haidi: a very good morning and welcome to "bloomberg daybreak: australia." we are counting down to asia's major market opens. shery: the top stories.

hopes for a negotiated settlement with ukraine dim as putin says the war will continue until kyiv says it accepts his demands. haidi: the u.s. weighs an embargo on oil. shery: china is grappling with stagnation airy pressures from russia's war in ukraine. haidi: let's get you straight to the markets. traders are getting set for another volatile week as we continue to monitor what is going on in the russian invasion of ukraine. the u.s. dollar -- the appetite for havens helping to raise that gauge the highest since july 2020. we will watch for a reaction when it comes to asia fx in particular. downside in new zealand, 0.3%. sydney futures up.

we did get the u.s. session lower on friday the s&p 500 dropping very everything -- we will watch for some of the miners and ag names trading in sydney. in the rejection of a multibillion-dollar takeover. [indiscernible] the second offer has now been rejected and there are indications there will not be another offer made. the 10 year yield -- we continue to watch bond markets -- so much of the price action has been flat toward safe havens. dollar-yen holding steady as we saw the soaring in the u.s. dollar gauge, the highest since july 2020 on friday. shery: soaring when it comes to

the commodity space especially because it is being exacerbated by the fact that secretary blinken says the u.s. and its allies are considering implementing the oil band on russian imports. at the white house is trying to figure out right now what this means. what will hurt the russian economy or if crude would simply go to other markets and drive up prices. we are waiting to see what will happen especially as pressure continues to grow on the u.s. to hit back harder. haidi: and of course, we are watching russian bonds as well. the fiscal position the country finds itself in amidst all of these sanctions and being shut out all these global markets. russia says sanctions will determine if foreign bondholders will get page. that will determine whether international investors will be able to collect. that is according to the russian

finance ministry. residents will receive their payments in rubles regardless of what the debt was originally denominated in but payments to foreign investors would depend on sanctions introduced against russia. this is just another aspect that we are watching in terms of how international investors, not just domestic players, are going to be affected. shery: that is the issue. the problems of the sanctions. will they only affect russia or will there be spillover effects and the rest of the global economy? the imf warning that russia's war in ukraine and subsequent sanctions will have a severe impact on the global economy especially when it comes to poor households. for these households, food and fuel are a higher proportion of expenses so what this means especially when it comes to a pass-through of rising international prices to domestic inflation and how this also

complicates the picture for central banks. haidi: we talk a lot about food security. soft commodities are something you i've been watching a lot particularly when it comes to the impact on emerging markets. the u.n. food index showing a record high in february. we know that everything from wheat to other kinds of soft and food commodities have been surging to a record. we have already seen a disruption due to the pandemic which has been exacerbated by the geopolitical situation. to that end, china says they cannot rely on international markets to ensure food security. we heard from president xi say that they need to find their own domestic food markets or focus on developing those. shery: not surprising given the russia and ukraine supplying about a quarter of the world. 80% of sunflower oil cargo.

if using mount and look at this chart, commodities soared most on record last week plus 13%, the most going back to 1960. and the longest rally since the 1970's. we have wti topping $115 a barrel. this as we are seeing the flight to safety. you can see the market moves we saw last week. we are talking about the dollar. hitting the highest since 2020 on risk off sentiment. we had treasuries volatilities index climbing the highest in almost two years and not to mention the s&p 500 fell four out of five sessions last week. and we had another strong jobs market -- number in the u.s. this gives rise to what the fed might do and we are watching dollar-ruble right now. the ruble capping its worst week in decades.

and continuing to be under pressure. this as we continue to see ukraine's evacuation efforts in the south failing again is fighting resumes in the city as more firms have joined the exodus from russia while the u.s. and its allies are discussing more action. >> we are now talking to our european partners and allies to look in acorn a did way at the prospect of banning the import of russian oil while making sure there is still appropriate supply for oil on world markets. that is an active discussion as we speak. shery: let's get the details from bill. what do we know about this potential oil embargo? how in-line are u.s. allies? >> this may be the case where the administration is facing a lot of domestic political pressure. there is a lot of bipartisan support in the u.s. congress to cut off russia, russian oil exports.

