higher the repercussions will be for the world market. >> there is a lot of uncertainty in terms of energy security. >> there is the idea we need to do more. the russia is not going away. > this is bloomberg surveillance. jonathan: live from new york city for our audience worldwide, good morning, this is bloomberg surveillance on tv and radio. futures stateside down 4/10 of 1%. tom: we have a few problems in the equity market and i will link it into bonds. high yield, look at the hangsen, 39% from the highs. i don't know what to make of

commodities right now. what i would say as we go into the fed meeting tomorrow is the linkages here and the signals of yields versus what equities are doing our front and center. jonathan: have you seen the bank of america fund manager survey? the lowest confidence since 2008. lisa: perhaps some people are starting to get bullish. we saw hints of that. there is a rotation into equities. the feeling that we are on the cusp of something significant and escalating conflict over in eastern europe is taking a lot of the wind out of the sails. jonathan: the two year yield is coming in this morning at 163. when we opened up last monday at 142, we added real weight to

those yields over the last week. lisa: people said they might back away from rate hiking expectations but we have seen the opposite not just from the fed but the ecb indicating they will watch inflation and that's a game changer even with the surprising growth. we see a more hawkish tone in the central banks. if you look at the nasdaq 100, the nasdaq 100 futures are down about 1/3 of 1%. yields down three or four basis points on the 10 but what a move in yesterday's session. there is the move in crude, heading the other way. lisa: what do you do when crude trades like a penny stock? it's trading like a crypto asset.

there are real things we use every day in the flood of money coming in and out and that's what we are grappling with. this is something i'm watching closely. there will be questions from the members of parliament about how the government is addressing the cost of living. inflation in the united kingdom could surpass 10% on average this year. the fed could raise rates for a third consecutive meeting. how do you deal with the cost of living that is reducing the spending power and reducing consumer estimates? 8:30 a.m., we get it u.s. february ppi which is expected to come in around 10% and the highest going back a decade or more and how much does this feed into the feeling that perhaps it has not peaked.

is that off the table? the polish check and slovenian prime minister's will meet with vladimir wilensky. how rare is it for sitting leaders to go to the heart of a conflict to meet with the leader of that nation? it shows the concern even as there is some feeling there could be some negotiations. there are some really severe images of people being killed in residential areas. how much do you see that fear in eastern europe? jonathan: thank you. investor expectations out of germany to talk about. tom: i went back to reunification in 1990. this is happened quite a few times but this is what we will see. you are going to begin to see this micro data shift off of

february 24 and that's what we see this morning. jonathan: look at the move out of china, the hangseng is down. we do trend a whole lot lower. three reasons, we've got the regulatory overhang from march. this relationship with russia is getting trickier and trickier for this country. tom: it's been that way or 50 years. you go back to the 60's and the balance of the enormous border they have. also with the equity carnage, the renminbi has moved out.

that's not a small signal. jonathan: we go to washington and russells. i want to start with a seven hour meeting between jake sullivan, the national security advisor and what happens in a seven hour meeting? >> it was a six hour meeting the last time they met and we would love to know. the white house has been cagey about what was said be on using the term severe consequences. jake sullivan's job was to deliver a message to stop right now. it was a warning from the united states in terms of supporting russia and the complexity of this relationship became more complex when you so vladimir putin and president xi standing side-by-side. things have changed since the olympics. china depends on the countries

that are sanctioning russia and is in a different position economically than russia is at this point. the relationship between the u.s. and beijing is advancing and not likely to help us and the war but the u.s. wants china to stay out of the way. tom: three very different politicians of eastern europe will go tokyiv. what is president biden doing? will he go across the atlantic and show a flag? >> the white house was talking about this yesterday and they are in the rows of planning a trip but it's unclear where he will go and i would not expect the president of the united states to touch down in china. poland is looking for help and it might coincide with this. i spoke with the former secretary of defense who is calling for more american troops to be sent to eastern europe along the border which would

