>> this is really about stopping market panic. >> challenging for central bankers to manage this conflict. >> we are all trying to figure out what is going on. >> if you look at the ramifications of the market, it is energy. >> the energy treat will be disrupted. this will not be a smooth thing. tom: good morning, everyone. on radio, television, we welcome all of you across the station and worldwide to an

extraordinary week. the news flow in the last five minutes, extraordinary. i want to go to this, and about 2.5 hours, nightfall in ukraine. jonathan: that convoy heading toward the ukrainian capital gets your attention. they have stepped up the invasion in the last 24 hours, the attack has intensified. according to interfax, the russian operation will continue. tom: it is across all of eastern ukraine. we will not go into the details right now, but the protests continue, including at the un's human rights commission, they stand up and walk out on a remote lavrov. jonathan: the foreign ministers say they have asked china to put pressure on russia to end the war. tom: let's fold that into the

markets. italian inflation, moments ago, german inflation, five point 5% versus 5.4. this is an inflation for war. jonathan: yes, equities are lower by .8%. crude is higher through 100. the move you are seeing in italy and germany, in the u.s., treasury yields aggressively lower. trimming rate hike bets for 2022 at the federal reserve as well. tom: let us assume they are rewriting the state of the union tonight. they have got to be rewriting the state of the union paragraph by paragraph given these events. lisa: how do you thread the needle with inflation that is facing consumers, their top

concern from a lot of the approval ratings, with the humanitarian and military crisis: on in ukraine? how does this end? how does the u.s. want to see this and? how far are they willing to go to prevent putin from taking over kyiv given that the sanctions implemented are already pretty severe? tom: a stronger swiss franc. real yield in the u.s. is stunning with a plunge in the inflation view. jonathan: lunching on the right side, aggressively lower. future down .8% on the s&p. the nasdaq 100 down .9%. yields down by seven basis points. i'm looking at the estimate for next week and i only have three. cpi and america.

morgan stanley has an 8 handle. raymond james, 7.8. looking for a step up from the previous month. tom: i am looking at the x-axis to see how far this new inflation lasts. let's go to an informed guest, absolutely brilliant in mathematics. her graduate studies are bulletproof. alicia levine of bank of new york mellon. how has your view of the markets changed given war? alicia: the geopolitical situation in europe with a hot war really just adds another layer to an already difficult environment for equities here. you have that specter of the late 1970's, early 1980's of the

stagflation fear, ever ratcheting down growth, ever ratcheting up inflation. what this conflict does is plays into the inflationary piece. i don't think the oil and gas piece -- the market is assuming flows will stay the way they are and then iran mow, on and it will be fine. what if that doesn't happen? what if we see a disruption? i think you can see energy higher. let's not forget, ukraine is the former breadbasket of the soviet union, a large amount of wheat comes from ukraine, so commodity prices will stay higher. that just adds to those concerns. and a difficult environment for equities. jonathan: are you surprised we are seeing fed action fading this year, getting comfortable with the idea that the fed will

pull back a little bit? alicia: i'm not surprised that the expectations for the ecb have pulled back. the european economy will be most directly hit by this conflict and by the sanctions, and buy some turmoil in their local banks. i think it is more surprising for the fed simply because the inflation fear is broad-based and becoming sticky. that is something the fed will have to deal with first and foremost. the worries about growth will be secondary, they have to do with the inflation piece. an ever increasing oil will not help. what we have seen is the duration that these kinds of factors filter into expectations just make it worse. even if we think it is transitory for a year, it has already gotten into the psyche of consumers and business leaders. lisa: what if we continue to get

this move that rates come down because people think the fed will not move but we see stockmarkets continue to decline because people price in stagflation? what happens in a regime where people say the fed has lost control over inflation? alicia: that is the key question. it is not a great environment for equities. we think we are in a range between the 4100 to 4500 hundred range, which is where we have been bouncing around, until we settle the issue. can inflation start moving lower in the spring, can the fed do it in a way that does not inhibit growth? data on the real economy is coming in pretty nicely for february, so that supports pretty decent growth. i am happily surprised about that. but the range is where we are until it gets settled one way or another. there are risks in both directions here.

