and make it through this. we have some buffers to eat through before the risk of recession becomes real. >> the market is relatively well behaved. >> the equity options market, things are still business as usual. >> this is bloomberg surveillance. jonathan: from new york city for our audience worldwide, good morning, this is bloomberg surveillance live on tv and radio. futures are up more than 1%. the difference between words and action. tom: it's an interesting monday on so many fronts in the words and action off the pacific rim in china. in europe, everybody's got their guard down after an emotional weekend. we are waiting for news but still, front and center is a war. jonathan: let's start with the war in europe and the fact that russia is 15 kilometers away from the polish border.

the same time, the chief of staff of the ukrainian president said that perhaps diplomatic thoughts were going in the right direction. talk is one thing, action is quite another. tom: we wait for the action here from moscow but from the allies and nato as well. i would suggest there is almost a pause and we simply wait and we do that around all of the economics including fed day coming up on wednesday. jonathan: over the weekend, several reports that the russians have asked the chinese for help on the military side of things. today in rome, the national security advisor along the top diplomat out of china, those talks are ones to watch. lisa: i think it's the most important aspect of the day because does the u.s. come into pressure china to move further away from russia? how much is that the next step of tightening the screws we see from the u.s. administration when the sanctions that have been implemented are considered incredibly harsh and how much

does that ratchet up the global tension. jonathan: china has its own problems. i look at the crew this morning, is that in line with the appetite we are seeing in the equity market. lisa: i can't answer that question. is it because people are more optimistic about talks or because the global economic slowdown the people are expecting has accelerated by the prospect of ongoing supply chain snarls stemming from china? i don't know but i know it significant and it comes as stagflationary is absolutely at the wrong moment. tom: brent crude is back after the huge technicals. it's worth watching and food emotion as well. chicago rices up 69% since 2016. that does not correlate with

thailand but it shows rice is beginning to move. jonathan: i'm looking up to catching up with jp morgan. equity futures are at session highs up more than 1%. equities are up in crude is down. look at this in the bond market, up 10 basis points, almost 2.1% on tens and two through 180 in the fed is a couple of days away. lisa: people are bringing up their forecast for how high the terminal race for the federal reserve may be given how much inflation we are seeing and how long it is persisting. that's what we should watch. as you said, the u.s. national

security advisor is meeting with the top lip -- diplomats from the chinese communist party. they are meeting in rome. how much do they give a conclusion as to how much china is helping russia and how much they are willing to come in and how much they are willing to adhere to the sanctions u.s. is threatening to tighten the screws further to impose more significant sanctions on china? if they don't comply with the ongoing sanctions the u.s. is put into effect? i'm interested to hear about the new forms of guerrilla warfare on the cyber front come on the media front and what's being used in the financial world. how much has this change the conversation on the ukrainian war about how it war is fought in 2022. ukrainian finance ministers meet on their budget for next year and have to come up with a

tougher fiscal policy and how much do we hear about spending more to support the euro area? borrowing costs are rising and it's a perfect measure. if you look at the total volume of negative yield and debt globally, it has fallen to a year and low back to 2015. it gives you a sense of how much and how quickly bond yields are shifting. jonathan: coverage starts right now. the talks between the u.s. and china today, how significant is this? >> it's significant because you heard from jake sullivan, the national security advisor and he is going to rome and sitting down with the top diplomat from beijing. what he signaled over the weekend is there there has been this pressure on china to make sure they are not coming to the aid of moscow on the economic or

military front. the news broke that russia is looking to china to come in and help militarily. we don't know what the ask was. but it comes as russia enters its third week of the war and they have yet to capture the entirety of ukraine which is under the purview of president putin. this is time for the united states with serious pressure on beijing but china recently had its brand-new foreign policy decorum with putin saying their relationship has no limits. the ukraine test will decide whether the relationship does have limits. tom: ukraine people have limits and i thought there was a dearth of new starting in the u.s. starting last night. what are you watching for this morning? what is the news item of this

battle that has our attention? >> we have to wait for the video conference to trend. ukrainian and russian delegation will meet but there hasn't been anything significant that has come out from those meetings. the ukrainians now say that russia is beginning to listen and this is not just ultimatums and they want to listen and have a conversation. the ukrainians say they want to see a cease-fire and sea troops pulled back and security guarantees. this is not just about russia. they would want to get every neighbor including turkey and germany and the united states involved in these talks. the other thing i would point to is that in the country, this is now 19 days of war. there is a message that is resonating among ukrainians which is the test of time, they are winning the war in their

