♪ >> volatility we are seeing is something that gives people pause. >> you are dealing with growth slowing and inflation going up. >> we will see price surprises continuing for quite some time. >> it puts investors in a difficult position that we can't really look to interest rates falling. >> the market is saying that the fed may overdo it. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. jonathan: crude absolutely surging. from new york city, good morning. for our audience worldwide, live on tv and radio, alongside tom keene and lisa abramowicz, i'm jonathan ferro. futures off the lows. crude off the highs. wti, $123. tom: right now, oil coming up a little bit. i am using dollar-ruble as the russian litmus paper. one thing i do want to mention

as we go into this hour, this is a morning where em begins to break. javier blas began to tweet about that, and i would suggest we've got to look at emerging markets and how they adapt. jonathan: just got a headline on some talks between british prime minister boris johnson and the president of the united states. boris johnson saying when he did -- saying we need to do more on sanctions against russia. the u.s. and adminstration saying they are considering banning russian crude. tom: the united kingdom has really been out front on this. not so much how is goris doing, but what is the tact you perceive from your prime minister? jonathan: can the u.k. join them? will the europeans join as well? it is a much bigger deal for the europeans, and that is why i think the reporting team down in washington, the suggestion that if they do this, the u.s. could be flying solo. lisa: flying solo at a time when you see natural gas prices in

europe surge to new record highs. as you pointed out that chart, just a catastrophic move for people who depend on gas in europe, which is pretty much everyone for their heating. you do wonder, does this lead to a stagflationary kind of feeling in europe that is very different than the u.s.? jonathan: demand destruction, how may times have you heard that over the past couple of weeks? lisa: that is the question. what is the threshold where it becomes a self-correcting cycle? lori calvasina of rbc saying she thought we would have already got there. the fact that we haven't is concerning. tom: so much of the things we are talking about is not substituteable -- substitutable. jonathan: what do you do? you spend elsewhere. is that going to be the bigger issue? tom: i think that is the bigger issue. this comes back to the income statement versus balance sheet analysis i saw all we can from our clients, global wall street.

what is the income statement effect to pick on total, in the news in france, and what is the balance sheet affect? jonathan: and the earnings story more broadly. we are down 49 points on the s&p 500. the nasdaq down 180. crude higher by 1.6%. yields aren't doing much, up a basis point on tens to 1.5476 -- 1.7426%. lisa: the big question for a lot of people is what is the offramp for this conflict and in the offramp for the surge we see ongoing in commodities. the u.s. secretary of state tony blinken will be meeting with the president in latvia, as well as the latvian and israeli foreign ministers about an iran deal and

possibly to get an increase in put action of oil, and how to handle this ukrainian invasion. this comes as crude not only surges to its highest into thousand eight both on brent and wti, but also as gasoline surges at a very rapid pace, above four dollars on average a gallon in the united states for the first time since 2008. today, some school mask mandates are lifted, at least for the new jersey and new york city regions. how much do we see the sort of end of the pandemic to an endemic phase? that was a shrug because we are more focused on what is happening in eastern europe. at 3:00 p.m., how much can consumers buffer their finances by just borrowing more? we will get a read on consumers as you start to see a resurgence, good for the banks, but it also speaks to the sort of dwindling savings of a lot of consumers we will begin to have as this conflict drags on. jonathan: in this hour we begin

with our top story, the u.s. administration considering banning the import of russian crude. >> we are now talking to our european partners and allies to look in a coordinated way at the prospect of banning the import of russian oil, while making sure there is still an appropriate supply of oil on world markets. there is a very active discussion as we speak. jonathan: team coverage starts right now with bloomberg's annmarie hordern at the white house and maria tadeo in brussels. are they willing to fly solo on that effort? annmarie: great question. they have really worked in lockstep with european partners come of the united kingdom, even japan to make this sums that was really multilateral in name, and now this would be the united states acting alone in banning these imports. the belittle pressure is intense and washington on this white house. we should note right now, there is an embargo in all but name.

