dani: this is bloomberg daybreak: europe. these are the stories that set your agenda. manus: not giving an inch. ukraine says it won't yield any territory but is open to negotiations. the u.s. house votes to ban russian energy. wild week for oil. prices whipsaw with the biggest drop since november. commodities had there were session since 2008.

it's ecb day. investors look to cruise on the path to normalization. good morning. it's a moment of diplomacy desperation. this is when the world took hold of maria tadeo's interview and said, the ukrainians are open to new policy. they still want membership of nato. that's a hard one. we are risk adjusting. dani: right. this is a market that trades based on headlines. the headlines coming from maria tadeo. manus: to the commodity market. the commodity market imploded. the biggest one-day repricing since 2008. it was a gargantuan gouging of oil that took place, down by 2%. fuel was thrown on top of that oil fire by the ambassador to

the united states saying, we favor production increases. that really helped demolish the price. the oil minister includes water on oil. get the pun? dani: it shows what a harrowing week it's been for investors. it's only thursday today. while you are looking at commodities, i'm also looking at this huge rally we saw in stocks yesterday off of the back of that collapse in commodity prices. the dax was at its best yesterday since march 2020. this is two-way volatility. volatility has surpassed that of the european debt crisis. this shows that markets can move both ways especially when you have an active investor base. manus: one month high on the

dollar-yen for the currency. 10-year gilts, we will get -- -- yields in the united states of america. we are expecting 8%. bill gross says this is the right price for bonds. euro-dollar down. the dax rally by 8%. that gave a floor to the euro-dollar. dani: how long can this rally continue? we have the ecb today. what will that mean for the euro? what will that mean for the dax? still outperforming. the ones who got hard-hit during the crisis are rebounding. we are seeing weaker s&p futures and nasdaq futures. inks will also be in focus today. -- banks will also be in focus today. manus: just a quick line on credit suisse. we had the red line in terms of their exposure to russia.

it's not as significant as some people have feared. they've seen higher credit positions in the short term. $914 million of exposure to russia. that's the critically important point in this. just under 850 million swiss francs of exposure at the moment to russia. limited exposure to belarus, i believe. dani: yeah. that exposure number is from december 31. they have said that they reduced it since but they haven't elaborated further than that. manus: ok. let's move along. we will come back to some of the conversations at credit suisse. let's come back to the main driver of the world narrative, it is ukraine and the market reaction to this ongoing war. the reporters already. juliette saly standing by with the market coverage in singapore. tom mackenzie is on the ground of the polish ukraine dani:

border. let's start with the -- ukraine border. dani: the u.s. house of representatives have approved emergency spending for ukraine. the package covers a boost in u.s. troop numbers in europe and weapons for ukraine's forces. the house also voted to ban russian energy imports over the invasion. bruce einhorn joins us now on this. bruce, what is the significance of the house passing this as well? bruce: it gives house members a chance to be on the record on this. as you pointed out, there's a band that president biden announced the other day. the senate is not obliged to pick up bills that the house passes. chuck schumer, the senate majority leader, said the other day that he would be talking with the administration about ways to go forward to make sure that the sanctions are tightened up. senator joe manchin, powerful democratic senator, has said

that this legislation is no longer needed. joe manchin was one of the main sponsors of one of the earlier proposals. the other thing to note from the u.s. is that president biden's band didn't include uranium. people familiar are telling bloomberg news that the administration is considering sanctions against the russian state-owned energy company which accounts for 35% of global uranium enrichment worldwide. there is still no decision made in the u.s.. there's disagreements in the uranium industry. the mystically, they want the ban. the u.s. doesn't want a ban. an administration official tells you no decision yet but everything's on the table. manus: we have the red headline that the vote had gone through in the house to ban russian imports of energy. what is the real impact here?

we saw a whole variety of estimates. 3% crude, 8% of overall energy needs in the united states of america. what are the ramifications of an official ban? bruce: as you point out, the u.s. doesn't have nearly as much at stake here because it doesn't import that much from russia. much more significant is what europe will do. europe is highly reliant on russian oil, russian gas. it is significant that the u.s. has done this because this is coming at a time when gas prices in the u.s. are already high, potentially a major problem for the democrats in the midterm elections coming up. yet at the moment, public opinion polls show that there is strong support for this even if it means higher gaia -- gasoline prices. whether that support continues, we will have to see. manus: thank you very much, bruce einhorn there with the very latest.