eyes. and they won't just settle for any piece deal. a piece deal is not something they would get or approved if it doesn't meet their terms. i would be cautious about this idea that ukraine will settle for anything. the impression i get is they still want to get something very concrete on paper and they would want to get in international accord around it all stop they do not trust vladimir putin and they don't believe the kremlin. lisa: more than two point 5 million refugees have left ukraine to go to poland. there is talk about overcrowding in the cities that people are concentrated. what have we heard from other nations about bringing additional refugees to their place? >> there has been a lot of concern in poland about the amount of refugees coming into the country and polish authorities have been doing a

lot to make sure this is happening as smoothly as possible and trying to accommodate people not just in camps at the border but in the city. they need support from other countries and that is something the polish have been very clear about. they have taken the front of the refugee flow from ukraine, one point 5 million people have come into poland since the war began. that is something they are expecting to get support from other countries, not just financially but people to take on the refugees and that they don't all remain in poland. it's important to note that many of these people want to stay relatively close to the order because as far as they're concerned, a lot of the refugees i've spoken to hope this will be a temporary issue and they won't have to permanently resettle in another country. jonathan: wonderful work as always on the border of poland. in 15 minutes time -- in the

next 10 minutes, we expect to hear from the president of ukraine and later, we should hear from the foreign minister of ukraine. two things to watch in the next 90 minutes or so. late on friday, goldman sachs out with a cup of their forecast on the s&p 500. 10% upside from here in the previous target was 4900 and the one before that was 5000. tom: not only in the equity markets but also inflation estimates going up and gdp going down. michael farolli has inflation at 5% and the jp morgan gdp call comes in at about 7% nominal gdp. jonathan: lower earnings from

goldman and lower profits. lisa: it's hard to see how we can avoid that type of trend given the fact the fed is facing the highest inflation rate going back to the 1980's and you have this stagflation that people say will cripple spending. jonathan: do you want to talk about brady coming back for an extra season? tom: let's be honest, jonathan: who convinced him? no easy could this be later on in life? lisa: i want to do it later. tom: let's do it now. jonathan: congratulations to brady. tom: go back to italy. we don't need him there. jonathan: futures up 9/10 of 1%. the federal reserve decision is

this wednesday. ♪ ritika: the u.s. and china will hold the first high level in person talks since russia's invasion of ukraine. jake sullivan is meeting today in rome with china's top diplomat. the biden administration wants beijing to use its influence on russia to end the war. china has placed 7.5 million people into lockdown and will undergo three rounds of coronavirus tests. apple is halting production at one of its china plants. the u.s. says russia has offered military assistance. the u.s. is not saying what kind

of whitman they have requested. the federal reserve will ramp up their campaign to stop the ramp up in inflation. 25 basis point increase in interest rates in russia on wednesday. tom brady has changed his mind and is not retiring after all. he will come back for a 23rd season in the nfl. global news, 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. ♪

>> we have communicated to beijing that we will not stand by and allow any country to compensate russia for its war. there will be consequences for large-scale sanctions on the invasion effort and support to russia. jonathan: an interesting time for the u.s. and china to hold talks. the national security advisor will sit down with his chinese counterpart later today in rome. from new york city this morning, futures up almost 1% on the s&p

500. what a turnaround in this bond market. back through 2%, up nine basis points in the yield on the 10 year treasury is zero point 8%. the yield on a german 10 was negative almost seven basis points and out cause it to on the session. tom: you really have to look at these wider ranges like oil coming down to mid range and still nicely above any kind of technical so for. the technical here are blown up for everyone. can we comment on the real yield and volatility at 0.89%? jonathan: we talk about these cross currents and we need to talk about china with shenzhen locking down. back to where they were before and we were meant to have the

synchronized global story but there is nothing synchronized about what is happening. tom: beijing is clearly constrained. futures are up 41 stuff christopher varona joins us at strategus and he and i agree that the trend is something of value. how do you do trend analysis in the time of a war? >> i think what you see, whether it's any type of geopolitical trend or a time like we had during the covid days is that the news really doesn't change the trend very much. if anything, it exaggerates with already laying out stuff we went into this over the last several months value already topping and bond yields in an uptrend in the market deteriorating internally

for months and months preceding this. i'm not sure the war has done much to change what the trends onto the service already were. tom: do you know where some work is on the s&p 500? >> in downtrends, we don't care about some work, we care about resistance. this is the first time in two years we have to worry about what's on top of us. this market had nothing in front of it for two years. in any oversold rally, where do we start to get discerned? somewhere in the 45-50 zone is where i would be looking to fade. the long-term support is somewhere in the 37 range but it's about resistance when you are in a downtrend. lisa: are you saying the trend of buying the dip is over? >> in relative terms, when you