you have refiners in the united states ditching some of this crude. 3% of imports come from russia you look at hardcore crude, 8% when you consider all of the other fossil fuels, but the signs are there that they are looking to do this because you have u.s. officials going to venezuela to potentially make up some of that shortfall. obviously this is a matter of when, not if. tom: in your world, what is the dynamic of going from aaa unleaded four dollars a gallon out to $4.10 or $4.40 or higher? how does that change the dynamic inside the beltway? annmarie: already for months, you have seen poll after poll, what do u.s. consumers say they want? more action being done out of washington, and that is inflation. it is gasoline prices, grocery bills, all of the above. this will make that domestic issue so much harder for the white house. lisa: we have gotten some word

from the kremlin as far as what they are looking for as we all look for in offramp to this conflict, and recently they said that ukraine must amend the constitution, reject claims to enter the bloc and a series of other demands. what you make on the latest out of russia? maria: was a say is the constitution has to be changed in ukraine as it stands because right now it says the country would join the european union and nato in the future. i see if that gets tweaked and the ukrainian government recognizes that crimea now belongs to russia, but also the two breakaway provinces would be part of the russian federation, that would be a good start to stop the russian fighting. these conditions, you would argue this is on a cap double to any country, but the reality is compared to a week ago, where russia was essentially asking for full capitulation, the language is no much softer, and

fact. a lot of this has to do with the sanctions that are kicking in for russia, but this i would argue is a step down from what russia asked for a week ago, which was obviously complete capitulation. tom: what is your reading over the weekend on reporting on the baltic states? what is their vulnerability this monday? maria: every official i spoke with in brussels friday and saturday in the baltics is incredibly concerned. they also point, and we are not talking enough about this, at moldova. they worry about that country and the spillover effects it could have. they want to see more nato troops. they are also very open about a full embargo on russian energy. today, tony blinken is in the baltics. he's been to poland. these are the countries that will tell you that we will sign it any minute from now. jonathan: thank you. there goes another one. levi strauss suspending commercial operations in russia.

i've lost track of the list now. tom: it was a drip -- lisa: it was a drip at first, and it has become a flood of companies exiting as fast as they can. how long before we see parts suspended? how long can russia continue with military operations if they don't get basic supply chain inputs they get from around the world? jonathan: paul sankey of sankey research has some things to say. "is no capacity to increase u.s. oil production faster than already planned for ukraine based on lack of labor, lack of steel and pipes, even lack of cement. any attempt in the short term to increase production will simply increase inflation because capacity would have to be competed away from existing plans." we are going to hear from him in about an hour. tom: this is so important. the key phrase is what i mentioned before on demand destruction, it is a substitution effect, not oranges

or apples, but of labor. mr. sankey is correct that in a constrained economy, you are up against constraints that are on budget -- that are unbudgable. the blended bloomberg commodity index, which is very good mass, i would say not third world as much, we are up 34% on that index off of year-end. what is frightening is the oil component of that in the gold component are like, you go ok, great. the wheat component is a paltry 4%. in so much of the world, that is not the case. that is the kind of tensions we are seeing. jonathan: how does the supply-side respond? it is more difficult than you think. lisa: frankly, there's the issue of whether they can because a lot of the opec nations, forget about domestic production the

u.s. is discussing right now, but opec nations can't even keep up with the targets right now, which really raises an issue of how high can prices go at a time when people evidently want to travel again. do they just cancel their travel plans? jonathan: who would you rather be, chairman powell this week or president lagarde? lisa: obviously christine lagarde has the harder path because of the euro and the increase in inflation or pressure deutsche bank has been talking about. jonathan: euro-dollar threatening to break 108 seemingly at one point this moaning. we recover just a little bit here. crude well off the highs. $123 on wti, up by six point 3%. with tom keene and lisa abramowicz, and jonathan ferro. on radio, on tv, this is bloomberg. ♪ ritika: keeping you up to date