coincide nicely with the trip from our president i would think. lisa: let's get more detail on the meeting from the eastern european leaders. can you give us a sense of how unusual this is and what they hope to accomplish? >> this is completely unusual. you have three heads of state going to an active war zone. they are going to k when wey knowiv is unprecedented and it's a huge risk. you do not send an active head of state to an active war zone. i was speaking to a member of the polish parameters office who told me we can't give you details and i presume they do this by land. they could gotkine -- they cannot give me any timing or any

location. this is really going into a war zone stuff they want to make clear that this is personal. the eastern european culture is what they share and it's important to go see zelensky face to face but also send a message to the ukrainian people that eastern europe is concerned and they need to be face to face with the president. tom: brussels and the eastern europe and the gentleman from slovenia, are they on the same page of the eastern european conservative leaders in the vicinity of what brussels is thinking? >> what is clear to me over the past 48 hours is that in russells, there are three teams, the polish, the baltic countries and there is slovenia.

then you have countries like germany that want to take a step back to figure out the impact of these sanctions before they go full steam ahead. there are issues between the west and the east. italy really believes that the west does not get the politics and the dynamics of eastern europe and don't know how to rein in vladimir putin. the french are trying to get a cease fire but from my contacts is that vladimir putin has changed the game and this is not just about you rain and he wants to settle the eastern european conflict and they believe the west doesn't get the message. jonathan: wonderful reporting as always. in the financial times, the u.s. is told allies that china has

ignored its willingness to provide military assistance to military assistance. china has denied the story but that's coming out of the financial times, additional information, not just every west from russia but it open request from china. lisa: that is perhaps why you're seeing the selloff hit such a degree in china with speculation of the potential sanctions the u.s. would put on chinese companies. that is very much in the popular discussion. jonathan: we are down 1/3 of 1% in the u.s.. from new york city this morning, this is bloomberg. ritika: keeping you up-to-date with news from around the world. the u.s. worn europe that russia

launched drones in late february. this began at the beginning of the invasion. west texas intermediate is down 20% since closing at the high a week ago. that is a resurgence of virus cases in china. this is stemming the spread of the coronavirus in china and a number of businesses will stop production in shenzhen. they halted output at several factories. a year after a giant container ship got stuck in the suez canal, another evergreen ship has run aground in the chesapeake bay after leaving the

port of baltimore. elon musk said cost were increasing on tesla vehicles. credit suisse says the price phrase will be between 3%-5%. this is bloomberg. ♪

>> a new package of sanctions, we have more than 600 russian people targeted and you would have a large part of the financial system being targeted, new plans on exportation and we will withdraw from the russian states the most within the wto. jonathan: that was the french minister of finance with futures

down this morning from new york, good morning, down a quarter of 1% on the s&p. no real drama stateside this morning. there was a big move lower in chinese equities. the in frankfurt, germany, the dax is down. let's briefly touch on credit. high yield spreads 3400. lisa: the extra yield over benchmark rate has been notable. it has actually been more notable because it's been dampened in the high-yield space because of the energy prices. the selloff has been dramatic. we have not seen something like this since the 2020 disruption in march. if you take that out, this is a slow temper tantrum. it's not just tapering, it's the idea of a trajectory.

jonathan: wti is 96.86. tom: we haven't seen 99 yet but that's of note step let's dive into the movements of the market with an important interview coming up. the ceo micro risk advisor joins us. a lot of people have shifted in the last days to mention catharsis, to measure it but it hasn't happened with the equity people are watching the bond people. why are the equity people watching on people? >> what we are seeing is a flight to a situation that's a liquid market. you are seeing asset classes rate down. metrics have been published that show bond market for liquidity stuff the vix is above 30 and

the ten-day averages above 30 and nothing really good happened edens debt happens in equity markets when the vix is above 30. we are watching a circumstance where the vix gets into the 40's. when the vix is between 40 and 50 and rising, the average return over 10 days in the s&p is -7% st it's about studyi market prices and appreciating the shifting movement of correlations. there is a lot going on and frankly, it's getting easier and that's not a good sign. tom: 32.78 on the vix. it's the angst we have seen. i want to look at the etf's in equity markets as personified by yields. tell me what you see in terms of

