>> good morning. we are counting down to asia's major market open. >> the top stories this hour, a u.s. official says russia wants military equipment from china to support the invasion of ukraine, sparking fears that bay showing -- beijing may undermine help to kyiv. >> russia has already lost half

of the currency resolve -- reserve. >> growing covid-19 outbreak, the move that could cause destruction and adduction delays in a technology hub. we are seeing a u.s. futures rebounding at the open, up .4%, this is after we saw the s&p 500 having the worst week since january a frenzied week of dip buying. we have the dollar on the session, rallying to highs we have not seen since 2020. this is as we are watching volatility in the market, staying above 30. we watch the wti and crude under pressure in the asian session. this is after we saw the first weekly loss since russia invaded

ukraine. we are talking about big fluctuations in the oil space, wti down by 5.5%. brent settling around $512 a barrel. it started around $470 a barrel. when it comes to the 30 year breakeven rate, the highest since 2013. markets pricing in at least a 25 basis point rate hike, coming from the fed this week. haidi: we are seeing the inflationary surge, the pressure coming from gas and oil prices bleeding through to the asian session. muddying the outlook winter conservation and aquatic currency markets. looking at the start of trading,

new zealand is off .3%. a muted gain at the start of the cash session, the downside of about 1%, the friday session. when you look at equity futures for japan and hong kong, looking like we could see a pretty downward day. a jampacked week when it comes to the latest developments in the war and the fed and the direction of the dollar weighing in as well. taking a look wh comes to central banks, that will be key as to how we see that global reaction. shery: we are focused on what will happen with the bed and how the inflationary pressures moving forward. we are talking about a collective insight into the state of the global economy. eight of the g20 central banks are due to meet this week. we are talking about a potential

rate hike in the bank of england, the bank of japan are firmly on the easing path. we have the pboc, bloomberg economics is expecting them to cut the couple are further to free up more cash for banks -- triple r further to free up more cash for banks. haidi: the country has around 117 dollars. a default is imminent when it comes to the nation's debt. we see stock trading remain close in moscow but ruble trading, so much of the volatility indicated at this point, stronger than the dollar in offshore trading. there is speculation going into u.s. and china, high-level talks and what moscow is asking of beijing. even in the imf head saying that the russian sovereign default is

no longer improbable. that would have counted with the assessment that it will not trigger a global financial crisis. shery: to delve into what is happening between washington and beijing because they are set for the first and person talks on ukraine. russia seeks a military assistance from china, let us bring in stephen, and others. let me start with you, what can we expect between this meeting between russia and the u.s., u.s. and china when it comes to this dynamic? >> u.s. and china officials meeting, the highest level of diplomatic and person meeting since the war in ukraine began will be between the national out of the top diplomat. u.s. is trying to enlist

china's support of the sanctions and put pressure on moscow to end the war in ukraine. press conferences with the premier of china, stopping short of condemning russia for the war. essentially, also saying that sanctions are only going to hurt the world economy. jake sullivan will be trying to gauge what level of engagement beijing is having with moscow to end the war. this is against the backdrop of the new explosive story, that is u.s. officials saying that they believe moscow has asked beijing for military assistance. we do not know what type of weapons they have asked for and if -- and what beijing's response has been. the air of neutrality, the

neutral stance on russia annexed crimea back in 2014, that veneer of neutrality that beijing has on moscow would be shaken quite considerably if they were providing military support in defiance of the global sanctions. >> answer get that report which would be really -- as we get that report, that would be really changing the dynamics of the world. what are we seeing when it comes to the nature of this invasion and will we see more sanctions to come? >> more sanctions to come, that is always on the table. we are hearing from the european union, today that they may sanction more russian oligarchs which includes the poster child here. he has ownership of chelsea, the

football club was frozen. all of his assets, in fact including chelsea. that seems to be in training. as far as the eu, in terms of the situation on the ground, there was some quite external warnings -- stern warnings from the white house national security advisor, who was saying that if anything drops on the nato's side of the border, there will be a response. it was from the alliance and he was asking a question along the line if russia, if a straight rocket or something lands a mile within poland. that was his answer. there is a heightened sense of awareness that this is drawing closer, or that russia is

drawing closer to the innate or outer border -- to the nato outer border. >> garfield, we are seeing u.s. features about .6 percent, how does that set us up for the asian session? >> it is being set up for -- think of it has you will. as you will. it is not particularly grim, especially compared to some of the previous weekends we have had. the prospect of the u.s. and china holding talks, there was more noises coming out of moscow and kyiv at different occasions. markets latch onto it for a wild police, a particular development that looks a bit better --

