dani: this is "bloomberg daybreak: europe." these are the stories that set your agenda. manus: energy stress. russia threatens to cut off the nord stream one pipeline. metal and nickel hits another record, surging above $80,000. the lme gives an extraordinary

reprieve to short-sellers. plus stocks tank as marty's climb. the european stocks 50 and nasdaq fall into bear market territory. 86,000 dollars for a ton of nickel on the lme this morning. we are up 200% in two days. this is parabolic. this is the black swan of black swans. good morning. dani: good morning. i had to do a double take and check myself to make sure this was nickel and not a meme stock. it is a short squeeze. it is also emblematic of what is happening across the board in commodities. these moves, be it nickel, gas, oil, wheat, continue to march higher. manus: and the lme taking emergency measures to allow holders of short positions to

avoid delivery. this is extraordinary moves by the exchange. it is a question we should ask our guest of today. where's the counterparty with the commodities? who holds the counterparty risks here if we have to make these margin calls across the lme? would banks have the exposure or do we have the capital? that is the question. i want to show you the funding stress. this is at. you talk about parabolic commodities, this is about squeezing funding that you saw in 2011 but we are not at the extremes of the pandemic. but the cost of funding stuff in a tight market is rising. dani: is -- if that is from the funding output, there is also an economic cost of the rising prices in commodities. if these last, investors fear this does real economic damage and that is what markets are telling us.

when it is breakevens in the u.s., the u.k., germany all hit records yesterday, does that mean that the fed is now hitting a dilemma where inflation is rising but economic guidance and output is going to fall? breakevens are high but spreads are low and real yields taking a turn. manus: those breakevens suggest that inflation could turn into stagflation shock. we know that parabolic schism within that on the soft metals, let's have a look at some of the red. you have brent up 3.6%, saying that there is not enough spare capacity to produce nickel. bold is up 2000 dollars as easy goldman sachs raised their three month price forecast by some 18%. you are seeing an 18 month high on the growing inflation narrative in the gold market.

danny, what have you got? dani: don't bet on a turnaround on tuesday. weakness continues in europe after $1 trillion was wiped from the global cap yesterday. dax, which entered the bear market yesterday, down another 1%. the u.s., it is nasdaq futures suffering the most, down 0.7% in the premarket section -- session. manus: let's get to our top stories. maria tadeo is in brussels covering the russian threat to cut off oil to europe, bruce einhorn is covering the u.s. reaction, and jules is in singapore with the latest on the risks. what is the latest in dubai to combat the oil markets? dani: russia has threatened to cut off its oil supply via nord stream one, and the move which

would be retaliation to sanctions, could drive consumer prices higher. the eu said it is working to cut the dependence of russian oil and gas by 80% this year. let's bring in our european correspondent for this. how real is this threat to further weaponizing gas and oil? maria: this is the thing. we know that nord stream 2 politically is dead nord stream one is still operating, and it has been operating at full capacity. yesterday we heard from opec saying that they do have a right to capture sanctions, so the west is not being friendly when it comes to russia. this is the first time that russian sanctions were introducing hints of cutting off flows. the timing of it is interesting because just a few days prior, the german chancellor came out and said in a written statement,

that at this point germany cannot afford to not have supplies of russian energy. he says we are not in favor of a full environment that has been floated by other allies of this coalition supporting ukraine because we need it for our everyday eating for industries in germany. -- heating for industries in germany. and today they are releasing a guidance on which they can bring down reliance on russia, but the reality is that when you speak to officials, they say this is still something that will weaken one nation from another. you cannot just unplug and switch up so quickly and renewable energy is not there yet. manus: thank you very much on the language used by the russians. meanwhile to the u.s. they are considering legislation to ban russian oil imports to the country.

