>> 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 churning in its range

bound. jonathan: yields are higher from the one 40's last week to the 100 80's this week. tom: here is a yield which folds it altogether. scott says why are you quoting russian yields at 12%? there is a lot of agony there from high yield to investment grade over to em and the trouble they are having in moscow. jonathan: in russia there is a low bar. the fact that ukraine talks are continuing is positive. lisa: i think a lot of people are hoping for more especially day after day of russian assertion or something happening at the different message from k yiv.

tom says we haven't seen catharsis but how unusual is it that bonds and stocks are falling hard? it's the worst performance going back to 2008. jonathan: and what's crude doing down there? lisa: it's hard to understand the correlations. you pointed to the goldman sachs call about financial is asian of commodities and how that is distorting some real assets in ways that perhaps we have an experienced to the same to great and i wonder how much that will be a driving force over what happens next couple of weeks. jonathan: shall we call it messy? lisa: that's pretty fair. we are talking about futbol. a big move higher over the last

week for crude but now it's down. lisa: there is an idea that had -- that yields have gone up significantly over the past week let alone year to date and it feeds into this stagflation discussion. at 7:30 a.m., the u.k. chancellor will answer questions about how much the cost-of-living is surging. the bank of england meeting thursday is where they expect to raise interest rates. how much to the talk about that they are seeing perhaps 10% inflation at a time of slowing growth was central banks hiking into a decline in how much does it feed into some sort of fiscal support? at 8:30 a.m., we get the u.s. pci. it should come in about 10%.

how much does this give you a feeling we haven't gotten there yet as far as inflationary pressure. the polish and slovenian prime minister heading to ky the center of aiv, to give their support and give a sense that they get the threat and they take it very seriously from vladimir putin. jonathan: talking about china, there is a seven hour meeting between jake sullivan, the national security advisor and china's top diplomat, a seven hour meeting and very little information on what happened in that meeting. the csi 300 is down by 4.6% and the hang seng is down by almost six percentage points. equities in china are getting hammered for more than one reason. there are lockdowns that we haven't talked about.

tom: seven hour meetings will be the norm in beijing because while you talk about that, he goes back to models of chinese roads. we are nowhere near 6% to employ china in a totalitarian regime. jonathan: what do you do if you are in the white house right now and reports suggest that china was asked by the russians for military assistance and reports in the last 24 hours from the financial time suggest that china has an openness to fulfilling that. tom: they are talking about drones. ukraine gets drones from turkey. maybe mr. putin gets drones from china but there is a real fear over these cheap drones which

are getting a lot done and that maybe is the trigger point. jonathan: we go to washington and brussels. how unusual is it to see european leaders had toured a war zone? >> it's completely unusual. when i saw that headline, a had to look twice. they confirmed there is a meeting and i believe the convoy has entered ukraine so we know the polish prime minister and the slovenia prime minister and the check for prime minister are both going together. the polish prime minister began to plan this in secret friday and yesterday on the european leaders that he would be joined by the slovenian and check representatives. we were told about this after they took off from poland into

ukraine. a lot of the details are being kept secret. it's incredible and normally you would never send three active heads of state to a war zone. this is very rare. tom: the symbolism here is europe and the european union. how close is ukraine and mr. zelensky to being part of the eu that the three members are? >> it depends who you ask. you speak to eastern europeans and they say these are slavic brothers share culture and history and belong in the european union and we should be accelerating all of the paperwork. this is unusual situation and it's not the time for bureaucracy but when you see the western european countries, they say this is different especially a country in the midst of war.