it is a small fraction of u.s. imports. a biden administration is now in a position of testing the waters with european allies to see how much appetite there is for that. it is certainly -- it would be a pressure point that the u.s. and its allies see at -- as hitting at the pocketbook of russia's treasury. despite the sanctions that are on in the international pressure , russia is still able to sell abroad and it is obviously their biggest export. haidi: we are also seeing the efforts to try to avoid default by putin. what are we hearing about the baton -- about the potential bond payments denominated in rubles? >> bond payments would normally be made in foreign currencies will now likely be made in rubles. it is not clear what exchange rate that would go through at this is seen as one way of

keeping foreign currencies from leaving russia at this point. russians who hold debt denominated in foreign currencies -- rubles at this point but this is another one of those broader consequences of the crack down on russia's financial system that extends beyond russia. haidi: bill with the latest as we continue to watch the developments going into another round of talks. china's ambitious growth this year of about 5.5% signals beijing may have to rely on -- to achieve its top priority, economic stability. let's bring in stephen engle to discuss not just economic stability. the implication is also social stability. we heard president xi talk about the importance of domestic food security. stephen: political stability of

course. the underlying theme in a very politically charged year with xi likely to secure that unprecedented third term. that is the backdrop of all of this. the expected range for the target ahead of the work report on saturday was between 5% and 5.5%. they went about 5.5%. the high end of expectations and well above what most tics -- what most economists expect. imf has growth at 4.8%. it tells me that the work report says it is ready to take bold steps to provide economic security. he says the risks and challenges facing the country's development have increased significantly this year. the harder things got, the more

confident we must be. there is internal and external shocks. we have been talking about ukraine. domestically, they have a lot of issues. if you are going to achieve five point 5% growth, most economists say you will likely see the old tried and true marching orders to the provinces which is infrastructure spending. but they have a debt issue in china. they will have to do all of these measures while also keeping in mind controlling debt measures. what will this mean in terms of cutting rates? and the housing crisis. how will you get 5.5% growth when one of the main pillars is the housing sector with so many developers to halting or having serious liquidity issues? if they are saying they are confident they can hit 5.5% growth, that means they will open up the taps and spend to

reach that all-important stability. shery: and that raises more questions about leverage. stephen engle with the latest on china. let's get to vonnie quinn. vonnie: the european union is calling for fast action to ensure the safety of ukraine's nuclear power plants two of which have been seized. in a letter to the international energy atomic agency, the u.n. urged moscow to return full control of the facilities to ukraine. the u.s. is said to begin a review of the first group of tariffs on chinese imports. of the process is needed to prevent duties from expiring and is likely to bring new scrutiny to their effectiveness. the biden administration has

given no signal of plans to remove the tariffs data showing china is falling short of its purchase demands. the batman reportedly collected more than 101 -- $128 million in ticket sales making its the top domestic release this year. the numbers are helped by warner media putting theaters on the forefront of its strategy after a year of simultaneous releases in cinema and online. 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. i am vonnie quinn. this is bloomberg. shery: we discussed vladimir putin's war in ukraine with an expert on russian strategic studies. curtin university's alexi more bev gives us the view. the cio of cap trust tells us where he is putting some of the

firm's dollars in client assets to work. this is bloomberg. ♪k. this is bloomberg. ♪

>> an extraordinarily strong report. >> clearly a strong report across the board. >> market reaction is about russia-ukraine. >> the escalation.

>> the war in ukraine is going to have some impact. >> a negative supply shock. >> the u.s. economy can absorb what is going on in ukraine. >> it puts the fed in a difficult position. >> it is a delicate task of policy to contain inflation. >> the fed says it is going to be open about gradually changing policy. >> a tough landscaper the market at the moment. haidi: some of our guests on the strong u.s. jobs market and the russian invasion of ukraine will continue to dominate the headlines. the risk of the work may come to a peak on thursday when leaders will meet as the ecb holds its first central bank decisions since the war began. there are a lot of questions but one thing is for certain, the

conflict is definitely inflationary. shery: we will get what is likely to be another red hot uscp i print hours after that ecb meeting. that headlined numbered likely jumping to 7.9% in february as energy costs spiked ahead of the war in ukraine. it will be the last meeting before the march fed meeting where the central bank is expected to lift rates. in china, cpi remain subdued while producer price increases have been slowly abating. haidi: and of course, beijing has kicked off its national people's party congress setting an ambitious growth target of 5.5%. economists say that will have beijing increasing infrastructure spending. more news could also emerge when -- when it comes to the covid zero policy. those are your major events in your week ahead. shery: let us bring in our next

guest whose does he has become more defensive both in fixed income and equity. with us is michael vogelzang. good to have you back. i know the markets have a lot to digest this week but what is giving you pause? michael: well, it is a better question asked the other way --what isn't? there are a lot of challenges for investors. we see a quickly slowing economy and the second half of this year. we see a fed tightening. high oil -- high oil prices. the unknown impact of sanctions. and we have effectively someone who does not appear to be thinking at least with a western hat on to say the least in moscow. we do not know what is going to happen. the reason we become more defensive is because we think