i think you will start to see a bid in the large-cap tech stocks as well because that is the safety play, earnings, cash flow, dependability of a business that is divorced from the economic cycle. we are more cautious on the consumer cyclicals. in a rate hiking environment, increasing inflation environment, those are the areas that could hit first. lisa: what are you doing with energy companies right now? alicia: we still like energy companies. we think most of the movie is behind us. given the situation, energy is still the play. you have been bringing this up all morning, the ceo of devon energy, why isn't the u.s. changing its energy policy in the way that germany has? german policy changed radically from what it was over the last decades in response to this.

that is something on a policy basis that would not be a bad thing from the administration to address, simply because it turns out conflicts in places with small percentages of global gdp to affect us. jonathan: wonderful to hear from you, alicia. really important questions including some thoughts on what devon energy had to say. i am a little mystified there has not been some dialogue about boosting output, essentially saying, if they were to reach out and be more collaborative, and may provide some cover. i want to talk about the banks. in europe, we are still down. the bank saying it has no plans to leave russia right now. they don't have any plans to leave russia. down by 11.6%. soc gen is down. in two days, one bank has lost a

quarter of its value. tom: we are seeing mutual funds, etf's saying we cannot trade right now. you wonder how that liquidity issue will pour into central banks. i think we need to understand, we are on so many different fronts on ukraine. i will go down to the black sea. the 400 miles from romania and odessa over to russia, a much greater distance. 400-mile shoreline that is under contest right now. jonathan: things are intensifying. to go back to the bank story, is that the primary way to express yourself in this market on what is about to happen in the russian economy given the stock exchange in moscow is not even open? lisa: if you have one area that

you can trade, if that is where everyone is trading and you have an outsized reaction in those shares -- i we seem similar bets play out in the rates market? people are flooding into government bonds of developing nations because they don't know where to go. that prospect is taking people away from banks. jonathan: 30 basis points above the highs on friday. 1.74, the 2-year. 1.31 on 2's. up more than 5%. 1, 60 five cents. this is bloomberg. ritika: with the first word, i am ready to group to.

russia vows to continue its attack on ukraine until its goals are met. a large convoy of troops are moving toward the capital. the mayor of the city of kharkiv says residential areas are being bombed. more than 100 civilian deaths reported and there could be more. the european union is discussing more sanctions against russia today, now seeking to block seven russian banks from swift. that is according to a draft list of the proposal. one of the banks is vtb, one of russia's largest. the white house had to shift gears for president biden's state of the address. originally, he was going to highlight the improving coronavirus outlook and we band's domestic your days. now the speech will also highlight the russian invasion of ukraine and nuclear saber rattling by vladimir putin. the price of oil cap rising

today. west texas intermediate went to the highest level since 2014. the u.s. and other consuming nations may release 60 million barrels from the strategic reserve, equivalent to less than six days of russian output. shares of target are soaring. the discount retailer reported earnings that will continue to improve on the pandemic related boom that has led to strong gains. wall street expected operating profit in the year to decline. global news 24 hours a day, on-air, and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. i'm ritika gupta. this is bloomberg.

jonathan: live from new york city. one hour, 12 minutes away from the open to. the nasdaq down 5.6%. in the bond market, this is where you are seeing some big moves. 10s, down another nine basis points. 2's, 1.31. euro weakness. i keep coming back to the bank story. it is ugly out there for the banks.

looking at the movers on the stoxx 600 bank index. socgen down another 7.6%. those losses through this week our building. tom: the movement here is important, some real up and down to the market. mark kimmitt will join us in a moment. right now on the state of the union, terry haines from pangaea policy joins us. biden, suddenly a more time president. how does a more time president speak tonight? terry: good morning. i don't think he speaks a lot more differently than he has. there are a few things going on here. they will want to continue to highlight their domestic policy agenda. people want to continue to highlight the nomination of judge brown jackson to the supreme court.