it's not realistic to give them hope, not at a time where they are trying to negotiate a cease-fire with russia. it really points to the huge cultural divide between the east and the west of europe. the eastern european say we are a single slavic people and these are our brothers and we have to support them in every way we can stop lisa: how much discussion is there in washington, d.c. about writing air support or the aircraft to ukrainians to fight that they are requesting? >> it's been a bit of an obsession. the mig 29th from poland's are still parked in that country and there is a big move on capitol hill to push the administration back into considering this after the pentagon said no. make 29th would go from poland somehow to ukraine and it's unclear what that path would be. there is a bipartisan group of 50 lawmakers who sent a letter to the administration demanding

they take a look at this and provide the jets. as we hear from president zelensky tomorrow, he will address a joint session of congress tomorrow which is quite rare since he asked for the opportunity. it's expected he will make another pass at this and ask lawmakers and the world will be watching. that could create more urgency underneath that request. jonathan: thank you so much. last week, when brent would open higher, it approached 140. right now, sub 100. we have a 99 handle 299.30. tom: everybody is long and wrong and out you go. it once again shows when you climb on board a certain path, get your radar up.

lisa: is it fundamentals? what do we know about the supply of gas and oil from russia? is it coming back online and it is this what is causing prices to go up given the lack of understanding of the fundamentals, i go back to that comment about financial is asian of the market. how do you factor in such volatility. a commodity producer is trying to hedge would you put out there and how you do that with all this volatility? jonathan: we now have a 95 handle on brent crude. we heard from credit suisse and these are the headlines -- the bank is reducing its russia risk. the bank is reviewing the situation in rough -- and russia and not taking any decisions on the country and they said

russian exposure is well under control and in the first few months, the ceo says he's satisfied with first two months, more interested in the first couple of weeks of this. tom: the lights are bright and we get the headlines fast and furious. satisfied with the first two months of 2022, that describes 99 percent of the global outlook. jonathan: i wish they could and the year like that. tom: let's just get through the next two months. jonathan: crude is $99 and five cents, down by more than 7% on brent and double teaching -- and wti is at 94. from new york city for our audience worldwide, this is bloomberg. ritika: keeping you up-to-date with news from around the world. the u.s. warned your that russia

asked china for armed drones in late february as musket was beginning its invasion of ukraine. china is not commenting about drones and has called earlier u.s. statements this information. west texas intermediate is off 20% and closing at the highest since 2000 and 80 week ago. there is a resurgence of fire -- of coronavirus in china. they have lockdowns aimed at stemming the spread of coronavirus and are blocking the operations of a number of businesses. they are stopping production of some apple phones in china and this is affecting more than 45 million people. the pfizer ceo told cbs that protection from three shots were

being weighed in a full one is needed right now. another ceo said a second booster is probably not necessary. a year after giant container ship got stuck in the suez canal, another evergreen ship has run aground. this happened in the chesapeake bay after leaving baltimore. it's not blocking other vessels. global news, 24 hours a day and on bloomberg quicktake. this is bloomberg. ♪

>> leap seen the price of gas go up -- we have seen the price of gas go up over a dollar since he put his troops on the border of ukraine. make no mistake, the current spike in gas prices is largely the fault of vladimir putin. it has nothing to do with the american rescue plan. jonathan: the present of the united states on guest prices and we need to talk about energy with futures positive stop what a turnaround in crude. brent crude a 98 handle and it's down more than 20% from where it

was a week ago. wti had a 94 handle. we are down more than 8% in today's session alone. tom: this reflects the real world and the headline from jet blue moving swiftly to cut capacity by 6-8%. do you increase it if it goes back down? jonathan: it's fake news. tom: we are in a lofty financial world and our listeners are out in the real world trying to not lose money. the big turnaround in this world is moving quick lee. -- quickly. tom: greg joins us from dws

group. i believe we went down to 19 basis points and have come back up again. you say there is more to go in the spread. how do we get up to 80 basis points a steeper curve? >> much of the action has been in the short end of the market. they got one priced in for every single meeting. we think what happens now and perhaps this week's meeting could be the went was we start pricing in more sustained inflation on the long and and could see the 30 year or 10 year start to rise. we think it's something the fed wants us to see. tom: in your mathematics in the

trenches, when you try to determine terminal value which helps you figure out the curve, is your terminal value the same as the dot plot terminal the fed will use tomorrow? >> ultimately, it could be the trajectory will go more slowly. we think in the second and third quarter, we will see some fundamental impacts like the stimulus run off most we are seeing the slow down in china and that will affect the stock market and even financial conditions, we could see some slowing growth in the second quarter and some weakening inflation pressures. that could give the fed the ability to cause and extend the rake hike regime over 24 months instead of 12. lisa: do you think credit is pricing in the economic slowdown