correlations of high yield to the greater market. >> this is why the move is important. we've been in this slow motion taper tantrum typically incorporate bond investments. there are two typically offsetting parameters within the fund. one is the duration risk and the other is the spread risk and they typically mitigate each other. if spreads widen, you typically get a rally in the bond market. right now, you are having a rush and it's not a good dynamic. it's what's allowing the corporate bond etf that tracks investment grade exposures which is having its worst quarter in the history of the product and that goes back to 2008 and that's evenly divided between

spread widening. this is where it's so problematic. the message from the fed is just unfriendly. the fed as it job to do and is risk managing inflation from well above target and i'd like to say the fresh -- the fed is a buyer in this context. the certainty typically provides markets when things go wrong which is the situation we are in is not evil. it has its own mission. lisa: to put some numbers around what you are talking about, investment grade is down 9.1% year to date with a 6.3 percent decline in high yields. do you get optimism that this is being led by the rate story and not necessarily the prospect of a recession or some sort of big downturn? >> i think the optimistic take

is if you look at the u.s. economy and you look at corporate earnings which is what will drive asset prices but over the long-term, equity markets are driven by profits. at least now, you are not seeing any real dent in the profit story. that tells us this is all risk premium, it's a widening of risk premium that to the uncertainty. if we get past it, and the other side are much cheaper asset prices. if you buy the earnings story for u.s. equities, the valuations have gotten easier to stomach. i think the challenge is that all these fast-moving parts are showing an overriding emphasis on confidence. it's the enthusiasm for owning

equities. it's losing out to the negativity in the headlines stop the second part is there is real potential economic damage from things like higher energy prices , higher commodity prices. they kind of reek havoc in corporate decision-making and they tell consumers to stay home. it's unclear if the earnings slowdown story will materialize. right now, it's risk premium. our call has been thendx was vulnerable to a 15% correction. i would say we have more to go. i just don't see a great resolution right now. there is too much uncertainty and too many negative headlines. jonathan: thank you very much. that's the difference between main street and wall street. tom: that is the heart of the matter. jonathan: futures down six

points on the s&p 500. on the nasdaq, pretty much unchanged. from new york city this morning, good morning for our audience worldwide on radio and tv, this is bloomberg. ♪.

jonathan: the most crowded trade in the bank of america fund managers survey is rude. what a turnaround. the bounce back on the nasdaq, pretty much unchanged, closing in a bear market for the first time in a while. good morning to you. in china, the hang seng was down hard. down by more than 21%. the regulatory overhang continues to lock down the spreading of its relationship with russia. tom: you gotta look always on

the pacific rim with the dollar-yen people are modeling what's anna -- what's unimaginable six years ago -- six weeks ago. jonathan: there is a move in the bond the orchid -- in the bond market. 142.37. there is a month of turnaround. the story over the last week is yields higher going into the fed meeting a day away. tom: i didn't know that. it begins this morning and we will have to see and talk about that with our guests coming up. an important interview is a summary of where you are and where we are. we have the head of research

that edf with a wonderful focus on commodities. i want to go to an emotion you have in your note which is this gyration. it's the field, we will feel less rich. what is the out come of feeling less rich? >> [indiscernible] tom: we've got some audio problems here and we will work on that. i was looking at her work and not only the feeling of less rich and what it means but she

focused on the shocking amount of sunflower oil coming from ukraine and russia. sunflower oil has moved out to 15-15 over eight double. -- over a double. i don't know if you use it but it's awfully important. jonathan: it accounts for about 80% of global exports and they come from russia and ukraine. the energy store is another point. gas is more and more expensive over the last few months. let's try hooking up with our guest again. we were talking about sunflower oil which dominates one of your

charts and that's shocking. what does ukraine and russia do with all that son floor -- sunflower oil, what's the importance of that? >> ukraine accounts for 80% of the world sunflower oil. is what the average person uses day to day but it's essential for cooking along with corn oil and other kinds of cooking oil. things are pretty tight out of malaysia and indonesia. tom: do you believe within this crisis, there will be a situation where people and businesses and industry will just move from one commodity to another easily? >> to the extent they can, they will try to. [indiscernible]