the representatives could soon vote on this and the support is bipartisan. bruce, the u.s. stands ready to go for isolation in terms of the unilateral move on energy. strong bipartisan support? bruce: yes. there is indeed strong bipartisan support. top democrats favor this, republicans are in favor of this, they are following up on what we heard from the situation in germany. it is a lot easier for americans to do this. the u.s. import very little oil from russia so there would not be that much hardship that this would impose on americans as it would for germany. this is something that we know that there is a framework agreement. we know that it is likely that we will see action in. the president actually doesn't even need congress to take action here. president biden has the

authority to ban russian imports onto his own. this legislation in addition to the ban would include other things such as requiring the u.s. trade representatives to try to get russia suspended from the wto. it is likely that this will pass and president biden will probably sign it. unclear how quickly that will happen, but it could be fast. dani: thank you very much. that is bruce einhorn. we are going to juliet for asian markets, but we have to talk about what nickel is doing right now, just surpassing 97,000. this is a doubling of the price in nickel in one day. it is hitting $100,000. i cannot even keep up with these moves. manus: we have got to pause for

just a moment and reflect on this. we are going to bring jules into this conversation on where we are with markets because when you see on markets go from $80,000 to $101,000 than 7.5 minutes, let's talk about this. you have managed to put on $21,000 in the marketplace. we need to be careful and understand the ramifications. we need to understand the volumes that have traded through, whether this is a gross exaggeration on the bid, but either way, this is a squeeze and a heck of a squeeze. there are a lot of details we need before we understand the scale of this move made. this is going to have ramifications across. juliet, this is going to have a major impact in terms of risk assessment across the world. juliette: absolutely. we have been watching that in the asian session, particularly with the likes of ev battery makers. a number of those south korean

players that have been hit hard. we are already seeing the impact hitting through the metals space. this is an extraordinary move that has happened in less than 10 minutes. we are also looking at the impact of the rising oil prices and the impact they are having to a number of these oil importing countries. you have got the likes of thailand, which has just opened up its borders. it's prime minister will talk at a meeting tomorrow to discuss the impact on consumers and how fragile this will be to consumer sentiment when you have got these oil prices. that is flowing through to a lot of movement in the currency market. you see upside in the offshore yuan. it is the safe haven amid this and there is a breather coming through on the rupee today which hit a record. let's look at how it is doing in terms of market sentiment. we were already seeing asian sentiment -- asian equities expanding to the sentiment.

flowing through into the likes of china and that lot market has lost around 8% over the past five sessions. the growth target not enough to shore up sentiment in these assets. this is playing through the bond market too. inflation concerns sending yields high and having the 10 up by 10 basis points. manus: thank you very much. the latest in singapore on the markets. let's get back to the oil market and the work in ukraine. the u.s. proposes a ban on russian crude and that is driving the market higher again this morning. prices have jumped up 30% since the invasion. we have goldman raising their 2022 crude estimate this morning to $145. we have covered nickel.

i don't think i have ever seen a commodity market move like that in 35 years. what is happening in the oil market? is this training, is the sphere? what is going on in terms of the moves this morning? >> we have seen incredible moves in the energy markets as well. gas and oil are going to esther monocle -- astronomical levels. we are not seeing what is happening in nickel's and other metals markets, but there is great fear at a moment when the energy markets were already very tight. there was little spare capacity globally for even natural gas or oil. oil inventories are low and we have a situation where we are getting big disruptions with russian oil. the u.s. might formally and imports from their and we are talking about a potential shut off of gas to europe.

this is something that we have been -- would have been unthinkable months ago. dani: thank you very much. that is paul wallace with the latest on commodities and nickel moves parabolic we hire. coming up, we continue the conversation on that. what does that mean for inflation and central-bank policy next? this is bloomberg. ♪

manus: it is "bloomberg daybreak: europe." nickel is now trading to a new record high. it has gone up 200% in two days. there is an explosion in the commodity market.

margin requirements, extraordinary exemptions are being given by the lme. the fact of the institutions we understand in china, one of them has been given an extension. there are emergency measures in aluminum, cobalt, zinc, short positions to avoid delivery. tatjana puhan is a chief investment officer at tobam. do you think there is a sense of panic in the equity and commodity markets? good morning. tatjana: good morning. i can imagine that people are panicking at the moment and it is up for the potential that this is something that we have seen in fx. this is going to happen now on the cost.