with news from around the world, with the first word, i'm ritika gupta. an advisor with you cain's president -- with ukraine's president says the next round of talks with russia will begin today. that comes as an evacuation from a southern city has been stopped for a second day. ukrainian officials claimed that russia has again violated a temporary cease-fire deal brokered to allow passage of civilians. the u.s. house of representatives is looking at a bill that would ban the import of russian oil and energy products following its invasion of ukraine. the biden administration is said to be think about taking the move all -- the move on its own if it cannot get european allies to go along. more than 16 million people, almost 37% of the total electorate, are said to have already cast their ballots, 11%

higher than the last election. the death toll from covid-19 has crossed the 6 million mark as the pandemic enters its third year. that grim milestone despite the distribution of vaccine that have slashed mortality in many areas. the pace has returned to what was seen during the first year of the pandemic. 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. ritika gupta. this is bloom -- i'm ritika gupta. this is bloomberg. ♪

>> i think there is very strong bipartisan support to cut off russian oil and gas sales to the

united states. it is anathema to many of us in congress that while we are censuring them and trying to cripple their economy, that we would help them in any way by purchasing their petroleum. but i think the admin attrition wants to make sure that we work with our allies. jonathan: congressman schiff over the weekend, catching up on the oil story. futures -0.7% on the s&p. on the nasdaq, down by about 0.8%. yields higher by four basis points. crude up 6%. the main event this morning, a conversation about america considering a ban on the import of russian crude. will the europeans join them? our reporting this morning's adjusting the u.s. whitefly solely for a brief time if indeed they make that call. tom: yes, the aloneness of the united states, do we combine it and say the aloneness of the united states and great britain? jonathan: perhaps the u.k. comes along for the ride. clearly, the dependence of

mainland europe on russian commodities is higher than the two nations we are talking about. tom: we are watching the commodity comp >>. gold up $25 -- the commodity complex. gold up 20 of dollars. right now, christyan malek glezman -- christian mueller -glissman of goldman sachs. i want to talk about a note out from ubs and also what goldman sachs is doing this morning. what are the dynamics of the income statement for the balance sheet that you are focused on? christian: i think it started to transpire what type of russian exposure you banks have, and the larger exposures we've had that have come out. i think for all of those banks,

it might hit the balance sheet and the income statement. on the other side of that, you are looking at the usual impact from trading losses that might come through, and obviously the whole story on that interest margins -- on net interest margins, the idea that higher rates can support this, is breaking away. tom: i'm going to call that over on the income statement as well. do we have exposure here? are we risking write-downs within continental europe? christian: this is impossible to rule out. we have data from the bank of international sediments that shows a decent amount of russian exposure which seems to be concentrated on a few specific banks, but then you have a lot of exposure you might not be able to track which is indirect, via particular loans, via corporate's that might have issues on the cash side, so we might have to through it to fully understand it. then you have the second-order

effects you were mentioning earlier. a lot of traditional businesses might actually have production shutdowns, supply chain disruptions, so that could hit their cash flow. i think the only good news we have is that coming into this crisis, you have seen a significant amount of balance sheet repair both in the banks and outside of financials, which means that the corporate sector is in relatively good health as we are now dealing with this. jonathan: and thank goodness for that because this could be much worse. you have written recently about the difference between equities, fixed income markets, and the commodity market, and the outsized impact of a relative impact shift from one to the other. do you think we fully understand the ramifications and consequent is of some of the flows right now? christian: it is a good point you make. we have a material shift in asset allocation, whereas the last crisis was about long

assets, whereas now we know that financial assets as a whole on equities and credit, they are suffering, so people want to have exposure to real assets, and there's not that many of those. you have the commodities market, but their size is small compared to the financial markets, and there is limited in terms of how much liquidity you can get, and you can have outsized impact on those because these are spot markets driven by supply and demand, very different to the commodity markets that are more forward-looking, driven by expectations. i think the other thing is other real assets. real estate, infrastructure. the type of size of the assets and availability of those with liquidity is very limited, so as an asset allocator, they are struggling to shift those two folios that will be a more important shift in this cycle. lisa: this is as asset price