on top of it, people want to talk about the ukraine matter in a general way, what they interested in doing. in a general way, they will want to talk about what is going on in ukraine, but they don't want to have the ukraine situation hijack it. tom: what does he say about five dollars a gallon gasoline? terry: generally speaking, what he does is twofold. continue to use the line, which doesn't wash with the public, that this is up to the fed. secondly, he will talk about a variety of things that they may intend to do from suspending the gas tax, opening up the spr, things like that that will only have a marginal impact. it will not fundamentally deal with things. you will also see over the next two days after the speech, chair

powell being hammered by congress to talk about how the ukraine situation, russian situation might affect fed policy decision. you will not learn anything specific on that but the body language will be really interesting, more so than most of these usual congressional appearances. lisa: i want to touch on what you said on oil prices, there is not much they can do, including the spr release. why has there not been more discussion about encouraging domestic energy companies to drill more? terry: because that is not where the base of the democratic party is, firstly. secondly, the biden administration has demonstrated over the past year a desire to hew closely to where the progressives are rather than, as tom keene may put it, instead of skating to where the puck is going, they want to have

everyone understand that they have particular views of where energy should go. those talking points are not what you suggest regardless of the new situation. that will help inflation stay with us. lisa: there is a short-term idea of trying to stave off the increases amid this longer-term goal of creating a greater energy system. how much do you see a splintering of the democratic party frankly in response to this to say that right now it would not be contradictory to do some sort of encouraging of an increase in production domestically in the short term, even if long term goals have not changed? terry: the democratic party is already splintered on this, will continue to splinter on this. uc centrists, led by senator manchin, pushing that line.

meanwhile, on the other hand, you have somebody like john kerry who thinks that climate change continues to be the worst problem as exacerbated by war. that is where the progressives are. that doesn't resolve anytime soon. if it doesn't resolve, i don't see how you can expect washington to changeover quickly. tom: who does the president focus on tonight, the progressives, liberals, or centrist democrats? terry: by every indication, they will continue to double down on the progressives. that is where they have been for the last year. even the decision to nominate judge brown jackson -- who will be confirmed and qualified -- over judge childs, who was preferred by congressman

clyburn, lindsey graham of south carolina, shows continued fealty to the progressive line. i don't see that changing. they can skate to the puck and flip the script on this but i don't see that tonight. jonathan: looking forward to this evening and the reaction and response to it. reaction and response through the morning from russia and europe. a punchy response from dmitry medvedev on twitter. "today, some french ministers said they declared an economic war on russia. watch your tongue. don't forget in human history, economic bars have often turned into real ones." rhetoric has moved in the wrong direction in the last couple of days. tom: we have not heard from mr. putin, and that is important to hear from. the swiss franc, that is a huge

deal. jonathan: alongside that, this bid into the bond market. the rally in treasuries, bonds. lisa: dollar rallying. how much does the fed come ecb respond by ratcheting back their expectations for rate hikes? how much are people using government bonds of the development world as a haven that will end up being a trap later on? jonathan: inflation speak over the next couple of days. could get pretty interesting. payrolls, friday. lisa: are you watching the body language of jerome powell? i wonder how much people will be parsing out his words, his body language, the way he talked about ukraine to figure out policy. jonathan: the read across for

the ecb may be off here. the fed, much less so. the bond market is taking on rate hikes for 2022. yields down eight basis points. the equity market is done .6%. crude, triple digits on wti.