markets latch onto it, watching for a particular development that looks a bit better. treasury futures have been slightly higher, but then once treasury futures looked and saw that stocks were climbing, they turned around and started selling. with stocks up and treasuries facing the potential for a fed rate hike and impacts from other central banks, the moves to tighten policy to fight inflation, it looks like bonds down, stocks up. we wait to see what else might develop on the ukraine front. >> there is always what else. we will be speaking to ukraine's ambassador to japan in the next hour, he tells us whether a diplomatic solution is possible

or more can be done by asian allies. let us go to caroline in sydney -- alan in sydney. >> china has a place a city into lockdown for at least a week with covid -- residents going under the rows of covid testing. shanghai is holding cross services as the outbreak grows. officials discussing whether to divert international flights. mumbai has become the first south asian city to detail a plan to phase out carbon emissions by 2050. officials laid out exhaustive changes to the management of energy, water, air, green spaces, and transport. mumbai's target was a two -- puts it two decades ahead of other's goals. vice president emerging as a top

pick to lead an economic rebound, a bloomberg poll asked investors who they think will be best to steer the country's economy, he is ahead of the may election. global news 24 hours a day, on-air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. >> we look at the rebound of covid cases in china and australia, authorities one of another variant. look for the global economy, ahead of key policy decisions by the fed, and the boj. this is bloomberg. ♪

>> it is hard to make -- it is hard for me to understand what progress vladimir putin is referring to. >> attacking children, civilians, it speaks to one fact only, we continue talking with russia. it does not have an effect on the behavior of the russian army. >> the war in ukraine is a substantial upside risk. especially to energy prices. if price pressures to feed through into higher than anticipated wage rises, or if there are adverse supply-side implications, inflation could also turn out to be higher over the medium term.

>> the toll of the were 80 ukraine, sitting the backdrop of policy decisions -- the toll of the war in ukraine, setting the backdrop of policy decisions. jerome powell says he backs a basis point rise in inflation. the bank of england, money markets are banking on more than 100 in june. china may also move on the mlf rate and an official considers what was an aggressive growth target on the year. >> the biggest collective assessment of a changed world since russia's invasion of ukraine. the fed is likely to steal the limelight. the focus will be on the details and how jerome powell views the

impact of the war in ukraine. the term will may be starting for markets. over the past four major tightening cycles, we never started the process with a correction in stocks and the yield curve this close. for those hoping for powell, there may not be sympathy for officials punishing russia. those are the major events in your week ahead. let us bring in our next guest who says we are in a collision pass of two storms. karen is global head of macro research. it is good to have you with us, we are seeing this inflationary weight in the real economy and a deflationary wave in markets. deciding where we go from here? >> thank you for having me. we are seeing businesses struggle with the math of 1973

plus 2008 equals 2022. the supply-side shock, in a real economy because of the war in ukraine is already in an economy that was exposed at a inflationary before that. on the financial side, we have fragile financial markets. the u.s. financial system is 3-4 times larger than it was in 1973. what we saw in 2008 was the real property was the bridge between the real and financially common. it looks like commodities are playing the role and as we see prices go parabolic in nickel, short squeezes, it is not clear who the counterparties may be. the impact that it may have in the financial system. haidi: when we talk about the

u.s. economy, it seems to be well aware that the u.s. economy seems to be on a solid path. when you look at the inflation numbers, we are growing as fast as the broader economic picture suggests. what about the financial space? how fragile are the financial markets compared to the u.s. economy? >> we are looking across the world, it is clear that europe has the first and most predominant exposure on the real economy side. christina lagarde talking about energy prices and dependence on russian energy. the u.s. has the real vulnerability on the financial side. we have had massive central bank intervention in the covid crisis. we are at near zero interest rates across the dimensions. that does create a lot of potential fertility as we see

russian -- fragility as we see russian assets become subprime and become untreatable in many markets. >> to what extent do we see the fed talk -- caught between the desire to go down the path that has been set and also paying attention to what is also desirable -- not desirable in financial markets? >> they are stuck, as we spoke about the last time, i conversation between the real economy and the financial economy. we were set to see these rises coming in march, 25 basis points was pretty well broadcast. we are trying not to pick the financial economy. -- prick the financial economy. it is deflationary,