inflation is translate into real asset price inflation. have we just started on that process, or is that an explanation for what we are seeing right now? christian: you make a great point. the last cycle has driven this major new economy asset price inflation which drove a lack of investment in capital heavy assets, and even some of those assets might have disappeared, and now there is a scarcity of getting capital heavy assets, and this is a process which i think could take a long time to actually build up these investments and these investment opportunities related to infrastructure spending, all of these things. tom: you are on your 14th call this afternoon. not that i know your calendar, but i guess you will get out to even 18 calls. what is the goldman sachs timeline with institutional equity given a war in ukraine? is your timeline three weeks,

three months? do you go out and say short-term is three years? christian: i think you got to take the information as it comes. i think geopolitical risk is impossible for all of us to take a view on, and it is difficult obviously. i think for us, this is definitely an issue just dragging out longer than most people have expected, and there is a risk it will continue the longer it drags on, and we are talking about weeks longer, the more economic damage it will do, and we are learning that as we speak. the good news is i think markets have not been complacent at all on this in the last few days. we are seeing a lot of signs of positioning and aggressive repricing of risk premia. dislocations are starting to emerge for the first time in the last two days. what we are really starting to see is aggressive positioning shifts. probably the next few weeks,

that will create opportunities to maybe lean against the bearishness. jonathan: a long time ago i got my fixed income education from steve major of hsbc and my commodity education from jeff currie of goleman sachs. he would say repeatedly equities are anticipatory asset class. with that in mind, at some point, no idea when or if this will happen, perhaps at some point we wake up on a morning where crude is rallying and energy equities are not participating. that is one to watch. lisa: that is one to watch when people start to book flights and say wait a second come of this price is way too high. i am not go to take that flight. i am going to drive less because of the cost to fill up the tank. how much is that what we are looking for for the breaking point here to break the cycle? jonathan: futures this morning down 0.6% on the s&p. on the nasdaq, down by 0.7%. as the session grows older stateside, equities continue to

recover and yields keep climbing, up four basis points, one point 7751%. crude backing away from highs, up by almost 5%. heard on radio, seen on tv, this is "bloomberg surveillance." ♪

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♪ jonathan: your top story this morning, the united states admitting they are considering a ban on importing russian crude. will the europeans come along or will the u.s. fly solo? we recover on the s&p, on the nasdaq, down just 0.6% or 0.7%. in the commodity market it looks like this. brent and wti absolutely surging overnight would not open up, approaching $140 on brent, now backing away. the relationship between what is happening in the commodity market and what it means for the fed has been totally blurred over the last couple of weeks. we kind of got a good feeling for what the fed might do, and now seemingly no one knows a clue. the quiet period for the fed this week has started. you won't hear from them. tens at 1.7751%, anticipating

this thursday when we get u.s. cpi at 8:30 eastern time, and seconds later you hear from the ecb president. what does president lagarde have to say? let's look at the european names, the european banks specifically. we are down 2.5%, off session lows. in one single month, 30 short days, that particular segment, that industry group is down 25%. it has been ugly. tom: they are in the heart of it, but so much of this is uncertainty, how they are going to market their balance sheets going forward. i get the idea of an income statement effect here. revenues will be down, as we just heard from mueller-gliss mann of goldman sachs. this is either about direct write-downs or second-order effect write-downs. jonathan: and they just maybe won't be able to hike any time soon. do you remember the story? how any people did we speak to at the start of the year, buy

these names, the ecb has -- the ecb is going to make a move. lisa: what does that do to the euro? jonathan: we have not even talked about the swiss national bank, with the swissie through parity for the first time in years overnight. let's get you something will names and say good morning to romaine. romaine: the equity markets are a forward pricing mechanism in theory. the commodity market price is in the here and now, and you are seeing the intersection of both of those worlds here. when you look at the premarket movers, everything to the upside right now is pretty much tied the commodity space in one way or another. all higher in the premarket. occidental shares up about 10% right now. it is not just the big oil majors out there that are moving higher here. a lot of the smaller independent oil and exploration companies in the u.s. also rallying hard. rally exploration up about 6% on the bet or the speculation that