stemming from disruption abroad but also from fed tightening? >> we've been talking about the ig space and has probably gotten a little ahead of itself step u.s. corporate credit is pretty strong. corporate liquidity is very strong. we think it's more of a technical market and people are leaving fixed income markets and pulling money out but it's impacting the spread and increased volatility, you are probably talking about wider spreads but we don't see any systemic risk to u.s. credit. lisa: are you buying now and is this a time to lock in yields? >> we are seeing yields that are quite attractive for some of our clients but we want to be careful. we are not ready to call the bottom in yields.

some of the yields are looking attractive. tom: how does the libor market look? >> they are pulling in maturities, no fund wants to be particularly long when the fed is doing a series of hikes that could be intermediated. institutional investors could pull their money out and go to treasury bills. there has been a demand gap. the spreads have widened considerably. i don't think it's a liquidity issue. it's just a mismatch between supply and demand. there are some pretty decent

opportunities for investors interested. jonathan: always fantastic to catch up with you, thank you. if you have access to a chart, the intraday of brent crude, political up, 97 handle on brent. a week or so, a $40 plus swing on crude in a week. tom: it's all the tangential to it as well. what it does to the food complex is important. this is a shock after you look at the tapes of our show from a week ago. jonathan: and china locking down in the mix as well. 97 from 140.

that's huge. lisa: we are moving back to where we were before the invasion of ukraine and how much this -- how much of this is a spike. if you are a producer, how do you hedge against this kind of thing. how to these companies operate in such a fast-moving real-world? jonathan: boosting capex's months and months of work. lisa: people say there's a self-limiting kind of process of prices go up and people produce more. can they if you have that kind of lag time? you can't count on it being their later dawn down the road -- later on down the road.

tom: what we need is a higher gas tax. jonathan: futures are up five in the s&p 500 and up more than 1 of 1%. /10.this is bloomberg. ♪

♪ jonathan: we have to start with brent crude. brent crude a week ago at the open, to some vizio, -- two sundays ago, $149. this morning, 98 dollars. under $100. i would throw in a china lockdown, all of the above. you can talk about that, the regulatory issues, and then the relationship with russia, and the move in chinese equities absolutely brutal. the hang seng down by 5% or 6% today alone. on the csi 300, down 4.6

percent. that's the equity story in china. the equity story on the s&p 500, brutal on the nasdaq 100 so far. a bit of a bounce this morning on the nasdaq, but the s&p 500 up 0.1%. so much of this has come from the bond market. twos has gone from 1.42% to 1.83% in a little more than a week. tens have gone from 1.67% to 2.12%. tom: i would really emphasize, this is em stress into the russian challenges of tomorrow. sidney mackey with our lead story this morning on russia spiraling towards 150 billion dollar debt default nightmare. that overhangs every discussion in bonds. jonathan: and the fed still set to hike interest rates. that is going to be the story for tomorrow. a cut to the growth outlook, and a lot to do in the --

lisa: let's say inflation stays hot, but the economy slows down. they could pedal back if they see that kind of function. jonathan: we have added a lot of weight to that two-year yield in a little more than a week. right now, 1.83%. let's get you some single names this morning. we can do that with romaine. romaine: the destruction of chinese tech stocks continues. the hang seng tech index, present tuesday after an 11% decline monday -- down 8% tuesday after an 11% decline monday. by -- baidu, jd.com, all down. member the valuation differentials we see now between some of these chinese tech stocks and u.s. stocks.