recessionary, letting inflation run, and subbing recessionary because mainstreet cannot afford the goods anymore and will push for a rate rise. they are stuck in a tough position and it is hard to see a lot of growth opportunities at the economy level over the next few months. >> what about opportunities at the corporate level? we are starting to see earnings expectations catch a bit of a reality check now. >> any downturn or upturn companies have the opportunity to position themselves to delight customers. we saw ipads take off during the global financial crisis, we will see customers needing goods, attention to the health of your consumer base and understanding what your consumers are under pressure and narrowing down to attend to those needs will be critical for companies from the time of real volatility and

uncertainty. putting the plan in place to manage that volatility. >> is the economic impacts of the pandemic behind us now? at least when you talk about these developed nations like the u.s.? >> as you just discussed earlier on the broadcast, we are seeing china do some limited or lockdowns. it is hard to know how that policy will impact and roll out to the rest of the world. china is an critically important supplier to many of the global markets. with that, it is tough to know, from most markets have moved on and said covid is behind us and it is policy that impacts the economy, the actual case counts which we have decoupled from the policy aspects. it is hard to know if covid is

behind us, it looks away the way in europe and north america. has a impacts from china may continue for some time -- the impacts from china may continue for some time. >> we appreciate your time, you can get a round up of the stories that you need to get your week going, go to dayb . you can also customize settings so that you just get the news on the industries and assets that you care about. this is bloomberg. ♪

>> taking a look at the day

ahead for australia and new zealand, australia's budget focuses on households under strain. that is according to the treasurer, speaking to sky news australia earlier. the commodities boom will deliver a windfall to australia that could exacerbate inflation domestically. they will have to tighten a whole or two train those pressures -- sooner to contain those pressures. >> deutsche bank is downgrading in russia, it will not have any new business in russia and that it reduced its exposure to the country since 2014. it would remove the i.t. hub which employs more than 1500 staff. >> commerce bank as pulling back from russia, the bank has stopped doing new business in

the country and is winding down is saying transactions while complying with sanctions. it said that the exposure to both russia and ukraine was manageable and has been reduced in recent years. >> jp morgan is the largest counterparty to new portrays of the chinese tycoon caught in an unprecedented short squeeze. about 15,000 tons of nickel short position over 150 thousand tons is held over the counter position at jp morgan. a company would've owed the bank over $1 million in margin on monday. coming up next, a sudden resurgence in covid infections has prompted a lockdown of multiple cities including the technology company. -- a technology company. this is bloomberg. ♪

>> achieving a growth rate of around 55 is at debility at a high-level equivalent to progress that will not be easily easy -- that will not be easy. there must be support for macro policies. we will make our covid policies more scientific and targeted. in terms of ukraine china believes every country's territory should be respected. we should make efforts to support russia and ukraine in

reaching a cease-fire. if the u.s. truth to ease export restrictions on china there would be an even larger trade volume. >> the national people's congress. virus cases are spiking across china with 17.5 residents of shenzhen put into lockdown until march 20. emma, we have seen different levels of lockdowns around the world. tell us a little bit about what this shenzhen lockdown looks like and what beijing authorities are trying to achieve here. >> yes, it looks as though it is a pretty typical chinese lockdown at this stage. it is probably the biggest city, the most significant city since we had china has actually locked -- wuhan that china has actually locked down. they had intended to tread more lightly -- tended to tread more lightly, for example, the

omicron outbreak in january was handled through repeated mass testing, not a lockdown. so the fact that they have locked down shenzhen, such a key city for the technology industry , also one of china's busiest ports does show they are concerned about this outbreak and they want to bring it under control. the way china works, this is about a knee capping the virus outbreak, really bringing it down to zero so they can reopen again before gets to a size like what they have been seeing in hong kong >>, out of control. > the numbers in hong kong. are we seeing any signs of tapering? >> i mean, the case numbers have been coming off from over 31,000 on saturday to around 27,000 yesterday. but it's very hard to tell with the numbers there because they have changed the way they

calculate. they are allowing people to submit a rapid test from home which, you know, a lot of people would not be doing. so i would not put too much faith in the infection numbers out of hong kong, particularly, when you continue to see just rising -- death rising. we have seen very significant for talent is in hong kong. we are still seeing those in the hundreds. >> we are seeing more countries pulling back on virus restrictions. is it too soon given omicron is still raging? >> you have places like the u.s. getting wet of best read of masks -- getting rid of masks. australia as well. trying to move back to normal. the nature of the virus is it that it will continue to mutate. whether that is in the direction of its becoming more like a seasonal flu and less threatening, that is the

greatest hope but not something we can guarantee. we will get new variants. some of those may potentially be of concern. we need to be monitoring that very closely and preparing for that worst eventuality eventualf it does not come to pass. dominant in hong kong. authorities are preparing for the cases to double in the coming weeks.