the left tail or the risky side of the world has gotten much more likely larger. while the upside is not interesting. shery: how are you turning more defensive? is that the generally accepted reducing of equity exposure and increasing the quality names? how are you doing it? michael: on our fixed income portfolios, we are getting more worried at the margin about a potential liquidity scare. liquidity is almost always by definition a psychological event. if you think back to march 2020 for example. we have upgraded the quality of our fixed income portfolios quite a bit. we have sold mortgages and corporates. we have increased our treasury exposures given demand for liquidity. you need to be there ahead of time.

secondarily, we have also cut back our equity exposure in our portfolios. every one of our portfolios have been overweight equities to the relative targets for at least five or six years. this is the first time we have gone underweight our benchmarks. that is you have less equity exposure and that is global equity. we have international equity exposure in emerging markets in developed equity. and developed equity. an u.s. equity exposure. we feel the negative outcomes could quite heavily outweigh the positives that we see in front of us today. haidi: there is a popular trade which is basically finding value in china as a hedge and maybe even a haven against what is going on in the rest of the world. you are not in that camp. michael: we are not. it absolutely may work.

the emerging markets particularly, not just china but also south america and so on did quite poorly last year relative to the rest of the world and this year, they are clearly having a bit of a rebound. i understand the impulse. the problem is if we get a full left tail event, if we get something we don't expect or the market is not pricing in, it won't matter where you are. you will not want to be. that is the essence of our discussion. how wide and how fat is that today? but what is really important here is that equity prices have gone up at least in the u.s. since the invasion. not only have we seen increased levels of risk which should bring equity prices down but we have seen equity prices go up. bras, we understand sentiment and investor psychology is negative. we understand that is a resident -- that is a risk to our positioning.

the possible outcomes is worrisome. haidi: as you would want to expect that the outcomes are narrowing and becoming more predictable, it is actually widening. is this -- there is no alternative? is this fomo with people thinking they are adding a barking given how high equities have traded over the last few years? michael: that is a great question. i think what we are seeing is a non-asymmetric risk profile in the market and that is a big word but what we are seeing is the left side or the risky side of the markets today could be a lot worse than the positive sides. the problem is investors in general think of the world in a normally shaped distribution. it is the only explanation i can

have that people have not reduced equity and we have not seen markets fall more than they have. my objective is not to be super negative. we hope and pray that things turned out well and markets go up. i would be a better outcome for humanity. but as risk managers and alligators, we have to be thinking about what could go wrong and the what could go wrong bucket is getting bigger and not looking friendly. we are taking appropriate action. haidi: michael, great to have you with us. michael vogelzang from cap trust. more to come on daybreak: australia. this is bloomberg. ♪his is bloomberg. ♪ haidi: here is a quick check ot

the latest business flash headlines, nestle shutting down business in russia, following the attack on ukraine. it says no new customers will be able to sign up but it is unclear what will happen with existing accounts. the streaming service -- netflix

has been healing through the national media group. the new fake news of law in russia, it announced the service will be halted until it reviews and the new rules, in that messaging, it will remain unaffected. samsung is spending our product shipments to russia -- sus pending all product shipments to russia. taking a look at the day ahead for us really up, agl energies has rejected are renewed joint bid -- a renewed joint bid. and other likely will not likely becoming. new zealand is working up to

reality that its efforts to keep covid out are failing. case numbers surge with covid spread a widening, expect more details and a plan >> these sanca

declaration of war, thank you it has -- thank god it has not come to that. >> i think that there is some strong bipartisan support to a cut off russian gas sales to the united states. it is an anathema that while we are sanctioning them and trying to cripple their economy that we would help them by purchasing petroleum. i think the administration wants to make sure that we work with our allies. >> we are ready for any option,

we are talking about any type of security operations, to anyone. whatever and whoever, if it is the you and or individual countries, we should act together -- eu or individual countries, we should act together. haidi: ukraine and russia have indicated that more talks will happen on monday, but negotiations face huge hurdles. joining us now is the curtain university associate professor. at these negotiations potentially continue, you are saying that the early outcomes are really capitulation by ukraine or a political outcome. what is the political outcome that is palatable looks like? >> i do not think vladimir putin