the biden administration's policy position of renewable energy and the restrictions it has on drilling in the u.s. might have to be eased in light of what is going on with the war in ukraine did not a lot of mining companies publicly trading here in the u.s.. newmont mining higher by about 2% in the premarket. maybe it is -- it has really been one of the big underperformers with regards to financials, down again about 3%. everything in the bank space and the financial space lower on the day. we should point out morgan stanley and bank of america have actually fared worse over the last three to four weeks in light of all of the whipsaw we have seen in the treasury market. airbus also on the back foot. the drop we saw from an american airlines last week, down about 25%. not only are the airlines down, all of the major hotels, casino stocks, all lower in the premarket. if you look at one bright spot

not related to ukraine, you will find that in bed, bath & beyond, up 60%. the cofounder of chewy, he also moved into gamestop, maybe he does something big with bed, bath & beyond. tom: 33.67 on the vix. s&p futures -23. right now, our interview of the day on the deepest part of the market in these uncertain times. mark mccormick has been brilliant at td securities with priya misra, talking up the idea of a resilient dollar, and he joins us this morning. i want to get away from the convention because i think everybody is not working -- not worried about a given commodity pair. what are the indicators you see in the machinery of the foreign exchange market, and bring it over to the plumbing of the global financial system? what are you studying right now

to get whispers of where we are heading in terms of the integrity of our liquidity and our solvency? mark: one is the price of oil and what is writhing it get if you look at the fed's composition, this is a supply driven stock. the other side of it is basically the currency basis swaps market. but we are trying to figure out is if published funding stress is coming for the markets, which banks are the most vulnerable, where the balance sheets are the most vulnerable. what is clear is we are trying to see whether or not this is a european growth shock slowly morphing into a global growth shock, and that is where the risks to oil come back in. tom: back in the summer of 2007 and the chaos of 2008, it was libor ois. there are other indicators. that separation of europe and the united states, how tangible is it this morning? mark: it is quite clear you can just look at the basis swaps

across europe blowout, and it is kind of showing you that there is the funding stress manifesting itself across european banks, european assets, so there's a clear divergence. we still anticipate the fed is going to hike in march 25 basis points. the market is still rising in 140 basis points from the fed. there is still concern about whether the ecb can hike rates. it is very clear that we are seeing divergence come through, particularly in the equity market, the funding markets, cross currency markets. all of this has led the scramble for dollar liquidity. cash is king, dollar is king, and that is where markets are gravitating to right now. lisa: i thought it was really insightful from you when you said we have been seeing this race to the bottom of some a central banks. are we going to get the reverse of that comedy race to perhaps a bit more strength led by the ecb? we did see from deutsche bank they are looking for in ecb intervention, a signal that perhaps they are still thinking

about hiking rates to get the euro stronger. do you think that is in order also? mark: i think that is absolutely in play. we left out this idea to buy euro versus early -- versus sterling, quite in favor of the euro versus the u.k., so i think one of the things you mentioned, if you think about what the snb is doing, central banks are using currencies to try to limit inflationary pressures. we had full exacerbation of those inflation are he pressures over the last couple weeks, so what we have is a potentially stagflationary shock. before the ecb, maybe there are more worried now about how much inflation is being generated. if you look at energy prices, if you look at food prices, if you look at the drivers of inflation come of the things that are being inflated now are the biggest components of the basket that we need to be worried about relative to other countries, so i do think there is some merit

here that the ecb can't just shif purely into growth and financial conditions because they need to be worried about losing how much the euro is going to decline and how much impact that will have on inflation going forward. so i think they are repairing to start to think about that. there's risks that the weakening euro does force the ecb to at least move in a direction that they thought may be in the last months. for now they hold steady on balance sheet policy, but you keep the rate hike study. lisa: what about the circuit breaker of the fed becoming more dovish than people previously expected and moving away from the rate hikes people are pricing in? mark: that is important i think for general global financial conditions. i think this is the part where you start thinking about buying a different equity, you start looking for some of the gross assets. this is part of the story that has kind of allowed this massive break between how currencies are trading. if you look at the best-performing currencies this year, equity markets are down,