there is concern about this and to the extent of the markets. dani: talk to us about how the contagion shows up. it is not just the margin calls but also coal and reports of companies facing margin calls there. what does contagion look like in this environment? tatjana: we have already seen in conversations with credit markets playing out, so we are concerned about that. a scenario of march 2020 that we have seen completely out of reach, so i think we should worry about what happens to the credit market did generally speaking, funding conditions. this has the real potential to become contagion for other sectors as well and to increase

marginal profits now. manus: what is the playbook for 2022? the banks have been slammed because people are applying the 2008 playbook of abandoning the banks. in 2012 i didn't note government debt could be worthless. and in 2022 i want to understand where the connected risk lies. explain to me where you think the biggest unintended, undiscovered risk vortex is here. tatjana: i think today, markets are still underestimating the levels of demand. there is fewer growth in the last 15, 20 years. in particular, certain sectors and economies have taken the movements and this is what is

priced in today to the deviations. the prospects that this consumer spending will continue to drive concern, and this has an impression that we have seen today. this concentration in equity markets and bond markets today. this changes once the investors change meant on the prospects and this is going to come because inflation has come to stay. we look at what is happening right now, and we have assessments and this is going to make the intonation possible. dani: once we understand that risk, we have to protect ourselves. pimco has said last week that commodities are the way to protect yourself in this environment, but this could be a short-term hedge but you could burn quickly. what do you mean by that? tatjana: the surges of commodity

prices, volatility is extremely high. it can be very helpful to test the commodity borders, but then you have to think about that as it comes. when it comes to companies that try to cash their quarters, what you see is burnout and they might see going into hedges and think that they have hedged their quarter, but if on the other side the counterparts came up with more on the duties, then your hedge support is gone. we should be ready for this as well, that your hedge is not going to work out. manus: you said you are worried about the liquidity, i am paraphrasing. you are concerned about the actions and the credit markets. in moments like this, liquidity is my biggest enemy. while the lack of liquidity is often my biggest enemy.

where in these moments of existential risk is the best liquidity and most robust market for me to participate in? tatjana: probably, you are thinking about where to participate at the moment. it is hard to say. i think it is important that you are spreading out and widening your investments at the moment. manus: what about liquid hedge? where is the most liquid hedge? tatjana: in equities at the moment, this is what we have been doing over the duration of last year because equity markets and inflation remains more strict. dani: let's get into that more.

you will stick with that coming up. coming up, we have the european response to potentially higher -- tighter energy supplies. this is bloomberg. ♪

dani: welcome back to "bloomberg daybreak: europe." i am dani burger with manus. still with us is tina fordham --tatjana puhan, chief investment officer at tobam. amid all the market action, bonds barely moving for a bid. our bonds no longer acting as a haven asset? tatjana: bonds in a way are getting low and they have interest rates, it is difficult for them to make moves, and we

have seen relatively positive correlations on paying them on time, so it is difficult for bonds to play out as safe investments than this type of environment. manus: we are all trying to grapple with the risks of stagflation. i am thinking of morgan stanley and what goldman had to say overnight. he talks about an immeasurable number of moves that are going to have to make. can the fed really stick to plans to raise rates, scale back the balance sheet in this level of existential risk? tatjana: it depends on how the fed is in the funding position that we have seen over the past few days. if anything, the fed still has plans for 2020, but it is

getting more desperate now. the fed deal -- still has the moves for this year, but i don't think they would have the courage to do that. dani: this is the thing i struggle with. you look at what happened in 2020 and we just got our forecast wrong for inflation. we are now in an environment where that tail risk is even fatter. our forecasts, modeling, are the even useful to try to figure out this environment and what the central banks are likely to do? tatjana: i think it is useless, to be completely honest. you cannot actually predict that because it is so hard to know. i think in this environment, you just try to be ready for any scenario. it is hard to really predict the

outcome. manus: it sure is. it sure is really unpredictable. thank you very much. our guest this morning, tatjana puhan, chief investment officer at tobam. let's check in on the price of nickel. we have just given a little bit of that back. this is again a 30 standard deviation move. if you want to understand a black swan moment, this is one of them. absolutely no one could have predicted this. the lme took emergency measures to allow short sellers to avoid delivery. there is an exchange allowing customers to avoid delivery on a short trade. dani: it really shows you how we are in a once-in-a-lifetime event, but it does feel like

those once-in-a-lifetime events happen every couple of months, manus. manus: absolutely. of course, russia's threat to cut off nord stream one.