would want to settle for something mediocre, he wants to have it all. even though the russian military has been having slow gains, they have expected that they are gaining ground and destroy the ukrainian military infrastructure. they have been a colossal damage on the country and it economy -- its economy. it can have the upper hand as the result because he can impose conditions and present ukrainians the options, agree on my terms or we are not going to have any disagreement -- agreement. i think it is about trying to meet halfway. perhaps the kremlin may not be

thinking of occupation of all of ukraine because they will be struggling to get a part of the country. -- central parts of the country. anything that the united states gives will follow and russia will regain control and the remaining parts of ukraine have resolved their no-fly zone. rather than spare them from try to take on the most difficult part of the country, it is a complication with a mitigation because i have been saying reports that one of the members was shot dead in kyev. their is a lot of ambiguity -- there is a lot of ambiguity.

they will not settle on anything less. shery: on other topics of discussion is leadership succession in ukraine, the president has done a remarkable job of rallying support musick lee, what happens if he is captured? or worse, what happens when it comes to the leadership and what is the best outcome to help ford pick? -- there? >> countries who are under siege have opposition. it is one of those objectives that they want to set up because the removal of the head of state can create confusion and i a demoralizing affect. -- have a demoralizing

effect. ukrainians and abroad see him and him as an international hero. i would welcome authorities to consider alternate heads of state. if he will be gone either because he will migrate or if the russians succeed in capturing or killing him, i think that panic will be difficult for the russians. shery: giving your assessment of the military progress of the russia has made a so far, we continue to see this massive presence but russia has suffered from poor planning and logistics. >> it is right. there is a great work going on

and the russians were not ready for an invasion on that scale. they had the russian military in syria on a different scale and a different level. i think the russians have a different understanding when they were -- had a different understanding when they were invading. persian thought he would be greeted as an liberator -- vladimir putin thought he would be greeted as an liberator. there was the exception of the donbass region where they concentrated the majority of their most complicated units. russia changed tactics, they fought as she took vulnerability in the ukrainian defenses. i think a lot of russia's process is happening in the

country where they can find core doors that allow them to connect moldova -- corridors that allow them to connect with moldova. >> can a cut them off from the u.s. and their -- can it cut them off from the u.s. and their allies? >> there is a transition. period. they have a safety button, a strategic error of judgment. the resources as well as global reserves in european banks who they were deliberately withdrawing from. . they have stockpiles in china and that will be the space.

in the short instance i do not think there is going to be any change of behavior. there is a lot of that shelti sentiment in russia and their disbelief are to mobilize the population by showing independent sources as part of their stop the propaganda campaign. there may be some ramifications, these sanctions, russians -- we have to be mindful as well. haidi: it is a long game, isn't it? georgia's president is urging the global community to support ukraine which it says issuing exemplary resistance to russian forces.

we spoke to berg's joe mathieu -- bloomberg's joe mathieu. >> i am not seeing vladimir putin's mind of one and where it stops. i have had the experience of the 2008 war which ended with two regions, 20% of georgia's territory it being occupied -- territory being occupied by russia. in 2005, we negotiated with russia of the withdrawal of russian military bases through negotiation. anything can happen. these is where nothing predictable. we need to support ukraine today. which is really showing an

exemplary resistance to the extremely unjust war and that is what is -- and that is something to be remembered. a few minutes ago, when on an event where thousands of georgians were gathered, the ukrainian president addressed the georgian people with a few other heads of europe. i had addressed to my people right after that. saying that we need to support ukraine because that is the value of georgia, freedom and independence. i think that those are the values that will be defended by the democratic world.

they are destroying countries. we are the democratic countries, we are those who are having freedom, with strong determination. >> are you concerned about this spilling over into georgia? you are right on the black sea where russia has warships and has been staging attacks against the south of ukraine and you share a long border with russia. what is the risk of a long regional conflict? >> we have been occupied in 2008 and we have been our work right after the independence in 1991. we have been occupied in 1921, we have been annexed by russia, we have reasons to be

worried and more reese's to be confident. -- reasons to be confident. georgia has a strong belief in independence and freedom and something that is stronger than these attacks on independent states. haidi: that is georgia's president there. >> a decree signed by president vladimir putin will allow a russia and russian companies to pay for an creditors 80 rubles -- in rubles. moscow's finance ministry says it will determine if individuals can collect on foreign bonds. the international monetary fund's is warning that censures on russia will have an severe impact on the global economy.

economic consequences are already serious given the effect of price shocks especially on poor households. in their quest $1.4 billion in aid -- ukraine requests 1.5 billion in a. id. -- vowing to take bold steps to protect the economy as risks mount. they are trying to ensure that they maintain a social stability by overstimulating the economy. xi jinping also addressed the ccp by saying that china can rely on international markets to ensure food security. china should focus on his domestic food market -- its domestic food market. technology lead developments of the feed industry.

