>> there's just too much uncertainty and too many negative headlines for investors to stomach. >> with the war in ukraine, inflation is going to become even worse. >> this is a time where you have to be careful. >> we think there is strong enough momentum that you can keep growth around 3%. >> the culmination of higher monetary policy, the geopolitical peace is -- the geopolitical piece is slowing down growth. 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. -- is slowing down growth. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. jonathan: good morning. this is "bloomberg surveillance ," live on tv and radio. futures down about 0.25% on the s&p, 24 hours after a fed decision. some big goals for the central bank. lisa: and basically a bond market that says we don't buy it , pricing and slower growth ahead and vying that the fed is not going to get to their

target. jonathan: and a little bit of inversion from the belly of the curve. it is just starting to come through. lisa: the more the fed tightens in the near term, the lower growth prospects in the long term. that is the message being sent by a bond market very much sending a different signal than equities, and then the dollar, which is reflecting a bit of pessimism in its decline. jonathan: weaker off the back of that. a bit of pushback to the fed forecast yesterday. in fact, a lot of pushback. pushback from russia as well that we need to work through. there was a report about progressing talks with ukraine. russia this morning saying flat out, wrong. kailey: that report that outlined a potential 15 point plan that would involve ukrainian neutrality, at least that is what russia wants, ukraine saying in exchange it would want its security guaranteed, but the message has been that it feels different every day, depending on what source you are talking to. we did hear a bit of pushback from the ukrainian side saying

that progress was not as substantial as may be indicated, and now it seems the kremlin is coming back to match that idea. jonathan: futures down about 0.25% on the s&p. i will whip through things for you. into the bond market, lisa has touched on it already, 10 year yields off the lows of the session, 2.1271%. twos about 1.90%, yields down a couple of basis points. prude almost back at $100. $99.31, up 41%. lisa: we have seen a dramatic klein in oil prices this week. i think it is somewhere around 10%, even with the gains we are seeing today, which raises the question, how much our repricing in the conflict we are seeing in ukraine? the oecd released their economic policy impacts from the ukrainian war. we will have more with the chief economist there.

my question is, they were talking about the potential decline in growth, the potential increase in inflation from the idea of market responses to the ukraine conflict that persist. they are not persisting. they have reversed in many corners. our markets too complacent to the idea that there could be a resolution for something that becomes increasingly entrenched? at 8:00 a.m. we get the bank of england rate increase that is expect to be the third executive -- the third consecutive meeting where they increase rates. they are pulling back from some of the more hawkish projections in terms of what the bank of england is going to have to do going forward because of the ukrainian conflict and what that will do to growth. at 8:30 we get a slew of data. got it in the united states including building permits, housing starts, and initial jobless claims are get this comes as fed chair jay powell talks about an extremely tight labor market. the unemployment rate falling

near the lows we saw pre-pandemic, but still the percent -- the part as a patient rate lagging behind. how much is that the focus, how much slack is on the sidelines, waiting to get back in as dependent it clears and people need to refill their savings accounts? jonathan: people seem to think -- in a very short amount of time. this is not 2015 out to 2018. this is a different effort this time around. lisa: frankly, it is a labor market we don't fully understand. we don't know where everybody went. there are some explanations. we don't know how quickly people can come back. that reaction function in terms of wages not fully understood. the fed's stance is it can with downed -- it can withstand what we are about to go through. jonathan: we are looking ahead to the bank of england this morning. remember, catherine mann put a hand up for a 50 basis point hike last time around, too. kailey: while jim bullard was

the only actual dissenter, even powell himself seemed to leave the door open to a 50 basis point hike at some point. he did not take that entirely off the table. i wonder what commentary we will get about that from the boe just about an hour. they are not expected to move 50 today, but could they do that in june? jonathan: every meeting is a live meeting. next one in early may is going to be interesting, too. lisa: how do they even position themselves? the bank of england had a pass because they are not going to be subjected to the grilling that fed chair jay powell is. but still, such a tricky time. i do feel for them. i know you are a little less forgiving than i am right now. jonathan: they got a seat on the central bank. congratulations. tough job. are you going to feel sorry for chairman powell when he does the speech tour after he leaves the federal reserve, and you see the numbers he gets on the checks for those speeches? i don't feel sorry for them at all. lisa: i don't have an opinion. [laughter] jonathan: you do i tour -- you

do a tour on the federal reserve and you could get $500,000 to do a speech after. you pity them? lisa: i don't pity them. they have to make a decision at a time where things are so uncertain. it is a difficult period, a treacherous one, especially with the overlay of the ukrainian more. -- the ukrainian war. jonathan: that i agree with. our team coverage begins with jack fitzpatrick and maria tadeo. have we made any progress? ukraine saying that really, and the reports that indicate we have come a russia says that is wrong. maria: if you look also at the major developments we have had over the past 24 hours, nothing has really changed on the ground. we know that yesterday, mario paul -- mar you both -- mario paul --mariupol is key to get control of the city, was shelled again yesterday. we have seen the bombings continue pretty much on an everyday basis.

