today, what is it? maria: we need to focus on nato. and we have to agree to the sanctions. and we know that the veto is pending. the frustration from zelensky and his speech was stuck in my

head for 12 hours now when he came out yesterday and said we need help now. i know i am the number one target for the russians, they are coming and we are staying put. in the tragedy that europeans played the long game. the ukrainians will tell you that it is too late and we need it now. there is a huge gap between one side and what the other side needs. tom: maria, estonia is the northern of the baltic states and we send -- and it will send more rockets to ukraine. that is great, as you well know, the soldiers have moved south from belarus and in the outskirts or into kyiv right now.

explain the threat to mr. zelensky at the moment. maria: they are moving into kyiv and that is a problem. this is the capital that has a huge victory for vladimir putin if he was able to say after 24 hours he was able to get to the capital and change the government and the ukrainians no that this could be a very trickling test tricky situation. they say that -- he says that he will not leave but the russians have made it clear that they do not want him in power and you can see why it will be 24 hours the president in full military gear said we have to defend our city with everything that we have, every inch anyone who can operate a weapon will get one. we are expecting a lot of

fighting in the ukrainian capital they expect a difficult 48 hours and they want to defend the city. >> the difficult and delicate move, we saw president biden answer a number of questions, two questions he did not answer that really stood out to me, how willing is china to work with the u.s. to try and isolate russia, and two, why did the u.s. not pose direct sanctions on putin. i we got new color on those two questions? maria: those are things we will see developing. one of those things will be interested to watch is what biden's own party will do when lawmakers get back to d.c.. you saw yesterday the head democrat with the foreign relations committee's put out a statement saying that the sanctions that biden had imposed and it closed ended go further.

they called for sanctioning russia's energy economy and for additional sanctions. they were working on that sanctions package before they took their scheduled break. there is certainly a desire to continue to work on that and to find a path forward because you are hearing from democrats and republicans. they do not think that the biden sanctions have gone far enough. >> letter we thinking in terms of energy policy and the next couple of hours? emily: so far president biden has defended the fact that they haven't put sanctions on industry, there is a global recovery going on and they do not want to hinder that and that is what we are hearing for why we are not sanctioning aluminum. i think to a certain extent biden knows that high gas prices are an issue and he has already

warned the american people last week that this conflict could mean higher gas prices. they think we are looking at the white house to see what if anything they do to try and make sure gas prices do not rise higher for americans as they already deal with a high inflation's. jonathan: maria, stay close we will catch up with you. the turkish leader on the line right now saying that nato should have taken more decisive action, speaking in istanbul that the west has offered only assistant so far. tom: this is loaded. bobby has a spectacular --a spectacular essay on mr. erdogan's choices. i will get that out on twitter. it starts with the bosporus strait, but it has much more to do with export and import lead from the massive tourist flow.

they are literally beholden to that just as one idea of the decision tree that mr. erdogan has. jonathan: we will hear leadership through the world this morning. lisa, this came from bank of america this morning. 76% of the nasdaq, 51 percent of the s&p 500. although he also went on to say that you do not should --you should not buy at the bear market. i believe that was his phrase. there is a real bifurcation by those who see a real opportunity and those who see further risk. jonathan: the fed tightening into a crash and stagflation. we are down .9% on the s&p and the nasdaq one hundred down point 8%. from new york, this is bloomberg. >> keeping you up-to-date with

news around the world. russian troops are pushing closer to kyiv. explosions were heard before dawn in the city as gunfire was reported in several areas. president zelensky says his military has stopped russia from achieving its objectives on the first day. president biden ramped up sanctions on russia, he is targeting the country's largest bank as long it -- as well as the country's elite and their families. the e.u. is making a plan to limit russia's access to key technologies and their economy. there is concern that the fighting in ukraine would impede shipments but it was relatively calm in the market after a wild session thursday. at one point brent crude saw more than 9% and is trading at around 100 dollars a barrel. federal reserve officials are

sticking to their resolve to raise interest rates next month despite the uncertainty caused by the russian invasion of ukraine. central bankers are stressing the need to find the hottest u.s. inflation in 20 years. governor chris wallace says that a hike is possible if data on jobs and prices stay hot. in other news, president biden has decided on a nominee for a seat on the supreme court. no word on who it is or when this selection will be announced. the president already said he would select a black woman fulfilling a promise that he made during the 2020 campaign. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. ♪