the s&p 500 now the biggest inferential we have seen going back to 2008. a great story on the bloomberg terminal interviewing fund managers about their hesitancy to invest in china. a big wait and see now to see how the regulatory issues, the covid issues, and the war in ukraine affect the economy over there. as far as the spillover into u.s. tech stocks, we are not seeing much of that. amazon, netflix, google all higher. let's take a look quickly at some of the airlines. a lot of commentary by united, american, jetblue, and a few others. delta airlines up four percent. they are all saying their operating revenue for this year is going to be better than what they previously forecast. they did address the situation in ukraine and said they did not see material impact on travel bookings as a result. they did say jet fuel prices are going to be a lot higher for them. i want to end on a very bizarre

acquisition. amc entertainment, which runs movie theaters, is taking a 22% stake in a gold and mining operation. highcroft has a really interesting history. it faced bankruptcy in 2015. this company went public vs back in 2020. the shares have been all over the place. basically, a microcap stock. the ceo at amc, i'm going to quote him directly. he basically made it clear. "it seems a little odd that a movie theater company would be taking a stake in a golden mining company." but he goes on to say that with his own experience, it makes them a good fit for a golden mining operation. tom: it is now i joy within your fears of the market to introduce liz ann sonders, chief investment strategist at charles schwab, writing notes and giving all modern and techy on us with the best chart flow on twitter

worldwide. . in your note is a phrase out of another time and place, a stealth bear market. how stealthy are we in our bear market? liz ann: less stealthy this year with the nasdaq, the nasdaq 100, and russell 2000 in that more traditional official bear market. but even in the case of the s&p, if you just look at the average number maximum drawdown from a 52-week high, the average across all 500 stocks is -25%, so a lot of the weakness predated the invasion. it traces back to the latter part of last year. i don't think we get out of this mode anytime in the near future, unless we get some miraculous cease-fire and beneficial solution in russia and ukraine. tom: for the brave buying today, do you stealthily buy the beaten

up or the ones that did not go down, they small set that stealthily missed the stealth bear market? liz ann: i don't know that i would trade around what worked or what has not worked. i think the leadership of what has been most consistent amongst this volatility is factors. i spent a lot of time looking at bloomberg's factors. tom: that's what we like. liz ann: and the value factors have been pretty consistent leadership factors, even in sectors like tech and consumer discretionary, communications services. you can screen for the characteristic of value without limiting yourself to the sectors or areas that just happen to live in the value indexes. so i think quality value is where investors want to focus and avoiding areas like high volatility, week balance sheets, non-profitability. i think that low-quality trade

is largely in the rearview mirror. lisa: we have seen a lot of outflows from equity funds, from riskier debt funds, but how concerned are you that as plants open up their statements, they will withdraw some more and accelerate some of the losses? liz ann: it depends on what type of investor you are. if you are an active investor, doing it on your own or you employ active managers, there's been a more level playing field this year. there's more dispersion, ostensibly more ability for active to outperform passive. so i think it depends on where your money is. in the passive vehicles, if you were in passive vehicles more on the high risk end of the spectrum, tied to areas like not just nasdaq 100, but some of the dramatic segments of the market, you are probably in more pain than if your index is in some of the safer areas, particularly if

you have a diversified portfolio and you have buffers in other areas. lisa: but it goes exactly where you say, the buffers. the buffers are not working. that 60/40 portfolio is seeing a lot of pain. is there a new hedge, or are you saying to clients actually now bonds are a better hedge because they are yielding more, and it is a time to rely on them in a traditional way? liz ann: i know you guys have on my colleague kathy jones quite a lot, my counterpart on the fixed income side, so i am parroting her and her team's views a little bit, but something in the 2.25% range could be an opportunity to extend duration little bit. we've had more of a short duration call, but i think you probably bump up around 2.25 percent the opportunity to extend duration. but we are in an environment where you have that changing correlation where you are getting hurt both on the equity

side and the fixed income side. i think the broader message that that might be sending is that we are in more of a secular, inflationary backdrop environment, where the u.s. and global economy is more subjected to supply shocks then demand shocks, and really for 30 years until about 2000, you had that negative correlation between bond yields and stock prices, which means positive correlation at the pure price level. so it unquestionably is a trickier environment, but if you take an active strategy in terms of things like ration, it can still add some diversification benefits in a mixed portfolio. jonathan: always a clinic. always enjoy listening to you. i will be catching up with kathy jones of the but later this morning. looking forward to doing that as well. some headlines from the credit suisse ceo in the last 30 minutes or so. on russia, they say their exposure is well under control. 4% of aum and wealth is with