a cease-fire which ukraine says is the number one condition before talks begin is really not happening, so i would say, have we made any progress? no. are we going to make any progress over the next when you've hours? the key is a destiny 24 hours? the key -- the next 24 hours? the key is a cease-fire. we are not going to engage in anything that could look like neutral status if we continue to get bombed on a daily basis. lisa: who's winning? i say this realizing no one is winning right now, but if we take a look at the conflict, some people are saying russia is losing. is that accurate? maria: it is in many ways, and that is pretty obvious to see. this was an invasion that is now going on into day 22. it is costing a lot of money for the russian federation. the russian federation, vladimir putin has essentially, and i never use this language, has essentially wrecked this economy over the past few weeks, and they have not taken the main

goals. they said they wanted to take the ukrainian capital, kyiv. that is still and control of the ukrainian government. this is still very much a military target that they have not been able to a compass. a lot of the places in which the main big offenses are all in eastern ukraine, but when you look at the west, this is still under the government of president zelensky, so this military operation that vladimir putin promised would be covered in glory and they could do in three to four days is turning into something that is very messy, but also very expensive for the russian federation. . kailey: speaking of expensive, obviously the biden administration is taking further action to aid ukraine in the fight, providing weapons, providing armed drones, not yet jets. it remains a question of whether that will happen. in terms of the role the u.s. could play and potentially a peace agreement down the line, how large of a role would let have to have in guaranteeing ukraine's security? jack: that is something that

there's a lot of bipartisan support in congress for in terms of continuing to send defense aid. i think a lot of lawmakers seem to believe that underpins ukraine's standing in any talks with russia. the question now is how quickly can they move on the funds congress has provided. you see a total of $1 billion over the course of a week. there are questions in congress about the seemingly obvious need for another bill at some point over maybe the next few weeks. the question is, do they get there in terms of sending planes to ukraine? how much of it is smaller things like body armor, and how much of it is more ideally a rebuilding of ukraine and other humanitarian needs rather than defense needs? so there's interest in congress in continuing to provide further aid, and over the next few

weeks, there is a conversation developing that is bipartisan on exact a what is needed. jonathan: check, thank you. jack fitzpatrick and maria tadeo out of d.c. and brussels respectfully. just getting some headlines from china that remind me of the headlines we used to get from the united states to be 12 months ago. the china politburo urging to increase the vaccination rate, thousand to further raise the vaccination rate to expand covid testing coverage of key groups. they go on to say, and this when i think is open to interpretation, vowing more effective measures on covid control. what do you thing they mean by that, studying virus control measures? are they studying a shift away from what they have been doing for the last two years? lisa: or are they studying what it would actually mean to do a full lock down the way that other places in the mainland are doing? because right now their facilities are complete the overwhelmed. they have not been able to keep up with what they would need to do to quarantine people in the way they are doing and mainland

china. how much is this a nod to xi jinping, and how much a nod to the business is leaving for singapore on mass -- singapore and mass -- singapore en masse? jonathan: in china, are we anywhere near to resolving those things? kailey: there was actually an interesting story on the bloomberg that we are still sticking with covid zero policy, but it is finding a way to keep factories running via closed loops. you essentially keep the workers cut off from the outside world, but they can continue to do their jobs. it is what we are seeing with foxconn's simply group -- foxconn's iphone assembly group. jonathan: that is the good news. futures down 0.2% on the s&p. the federal reserve yesterday. the bank of ending this morning. that decision about 50 minutes away. we will catch up with sarah hewitt of standard chartered bank on that. this is bloomberg. ♪ ritika: keeping you up to date

with news from around the world, with the first word, i'm ritika gupta. the bank is almost certain to reach another milestone today. it is expected to take interest rates back to their pre-covid level. policy makers are likely to increase benchmarks a quarter-point. they are responding to a worsening inflation outlook. equivalent says reports of major progress in talks with ukraine are wrong, i day after russia said a proposal for ukraine to become a neutral country with its own armed forces could be seen as a compromise. today, quinlan spokesman said ukrainian negotiations are in no rush -- a kremlin spokesman said ukrainian negotiations are in no rush. the u.s. would propose higher tariffs on russian goods if the house action becomes law. russia would be put in the same category as countries such as north korea and cuba. in china, the latest covid outbreak appears to be easing.