pres. biden: he has much larger ambitions, he wants to reestablish the former soviet union. our forces are not and will not engage with a conflict against russia in ukraine. they are not going to europe to fight in ukraine. jonathan: the president of the united states from new york city, this is bloomberg with futures down point 9%. we are down by .8%. into the bond market yields are lower by a basis point of 1.9530. governor wallace taking up perhaps 50 basis points. in the commodity market we are down .1%. a massive swing yesterday and one point positive after being

up nine percent. we were down almost 1% of one point. unreal to turn around crude and equities. tom: the real yield was a little bit of a bounce. as you go to your program the 10 year real yield gets my attention. i think we just lost it. we had a shot of independence square in kyiv. this is what i will be watching through the morning. this is the emotional lodestone for the people of ukraine. the tower is recent, only 10 to 15 years old, independence monument. this was soviet square in 1919 and with the ussr it was october resolution square. and with a menstrual -- immense pride, independent square. jonathan: it is an emotional moment for the people of that country. we reflected on the emergency un security council meeting that took place and observed the fact that china's ambassador was the

only one not to criticize russia. just seeing a headline saying that xi and putin will talk over the phone friday afternoon, just seeing that headline right now. tom: we will have to watch that. even with some strength the yuan is 6.32. on the liquidity of the financial system in europe, we have the right asked. jonathan: let us get to tony. what i would love straight off the bat is your observations in the last 20 four hours and how the markets have been functioning. tony: it does seem like investors are doing what they often do witches take a leap of faith. all of the debt exists in the world exist because of that leap of faith. investors have to have confidence in cash flows whether to bond investors to equity investors and buyback, it seems like they are retaining that. we know that over time, human beings, generally speaking show

a remarkable ability to adapt, the phrase keep calm and carry on is attributed to england in world war ii and winston churchill, and it is the feeling that investors tend to have, it is not a shock that the echoes from recent inflation data at the fed at least are louder than the rumblings in ukraine. the fed's state of affairs is finance and the way things are. lisa: just right now in the here and now, there is an issue that things are moving so quickly that sometimes parts of the markets actually do break and people are looking for potential notes of contagion in money markets with the russian sanctions and oligarchs, particularly with a flight to cash, have you seen any signs and are you looking for that as we see these developments really evolving in real time. tony: there remains ample financial liquidity in the

system, clearly in europe and also asia and the united states. the easiest case to look at is overnight transactions and the exchange that occurs between two parties, between securities and cash which is extraordinarily low reflecting the surface of money in the system. even if there were some tightening of conditions in that realm you would expect central banks to do what they always do which was to ramp-up printing prices and they showed the remarkable ability to do that in the last decade or so. lisa: perhaps liquidity is consistent or ample however there has been a huge divergence between the u.s. and europe with respect to what the impact from the ukrainian conflict could be. we got this headline of the ukrainian war shaving up to zero point two 4% from the gdp. how much have you shifted your view on how quickly the ecb could move versus the federal

reserve? tony: on the margin, we think that the stress increases the downside risk to global economic growth. pimco will hold a quarterly meeting at newport beach and around the world. with its investment and professional success, we currently have penciled in the growth rate for the u.s. this year and close to somewhere in the high three's for europe. the downside risk emerges from the confidence in europe more than it would be in the united states, and the impact of energy costs which is greater in europe than it will be in the united states. there is some impact, and it is probably too soon to say that the numbers will come down and importantly looking at the two year story, one should remain sanguine with a high degree of caution about the predictability of that.

with respect to the global outlook, and that is what market seemed to be reflecting with the current information that it has, that things could change rapidly. we say about the outlook, there is a high degree of uncertainty, so one wants to have portfolios that are liquid and agile. jonathan: does that mean more cash? tony: a little more, not to say sell everything, of course. we think right now, maintaining flexibility. this might mean choosing more liquid assets but staying in and invested but simply choosing more liquid assets. in the credit markets, and institutional marketer could choose in index because of the -- an index because the quote depth tends to be razzed -- rather large in comparison. jonathan: always wonderful to catch up to you. 20% of pimco. you would've noticed the headline on the sports pages, but i think they are relevant.