russian clients. tom: i get that, and i have seen other numbers like that. i just think it is also not a distressed, but what is the derivative exposure, what is the leverage exposure, and what are the almost interstitial relationships that you have away from direct relationships with russia. jonathan: there was another headline that came from the ceo, something you have been out front on over the last 12 months, 18 months, maybe even two years. teams are moving from hong kong to singapore, from the team over at credit suisse. tom: what is interesting is where do you move. some could move to shanghai. that is something the chinese have advocated for years. this really has not worked out. but where do you go? there's only one place to go. singapore, and it is a long four hour flight. it is not close by. jonathan: is that just covid, or

something else? lisa: something else. tom: thank you, lisa. lisa: absolutely. people are concerned about the oversight and the integration of hong kong into mainland china, and they are concerned about the financial passageways being frayed, so they are using singapore instead of hong kong. you are seeing this sort of trickle that has accelerated as people get concerned about the lockdowns that are imminent. jonathan: the ceo of credit suisse said not taking any decisions yet on russia. the bank is reviewing the situation. it will exit several emerging-market businesses. they will have to look at russia and east europe. be interesting to see how this develops. the banks are moving much more slowly, for obvious reasons. it is taking a wild to get definitive answers for them. futures up zero point 1%. big turnaround in crude. wti, $94. yes, that's right, 94 dollars $.50 on wti, down more than 8%. ritika: keeping you up to date

with news from around the world, with the first word, i'm ritika gupta. ukraine's president valletta mayor zaleski -- president volodymyr zelensky said the ukrainian delegation did good work in monday's session, but did not elaborate. avoiding sanctions over russia's war, one of beijing's most explicit statements yet on american penalties. concerns are growing amongst investors that chinese companies will face sanctions. american officials said russia requested military and financial assistance from beijing. the u.k. has imposed new sanctions on russia and belarus, along with its g-7 allies. britain is banning the export of luxury goods to the two nations, also revoking their favored nation status, meaning hundreds of products from russia and belarus will face an additional 35% tariff. united airlines has become the first major u.s. carrier to cut back on flying because of

soaring fuel prices. capacity will be 19% below 2019 levels, a bigger cut than originally expected. cost will be 18% higher than a year ago. a social communications platform for gamers, discord, is talking to investors about going public this year. bloomberg has learned discord is considering a direct listing. the company was last valued by private investors at about $15 billion. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm ritika gupta. this is bloomberg. ♪

>> if beijing is so concerned with safeguarding its national

objectives, its business objectives, i think they need to make clear on which side they are. jonathan: the former nato deputy assistant secretary general. good morning. big turnaround in the commodity market this morning, from close to $140 on brent last week to sub-$100 this morning. wti, $95.35. brent crude, 99 dollars $.34. both of those down about 7%, but off the lows. tom: importantly, the havens, gold may be as a normalized panic, it is basically down $100. jonathan: look at treasury yields as well, and by three basis points at the front end. tens basically unchanged at 2.13%. tom: we will keep you abreast of those markets.

right now, and this is very important, or definitive source on what is actually going on on the ground in china. china beige book international has a read on the micro data. leland miller joins us this morning. i'm going to go to "the world according to china," and the china reset. what is the state of domestic affairs in china right now that allows president xi to get to a china reset? is his economy falling apart? leland: the economy is not falling apart, but they are on the precipice of some bad things if they don't take care of business. from the beginning of last year, we saw this enormous de-risking of the economy, de-risking of the financial sector. we have been explaining that this is xi's restructuring towards a different growth model. there is going to be much slower growth going forward, and in return, xi is promising, and prosperity. but the past to get there is not going to be easy, and it is made

even more difficult by the fact that this is a party congress year. at this point, xi has to be very careful. there are no threats to his power, but he's making some seismic changes in a very politically sensitive year. tom: my memory suggests two mayors were shown the door in recent days. the mayors are powerful. what is the symbolism if mayors of cities are shown the door? leland: sometimes it is economic performance, and sometimes it is because they did not get their business taken care of on the covid front. but what xi is saying is there is no room for error this year. look at what is happening in chinese stocks. obviously the world is very skittish on the path that china is taking. what the restructuring that is actually happening is something that the party would not be doing unless they thought they needed to. but this means there's no room for error, and if there's people not doing their job, they are going to be tossed aside. lisa: no room for error at a