authorities reported the lowest number of cases so far this week, and in the epicenter of the outbreak -- more chaos in the london nickel market. brokers tried to sell at the 8% daily price limit and had their orders canceled. that pumped of the london metal exchange to delay the opening of electronic trading. it is a setback as the lme attempt to restore order following a week long suspension. 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. ♪

chair powell: the fomc raised by one quarter point. the fed anticipates that ongoing changes will be appropriate. jonathan: chairman powell, the first interest rate hike since 2018, and going back a couple of years, did you think we would get this soon? lisa: no, and i think they did not think so either. they really indicated they were surprised. he also seems to indicate that the labor market was dangerously tight.

what did you make of that? that is pretty strong language for a fed that has had such a strong implement made it. jonathan: i found that news conference fascinating. if i checked the equity market, i think it would be surprised to see how deep into the green it was a stunned some of the things he said yesterday on what they got to do through the next two years. futures come in a couple of tenths of 1%. yields come in five basis points on tens. crude just short of $100 at $99.59. if you are wondering what happened to those two dollar bonds, the interest payments on them russia needed to pay yesterday, the total was about $117 million, russia's finance ministry saying the payment has been made to its foreign correspondent bank. they go on to say this. the ministry said it will comment separately later on the payment agent for russia's europe pond. so we still have not cleaned

this one up. kailey: there's a lot of information we still don't have, including, currency that payment was made, because if it was made in rubles, technically the rating agencies have said that still constitutes a default if the payment is not made in dollars, but this one is very unusual because it is not that russia does not have the money. it is the ability to use it that is in question. jonathan: john bel edwards -- jean balvin joins us now. yes after guest, with the exception of gens nor drake -- of jen's northlake -- of jens nordvig, said that plane is unachievable. do you agree? jean: i think it is hawkish, what they put out yesterday. it is useful to remember, and september of last year, 50% of the committee thought there would be no hike in 2022. now we are talking about seven in total and more coming.

they are planning to go to 2.8 percent, above their long-run neutral. that is unrealistically hawkish in our view, and i don't think they believe it because their forecast itself does not show what that should do if they were to deliver that. lisa: do you think it is unrealistically hawkish if the ukraine conflict were to get resolved in short order? jean: even in that, i think in this kind of environment shaped by powerful supply factors, we have talked about this a few times when you had me on the show here, is independent of the ukraine situation. i think the ukraine situation is another layer that makes it even more tricky to slam the brakes on this economy, but even without the ukraine resolving swiftly, which i think the market is starting to assume, i think it is still very hard to deliver that, and to make the point here about there forecast, the unemployment rate that is

supposedly unhealthy, extremely tight the term used by chairman polly month ago, they have gone to 3.6% in 2024, so it will be unhealthy still in 2024. that does not sound like addressing the issue. kailey: there's a lot of questions about that forecast staying so stagnant over the next two years. is what we learned from the fed yesterday that inflation is going to dig president over anything else, including growth? i wonder if that is a global story in your view when we think about the boe, the ecb, and what that as a result means for the necessity of fiscal policy. jean: i think at this juncture, it is a lot easier to talk about inflation, and i think the temptation to look strong on inflation is dominating everything else. which is why i think we need to distinguish between what we want to say now about the future

versus what they will actually do. in reality, as time goes by and we see the consequent as of a few hikes, the growth aspect will become more real and i think the tone will change. but at this stage, talk is cheap . talking about inflation, you can move dots around. it is not very costly yet. i think that is why central banks are tempted to emphasize the inflation side of things at this juncture. i agree with your point that in 2020 we have entered a policy revolution, which is about more specific coronation between fiscal and monetary policy. i think it is about fiscal taking the lead, and central banks are in a bind. they will talk around it, but the real move will be coming from fiscal policy going forward . i think if we needed more in the u.s., this is also where i would expect it to come. jonathan: let's talk about the u.s. equity market. a lot of people are nervous about this market right now. you've got a yield curve slowly

inverting, consumer confidence in america at decade lows. you've got another energy shock on top of that and growth expectations are being cut. they are not being raised. have we seen enough of a price correction year to date so far to make you want to say the stocks of the place to be for the rest of the year? jean: i think bonds is not the place you want to be, so i would start by making that observation because that leads you to where do you want to be elsewhere. this environment where the risk of the hawkish talks we see now israel. we see inflation -- see now is real. we see inflation in the portfolio. as a result, using about where you want to allocate, and we think dm equities will provide more resilience in the place of -- in the face of disinflation.