the reason i think this is important is because the accusation has been leveled at sporting organizations for the last past how many decades that they have allowed autocratic regimes to legitimize themselves by allowing them to host events like these, the olympics, formula one, that needs to be discarded if it will take place in russia and these finals as well. tom: i think it is important particularly with your serious knowledge of those. london is a conduit and i make jokes except it is not funny. what does chelsea do and what does mr. abramowitz do? jonathan: there have been calls to sanction him. what -- you can see that there are some people in the u.k. asking for that is saying test for that to happen. tom: i wonder where we finally click and. jonathan: there are more to come. tom: to mr. johnson's clarity,

he has said this is it and let us go and others saying that they are very dependent. jonathan: it seems to be the europeans holding back a little bit stale. futures down .9%. this is bloomberg. ♪

jonathan: key feature of the price action in the last 24 hours, the s&p 500 yesterday, at the close, positive. this morning, same story in the commodity market, we are down. wti, $92.20. it finished positive yesterday. what is this a measure of? this is arguably a measure of the worst appetite to compromise their own economy in an effort to compromise vladimir putin's. for me, yesterday, the

administration said the quiet bit out loud. "we don't want to compromise global energy when the economy is recovering." that is why we have a turnaround in crude. you can see the data in ukraine. the gas flowing freely into europe. it is picking up. yesterday and today. tom: no question. bloomberg charts showing a maritime, the disruption is pipelines and delivery of hydrocarbons across the black sea. jonathan: let's talk about bonds. $157. we went through the fed speak. 50 basis point move potentially next month. we get a feeling not much has changed at the fed at this point. we are still in between that

range. lisa: frankly i was surprised yesterday was that the fed might get more dovish. inflation is running at the hottest pace since the early 1980's. that is their priority. anything in ukraine will exacerbate that impulse. jonathan: not on the radar, should be. china. vowing to boost economic support for the economy. rick reed is also obsessed with the shark closest to the bow. a chinese effort to stimulate its economy. lisa: they have added the most stimulus to their economy in this past week. they may hold the key to a quicker resolve of the russian- ukrainian conflict. xi jinping and vladimir putin had a phone call.

how much does this percolate into something where russia get support from xi or the opposite. jonathan: let us continue. tom: this could be a two hour conversation. we don't have time for that and neither does dan, editor of foreign affairs magazine, which barely describes what he has none on china. get a subscription on foreign affairs magazine and use their website. you have been going 24/7. i want to congratulate you for the piercing essay of what is next. tell us what douglas of london says about mr. putin. >> this is a great piece by someone involved in these kinds of challenges. what doug london looks at is one

of the ways in which this could prove to be a much more complicated victory for black americans -- four vladimir putin in this case it is really about the kind of insurgency they see in ukraine. doug london and many others in the national security apparatus know how well challenging it is to address that even when you have overwhelming firepower that would bring a military victory quickly. you have talked about other ways in which this is a much more complicated outcome for prudent -- for vladimir putin. the domestic opposition at home, the effect on the russian economy. even as we see the scenes of russian troops coming into the city, the longer term ramifications are much more complicated. this coming insurgency in

ukraine complicates this as well. tom: we have done our best to keep up with foreign affairs magazine. here is the headline. ukraine zelensky calls for negotiations with putin. based on your counsel of foreign relations resources, will mr. putin "negotiate?" daniel: there has been no sign through this low running crisis that he is satisfied with anything less than his demands. the u.s. government saying from last fall putin had the most extreme's objectives, objectives you could think of when it comes to ukraine. lots of people were trying to think through this from his perspective. a lot of this did not look rational. there were reasons why negotiation, excepting some type

of half victory seemed much more sensible from his perspective and that led a lot of people to argue. those predictions he was going for everything proved to be much more present. this bears on china and what is happening with xi jinping. we don't know what the world looks like through putin's eyes. he has been very isolated these past couple years with very little contact with the outside world. the picture could look much much different from the way we imagine. we ran a great piece a couple weeks ago. they talked about how dangerous it is when you have this isolation among leaders, especially strongman leaders who have an incredible amount of control. you see the same thing with xi jinping. you can imagine what would be rational to us but it is much