look at the type of stocks that have driven the last 10 years, there is no longer of the relative leaders of this market. one of the relationships we look at is the triple hughes. that started to peak 1215 months ago. i don't think that'll lot has changed over the last several months. this has been a move away from growth and into value with rates driving that and i do think russia-you and has changed that at all. lisa: is this a that that's being priced into the market that the fed will tighten to the degree where it hampers growth or is it a bet that growth is slowing and rates are rising with what's going on with inflation and the fed has little to do with this? >> this is the first equity

market correction in the qe era where bond yields have gone up. the first equity correction where the yen has weakened and not strengthen. regime changes are in wharton in our work. we see it in the macro and bonds and currencies. a week ago, if we were having this conversation and it was trending 156 last monday, there are new highs today. this is a consequential moment for the bond market as we start a tightening cycle. you do not want to see bond yields at the beginning of a tightening cycle. they tend to peek at the earliest midway through a cycle. if you are looking for a recession signal, you do not want to see the yield peak here. if 10 year yields are back to 156, that's a bad message for the economy. jonathan: this is all about the

fed? >> absolutely, i think that's been the message here. you go back to the story of how bond yields every's bonded pre-voelker. it was high bond yields there were often causing recession and post voelker, bond yields fell before recessions. i think we have to make adjustments about what the message is off the bond market. the move in german 10 year yields over the last week is absolutely astounding. jonathan: that gets your attention, wonderful to catch up . the fed expectations don't add up in the debt market. lisa: it's confusing that people expect seven rate hikes or more than six rate hikes this year and they are expecting that things will remain.

we've seen a correction but that we have seen the worst of it and there were people trying to come in and by the dip. either the fed will not be effective in tightening financial conditions further or we are going to have to see inflation roll over. something has got to give and it has to be growth or inflation outlook will stop there is another central bank decision this week. the bank of russia says we will hear from the governor of the russian central bank. she will make a statement on march 18. i just saw that headline. tom: in a new yorker magazine article this week, maybe that's the one part of the russian model over the last number of years that has worked. we will keep moving forward

because it is the depth of the american economy. jonathan: we look forward to a fed decision two days away. yields are higher by 10 basis points in germany and stateside. treasury is 2.09%, from new york, this is bloomberg. ♪

jonathan: lower earnings and a lower price. goldman sachs drop their forecast from 4900 down to 47. futures on the nasdaq are up about three quarters of 1%. we keep emphasizing the difference between words and action step every time we have hopes for a diplomatic rector, the action on the ground is different. you can guess where crude is, lower on wti and brent. this cannot just be about ukraine and russia. we have to talk about china as well. shin jim is locking down under the idea that the economic growth in china is heading in the wrong direction. lisa: we heard from strategist

down rating china's growth in response to the new lockdown. how long can they persist with this euro covid policy given the fact that it seems the pandemic is getting worse and they are struggling to contain it. jonathan: the divergence between policy in china is strange. look at treasuries going into wednesday on a two year yield, we are north of 118. citibank is looking for 25 basis points on wednesday and looking for the chairman to leave the door open for 50 basis points move in may. a drop in growth forecast and a list in the inflation forecast expected from the fed.

tom: this is a reset on the terminal value. these are the higher yields that john is showing step we have a higher yield without much curve steepening. that is significant. jonathan: what will be interesting wednesday is the rate cycle and what is the peak? tom: they are resetting to a higher terminal value which is out there somewhere. this is a great joy. in the studio someone with a rare talent, degrees from cambridge, oxford and the london school of economics. she also has service to europe and britain. thrilled to have you in the studio today. the euro is at 116. gyrations up that germany did

not like. where is fair value on the euro? >> that's a great question because when we they should our forecast following the invasion of ukraine, we didn't really change them. we nudged the short-term to market. a lot of thought what i was going to drive euro-dollar is playing out this year. resetting terminal value for the fed is the difference in policy. tom: we are talking to someone with physics in economics. the terminal value is not only about the magnitude of the value but about the when of it. do we extend our view or do we coming closer? >> it's not a question anyone can answer at the moment. i think we have seen it with the ecb and with chairman powell and trying to maximize their

options. lisa: we know finance ministers are meeting in the euro region to determine what the fiscal spending plan will be going forward and how to support the region. what is baked into the euro? how much fiscal support? >> there is a little in there but people have been skeptical about the europeans who deliver because of the opposition from germany and the netherlands and hawkish countries. in this crisis, we have seen unthinkable things happen. i wouldn't rule anything out not when you have the escalating situation between russia and ukraine. lisa: if we do get a fiscal response, do you expect an upside to the euro? some people say there is further to go. if we get this fiscal support, that could be a game changer? >> it's definitely a game changer in the yield space. this is not going to be an easy economic environment in europe