tenuous time globally. how does this fit into china's apparent not support for russia, but tacit acknowledgment of what they are doing and none? leland: withleland: this conflict i think people are way too -- and noninterference this conflict? leland: i think people are way too over their skis. this idea that russia is about to ship tanks or missiles, nobody knows what is ahead, but this is very unrealistic. just because china has busted sanctions in the past and may do so on the margins in this round with russia does not mean they are prepared to take catastrophic losses to their big companies and their economy, to the tech sector, etc. i violating sanctions like before indirect product rule or anything on the central bank side. i think people are too worried right now over this.

we need more information before we see that china is actually moving in this direction. lisa: we are hearing about china possibly investing in oil companies in russia, trying to be partners, and part of this is opportunistic and part of this is to secure their own energy independence because of their lack of oil supplies right now. how much credence do you give some of those rumors? leland: i think that is absolutely going to happen. the advantage for china and having a russia alliance is not so you get grouped with vladimir putin on the -- vladimir putin on a global stage. it is so you can buy commodities cheaper. this is a dream come true for xi in an area that china is really nervous about. so i think they will be positioning themselves to provide credit to the russians in certain ways. there are bilateral swap lines they can make available. so you are absolutely seeing chinese using as much russian

energy as possible, but you will not see them arming russia and ukraine. lisa: at the meantime, you are seeing these covid lockdowns, the expectation with a lot of these wall street houses downgrading their view of the chinese economy. what is the popular support of xi jinping like right now? is he suffering with the domestic population? leland: there is no evidence that xi is struggling. if you have problems in your economy, there are things you need to take care of, but a lot of these wall street jobs now pritikin 3% growth, it is like they have not played this game before. the odds of china announcing 0% growg close to it in the next quarter -- [laughter] tom: did you see that? leland: it is ludicrous. it does not matter what is going to happen. they are not going to report that. there's going to be a lot of people with egg on their face at the end of this quarter. plus, we are not seeing 0% growth.

jonathan: what would you look for? wherein the data would you look? leland: you look at the credit data. are things going great? are we seeing the big easing? no, we are not. we are sawing -- but we are seeing more than we saw in january. there is not a dramatic deceleration going down, and a one-week covid lockdown is not going to knock the economy off its cylinders. tom: you sound like mcgregor. what is it about these wall street chaps? leland: all these wall street shops are trying to get into china, which means they have to and bank nice with beijing. this is one of the rare occasions where you are seeing a more negative take on this. you either have real data and you are seeing what is going on or you are believing chinese lagging data that is three months old and often manipulated, so pick your poison. jonathan: leland miller, thank you. if it's bad, they don't tell you

. and if you are trying to depend on wall street banks if they want to get into china, are they going to give you the right call from the research division? i know it is meant to be separate. we all know it is meant to be separate. but we also know sometimes it is not. jonathan: sometimes -- tom: sometimes it is not, was that initial struggle of a million years ago. i'm also going to credit bnp paribas who had the credit to go in early. everybody says we are pulling out in four months, seven months later there's the press release, we have decided to rebuild the pacific rim. jonathan: look how quickly things have changed in a week. i joke we are in a bear market in crude, but it is quite a turnaround. this line from china this morning, more than 100 international flights diverted away from shanghai to other cities to ease pressure on quarantine hotels and isolation facilities. lisa: how do you deal with the

fact that they are trying to get everyone into a hospital with covid? can you imagine that? jonathan: futures unchanged on the s&p. on the nasdaq, up 0.2%. crude at $95. this is bloomberg. ♪

>> we have seen demand continuing to be strong, irrepressible even, and pressuring supplies. >> we might get some sort of alleviation given this break -- given the spike in energy prices. >> the market has discounted quite a lot in terms of future hiking in global rates. >> obviously there's a giant wildcard out there, and that is russia, but we are optimistic. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. tom: good morning, everyone. on