global news 24 hours a day, on-air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. shery: the u.s. weighs a ban on russian oil with allies. more with the impact ahead, this is bloomberg -- more on the impact ahead, this is bloomberg. ♪

shery: you are washing daybreak australia, morning calls ahead of the asian date trade -- trading day. strategist brendan mckenna warning that china has a greater reaction from emerging markets in russia. haidi: good oil prices are higher still, further to climb according to the home group, the head of it says global markets are fully -- are yet to fully price in oil. libya is facing supply problems. oil could still see even steeper aggradation.

this is as antony blinken has signaled that the biden administration are discussing an on bargain -- embargo on russian oil. let us bring in james thornhill, not surprising that it is surpassing the $115 a barrel level. >> i think this may be a wild ride in the oil market. antony blinken raises the possibility of sanctions on russian oil which would be a major escalation in the embargoes that have been slapped on russia. russia clearly is key in the oil market and alongside saudi arabia one of the most -- alongside saudi arabia the most influential partner in opec. we already have some of the

leading commentators on the market seeing it get up into the $200 range this year which will cause major shocks to economies around the world which are already facing upward inflation pressure. this is a serious situation that we will be monitoring closely. haidi: opec-plus has been pretty resistant, is there a ceiling to the price level where they may move? >> yes, i think it is a good question. there is some scrutiny on saudi arabia, clearly, along with russia, we want to put them off to the side although there will be a lot of pressure on them to open up production a little bit more, also we have the

talks with iran which can ease the situation. it is hard to get a handle on, we are hanging over it. we see these talks between blinken and european cows -- powers to see this be an major impact on the market we are not quite there yet. shery: coming up, when it comes to new zealand, that is over. covid-19 cases surging. we will get the details, next, this is bloomberg. ♪

haidi: new zealand -- covid cases in new zealand are ballooning. island joins us with more, how big is -- alan joins us with more, how big is he getting? >> towards the end of last week, case numbers hit 22,000. still pretty low compared to elsewhere in the world, but case

numbers in new zealand was a or close to it. -- zero or close to it. covid was largely eradicated from the community and there has only been 65 deaths in total. omicron has found its way through and it is everywhere and it is psychologically jarring. there are few restrictions in place but a lot of people decided to self police and lockdown anyways. shery: how likely is it that new zealand will further relax restrictions? >> we have seen a bit of relaxation so far and new zealand citizens are allowed to return without quarantine because it is clear with a balance of risks. four cases were found at the border over the weekend, tens of thousands are circulating in the communities. border walls are due to reopen to everybody without quarantine

but there seems to be an acceptance that the government has had its day and towards him is important for the economy. it accounts for 5% of gdp so the finance minister came to see that return or it will take things quite a bit of time -- and it will take quite a bit of time to get things back to where they were. haidi: quick check on the latest business flash headlines. visa and mastercard are suspended operations in russia. this came after the ukrainian president called on attempt to halt all business in russia, each company gets about 4% of that revenue from businesses linked to the country. visa and mastercard sanctions of their businesses are prompting local banks to look for alternative payment systems. and is looking at issuing cards using russia's mirror and china's union pay.

the russian central bank has asked citizens abroad to use cash. warren buffett is moving his investment in petroleum as oil prices soar. bringing the total stake to about 11%. carl icahn has sold the remaining of his stake in occidental. let us take a look at some of the stocks we are watching as we head into the sort of trading in sydney. we are watching a geo, the second is wheaton from the brookfield. we are getting indications that this is probably going to be the last offer to be made in an

attempt to accelerate that transition to net zero. we are watching a local report saying that proxy advisory firms are providing for the australian pharmaceuticals industry. avg mining and the mining stocks to be added to the stacks, watching those and more broadly we are watching any kind of reaction we see in the energy and commodities complex. we have seen some big moves and the oil producers and the australian minors as we continue -- minors as we see it continues to soar. we are talking about china's latest growth target, a very ambitious target and that has implications for fiscal and monetary stimulus. deutsche bank will be on with

us. improving gender equality in japan, that is it for daybreak: austrailia, daybreak: asia is next. this is bloomberg. ♪

haidi: we are counting down to the major market open. shery: welcome to daybreak asia, asian stocks start with a risk of start to trade. booted assesses the ukraine war will continue -- vladimir putin says the crane or will