harder when you don't have the interaction you would have had in normal times. lisa: if the west is dealing with an irrational figure, does xi jinping hold the only key to a quick resolution? that sanctions won't have a logical consequences because of the lack of rationality? daniel: sanctions have failed to deter this kind of action. the u.s. was public in describing the kind of sanctions. they work very hard to bring the europeans on board. that has failed to deter putin in taking these steps. it is hard when you have a leader set on this kind of action to use sanctions to deter it. this suggests there will be a cost for other leaders who may be thinking of it and certainly

xi is one of those leaders that european and american policymakers have in mind. there is lots of speculation now about how chinese policymakers, what they are taking away from what is happening in ukraine with taiwan and other potential actions in east asia. the u.s. government and european governments are trying to suggest that the costs will be quite high. even if militarily this is something that is plausible, it may not be advisable if you are a chinese communist party leader. you have concerns. economic growth, legitimacy with your own population. lisa: according to chinese state tv, xi jinping is urging russia and ukraine to negotiate. hard to tell how hard they are pressing on some resolution to this. do you have a sense of how closely aligned russia and china really are versus just a

marriage of convenience? daniel: they have been converging in lots of ways that would have surprise observers 10 years ago. so many reasons why you expect national tensions to crop up between these countries. we are talking 50 years this week since president nixon's visit to china which really marked the diversions of the soviet union and china after they were more aligned. you have natural geographic and economic tensions. at the same time there is a marriage of convenience, a shared interest in disrupting the u.s. led order and alliances and help changing the way the international system works. as long as the two c common objectives in that regard, they will work together. we see a lot of anxiety in beijing about what this means. they don't want to create this norm of territorial sovereignty

being violated. they talk about sovereignty all the time. they don't want to live in a world in which they are economically isolated, with only allies like russia and north korea. this has been much more complicated than the narrative of an easy win for the chinese. jonathan: thank you, dan. it is a whole new world at the moment. companies are going to start to adjust to that. the banks in particular. credit suisse joining ubs and cutting, lending against russian debt. that does not mean russian bonds are value less. it means using them as collateral to get lending. some of them, according to the swiss bank, zero lending value for some of those russian bonds. tom: it is very traditional. i stand corrected if i am wrong

but i thought this last night and the nexus between london and zürich is critical here in terms of finance. it is not stereotype of the norms of zürich. i have assets, maybe petroleum, whatever, wheat, and i want to borrow money against them for whatever reason. jonathan: we go through this piece by piece, all these banks trying to work out what it means for them. lisa: trying to have the margin calls now before things get more volatile. jonathan: futures down a half of 1% on the s&p. a bit of recovery on the european equities. this is bloomberg. ♪

>> russian forces are closing in on ukraine's capital. sirens warned residents to take shelter this morning. ukraine's military says they are fighting russian tanks to the north. vladimir putin is shrugging off new sanctions imposed by the u.s. and europe. he spoke with xi jinping today who supports negotiation with ukraine. the biden administration is holding off on sanctions that could disrupt global aluminum supplies. white house officials met with industry representatives and told them there was no plan to target russian aluminum. morgan stanley has disclosed u.s. regulators and prosecutors are investigating various assets of its block trading business. the bank itself is under scrutiny. they are digging into how bankers and money managers carry

out stock transactions big enough to move prices. fallout from russia's invasion of ukraine has reached the highest levels of soccer's. russia has been stripped of hosting the champions league final in st. petersburg. it will now be played in paris. global news, 24 hours a day, on air and on quicktake from bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. ♪

announcer: from the world of politics, to the world of business, balance of power with david westin, weekdays, this is bloomberg. >> we have intentionally scoped sanctions to deliver severe impact on the russian economy

while minimizing the cost to our economy and our partners. our sanctions were not designed to cause any disruption in the flow of energy from russia to the world. jonathan: the u.s. deputy national security advisor, we are catching up with him later this afternoon. on the nasdaq, we are down .7. i went through that briefing yesterday. i watched the whole thing. i went through the whole thing when it was published online. when it comes to energy this is the one area where russia is of systemic importance in the global economy. russia depends on it. we are not going to do anything to disrupt the flow of energy. tom: classic joe biden. it is simple, johnny. does not have the votes.