and the current conditions which we would get that fiscal support would be a more extreme crisis condition. don't get me wrong, we have found opportunities to be tactically long euro. as a core position, i'm not looking to get long euro targeting the 118 that many people had at the start of the year. lisa: is this a euro story or eight dollars storage? is that really what we are seeing and will continue to see going forward? >> we have seen a lot of independent euro weakness. there was independent euro strength last week. yes, the dollar has been acting as a haven but there's been specific euro weakness. it's not just been about the dollar. tom: tell me about the pacific rim. just as a general measure, how

do you measure stress on the pacific rim? it was a simple answer before but what's the measurement we should use? >> dollar-yet is an interesting transition at the moment. the australian dollar is still the proxy. you can look at it at the euro-dollar and depends what you are trying to measure. are you measuring risk against was going on in the -- in the pacific rim? tom:aussie-remembyi is that important? >> that's tricky because it's manipulated. i think the yen is actually more interesting than we give it credit for. it comes back to regime change.

depending on what happens to bonds and equities, we could see dollar-yen higher or quite a lot lower. i think markets -- should try to be certain. tom: some were looking at 120 or 130 week yen but what is the rbc call on yen? >> we have a call for dollar yen trading higher into the end of the year. there are a lot of downside risks that make it difficult to take long-term positions. tom: instead of saying plunge, we can say roll out. jonathan: thank you. the global head of fx strategy at rbc. the bond market gets my attention so let's whip through it step 10 year treasury yield, close to 2.1% and germany up 10

basis points. i'm trying to work out what's unlocking the risk appetite. let me read this comment for you. i see the understanding and there is dialogue. lisa: i don't know if this is risk on. i don't know if that's a fair characterization at i wonder how much we are seeing in the bond space to do with china and the idea of supply chain disruptions and lockdowns have furthered output and they could get more inflation down the line. the inflation inputs are going in the opposite direction whether it's oil or supply chains and i think that's what you are seeing in the market now. jonathan: i'm looking at the global growth story as well. brent down by 5%. you can talk about risk apposite -- appetite but look or broadly,

the mental story of the back of it. china locking out is a big issue. tom: i strongly agree. the headlines are foxconn and apple. in war it doesn't matter but on an inventory level, do we really know the stockpiles in china and i would suggest that we don't. jonathan: i would agree and looking forward to the federal reserve this wednesday. remember that line from bill dudley? he said the fed projections are in fantasyland. tom: jp morgan with a good team of people this weekend when out to 5.4%.

jonathan: and we look at the dot for next year. lisa: do we think -- people care but they care for different reasons than using that as gospel. they are using that as a guide for what they seem to be targeting is manageable. you can come out and say it's not going according to your plan. maybe you've got to adjust your plan. jonathan: did anyone take the fed plan as gospel? it's about reaction functions and all of the above and we are about to see a federal reserve that needs to lift that dot plot. jonathan: lisa: did you see janet yellen say that she said inflation will be uncomfortably high for 12 months at least? what happened to transitory? the politicians are rebranding the whole story. isn't that the story out of washington, d.c.?

tom: that's one story and a lot of people i would consider pros aggressively push against that. there is some of that at the margin. it's hugely fragile right now. i'm looking for the dot plot here. it's not going well. jonathan: you didn't watch the soccer game? tom: you have to have like five streaming feeds. jonathan: i got a message from tom over the weekend, it's on peacock, i'm livid. how much does it cost? tom: it used to be nbc, cbs and channel 38. jonathan: yields are up nine basis points.

from new york, this is bloomberg. ♪ ritika: keeping you up-to-date with news around the world. what -- watching dez russia and ukraine are holding another round of talks today. there have only been brief pauses in the fighting. russian prosecutors are threatening u.s. companies for criticizing the government or pulling out of the country. corporate leaders could be arrested. they have called on a broad range of companies in this warning. there have been several weeks of criticism including payments to the households accepting refugees. tens of thousands of ukrainians

will eventually get to britain. russia has access to almost half of its reserves. the country has about 640 million dollars but half of it can't be used. kkr has raised its biggest investment fund ever. it includes -- it could include sovereign wealth funds and they will invest in north american and western investments. this is bloomberg. ♪