jonathan: price action for you on tv and radio. equities down .4%, erasing some of the losses on the nasdaq. we give up some of that bid in treasuries. yields lower by five basis points. 1.7736. a bit of a turnaround in equities and bonds. to your yielded down by nine basis points. 1.35 at the moment. backing away from triple digits on wti. up more than 4%. tom: markets on the move right now. what we will do is speak about this more, with a gentleman, early in his career, mark

kimmitt was with the eighth infantry in the army. general kimmitt, the first armored division in germany. he has hands on experience. general kimmitt, thank you for joining us this morning. what will the tank warfare look like in kharkiv, when will the warfare look like in kyiv? mark: first of all, it will not be tank warfare. all of those advances that the russians have with those mechanized vehicles to a great extent is completely neutralized inside the city. these are small streets. even the large ones cannot fit tanks through them. it goes down to a completely different kind of warfare that we are seeing right now on the roads. tom: if we are seeing a different warfare, do you suggest that we will see it at any moments noticed, and with

that, but we see ukraine do better than the last week four hours? mark: we will see. clearly, the ukrainians have done very well up to this point, but it is the first inning in a non-ending ballgame. in the cities, everything they been doing changes. they have the advantage as the defenders in the city, and a lot of the advantages that the russians had are completely neutralized. but it is still tough, brutal combat in a way that we have not seen yet. urban combat, for any military historian, understands it is the toughest, greediest kind of war there is. jonathan: we have heard has to favor the attacker in urban warfare. tell me about the ratio you are thinking about. what kind of ratio is needed?

mark: you take a look at what happened in mosol. 100,000 troops were necessary to go up against isis, about 6000 in there. unfortunately, there is a huge toll on the civilian populations within those cities as well. but for an attacker to win in a city fight, as our marines did in fallujah, takes extraordinary numbers and also extraordinary valor. jonathan: that last point is the important point. how unique is this, when we see these videos of individuals coming from the russian army into ukraine with seemingly very little appetite to attack, and the ukrainian people pushing those tanks back. what have you made of those videos, reporting from news networks around the world? mark: i have seen the ones on social media where the russians

are not coming across well. what we are not seeing are those early insertions done by russian peer troopers into those airfields. those are professional paratroopers, much better trained. but when you are talking about the conscripts that we are seeing on the road that are basically giving up or dying, i think the ukrainians have done spectacularly up to this point. lisa: do you think beer underestimating the morale issue, both on the ukrainian side and on the russian side? mark: i think we have got it about right. i think everyone is surprised at how poorly the russians have done up to this point. much can be explained by these conscripts, who never knew they were going to be thrown into war, and number two, the intent leadership shown by president zelensky, which has shown the

backbone of every one of those civilians in the military and militias. lisa: can you see an endgame at this point? it seems vladimir putin is not giving in in any way, and western i allies are simply trying to remain with the sanctions, clamping down harder on that front. mark: as i said earlier, this is the first inning in a non-ending ballgame. the russians will just continue to hammer and hammer away at you in places such as cities. they don't worry about casualties, don't worry about collateral damage, they don't worry about infrastructure. i would expect his and game will be to go into those cities and destroy the. destroy the buildings, the people, civilians, they don't care. they will continue to flow troops and equipment in there and fire artillery missiles and bond time until they are destroyed.

in many ways, people would say that is really the only and game you can accomplish with this type of warfare. tom: i want you to speak to the public. there is a massive primal scream, just do something. i want to talk about the initiatives here. to fly into western ukraine and deposit a massive force that the ukrainians could use, or to come in through the black sea or others. what is the initiative that america can do now to assist militarily resident zelensky? mark: the main thing is to do what we have been doing, not only as americans but our nato allies, fly as much precision weapons into ukraine as possible, whether it is stinger missiles to takedown helicopters, missiles to take

out tanks, drone warfare against selected targets. but we want to continue this insight ukraine. we cannot be putting americans into ukraine, otherwise, this will spill into nato it will be a much bigger war. tom: what do you do as a general in combat, what would you do with a convoy 40 miles long? is that the job of modern technology and the drones? mark: the problem with that is we do not have air superiority. tom: do we need a no-fly zone? the comment at the moment is we need a no-fly zone. mark: a no-fly zone but not help the ukrainian air force get into the air. it is virtually nonexistent at this point. but no-fly zone would completely change the dimension of this conflict from a war insight ukraine to a war that can spill over into your.