it's been a wild week for oil, has net? flat at the moment. yesterday was the biggest drop since november. the war ukraine is continuing to rattle the market. as well as the uae call for opec-plus to boost production and fast. iraq's oil minister says there's no shortage of crude. >> there's no real shortage. we think that the situation in the price is because of the geopolitical issues. even that, we will take care of that. to make the market more balanced. dani: let's get the latest on oil moves from juliette saly in singapore. what's it looking like now? juliette: a lot calm or when you are looking at it this morning. you've only got a small move coming through in wti crude and brent up by about 1% after we had that big drop that manus alluded to. that was when the omicron

variant was first detected. we saw a drop to 105 after touching $139 on monday. it's been a wild ride for the crude market. we've heard from the heads of opec and chevron saying the same. opec-plus has been shying away from discussing the russian energy crisis. there have been tensions in the grid. the way you will call on its fellow opec-plus members to boost output faster. the ambassador to washington saying they will be encouraging opec to continue -- consider these higher production levels. bullish calls in terms of what the later headlines -- latest headlines we've been following. crude rising to 240 barrels this summer if sanctions on russa continue. golden saying, this is the biggest shock we have seen in the oil market since world war ii. manus: of course, the uae oil

minister came straight out and poured water on that tweet from the ambassador. we stand by the line. we had this rally in u.s. equity markets. you ran through it. how have your markets picked up on that? where has it been manifest? juliette: yeah. we've been seeing asian stocks and bear market territory. a number of these indexes testing multi-year lows. it's been a huge rally. have a look at what you are seeing in japan. having its best day since june 2020, up by 4%. a number of big conglomerates rut -- exiting from russia. china's market looking pretty good into the last hour of trade. we are seeing movement in the bond market. the aussie tenure up by five basis points. we are from the rba deputy governor. he will be stepping down from his job. dani: thank you so much.

that's juliette saly in singapore. ukraine is open to discussing russia's demands of neutrality as long as it gets security guarantees. a top foreign policy aide to volodymyr zelensky told bloomberg. >> many people ask whether the u.k. -- ukraine is ready to discuss. the answer is yes. at the same time, the talks would be about hard security guarantees for ukraine. what does it mean? all the neighbors of ukraine including russia, together with big states such as u.s., great britain, germany, turkey, and others should give strict guarantees of ukraine's security. manus: joining us now is tom mackenzie in poland for us on the ukraine border. bring us up to speed in terms of the situation on the ground. this is where you see the biggest flow of refugees into poland. tom: indeed.

the biggest flow of refugees in europe since world war ii. you speak to many of them, the questions they ask is, when did -- should they expect to be able to return to ukraine? they've left families, jobs, and homes. they've come over here on the border with a number of bags and are having to stay and live in tents and be given handouts of food from volunteers. of course the question then moves to what we are hearing from those political leaders. it's an important conversation that maria tadeo had with that foreign policy advisor to the ukrainian president. the focus on that line about neutrality because that has been central to the set of demands from the russian side. they want to see ukraine kit -- committing to neutrality. the definition around that is going to be important. we know that the russians want to see part of their territory in the donbass treason -- region recognize. there toward terrio escapades

and crime era -- in crimea. we heard from that foreign policy advisor that the aspirations for ukraine to join nato remain. that's going to be hugely contentious for the russian side. maybe at the margins, a little bit of movement in terms of these two sides. a long way to go, clearly. of course, we also have the german newspaper with the ukrainian president who said he wants to have direct talks with vladimir putin to move things forward. there's a long way to go but may be the concept of neutrality, the two sides are coming close to some kind of recognition of what would be acceptable. dani: thank you very much. that's tom mackenzie from poland at the ukrainian border. coming up, pressing pause. the ecb is likely to halt its plans to exit stimulus as it assesses the worst damage to the

economy. manus: we speak to the ceo of jc decaux.

manus: it's daybreak europe. the world's first major central bank policy meeting since russia's invasion of ukraine began and is being held today. the ecb will meet. the central bank assessing the damage of war and how that could inflict on the european economy. the ecb could press the pause button on its plans to an stimulus. we are tracking the narrative for the european central bank.