tom: we've got audio problems again and we will leave her there and hook up again with her a better audio line in the coming days. i look at where we are now in the commodity market. we got to go to oil, 130 down to 101 which is good for the pump price. jonathan: let's go to the dependency on russia and ukraine for some of these goods. europe depends on russia for about order of its crude oil and one third of its natural gas. you know the stats already. here are three we don't talk about enough. russia and ukraine supply about a quarter of the world exports. 80% of some flat oil cargoes and some of this will be factored in already but something we haven't discussed and just started

discussing is the conversation we had with the deputy governor of the ukraine central bank. what happens of the farmers can't get into the fields this spring and we talked about it briefly yesterday and we will talk about it a lot more in the weeks and months to come if we do not settle these issues on the ground. lisa: people are saying it's highly unlikely they will have a normal season step that is potentially devastating for certain regions. what we heard yesterday is just how much wheat egypt has stockpile. 86% of their entire wheat input -- he purports -- imports come from russia and ukraine and they will not be possible to the same extent of things aren't remedied and even if they are, it might be too late. jonathan: how large are the stockpiles in china and do we take on a more protectionist approach to some of these commodities? to the exporters hold back -- to

the importers hold back because they might not have enough at home? tom: we will talk with an expert on inventories. the inventory discussion in china is a mystery and it's important and that goes back to the fundamental basis of copper. it affects northern africa and the middle east. lisa: how much does this lead to civil unrest. we saw in the arab spring, they were damaged from food shortages and will we see a repeat of that. people talk about how this connie globally and particular in the u.s. and other developed markets are less dependent on oil. if the price of oil goes up dramatically, it will not have as big a ramification on consumer spending. how do you factor in that it's not just oil, it's all the commodities. it's all of these imports and how do you factor in the

response. jonathan: the commodity intensive miss of gdp will be lower than used to be but we still need crude we still need oil. tom: absolutely, with the challenges we had, i've been in dubai when we had audio challenges so that's normal. i want to talk about what s damienasshauer says. will we see a default tomorrow by russia in some way where they have a yield of 12%, a ruble where we don't know the value and equity markets shut down? i don't think we are making enough about the tension in moscow into tomorrow. jonathan: we need to define what a default is. there are two interest payments coming due.

there is a 30 day grace. e period. ? the other issue i have is what happens if someone tries to pay the coupon payment as it matures? and if it doesn't reach the investor because the pipestone clear, is that a default? people don't clear the payments to a foreign investor, what is that? lisa: you're talking about the supply chain of the monetary system and the idea that what happens if they go awry as most of the connections get severed. the reason why it's important, just to add to this, the reason why it's important to call it a default is because that's what will trigger a number of payouts

uncertain derivative contracts. that will cause some of the losses to be realized which could cause a cascading effect and that's what people are concerned about. the technical definition of default matters. it's a slightly stronger ruble. futures are unchanged on the s&p. a bit of a turnaround and we will catch up with morgan stanley later this morning. with the war posing a new thread to daemonic, they think the fed will keep a watchful eye on the data but will err on the side of hawkish nest. this might mean a collision with equity markets this spring with valuations overshooting to the downside. if you think we are there yet, they suggest perhaps we are not. tom: we talked yesterday and i

don't know where april is let alone the end of march. jonathan: we are anticipating a cut to the growth outlook. there is a big change in the dot plot tomorrow. tom: that's well said. they emphasize that and that would be a good place to go. jonathan: good luck to them. from new york city, on tv and radio, this is bloomberg. ♪ ritika: the ukraine presences talks with russia will continue today. ukrainian delegation made

progress in monday's session but did not elaborate. china does not want to be impacted by u.s. sanctions on russia. concerns are growing amongst investors that chinese companies will face sanctions. the u.k. has imposed new sanctions on russia and belarus along with g7 allies. they are banning the export of luxury goods. that means hundreds of products from russia and belarus will have a 5% tariff. vodka was suspended last week. discovery paid ceo more than

$246 million last year, making him one of the highest paid ceos in the u.s.. elon musk said that because for increasing. global news, 24 hours a day, on air and on bloombergquint take. -- bloombergquint take. this is bloomberg. ♪