we had a war in eastern europe, and the brazilian rail, the peso , some latin american currencies are the best-performing year to date. i think with the fed in mind, if you take a little bit off of the caucus from the fed, you have that global financial conditions cushion. the fed could use less balance sheet, where they allow that to be a little bit more supportive. on the other side we have china, who has been stimulating their economy for the last couple of months. maybe if you get less balance sheet runoff, less fed hikes, more china support, and maybe some drawdown in the jew clinical tengion -- in the geopolitical tension, we could start to talk about dislocations of risk assets. jonathan: mark, thank you. mark mccormick of td securities. futures well off session lows, only down 0.5% now on the s&p. on the nasdaq we are down about 0.6%. euro-dollar totally turning around. the dollar index was positive

about 0.8%, now essentially unchanged. crude was much higher, now coming down to 1.20 percent after being through 1.30%. -- down to $120 after being through one junta $30 -- three $130. tom: i am going to go back to deutsche bank last week, which is whatever the outcome is of war, europe is going to spin a lot of money to rebuild out defense, and that is one of the trends here where, where there's not grim headlines, we get a lift. jonathan: this whole market recently trading like a meme stock. do you make anything of this turnaround? lisa: the only thing i can point to is what maria tadeo was talking about earlier, the new demands russia is putting out there.

it does seem like a fairly serious climbdown in their requests. it seems like there's a growing sense in russia that this is a failure for them and that there is some desire to walk away from it. i might be extrapolating too much, but it seems like that was sort of the pivot point for a lot of people. jonathan: so far, the older this session grows, the more we see a recovery on the screen. futures down about 0.6% on the nasdaq, down around 0.7%. tom: again, it is improving. i'm looking at the vix, 35 and ugly two hours ago. it comes in, but still 33.75 shows us the moment we are in. jonathan: i am looking forward to catching up with diana, nomura em specialist. with crude at $120, this is bloomberg. ♪ ritika: keeping you up to date with news from around the world, with the first word, i'm ritika gupta.

the european union is calling for fast action to ensure the safety of ukraine's nuclear power plants, two of which have been seized by invading russian forces. in a letter to the international atomic energy agency, the eu energy commission urged moscow to return control to ukraine. it said missile strikes of europe's largest plant and its recent takeover rn except about. a decree signed by russian president vladimir putin will allow russia and russian companies to take foreign creditors in rubles per it establishes temporary rules for sovereign and corporate debtors making payment to creditors from countries that engage in hostile activities against russia. russian corporate bonds denominated in foreign currencies have plunged too deeply distressed levels in recent days. china has announced a ddp goal of about 1.5% this year, the higher end of many economist -- a gdp goal of about 1.5% this year, the higher end of many

economists. china is warning the u.s. against trying to build what it is calling a pacific version of nato, saying that security disputes over taiwan and ukraine should not be compared. china's for you -- china's foreign minister said the real goal of the u.s. indo pacific strategy was to form asia's answer to the nato, and warned against calls to expand u.s. ties with taiwan. 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'm ritika gupta. this is bloomberg. ♪

>> so whatever, whoever, whether it is the u.n. or any other individual countries, we should act together. jonathan: that was the ukrainian ambassador to the united states this weekend. it turnaround in this market, now down 0.75% on this and become offset those -- on the s&p, off the lows. we have talked a lot about crude this morning. haven't talked much about the cpi coming thursday. bring you the estimates, 7.9% is the estimate for this thursday for cpi in america for the month of february. just to go through some of the individual calls, morgan stanley at 8% for thursday morning. tom: how do you digest that if you are me or you, chairman powell? jonathan: what do you do with

it? what do we do with payrolls? we ignored it. i am not sure you can ignore this thursday. tom: it seems distant away. i am trying to get to tuesday or wednesday within the tragedy of what we see and ukraine. we have not look at the pacific rim. we have not looked at emerging markets, the haves and have-nots of commodities. we do that now with diana amoa, chief investment officer for chris wald investment. let me start with the have-nots of commodities. how grim will this be? diana: early indications definitely point that in a fast resolution, it could be fairly grim for the have-nots you'd we are talking about the net importers of commodities, but also talking about the countries that are highly reliant on