manus: it is "daybreak europe." dani: russia threatens to cut gas to europe. metal mania. nickel hits another record above $100,000 a ton. the lme gives an extraordinary

reprieve to short-sellers. stocks tank as soaring commodities cloud the economic outlook. euro stoxx 50 and the nasdaq fall into a bear market. straight to the stocks this morning, taking another leg lower. euro stoxx 50 futures down 3%, falling into a bear market down more than 20%. from the high. also looking at steep declines in u.s. futures, at lowe's this morning. it is the threat of higher inflation as metals, commodities, as oil markets chart higher, can the fed, can central banks combat this type of inflation? or stagflation? manus: we traded down yesterday 3%. earnings are turning negative for the first time since 2020. goldman sachs say u.s. assets have processed the ukraine invasion rlly so far. morgan stanlsell any rally. you have a downgrade by ubs.

downgraded their global and european equities to neutral. you have oil higher. the world does not have sufficient oil production capacity to replace russia. that is what we are grappling with this morning, make no doubt about it. the threats that russia may close off europe to energy and the u.s. may ban russian imports. nickel is flying high. we have gone from 101,000 to 83,000. in seven minutes we put on $20. in 32 minutes we have taken aback. gold is at the $2000 level. dani: this is extreme volatility. it does all come back to liquidity issues driven by the crisis, the invasion of ukraine. the u.s. has outlined legislation to ban russian oil imports into the country. key lawmakers announced a framework on monday which the house of representatives could

vote on as soon wednesday. for more, bruce einhorn joins us. this is something the u.s. has brought up before. who is likely to be the first to move when it comes to weaponizing oil? >> we know that there is an agreement from the top committee chairman and the ranking members in congress from the house and senate side. we are likely to see a bill with a vote sometime in the next few days. given that this has strong bipartisan support, seems like it is something president biden will indeed sign. yes, the u.s. would be the first to take action here. it is worth remembering the u.s. can afford to do this more than european countries can. the u.s. is a huge producer of oil and gas itself. the u.s. just does not import that much and really does not

import that much from russia. russia counts for 3% of u.s. crude imports, about 8% of total oil imports. this would be something that would not be too painful in the u.s.. you cannot say that for a place like germany, highly reliant on russia. it is unlikely that will see this kind of action from the europeans in the short term. manus: to what extent is that divergence -- olaf scholz has made it clear, it is almost like russia is there energy lifeline. they cannot wean themselves off overnight. the u.s. can go it alone and not just go it alone, pushing russia out of the wto. what do you think biden will go

for? bipartisan support or go it alone because it gives him more ability to backtrack if there is a de-escalation? i think that is the lien on the story today, isn't it? >> that is a good point. this legislation we deterred the framework announced for, in addition to barring imports of russian oil, would include other things such as a requirement that the u.s. trade representative seek a suspension of russia from the wto. as you pointed out, president biden does not have to do this. he could do this on his own. he does not need congressional approval to bar russian oil imports and would prefer to do this from an executive level rather than through legislation. it would give him more flexibility. given this is legislation that probably is going to have really strong support from both sides of the aisle, it may be difficult to just say, well, we

won't do that, we will do this through executive order. clearly pressure is building for the u.s. to do something. manus: thank you very much. the nickel markup, we have been talking about it the past 35 minutes. setting record after record. a short squeeze is happening. supplies from russia. short traders differ the metal delivery. this is surreal. good to have you with us. withrow this word -- we throw this word around, unprecedented, a lot.