ukraine has been a concern playing into the equity market. i don't think that can be a drag for months area at some point, despite the human tragedy which is a real big issue, i think at some point that is going to take a turn and markets will start to focus on other factors, so i think em equities on a six to 12 month basis, we are overweight, and that is an attractive place to be. jonathan: thank you. tough year ahead, for sure. futures down 0.3%, but bottom line for the team at blackrock, they are sticking with it. lisa: given the fact that people are still buying iphones, still going out and making purchases at walmart and on amazon, why not go for those cash flows, especially given the fact that they have more inflation resilience than bonds that are getting hammered? jonathan: kailey leinz, did you hear that? was 'bramo bullish? lisa: that was a realistic

assessment of what is going on. jonathan: tom is not here, and you -- lisa: i'm not always negative, i mean honestly. it is just, where else are you going to go? i'm some of that active it. jonathan: i'm just surprised by it. pity for the fed come along stocks. what is this? [laughter]

♪ jonathan: following the biggest today pop on the s&p 500 going back to april 2020, we come down 0.3 percent on the s&p 500. the line from russia on talks, any report that they are going really well, particularly that "financial times" report, russia saying it is wrong. so i think any hope for diplomat breakthroughs, that hope got some cold water in the last couple of hours. the move back is not a major move in the equity market. resilient in the face of some aggressive fed talk. let's talk about what that means for the bond market. last week on thursday, the low end of the session, 1.96% on tens. twos are above that now. we've seen a lot of work get put into the front end of the curve going into this first rate hike

for the federal reserve since 2018, and we are starting to see things not just flatten out, but in parts of the yield curve, invert. twos-tens, the gap about 20 basis points or so. the gap between the belly, 3, 5, 7's out to tens, all over the place for much of this morning. lisa: underpinning this is the question of how long the transmission mechanism will take from tightening to an economic slowdown, and can the economy withstand it and continue to grow? i think the bond market is sending a message that a lot more pessimistic than what we are getting elsewhere. jonathan: jim bullard saying i will have 50, please. the bank of england in about 30 minutes. remember catherine mann? she put her hand up and said, can i have 50, please? the close was 135.98. all the way back to 131 on

cable. just wonder how sterling is going to match up from what we might here in 28 minutes. lisa: i don't even understand the currency reaction to the central bank. even if you have a hawkish kind of proclamation, you could see a decline because that means slower growth ahead. the currencies are responding to something other than simply tightening or loosening. jonathan:jonathan: i crowd sourced yesterday on what stocks were up. i got about 200 different responses. lisa: it explains that we do not know. that is the very clear message. lisa: that's -- jonathan: that's the cross asset price action. a man who might know, romaine. romaine: that's a lot of pressure. we should point out that the equity market certainly has one eye on the cyclicals coming out of the foreign bond market and the other eye on the fog of war coming out of ukraine. put that together and you got a little bit of a breather on this day, coming off the biggest today rally we have seen on the s&p going back to april 2020. the energy trade is reasserting

itself as we see crude oil in london drift back above $100 a barrel. occidental petroleum up today. schlumberger the big name in terms of a volume basis. to the downside, a lot of travel stocks moving lower. interesting downgrade at truist on a lot of the cruise lines. a big concern that some of the bookings we have seen for cruise travel has not lived up to some of the bookings we have seen in land-based travel. let's take a look at what is going on with the chinese tech stocks. they had an amazing day yesterday. the adrs in the u.s., alibaba had its best day since its debut back in 2014, pulling back a little bit here. down about 3%. there is still some concern that the rhetoric out of china with regards to the regulatory picture is still just rhetoric. apple shares in the stocks in the u.s., these tech stocks not so much a selloff, but more of a holding pattern, down about 0.5%. that is pretty much the story

for the mega caps. amid the fed meeting, they are re-thinking their policy with regards to people sharing their policy, testing out a program in a couple of countries that could make you pay to share your password with others. jonathan: did you watch "inventing anna?" romaine: i did not. i'm still on "the tender swindler. -- "the tinder swindler. " i walked away with a little simply. jonathan: how on earth did you have any simply for that matt? romaine: i plead the fifth on this one. [laughter] lisa: i just think you are the simple the police today. jonathan: you've got somebody for him too? lisa: no, i have not watched it. i'm just going back to the fed. jonathan: i think you're going to get to memory emails when you get back to your desk. i look forward to the explanation in my inbox. kailey: i have watched "inventing anna," though.