>> we never asked for boots on

the ground but since we are fighting, fighting against one of the largest armies in the world, give us everything we need. including planes, supplied ukraine with literally everything we need. the future of euro security is being decided here. . jonathan: ukraine minister of foreign affairs going into the weekend, from new york city, futures up by nine/10 of 1%. euro-dollar, almost back to 110. getting very close to 1.2% on the tens. crude heading south, down by four or 5%. going into wednesday, the

federal reserve decision is right around the corner and the call from morgan stanley says after 25 basis point hike at the march meeting, we see the fed delivering an additional 520 basis point hikes this year followed by four hikes in 2023 to end the year at 2.65%. lisa: to me that is a shocking prediction because they expect to start a quantitative tightening in mid may which is the equivalent to some people saying a certain number of rate hikes. how does the economy handle this at a time when even those prognostications are showing yields at 1.2 percent on the 10 year. jonathan: this market is already there and i don't know how to price the balance sheet. isn't the market already priced for this? lisa: a lot of people say yes, the absolute level of rates are rising this in.

has it priced in the slowing ramifications of this type of rate hikes that are the main transmission? if that isn't working, what does that say about the fed's of letty to combat inflation? are we accurately pricing in slowdowns? jonathan: i think this could be one of the toughest fed meetings for the chairman perhaps in his career. if you go back to the pandemic, it was pretty straightforward, the direction of travel was obvious that we need to go big. this time around, when you have to raise your inflation forecast and drop your growth forecast and tighten policy, that's the time -- that's the kind of thing the european central banks are used to doing, not the fed. tom: we need to watch wage

inflation. as such a large art of the to date and its underplayed by the media and right now it's quiescent. if we see that wage gains we see in annual income, if that was the move to the middle class, it would be different fed meetings. jonathan: i would agree with you. let's get to bloomberg's and marie. we heard from the ukrainian foreign minister when you set them of them friday so what is the big ask coming into this week? >> from ukraine, military support which the united states has upped their support economically and militarily in terms of the dollar amount, $13 billion. also, the ukrainians want more sanctions. two things stand out, they want zero loopholes when it comes to companies that are cutting their ties with russia but there could

be some loopholes around may be keeping some operations open within the country and he wants western countries to ban any russian vessel from entering a port. that speaks to going after the oil trade. lisa: there is the possibility that russia continues to get support from china. that's exactly what they are asking for. what kind of discussions are there in terms of clamping down on china and pressuring them to not give aid to russia? >> the national security advisor will have this meeting one on one with his counterpart from china in rome but he signaled on the sunday shows that there has been a lot of pressure privately put on beijing, making it clear that if they usurp western sanctions and continue to give a to russia, they will be in the crossfire's of the western nations and gina raimondo, the

united states secretary talk about the fact that they're putting chinese chip companies on alert as well to make sure they are abiding by the western sanction regime. this comes as russia's looking to china for more support when it comes to the military. that will be the main point that we will focus on today out of that meeting with dix sullivan. -- with dix elephant. -- derek - dick sullivan. tom: i learned the absolute loneliness of vladimir putin. you know him and you been there. how lonely is lonely for this guy? >> i think he is increasingly getting lonelier and that's a good point, his inner circle seems to be getting smaller. he surrounds himself with the kgb security apparatus and every

day, there is a new oligarch or someone from the elite world coming out and bashing what moscow is doing in response to these sanctions. they are also calling for peace but they are not directly criticizing vladimir putin but you see this uncomfortable atmosphere around the russian elite. internationally, he's looking more isolated stop his only friend is xi jinping. he says -- he says the relationship has no limits but this is a test for that relationship stop jonathan: thank you. chevron and occidental downgraded to equal weight from overweight. bullish on the energy sector, those names of outperform their peers and offer less attractive valuations.

valuations across the sector broadly remain palliative. tom: occidental petroleum in the last 18 months up 542%. i remember when their ceo walked in our building with the brunswick group. they were flat on their back. there was a huge criticism and they were flat on their back. they got some macro trend that helped out step warren buffett over the weekend said he still likes occidental. i'm thinking up for -- up 542%

is a good thing for him. jonathan: you are long and spring of 2020 and you are a genius. this is bloomberg. ♪

♪ >> inflation has really been dragging down americans' perception. > we have some buffers to eat through before the risk of recession becomes real. >> the market has been relatively well behaved. >> in the equity options market, things are still business as usual. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. jonathan: live from new york city, for our audience worldwide, good morning. this is "bloomberg surveillance ," live on tv and radio. alongside tom keene and lisa abramowicz, i'm jonathan ferro. futures up 1% on the s&p. big week coming up. tom: the fed meeting on wednesday, we will have full coverage. it all wraps around the next step in this war. what is fascinating is on the warfront, maria tadeo will give us