i think even by your estimation, this is pretty spectacular, isn't it? >> it is fair to say this is one of the most extraordinary days in the history of the london metal exchange, which goes back 145 years. prices jumped as much as 90% yesterday and we thought that was pretty stunning. we have seen them go up more than 100% again today to more than $100,000 a ton. that compares with, as you said, just about $20,000 not that long ago. it is an extraordinary move. it does not have any president in the lme market at all. what is driving it is a massive short squeeze. there are substantial holders of short positions who are getting stock as prices have moved higher this year. there is not enough inventory

around for them to liquidate their positions, but they have been forced to do so as prices get higher. someone somewhere is losing a lot of money in this trade. they are being squeezed, forced to liquidate, pushing prices higher. it is difficult to see what happens until this short squeeze is resolved. dani: it is really remarkable, not just the moves but the lme allowing traders to defer delivery on main contracts. as you say, it is hard to know where we go from here, but how acute is the risk of margin call up, and more contagion from the moves, parabolic moves, volatile moves, in this one single asset? >> what we reported yesterday evening london time was that a major state owned chinese bank on behalf of one of its clients

had failed to make a payment monday morning. it does not suggest wrongdoing or anything by this bank. it just implies one of their clients is not paid that margin call. they have been given extra time to do that. i think the more prices rise, the more you are going to see traders coming under pressure, prices at levels, and there is going to be no one wanting to sell at the moment. you just want to let this flow-through and that the situation resolved itself. dani: that is martin ritchie in singapore helping us track volatile moves. we have seen u.s. futures, european futures decline this morning. a sentiment continues to worsen as we look at moves in commodities. you see this does not even have

nickel, but there are big moves this morning. manus: take your eyes onto the fx box. this is where implications are beginning to appear. you have the russian ruble. you have a move of 6%. kuroda, the bank of japan governor is now talking about what are the risks around a 1998 style default? is it all really is and the price? that is what we need to ask. we could be looking at a further 20% drop according to some of the analytics in that case. keep an eye on the commodity box. dani: i love how camille almond from ubs described this. we are moving from something community -- commodity driven to

something with growth implications. credit spreads widening as well. let's get to the first word news. >> u.k. lawmakers have voted in favor of measures to toughen government powers and speed up sanctions against russia's tycoons. the economic crime bill looks set to become law after it was rushed through the house of commons. it would prevent hiding behind shell companies. a new study warns even a mild case of covid-19 can damage the brain and effect thinking. oxford university researchers found covid linked to brain damage months after infections including in the recent -- qantas has flagged a period of higher airfares to combat rising fuel costs as russia's invasion

of ukraine sends oil prices soaring. in an exclusive interview, the cfo told bloomberg demand is high enough to tolerate price hikes. >> if we see the oil price continue to stay as high as it is heading into the end of this year, the way in which qantas has historically managed higher fuel prices is to recover that through higher fares. >> the cost of rescuing a failed u.k. energy supplier could jump to as much as 3 billion pounds after wholesale natural gas prices reached fresh records. bloomberg understands the administrator running the company is -- needs more funds to purchase energy for customers. global news, 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. manus: before we go to break,

the hang seng tech index falls 3% now. you are just seeing some of these equity markets. we are also looking at the ruble. the one we showed on gmm many think is the best indicator. indicated 20% lower, 20% lower on the ruble this morning in the offshore market. this is critically important. this could be potentially one of the biggest moves since -- if you look at the i.b., some of the story. this is potentially the unseating of risk. dani: biggest drop since 1998 with the 20% drop. what does it mean once russian markets open? russian stocks closed yet again today. this is the furthest period they have indicated so we will wait tomorrow to see whether they open, but they have kept russian equities closed so far.

manus: equities decline. markets go parabolic. europe continues to see shockwaves in commodities. don't miss our special at 9:30 london time. this is bloomberg. ♪

manus: it is "daybreak europe." the big take of the day has been the global response to russia's invasion of ukraine, highlighting the dangers china would face if it attacks taiwan. are they comparable? let me put an's war looks more like a deterrent than a roadmap. china's foreign minister called

the two different issues. >> the ukraine issue arose from contention between two countries, russia and ukraine. some people are being vocal about the principle of sovereignty on the ukraine issue, undermining china's sovereignty and territorial integrity on the taiwan question. this is a blatant act of double standards. dani: joining us now is our asia managing editor. what lessons should xi jinping learn from the invasion of ukraine especially when it comes to taiwan? >> just like russia wanted a quick, decisive victory in kyiv, most china military strategists see kind of an overwhelming shock and all campaign -- shock and awe campaign in the first few hours in taiwan. overwhelming the island initially. what has been happening, what we have seen in russia is taking