for analysis we are joined by catherine bennett. we are grateful to have you with us, as always. how worried about you -- how worried are you about the new variant? >> we are worried about the level of infectiousness we are seeing with ba.2. we had warnings from other parts of the world who experienced this variant earlier. we are not so worried in the sense it is not leading towards more severe illness and we have been pushing up the number of people with boosters and that reduces symptomatic infections in particular and takes risk down in terms of hospitalization. numbers rose 40% week on week in new south wales over the past couple weeks. we are still seeing hospitalizations pretty little. they stopped declining. they are leveling out. i think it really is a signal we

are running out of time to get the booster. it will be more important now in australia then perhaps people thought. so that is key. we are seeing some local area restrictions being applied in new south wales, some schools reintroduced mask. s where they are seeing high numbers amongst schoolchildren. they were had -- they had reduced testing. other states, victoria, still had full testing. we might see going ahead extra screening testing, for example, to try to just keep a lid on this so numbers do not rise too rapidly. >> does the emergence of ba.2 give some comfort as to how the viruses mutating and what future variants could look like or is it still a bit of luck of the draw? how easily are we seeing new mutations now? >> i think ba.2 probably evolved

around the same time as ba.1 anyway. so, this is something that was out there. it took a bit longer to get footing in areas where it could take off as quickly as it has. it has is that edge on ba.1 so it is now replacing it. this looks like a cluster of variant ba 1, 2, 3. there is still this potential within four mutation but also we do not yet know what is really going to come out of the omicron wave across the world. we have had higher infection than ever before. there is more chance potentially for mutations. the good news is as different as omicron is, they describe it is very mild. a lot of that is to do with our immune status, the change we are seeing globally in term of vaccine rollout and also passed infection.

-- infections. hopefully, going ahead in the -- even if the vaccine does not cover all variants, the booster does a better job of that with cross-reactive immunity. this hopefully means we will be less likely to see a more verlander -- virulent variant. >> hong kong has become one of the deadliest places because of covid in the world. in a very densely populated area, what are the lessons we should take when it comes to the potential for more mutations from such places? >> having infection in the past and vaccine rollout. the big concern with hong kong was actually some of the most vulnerable people, the older people, did not have the vaccine protection that would allow

outbreak better than it is the rights of people that had booster doses was very low, 25%. it is 50% now but there is a cost with that. boosters are critical when it comes to omicron. >>catherine, we are seeing the w.h.o. trying to find the conditions needed to end the global public health emergency to declare covid more endemic. what do you think should be the criteria? >> well, it is so different in every country because our history of both exposure to the virus and our ability to access vaccines varies country to country. it is really still looking at the risk that hospitals will be overwhelmed. we cannot protect everybody from serious illness or death. but we need to have the conditions right globally where you are not getting crises on

crises where numbers go up quickly if you do not have good immunity and if they include a large proportion of cases that need hospital care and you cannot provide that, then, we are still in crisis mode. i think it will be looking at that type of modeling and the push to look at vaccines, especially the booster, making sure it is available locally -- globally. >> catherine bennett, always good to have your insights. deacon university share in epidemiology. as chair in epidemiology. >> russian missiles hit a military training facility near the polish border killing 35 people and wounding more than 100 after russia warned the convoys of western military aid would be considered legitimate targets raising new concerns about the war spilling over ukraine's borders. the eu is discussing sanctions

on the owner of chelsea football club, roman probe on the bench and other prominent russians. a list of 15 individuals and nine entities includes several energy and mining executives as well as leading media figures accused of spreading propaganda. these sanctions are expected to be finalized later on monday. the imf head says a russian sovereign default is no longer improbable but unlikely to trigger a global financial crisis. russia has the money to settle instead but cannot access it. with russian banks under sanctions russia's credit has faced it downgrades. a u.s. official says moscow ask made during -- asked beijing for military equipment. russia sells more arms to china then advised. it is unclear what equipment has

been requested and how beijing might respond. the u.s. and china will hold their first in prison high-level talks since russia's invasion of ukraine. jake sullivan will meet with the communist party leader in rome monday. president biden's top advisers have been working to increase pressure on china to enforce sanctions on russia. global news 24 hours a day on air and on bloomberg quicktake powered by more than 2700 journalists and analysts in over 120 countries. shery: next, veteran investor margo bs tells us why -- mark tells us why china could benefit. what could be another volatile session in equities. this is bloomberg.