there are not enough votes in europe to link sanctions. with a real focus on wheat, the usage of russian wheat by north africa. there are market realities here that would cause massive disruption. jonathan: mario draghi said italy could reopen coal plants amid the crisis in ukraine. tom: you wonder where that is coming from. if we have a sustained price, maybe it works out. quiet in the headlines. let's monitor again. independence square, afternoon in kyiv. the russians moving south into kyiv, reporting right now. paul sankey, absolutely definitive in oil. a time and place long ago at

deutsche bank where they were the definitive read on hydrocarbons. we are thrilled at the acuity. paul, i would wait until i see your supply and demand logistics of russia. what are the dynamics of russian oil we need to focus on? paul: europe is fine. ukrainian gas, because of the contracts, european buyers are holding back. [indiscernible] they going to nominate more gas through ukraine, which is incredible. how on earth are these pipelines still running? why didn't ukraine shut them

down? it is difficult to establish. fact of the matter is russian gas through ukraine is still going to europe. hugely important part of the balance. tom: what are some weapons the allies have to stop the cash flow to mr. putin from hydrocarbons? paul: they could cut them off and say we don't want them but they cannot do that. all these sanctions, the germans say don't do that. you are going to cut off our energy. european energy policy has been completely misguided. as a result, europe is powerless. this is the oddest thing about working out what putin would do. number one, europe is so dependent on russian energy. number two, the quality of european and arguably u.s.

political capital is so low. you don't have strong politicians. putin did what putin did. it was irresistible. lisa: we have heard stories about europe trying to find sources of oil in other places. gas and other places, aided by the u.s. how substantial have the efforts been? paul: have you heard of the u.s.? lisa: never. paul: the biggest gas exporter. shell said this monday, the u.s. will become the biggest in the world this year which is stunning. we weren't even getting natural gas seven years ago. unbelievable. europe stumbled into this. shutting down nuclear. i understand building wind and

carbon tax but shutting down nuclear makes no sense. you have left yourself absolutely exposed to putin and look what happened. lisa: in the here and now and what they can do in the next couple months aside from changing policy which will take longer in terms of nuclear energy, how much can the u.s. boost supplies of gas in order to export to europe at a time when there has been disinvestment and a lot of these plants? paul: guess how many terminals there are? zero. what? [laughter] it is incredible. even just to get lng into germany is impossible. they depend on their neighbors. guess what? global lng is not drum tight. china connected enough. they are burning coal.

we are in an energy regression. i don't know what people are talking about about transition. we are going backwards. we will get all-time record lows this year globally. jonathan: that line from mario draghi this morning. they could reopen coal plants. how difficult is it to be sure? paul: [laughter] you are mocking me. i thought putin would just take the east and it was a great opportunity to shore crude. underwater eight dollars later. on tuesday, i thought putin was essentially going to do in eastern, existing territory grab. obviously that was a bad call.

what i would say -- jonathan: that was just payback. [laughter] lisa: [laughter] paul: my friend mark farrow is that jp morgan. jonathan: he is my cousin. [laughter] paul: crude hasn't gone up as much. if you look at the crew chart, this was discounted. still thinking it is a shorting opportunity. i have not been as destroyed as i would have been. the back end of the curve went down yesterday. my short, and i personally traded, was in uso. it did not wreck me yesterday and i am still in with a shot. jonathan: lucky for you we are out of time.

you are a windup merchant and you know it. it will catch up with you. paul sankey. futures down .8. this is bloomberg. ♪

♪ >> the most obvious impact of what we have seen is just a rise in uncertainty. >> we are going to have to deal with this friction with russia right now. >> inflation stock, inflation dynamics is getting intensified. >> we could see prices moving closer to $125 and stay there. >> globally, stagflation is the fear here. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. jonathan: from new york city, for our audience worldwide, alongside tom keene and lisa abramowicz, i'm jonathan ferro. futures are lower by 0.7% on the s&p. we are staying on top of the story as it develops. russian forces closing on ukraine's capital. tom: developing on multiple fronts. we have many reports of sirens were a lot of the western media is.