out air defenses and things like that are difficult right off the bat. the fact russia's forces have struggled in ukraine, that is one key takeaway. whether they can actually accomplish a swift, overwhelming military victory in the first few hours of the campaign. there is also the atomic side. manus: we see beijing backtracking from that friendship without limits. wondering what that really means , which was at the winter olympics. are they having second thoughts? china mentioned worries about the indo pacific nato. what are the similarities and what are the differences? >> the fact they use that phrase is worrying in general given it was a similar justification putin used to go into ukraine. it is very different, all

the alliances the u.s. has in the region, japan, south korea, the philippines, mutual defense treaties have been in place for years. the new arrangements the u.s. has which were cited by china yesterday, none of these contain the same obligations that article five obligation that nato has, which is common defense. in that sense they are very different. what china does see as the u.s. and circling china -- encircling china and pressuring it on various fronts. dani: how likely is china's take action anytime soon? >> certainly not anytime soon. xi jinping has emphasized stability above all things this year. in a lot of ways they are probably really not happy about what is going on in russia. it is destabilizing global markets which gives them a lot of domestic headaches.

xi is trying to secure a third term. a precedent breaking third term. traditionally in the run-up, they do not want problems at all. they want everything to go smoothly. an attack on taiwan would be very contrary to anything that is what the chinese normally do in these situations. there is no sign of military buildup or imminent action. manus: thank you very much. the risks for china in taiwan. coming up later today, we will be speaking to the executive director of the iea. this is bloomberg. ♪

dani: it is "bloomberg daybreak: europe." u.s. president joe biden is expected to sign an executive order outlining the government strategy for cryptocurrencies. bitcoin has slumped to below $38,000, slightly higher this morning. we have president biden reportedly planning to sign an executive order, it would outline the u.s. strategy for crypto. what are we expecting from that? >> probably something that says we are really looking at this, thinking about it. a lot of these things have been mentioned or started to be dealt with in other areas, but this is from the white house. it is going to say we are making

this a priority, we have had senators asking about crypto. it has been getting attention because of russia's invasion of ukraine, all sorts of things. they want to now look like they are paying attention. mark: -- manus: we went through the media, bitcoin is inflation hedge, that got busted. bitcoin as a flow of billionaire money, that has been questioned. so where does it sit in the current volatility from your estimate? >> it basically is still in a range of $35,000 to $45,000 it has been for a month. occasionally getting momentum upward, occasionally downward, but the surprising thing is that it has a little bit of a bit at one point over the weekend, but

it was not able to hold that, so it is still looking like it is trading along with risk assets and it is just not able to get a lot of momentum. longer-term people are looking that insane, in terms of momentum, can we go anywhere with this? it is not looking great right now, though it is still holding, 40,000, if you look where it was even two or three years ago, it is still up, but it is in a holding pattern as opposed to really gaining. manus: we are going to have a big crypto conference in a couple weeks, so let's see where it goes. great reporting is always. equities are really pulling away from any kind of a risk move. we have a perfect storm brewing according to morgan stanley. we are down in bear market now. in the euro stoxx 50, dax futures, nasdaq and s&p all getting demolished this morning, the threat of russia not

supplying oil into europe. that is the beginning of weaponization of oil. what comes next? what is the next weaponization move from russia if they go forward with that? dani: some of the more spectacular moves this morning have been nickel. nickel surging more than $41,000 in the span of an hour. then they stalled $25,000 in the span of 20 minutes. extremely volatile moves. taking the extraordinary step of allowing traders to defer delivery on obligations on all of its main contracts. manus: keep an eye on nickel as the cash markets open. also the likes of glencore. look at bp as oil flies higher. the copper exposure, think of these.

how stressed are these markets? dani: they are stressed -- manus: there is the primary aluminum marker up.

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dani: -- anna: welcome to "bloomberg markets europe." russia threatens to cut gas supply to europe by the nord stream one pipeline. the eu planes to slash its reliance on moscow. a reprieve to short-sellers by the lme.