what we need to do more than anything else is see if we can get those ukrainian helicopters in the air. as we say in the military, 40 miles of vehicles is a target rich environment. we have seen them destroyed, as we did in the goal for, where we destroyed about 10 miles of vehicles, and it would be pretty easy, but the russians have air superiority. we have to take that away from them through anti-, things like stingers. but i don't think that will happen in time. jonathan: we would love your assessment of the base case of how this turns out. eurasia group said we continue to see the most likely outcome as a regime change and russian political control over the entirety of the country. what is your conclusion at the moment? mark: i think that is probably where it will end up, if these peace talks on the belarusian

border don't accomplish anything. wars don't end when the last person dies. it ends at the negotiation table. the sooner we can negotiate russia out of ukraine, the better. lisa: general, a lot of people are talking about the fact that russia is a nuclear power. nato came out and said there is no need to change the nuclear weapons alert even though russia has taken steps on that front. how concerned should we be, can we shrug this off? mark: i don't think we can just shrug it off. i will tell you, while vladimir putin may be suicidal, he is not stupid. you knows that a nuclear exchange with not only be the end of not only his regime but could completely sink the russian federation. jonathan: we appreciate your time. we would love to catch up with you soon. general mark kimmitt.

some headlines from cctv. china calling on russia and ukraine to find a solution through talks, citing a talk between chinese and ukrainian foreign ministers. tom:, it is very fluid about to the general's point, you have india, china -- what i would say is the military operation going into 4:00 in kyiv is front and center. the military has really come in. jonathan: suspending all russian securities from trading from wednesday, that is from georgia force. rt being taken down. fifa, formula one, that country

increasingly becoming isolated. lisa: how long before it becomes politically toxic to do business with russia, even before sanctions are legal prohibitions come into place? jonathan: jamie dimon called himself a patriot. tell us the rules, we will follow the sanctions. the real question, do you have a moral obligation to step back from doing business with russia even if the sections don't require you to? that is what you have to ask the leaders of these companies. lisa: we have seen different approaches with big oil but i imagine you will hear this from other companies. jonathan: down .4% on the nasdaq. yields down six basis points. 1.76. crude, $100 a barrel. ritika: up-to-date with news from around the world. the mayor of ukraine's second

largest city, kharkiv, calls it a war to destroy the ukrainian people. russia stepped up showing up she cities overnight. residential areas are being hit even though moscow says it is only going after military targets. meanwhile, a large convoy of russian troops is approaching the capital of kyiv. joe manchin was to encourage more domestic energy production. he is planning on weeks of hearings for energy production. facebook and tiktok are trying to curtail propaganda of russia's invasion of ukraine. the channels are run by sputnik and russia today. the ship that caught fire while caring for thousand volkswagen vehicles to the u.s. has now sunk. it sank off the coast of

portugal today. the ship had a number of luxury cars. an international boycott of russian vodka is spreading across three nations. steps may be largely symbolic. the guy from russia counts for about 1% of total boundaries imported into the u.s. global news 24 hours a day, on-air, and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. i'm ritika gupta. this is bloomberg. this is bloomberg.

>> i'm all in favor of finding a solution, but how can you

negotiate with someone who's tanks are rolling toward kyiv, who is bombing innocent civilians? i think it's impossible at the moment. that is the reality. tom: the prime minister of the united kingdom. he visits two countries on the russian far abroad. right now, we will look at kriti gupta with a chart on food. >> we have been talking about the readthrough from the russian invasion on ukraine. we should be talking about grains. ukraine and russia making up a quarter of the world's grain supplies. my chart of the day shows the spot index near its all-time record. blue circles show the previous peaks. going back to the 90's, every peak has been whether driven or a harvest crisis.