jonathan: f1 begins this weekend. i know a lot of people are excited about that. just not the people sitting next to me. from the oecd, lawrence, great to catch up. they have had to raise their inflation outlook. they have had to drop their projections for growth. it is a difficult position for policymakers, fiscal policy makers to be in. what is your recommendation for how fiscal policy makers should react to the higher energy bills across europe? >> this is a moment for fiscal policy makers. what we are seeing now is a hit to consumers of energy and food, and that needs to be addressed with fiscal measures.

we have a recommended temporary measure for the lower income. that will also help inflation to be kept in check by lowering the weight -- the wage price spiral that will come out of inflation. lisa: right now, i was looking at your projection, and there was a careful categorization of the market response slowing growth materially and pushing up consumer prices. markets seem to be starting to move on, and assume that there's going to be some quick resolution to this conflict, at least relatively speaking. does that mean that the ramifications economically, however horrific the humanitarian aspect of this is, would be really dampened because the markets have moved on? laurence: i think we should refrain from any conclusion. the situation is very volatile. it evolves by the day.

we are seeing this not only with the humanitarian situation, which continues, but also in prices. the market anticipates what is going to happen in the future. as the situation evolves, the expectation will move. one known thing is that we will get a lot more volatility ahead. the situation -- ahead as the situation evolves. the unknown is what direction that goes and how far it can go. lisa: do you think that the economy can handle in the united states the idea of a more hawkish fed, tightening in the face of inflationary impulse? laurence: we are not starting any vacuum. the united states economy was doing very well. strong recovery, low unemployment rate. in that circumstance, the fed is moving in the direction that it

should. now some consumers, some households will be hurt, and those households need to be supported because for some of them, the energy and food bill is 50% of their purchasing basket. perhaps fiscal consolidation in the u.s. will be delayed a little, but that will also allow the monetary policy to run its course and do its job. kailey: speaking of monetary policy specifically for the federal reserve what was absent from its statement yesterday was a mention of covid-19. it was only actually mentioned in the context of the inflationary impulse because of the supply-side challenges the pandemic presented. has the world moved on from the pandemic as an economic risk going forward? laurence: i think it remains an economic risk. you can see that from china

where some cities are being shut down, and many of the cities, the many factors contribute to the global supply chain. there's also some technology, so i don't think we can disregard this risk in many countries, and this still has impact on supply chain and on the inflationary tension as well. jonathan: european consumers are going to be in such a tough spot through the next few months. thank you, laurence boone of the oecd. citi just published the note. "investors should heed this warning and expect the fed to continue to wage rates and engage in balance sheets reductions until some combination of higher real rates and lower risk asset valuations are achieved." they expect a 50 basis point move in may. they previously published that. they expect the announcement of balance sheet reduction as well.

so the next meeting, between tightening announced. 50 basis point hike, balance sheet reduction. they will keep doing this until some culmination of higher real rates and lower risk asset valuations are achieved. lisa: which brings me to a question you were asking before. what would you think if you were fed chair powell and you look at your bloomberg terminal after his press conference and saw the green on the screen, saw that incredible rally. would he be happy, or would he be upset that he did not give the kind of hawkish rhetoric that could actually stymie some of the risk rally? if the application is that we have not yet seen the bulk of the pain in markets required to reach that tightening, then 50 basis points could conceivably be on the table. jonathan: i think of them, the goal is clear, to have tighter financial conditions. there's a range of inputs into that, but he basically said that in the news conference yesterday. that is going to happen as they

raise interest rates. lisa: i do wonder how much he is trying to stymie credit markets. we saw credit markets rally after that. what is the tightening mechanism if you do have resilience in some of the main metrics of risk assets? jonathan: spreads over the last year or so, your to date they are wider. kailey: credit having its worst start to a year since 2008, but you are starting to see financial conditions tightening already to levels that we have not seen since 2018, and we all know what was going on then, although that was a very different cycle for this federal reserve. jonathan: replace march with may, and we are having the 50 basis point conversation all over again. citi sticking with may at 50 basis points. you wonder if anyone else joins in. coming up shortly, the practice head for china and northeast asia at eurasia. that is coming up in 20 minutes. the bank of england rate decision. ritika: keeping you up to date