>> in this situation of sanctions, it's important that we have solidarity between

countries because for some member states, the import of russian gas is a crucial part of keeping houses warm and keeping electricity in their grid. jonathan: unity in europe, from new york city with futures up 1/ 10 of 1% on the s&p 500. yields come in a couple of basis points down. crude down to 97. tom: i say good morning to a

gentleman named mark keller who sent me down once and said, if you want to lose money, invest in oil. this was an extremely important discussion. we will try to think about the future and maybe how things have changed for mr. putin. michael muller is the mechanical engineer from rwe a, wonderful company in germany that tries to get ahead. we are glad he can join us this morning. we usually talk about earnings but there is too much else going on. blue hydrogen, green hydrogen, hydrogen from nord stream 2 and germany's ability to say we will not do it step has germany made the decision not to advance from oil to natural gas to hydrogen with mr. putin?

>> first of all, let me say that the whole situation in the ukraine is shocking. it clearly has shifted priorities. the focus is now on energy security and energy independence. therefore, the push toward renewables will be stronger. what we currently see is a drive for a more renewable buildout in the european commission said energy independence from russia can only be achieved by 2027. it's important we take the right steps now. tom: you were one of the pros on the buildout of that infrastructure. how can you speed that up and move 2027 two 2025? >> a key aspect is building out

renewables, that we speed up approvals. we need an environment to build renewables and quickly build it. we will do any project we can do. capital isn't the issue and the willingness of companies is not an issue. it's a question of getting consensus. lisa: how much russian gas is r we relying on in some capacity? >> our exposures fairly low. it's more the exposure that generally europe has unrushed gas -- on russian gas. lisa: what's the ramification

when you are profiting from the increased guest prices? how difficult is it to report these earnings while at the same time, it's becoming such a political issue for so many across europe and in particular germany? >> let's talk about our results. we typically hedge our generation could have city two or three years ahead, we are not benefiting from higher gas prices. the impact would only be longer-term and longer-term needs to be seen and development going forward. the companies that are profiting are those that have upstream capabilities and reserves for gas that are focusing short term. tom: it was so long ago i was younger than lisa abramowicz and at that time, i would go to fancy meetings lng.

now lng comes to the rescue. how do you suggest europe can jumpstart lng so it can rescue germany and europe? >> what we need in germany is import capacity. tom: what is import capacity? 9 >> the lng market is global gas it needs to come to europe while in the netherlands or in spain. that's what the german government is pushing and we communicated we will support providing liquid capacity to germany. the other thing is lng is a global balance. we also need gas capacity to

liquefy the gas we produce and that's something that doesn't take place in a short circle. jonathan: thank you for spending some time with us. tricky moments for the europeans. lisa: especially since there is this feeling they can't cut themselves off from gas while politically it's uncomfortable to continue this. i am not as young as tom keene seems to make me out to be but thank you for the implication. tom: the best part about lng meetings is the cocktails and hors d'oeuvres. jonathan: you went to that meeting? tom: meetings plural. lng was going to save the world.

what was great about mr. mueller, here is a chief financial officer thinking he was going to talk about ebita and we are grilling him about his core knowledge and mechanical engineering. i thought he was great. jonathan: i think he was well prepared. lisa: the discussion will reopen again on nickel. i can't believe i am trying to focus with tom. jonathan: everyone knows tom is the youngest here. yields are coming in a couple of basis points and we were looking at one 60's last week in the

turnaround in the treasury market is unreal alstom last week was a different story. from new york city, for audience worldwide, this is bloomberg surveillance. ♪

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>> this is the first time in two years we have to worry about what's on top of us. >> the longer this plays out in terms of the conflict, the higher the repercussions will be for the world market. >> there is still a lot of uncertainty in terms of energy security. >> there is this sort of idea that we need to do more. the russia risk is not going away. >> this is bloomberg surveillance with tom keene, jonathan ferro and lisa abramowicz. jonathan: live from new york city for our audience worldwide, morning, this is bloomberg surveillance on tv and radio. futures are up /10 of 1%. tom: the vix is at 32 and we are watching for 40. it's