manufacturing, such as taiwan, central and eastern europe, because we are starting to get out of the global supply chain. we are hearing more about factories shutting down because they can't get out of this to the core components they need. tom: the first thing i looked at this morning was what is singapore doing at the junction where the tankers go north, with all of the hydrocarbons and all of the commodities to a blooming pacific rim. how is the broader industry of the pacific rim? diana: you're definitely seeing that play out in financial markets, but also, markets are telling us something. when using about the small open economies that rely heavily on exports to europe, that is going to have a big impact on their

outlook going forward if we continue to kindest -- continue to see the kind of pressures of the last few weeks, and especially if it starts to contract, which is not inconceivable. lisa: where do you think is the biggest mispricing of where we are at a time when supply chains are getting disrupted and we are seeing the price of basic staple foods soar new to -- soar to new record highs? diana: we don't actually have a lot of stability on how things play out from here. the key thing is the price action this morning. we came in with a pretty dire market backdrop, and the last couple of hours, things seem to be turning on some expectations that perhaps those were true. it is hard to really know what sort of premium you need to be putting in assets, so our preference has been too focused on preservation and you will

have a little bit more uncertainty. lisa: if this basically what everybody in emerging markets has been doing because we on the cusp of such a binary situation, that basically people are hiding out to create a liquidity dry up that could be pernicious in its own right? diana: that is one way to look at it, but something we are really focused on is the flow picture. we had the initial knee-jerk short, which markets were fairly fast to price, but in the last week or so, what we have started to see is outflows picking up, and that acceleration of outflows and fairly indiscriminate outflows, so even countries that look like they should be more economically insulated from the fallout on commodity prices, we are seeing money in that space. so until people have de-risk to

the extent that they need to come i think it will be a bit too early to say that people don't have a position here. lisa: at what point does the fed exacerbate this? if the fed hikes rates by 25 basis points, talk about reducing the balance sheet, is it going to become something of a spiral or are we going to see it really take it in stride as has basic a been telegraphed? diana: it has been telegraphed, but it depends upon what broader financial conditions are doing. we have seen tightening and financial conditions in the u.s., but it is only getting us to neutral. if the fed keeps on hiking into very weak stress markets, you might see that spilling over, but to the extent that it is a measured hiking response and there is any knowledge meant that the inflationary dynamics do actually require a hiking cycle, particularly in the u.s., then i think markets should be

able to take that. jonathan: diana, always great to catch up with you. futures have turned around a bit, down 0.6% on the s&p. at session lows, we were down by more than 2%. lisa gave a nod to the reuters story of the last hour. i will redo the headline. "russia is demanding that u.s. see some military action -- that ukraine cease military action, acknowledge crimea and the separated regions as part of russia." it said it would have talks in moment if kyiv agrees to those conditions. tom: to me, that is pretty much what we heard on separate 23rd. -- on february 20 heard. -- on february 23.

jonathan: they also asked for a change of leadership. i do not see that in these demands this morning. lisa: at what point does this indicate a willingness to come to some serious discussions about a cease-fire and how much is basically lipservice? everyone is looking for an offramp and it is getting harder to see one. does this break that narrative even a top -- even a touch? jonathan: we can just follow the news, give the price action. we are down 0.6% for the s&p. on the nasdaq we are down 0.7%, climbing a little bit higher, and the net move on crude, pa ring overnight gains. tom: nice move, particularly in the yield market. we get our first print on the 10 year real yield from when you did the real yield on friday,

-1.00%. on the bond market, surely we will catch up with tony rodriguez, the head of fixed income strategy at nuveen. good morning. this is bloomberg. ♪

>> it is a very tricky environment. obviously market reaction is about russia-ukraine. >> commodity prices have been exploding. >> we think once we get through the volatility, things will tone down. >> the consensus view in the equity markets is that this too shall pass. >> there's a significant cushion of momentum to of zoar this stock -- to absorb this shock. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. tom: good morning, everyone. thrilled you are with us on an eventful monday to the inflation report on wednesday and

thursday.