what is my risk as i go into the ecb today that lagarde hits a massive pause button? >> probably quite high. good morning. what we are going to see is a very concerned president, of course. talking about the impact of the russian invasion in ukraine onto the euro area economy, onto inflation in particular. it's now expected a riot -- to rise a lot further. we are seeing a print 5.8% which is almost three times the ecb mandate and that rate is going to go up. the challenge will be the ecb delivering price stability and bringing back inflation while also lending support to the company. the outlook is very uncertain. dani: all right.

thank you very much. joining us now is lena komileva. thank you for joining. great to have you in the studio. our reporters are likely -- laying out the likelihood that the ecb does nothing. can the ecb take any sort of definitive stands today, given the uncertainties of war? lena: the central bank is in a state of paralysis. the verge of a historic deflationary shock. the ecb doesn't know at this point how deep the growth shock is going to be, how lasting the inflation stock is going to be. we've seen a great deal of volatility in financial markets that shows a systemic fragility. so the ecb does have a very difficult decision here. it has no certainty or visibility. it has no power to impact either growth or inflation.

at the margins, financial consistence -- conditions, it's difficult to see what the right calibration has to be. manus: good morning. good to have you back in person in the studio. nobody knows what comes next in the weaponization of war, do they? they don't know what comes next from russia or whether we will escalate. the euro has been under incredible pressure. this is an additional flesh wound in the inflation story for the ecb to consider, isn't it? how much pressure comes to bear on the currency and the consequence? lena: there are so many variables that the ecb has to consider at this point. the inflation rate is thankfully one of the certainties that we have. the weaker euro will impact inflation expectations, will extend the high inflation horizon. at the same time, the weak euro as of -- is a reflection of the repricing we have had in the euro zone markets.

a week of war has normalized euros on financial conditions. late 2020 levels, over a year of repricing has been priced out. some of the euro weakness reflects the outflow from european bank capital on fears that the war in ukraine is really no longer a local military conflict, it's an international economic conflict, a war between the west and russia. unprecedented economic sanctions. dani: can i talk about contagion? the ecb itself has said to banks, you need to look at your loan books. maybe not direct loans to russia. any sort of second order. how real is that contagion risk for the banking sector in europe right now? lena: that's a great question. absolutely. what we don't know is just how far-reaching the behavioral aspects on financial markets,

the impact of these sanctions are going to be. what the sanctions have done is left unpriced the world's biggest oil importer. the impact on european banks in terms of direct exposure to the high likelihood of russian default, but also to secondary facts of corporates struggling. the fact that russian exports are essentially a liquid asset. the collateral problems are closing in and european funding. this poses a huge dilemma for the ecb. tightening conditions at this point in order to strengthen the euro zone, to inform the inflation outlook is going to have a direct impact on buying capital which is disinflationary. manus: of course. we have a lot more to get to. lena komileva.

coming up, we speak to the ceo of the out for advertising campaign jc decaux. the impact that he sees as the war clouds gather across the global economic outlook. our conversation in just a few moments. this is bloomberg. ♪

dani: welcome back. dani:we continue to look at a market that's rebounding but let's also get to what larry fink had to say yesterday. he was talking about inflation, wasn't he? manus: he was indeed. larry fink says that the russian invasion in ukraine is causing profound changes in the global economy. he warns that higher inflation and an acceleration away from globalization.

the chief economist of g plus economists. i love larry but i don't want to talk about that. i want to talk about the line that you gave us. you defined what central banks have been trying to do for months. they can't tighten in the space of the week. this unfortunate and tragic war has done more to tighten f,'s than anything else. recession and nearer term recession than we think? lena: the recession risk is very much present. that's a supply shock. the impact of the russian more is covid 2.0. there's a negative labor supply shock. now we have a negative global commodity shock. tightening commodity markets across the board, not just in energy. it has been exacerbated from

taking russia off of the back burner of the world. the critical thing is that this is no longer just an acute short-term conflict in the path of europe. this is an economic war. even if the negotiations are successful, and we all hope they are, this is a process, not an event. even at the end of the process, are we going back to the old world of relationships? clearly not. dani: to that point, covid 2.0, this is another crisis of real assets, not financial assets. in the last crisis, central banks went into kiwi mode. they were already very easing. do they have any levers left to pull? lena: it's very difficult to see at the moment. i believe that the ecb and other central banks have to address the issue of russian collateral in the short term. that's going to create problems.