this time the supply exists, but because of transport costs coming out of the war zone, the market is treating it like there is no supply at all. that will have a readthrough do things like cereal, beer, think about companies like general mills, anheuser-busch. tom: greatly appreciated out this morning. it was bailout nation, a combination of barry ritholtz, writing a book on the financial crisis. leave it to him to do the collation of the sum of all of our fears. i love the research. you line up the sum of our fears going back to december of 1941. pearl harbor, tet offensive, madrid bombing, saudi aramco

bombing, on and on. what do markets do given these fears? barry: the immediate response, the fast response is an emotional spasm, overreaction, typically in opposite direction of what the prior trend was, but then cooler heads prevail -- prevail. what is the actual economic and corporate impact of these assassinations, wars, terror attacks? it turns out, for the most part, it is a modest impact. after an initial stumble, markets stabilize and resume their prior trend. tom: if i am in and etf, fund, it has exposure to russia, i just wait for it to become unfrozen? i guess that is the perspective. barry: it depends on whether it

is an index or an active fund. i was heartened by the news from msci yesterday that they are considering tossing russia out of their emerging market index. what may end up happening is russia gets downgraded to frontier nation status which is just tiny compared to the trillions of dollars in emerging markets issuances. when you look around the world, what is russia's stock market relative to the rest of the globe? a percent, 1.5%? not that big of a deal. eventually you'll have the opportunity to liquidate or rotate into an ex-russia fund. lisa: it is all the ramifications for oil. wheat, as we saw from kriti. i wonder at what point you take stock of these input costs and

say this feels different. it is the fed, yes, but they have lost control of some of these inputs that have nothing to do with policy and have to do with supply chains and human labor. barry: the fed doesn't have control over chip manufacturing, control over vladimir putin's or objectives. -- war objectives. this is not the sort of thing that can be affected by fed funds rates. the concept of a half percent increase, where there was a ton of chatter, you will not see anyone talking about that for a while. the bigger question is what this does to gdp, inflation. i know transitory has become a dirty word. unless you think this wwar will last a year or two, this is likely to be over in a couple of months, and things should start to go back to normal. that is what typically happens.

we will see alternative sources of energy. i like the bloomberg headline today, the cure for russia's power is green energy. that is how you really hurt russian global ambitions, take away their source of financing. lisa: in the short term, things will be bumpier, because that is a longer-term solution. from your perspective, what has to happen to change your view that this will end like other geopolitical risk upsurge is, that it will be short-lived? barry: on that list that tom mentioned earlier, including the u.s. entry into war to, arguably the worst war in human history. from pearl harbor, about 154 days for the market to bottom, another 300 days to regain its pre-pearl harbor highs. not to downplay the human

tragedy, the horrible things happening in ukraine, but i year -- one year after world war ii, the markets shook it off. unless there is some terrible miscalculations, they should not spill over into europe, the u.s. should not be dragged in. this should be a somewhat limited war. we can do what we can to cut russia from the global finance system but there is no appetite for boots on the ground. tom: we have to leave it there, thank you. headlines from china. lisa: cctv in china, a senior diplomat talking about the issue in ukraine, with the ukrainian president. so lenski coming out asking that shiner pressure russia to stop the invasion, saying it is a priority to prevent harm to civilians as the war expands. saying that china is extremely

concerned about harm to civilians and that china up all the respect and sovereignty of all nations. significant words from a nation that has been relatively quiet on this. china and russia have been somewhat allies of convenience as a response to their trade relationship and geographic relationship. how long does that last in a time when people are looking for maximum pressure? tom: an improvement on the tape from -200 on the dow, now negative 60. the russell is up four. the vix decisively coming in from the high 32 level, so a better tape. you see that expressed in yields, as well. oil, brent crude, 105, down to 103.22. goal pulling back to 1918.

a better tape as we enter that final half hour before we open up for treating. at 12 noon today, but the state of the union later tonight, william cowan. this is bloomberg. good morning. good morning.

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>> the equity market recovering a little bit this morning. the countdown to the open starts

right now. >> everything you need to get bloomberg: the open with jonathan ferro. jonathan: live from new york city, we begin with the big issue. a massive russian military convoy. russian forces will continue their military operation until they meet their goals. president putin pushing forward despite sanctions on energy. a shipping giant suspending their shipping saying, they were indirectly being impacted