>> there will be in inflation component. i estimate that 7.9% we will probably get very close or above 10% for we come down. that difference will be all because of the dysfunction that vladimir putin's war had on

commodity prices, supply chain shipments. >> chief economic advisor there. morning calls ahead of the age of trading day. u.s. stocks face growing pressure from the commodity crunch. strategists flashed their s&p 500 target for the first time under the month. goldman sees the benchmark ending at 2020 -- the benchmark of 2022 down to 4700. goldman cut its eps growth target down to 5% from eight. >> dollar bonds look like a bargain at this point. bond spreads have jumped over 500 basis points. it crossed a threshold seen only two other times over one decade. em spreads have never finished a calendar year with a negative return. so that does suggest a rally could be coming. emerging margaret invest --

emerging-market investor mark mobius says china will stand to grain -- to gain from the ukraine crisis. >> he said a very strong speech. it is amazing in addition to the military assistance, there will be an escalation of this and basically what we are looking at is that this will be russia's afghanistan. they are going to tie russia down in ukraine for quite a long time. what is that also means of course is europe is insecure. you have already seen the dac and the french market crash. you see europe not in good shape. the good news is other parts of the world are doing very well.

because of commodities. asia more or less is flat with the exception of china which is down. but i think probably china could be a winner in this case. >> you do not think that china at all will pay a price for being shoulder to shoulder with russia at this point? >> they will from a pr point of view. but, they probably will pull back and become more neutral. the reality is that trade with russia will probably increase. it is going to be probably difficult for the west to convince china to stop trading. it's china. but that's an interesting possibility. if that happens russia is in big trouble. >> market veteran mobius to guy johnson. we are now hearing from the china securities journal in the front page report, analysts are

saying china may be cutting it rrr and interest rates in order to stabilize growth. remember, china has an ambitious growth target of 5.5% this year. we are getting those decisions of monetary policy this week coming from the pboc, the china securities journal is now saying that analysts expect the pboc to cut the rrr and interest rates to stabilize growth trying to free up cash as well in china in order for banks to lend more. we are now seeing these lines from the china securities journal. this is bloomberg.

>> you have had a substantial market stress. >> geopolitical risk. >> food prices higher. >> inflation is not likely to roll over. >> it is not slowing. it continues to accelerate. >> the fallout from ukraine. >> this makes a very difficult

situation worse. >> sitting on the sideline is not an option. >> they have yet to stop expanding their balance sheet. >> look at dislocations in treasury. >> they have to move. how long the conflict plays out. >> they have to be careful here. they cannot over hike. >> you have to go cautiously. >> bloomberg tv guests talking about the volatility markets. heidi, we we could see them more when we are headed for perhaps the fed raising rates this week. the expectation is for at least a 25 basis point hike, perhaps more given the hottest inflation in four decades. look at history. you are expecting more volatility but that does not necessarily mean the bull run is over. in the previous eight hiking cycles of the s&p 500 was higher a year after the first interest rate increase every time. you know, we have seen huge

volatility in tech. look at our chart. after rate hikes we have seen an average gain of nearly 21% or so. yes, some people might say we have surging oil prices that will hit the economy. schock has proceeded economic downturns but not -- that has not been the case everything all-time. perhaps there is hope the economy could remain solid even after the fed begins hiking rates. >>shery, when it comes to asia this is a good example of why you need a well diversified portfolio across the region because the historic surge in crude will continue to impact the asian stock markets according to what the situation is when it comes to be importers or exporters of crude and other commodities. we already talked about net moderately exporters the likes

of australia likely to emerge as beneficiaries, seeing that import value windfall. for other nations, more mixed. indonesia is set to benefit as well. there markets are holding up well since the invasion of ukraine. we have also seen strong equity outflows when it comes to markets like india, south korea. these are really current account balances that have seemed to take a beating from these strong output flows as well. >> let's stay with india and get a check of headlines. atm is taking steps to comply with an audit directive of its i.d. systems. -- i.d. systems after the central bank abandoned the fintech platform from taking on new customers until the audit is complete.

>> i'm haidi stroud-watts in sydney. >> i'm shery ahn in new york. welcome to daybreak asia. the u.s. says russia wants military aid from china sparking fears that beijing could undermine efforts to help give. -- kyiv. >>