what we've seen in the last few weeks is that we are in a nonlinear, shock prone financial system. even small events or narrow events can have a very big knock on impact. coming into this crisis, the view was that the banking system is very well prepared to absorb the shock of russian default. it's clear now that this is going to have a similar effect on bank liquidity. it's going to have a spillover effect on economic confidence. that's rewriting the script. the other difficulties for central banks is the issue of credibility. especially in europe, negative rates and positive easing. nominal gdp growth is starting to normalize and get back to pre-covid levels. the crisis is going to change the balance between growth and inflation. nominal gdp will still remain. the ecb is behind the curve on inflation. it has an acute imperative at the moment to address the growth and financial risks.

adding more fuel to the fire is going to create a very exciting shock. dani: thank you so much for joining us ahead of the ecb date. coming up, we speak to the ceo of jc decaux. this i if you're a small business, there are lots of choices when it comes to your internet and technology needs. but when you choose comcast business internet, you choose the largest, fastest reliable network. you choose advanced security for total peace of mind. and you choose fiber solutions with speeds up to 10 gigs to the most small businesses. that's virtually everywhere we serve. the choice is clear: make your business future ready with the network from the most innovative company. comcast business. powering possibilities™.

manus: this is "daybreak: europe." these are the stories that set the agenda. dani: not giving an inch, ukraine says it won't yield any territory but is open to negotiation. the u.s. house boats to ban russian energy. commodities have their worst session since 2008.

and it's ecb day, investors look for clues on how the war could derail the path to normalization. a huge rally but it shows how the market moves both ways. the market trading on headlines, how long can it last? we look at futures in europe trading higher this morning. manus: a ferocious turnaround in risk, up nearly 8% pay you look at volatility, going back to almost 10-12 years ago in terms of the level of volatility. money goes into the dollar and out of yen, which is the classic sort of whip around their. it did bounceback 10 basis points yesterday on the of

diplomacy driving through and delivering some developments. a quick snapshot of what went on , they've given us a number on their exposure to russia. the bank signaled 850 billion swiss francs, annette credit exposure to russia at the end of last year. dani: let's get to the bigger story, the war in ukraine is raging on, sending shockwaves throughout financial markets. that's the outlook for the post-pandemic global economic recovery. we've had a list of corporate stead of exit it russian markets, it gets longer day by day. rio tinto, ferrari latest to join the exodus. there's also the concern of secondary impacts and growth -- if growth locally in europe starts to slow. manus: full-year earnings came

out that beat the estimate, the ceo joins us now. great to have you with us. back in the studio in paris. let's start with the global risk that we have, ukraine, russia at war and the world along with the u.s. and the u.k. are grappling with that. is now a moment where you are seeing any reverberations in terms of advertising spent, any consequence at all across the business? >> not for the time being. we are going to be growing at plus 20% in q1, inspecting the fact that the company is getting back to an earlier level pretty quickly. we decided to exit russia back in 2020, almost two years ago.

our exposure to ukraine is white small, only 0.1%. having said that, there's no doubt the impact on the economy will be felt across all industries, but we are geographically diversified. devise a good example, despite the fact that were still 40%, our revenues last year in q4 read the same level as 2019, reflecting -- that's the beauty of our geographic diversification. dani: you talk about the risk more generally of a slow down. i wonder how you are thinking about quantifying the impact of an economic slowdown brought on by the war, given that the range of outcomes is so wide at this point. jean-francois: we tend to

outperform gdp of supply and growth. if there's a gdp contraction there's no doubt it will be hit. people might be tempted to save money rather than spend money. in the past, pre-covid, when the economy was was -- with growing about 3%, we were around 4% growth. especially because of digitalization, which is growing very strongly, we are about 30% of our revenue, nearly 30% is digital. in the u.k. alone, 70% of our revenue is digital. we launched a trading platform about three years ago that is

starting to bring very good revenues and programmatic trading. the impact will be felt, but is this time, impossible to quantify. manus: you have counseled many leaders of many businesses through many crises. everything that you've lived through, when you talk to industry leaders, they're going to come to you for counsel. going to talk to them about the advertising world, what to do and what not to do. as you talk to your biggest science now, what is your advice? would they react differently to christian dior or volvo? jean-francois: obviously during the covid pandemic, especially

when lockdowns were introduced, more than half the population was on lockdown, the cancellations, clients asking to move or postpone their campaigns, it was felt that the world would be back to normal in july or september of 2020, if you remember. we had to bring eyeballs. with the revenue decline of 40% in 2020, having said that, our business category is luxury, fashion, and personal care. it's about 50% of our revenue. consumer demand in china is very strong. we are back to pre-covid revenue

in shanghai. internet is on the rise, 60% plus. we are talking to all these companies all the time. dani: given this uncertain environment, it has been an uncertain one at the while. back at the start of the pandemic you had scratched your 2019 dividend. you are proposing another dividend for 2022. what will it take you to get the confidence to go ahead and start to distribute to shareholders again? jean-francois: the reason we are not paying any dividends is very simple. the industry is in a consolidation phase right now. we expect some companies to be sold, companies which have too much debt. we want to keep maximum financial stability.

we are in a financially very strong position. most investors are buying growth stock. having said that, when we feel there are no longer enough opportunities to grow externally , by acquisition. that's why we want to keep the firepower. dani: are you looking at more m&a right now, are you looking at more opportunities at this moment? jean-francois: yes, we do all the time. two years ago we acquired a significant stake in a company in china, so we divested russia but we invested in china. so we are constantly looking at opportunities, our industry is fragmented and we have to

consider a global position. that's why we decided not to distribute dividends in 2022 42021. manus: you sound like a man ready to get his next deal done inside. where do you believe the next evolution of growth is for you? is it china, latin america, core europe? where does the future lie? jean-francois: core europe is certainly an area we are looking at. south america as well. both regions are still local players, which will enhance our footprint tremendously. at the same time where focused on driving the digitalization. we are investing a lot in data as well. about 90% of online spent, is

only a fraction of our overall revenue for the time being. which is why we feel it's quite important to keep the firepower high. we have a long-term view on the business, we've been in business for more than 57 years, and we want to have critical mass almost in every single region around the world. having said that, we had some arbitrage in russia years ago when we decided to exit. we want to take advantage of the situation where we have a very strong balance sheet and we can leverage our balance sheet in order to make some creative acquisitions. dani: feel free to come and join us again when you start putting some of that firepower to use.

thank you so much, chairman and code cheap executive officer at jc decaux. where does the euro go next? this is bloomberg. ♪

dani: welcome back to bloomberg "daybreak: europe." i'm dani burger in europe -- in london alongside manus cranny in dubai. rallying yesterday more than 1%, posting the best day since 2016. trading off a stronger stock market, trading off signs coming from ukraine. our interview with the top aid of zelensky saying they're

willing to discuss new talks. your thoughts on the euro's action yesterday. >> it was in line with some key moves across markets. we had a tremendous reversal of crude oil prices. to one degree that was sparked by the ukraine-russia situation. also some opec plus, the story from that source and also the oil price. everything tends to move together these days. not just crude oil prices but power and gas prices, those also reversed heavily yesterday by something like 30%. that generally links into risk sentiment and were seeing a rebound. that cut in half or slightly more. the move down around 113 where we were trading before the russian evasion of in crane. far from out of the woods, but

everything is moving and clicking together these days when you have a market back like this. manus: in part, we have unknown risks, what russia might do next in terms of raw materials, maybe even gas. with that in mind, the morgan stanley dip is -- morgan stanley matter is sell the dip. should we be loading up on the back half of this rally to pick up optionality on the risk of another downside swoop? john: that's a great question. i have my hopes that we've seen the bottom in europe, but you can't know. this is the fog of war. anything can happen in any direction that could apply that sort of divergent pressure into the e.u. from its exposure, as you say, on the commodity side of things. for example of russia takes a

step to cut off natural gas as a punishment for sanctions. is going to be a discount for the euro as long as things are not tracing back toward some sense of normalcy. i don't see that we are there yet. i'm just saying we should simply tread very carefully in both directions. i more constructive on the euro long-term in the move toward fiscal stimulus to address those energy and defense priorities they now have. dani: are we still constructive long-term if it ends up being more drawn out? what would it take to derail your forecast for the euro-dollar going forward? john: my short to midterm forecast is nonexistent because i simply don't know how this will turn out. assuming we get to the other side of this conflict, and i'm assuming the schedule is reasonably short, simply due to the pressure on the russian economy.

i think given the current valuation, and what i think will be a tighter ecb and a looser fiscal situation, ecb ready to begin some form of normalcy move out of negative interest rate policy on the others of this, and the fiscal stimulus, keeping more euros at home and investing within the e.u. rather than recycle abroad for yield. manus: we're expecting just under 8%. i know were in the fog of war, the dollar has done a lot of the heavy lifting in terms of haven. on an 8% trend in cpi, is that just a confirmation that yes, they will raise 25 basis points, what do you think the narrative is going to be from the federal reserve? john: it's not a position i envy

. sitting in fed chair powell's seat where you have this galloping risk of further price rises that are going to cramp real growth. they are going to deliver a series of rate hikes and they will be very concerned about the risk of recession if the prices don't retreat, especially for key energy commodities. it's a risk on the way for the fed if we get the 8% handle, if it rises slightly above expectations. let's not forget a lot of the price rises we've seen for key commodities have been happening here in march. there could be a risk of being higher still. dani: given that we have europe potentially looking at rerouting lng, buying from asia, that something em countries are not going to be able to afford to do. how does that go in terms of your playbook in the region? john: em is certainly not

monolithic. we've seen it very differentiated trade within em. some emerging-market currencies have us -- specific currencies that are beneficial from a trade perspective for their economies. they tend to be higher energy use capital per gdp. those who are relied on commodity imports are more risk. any time the dollar is going higher, yields are going higher. there is risk from the carried side. broadly speaking em's have been reasonably stable. a lot of that is the commodities that can be beneficial as an offset to the other risk. it depends on if you're talking about brazil and is commodities portfolio or different country, perhaps india, which has relied on commodity imports to a larger degree. again, not monolithic, and a

varying set of risk, depending on the focus. manus: john hardy, thanks for being with us this morning. we will catch up soon. coming up on programming, the chairman of hugo boss joins us on earnings and the fallout from the ukraine-russia conflict. what that will mean for retail in europe. this is bloomberg. ♪

manus: this is "daybreak: europe." dani burger is in london. the lng market is prime for a global battle for supply and the threat of russia cutting off,

sending people scrabbling for alternative. russia pumps enough gas every day to cover consumption and replacement of may be equivalent of annual deliveries to south korea. let's put it in context. stephen, how realistic really is it that europe can replace russian gas? how quickly could they actually do that? stephen: it would be challenging. the plan to cut their import of russian natural gas by two thirds by the end of this year by importing 50 billion cubic meters of liquefied natural gas, cutting some of their demand through efficiencies, and also boosting renewables and domestic production. just a demand part for lng is enormous, equal to almost the

303rd-biggest lng importer in the world. will that be able to find that spare capacity? that is the challenge there. it is possible dani: dani:. if we work through this, presumably if europe is buying more lng from asia, someone else is going to get less lng from asia. what happens to other markets if europe goes through with it? stephen: exactly. basically europe would be importing significantly more lng at the expense of probably emerging nations, that's pakistan, bangladesh, india. those countries -- if there's enormous new demand, lng is going to rise. that means only those developed nations will be able to afford the lng going forward. likely what's going to happen is

if europe does import all this lng, there were -- there will be less for the emerging world. that will have a wide impact across economies. that will mean that pakistan, india, bangladesh will have to depend more on potentially coal or diesel to power their economies. and that is quite dirty. there are more emissions than natural gas so that will hurt any commitments they have for green goals in the future. dani: stephen, really great reporting. thanks for joining us. let's get a check on the markets as we close out the hour. a rebound in europe, the u.s. is weaker, but huge numbers being posted by european stocks yesterday, stocks up more than 7% for their biggest bout of volatility since the covid crisis. manus: absolutely, and the bar market has a lot to grapple with as well.

between the pimco veteran and the septuagenarian bill gross saying bonds are not priced properly. is the ecb going to take its foot off the gas?

>> welcome to "bloomberg markets." europe. here are your top headlines. zelensky calls for negotiations with putin and said foreign ministers get ready to meet at the high level encounters since the russian invasion. the u.s. house approved over $13 billion in aid for ukraine. a wild week for oil. the biggest drop since november.