with news from around the world, with the first word, i'm ritika gupta. the expanded arsenal that the u.s. is sending to ukraine includes 100 armed drones. bloomberg has learned the drones are launched from the ground and plunge into their targets. president biden has promised thousands of antiaircraft and antitank missiles. russia's finance ministry says it has paid 100 haven't in million dollars in interest on its dollar bond, but bondholders in europe have received no sign of the funds. the payment has come to example if i how russia plans to handle its future relations with creditors. the country has 30 days to pay or risk a default. the price of oil rebounding following a three-day route. futures were up more than 4% after having fallen more than 23%. investors continue to weigh the fallout against lockdowns and china. in japan, an earthquake code at

least four and injured dozens more. the quick was a magnitude 7.4 and struck in roughly the same area devastated by an earthquake and tsunami 11 years ago. robinhood markets plans to let users loan out there stocks to other financial institutions, part of a push to compete with more conventional brokerages. robinhood is best known for its commission free stock and cryptocurrency trading, but it is gradually becoming more available as a service platform. 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. ♪

>> president biden, you are the leader of the nation.

i wish you to be the leader of the world. being the leader of the world means to be the leader of this. jonathan: a deeply emotional address by ukraine's leader yesterday. that was president zelensky. futures -0.4%. crude climbs back through $100, $100.60, up by 5.8%. some comments from the kremlin spokesperson earlier today. "the financial times" had a report yesterday that ukraine and russia had made major progress towards a deal. these are the words, the precise quote. "on the whole, that is wrong. some correct elements, but on the whole, that is wrong." lisa: basically, we are not nearly as close as the implication is. however, there are talks on

going. who has the credibility in the kremlin? one person. do any of these books per -- the spokespeople around him there any weight, and we trust it? jonathan: we keep going through the following exercise. you take the words, you look at the action. contrast the words and look at the action. the action on the ground is hardly getting better, is it? lisa:lisa: the idea of buying -- lisa: the idea of bombing areas where children are hiding does not suggest a closed end to this conflict. jonathan: just on words versus action, can we touch on this? it has such a major impact on equity market yesterday. government departments and china should "actively introduce policies that benefit markets," according to a meeting of china's top financial policy committee, led by the vice khmer liu he. what did -- vice premier liu he. what did you make of that? what kind of follow do you expect? >> i thought on the whole it was

a constructive statement. the reason why i think it was constructive is it went piece by piece to address some of the key concerns for markets, whether that is a potential delisting of chinese stocks, regulatory actions that come not from the securities regulators come but from other agencies that have roiled the markets, and even a nod to the property sector. on the whole, i think that is the right approach, directly addressing market concerns. the problem is vice premier liu he is very influential, but many of the issues weigh in on markets are outside of his direct purview. it includes the worsening covert outbreak, the spillovers from the ukraine crisis, including china's stance, which is going to be a foreign policy dependent -- policy decision that rests with president xi, and even delisting. i think a positive statement, but it is certainly early to presume that this is going to

address the issues hanging over the markets and the confidence for the rest of this year. lisa: you mentioned china's response to this ukrainian war that will actually have a significant impact on markets. is the implication that it could potentially provoke sanctions from the west that could actually lead to a further deterioration? are they girding for that type of backlash? michael: i think that is absolutely the risk. china is walking a somewhat careful balance in this conflict , but it is perceived right now by the u.s. side as a pro-russian stance. if that translates into military support for russia or certain types of economic and financial support that cross the line, it does place china at risk of sanctions, tighter export controls, and just a broader

worsening of the relationship, so that is the risk. i don't know if that has fully written stirred with the chinese side, but that is, i think, a very important issue to watch. really, the next step here or the next signpost will be whether president xi and president biden have a conversation in the coming days because that will be very important to avoiding a kind of miss copulation. kailey: how much do you think president xi would be willing to risk in order to maintain a friendship with russia? michael: it is a difficult balance. i think what we need to differentiate is china's support for russia broadly, which i thing is not going to change, and the more concrete, specific role in terms of trying to de-escalate this conflict. it is not an easy balance to walk, so when u.s. officials are going to be focusing on china using its influence to try to be escalate, that could -- to de-escalate, that could happen with china still be in somewhat

close to russia. i think the problem is beijing, xi has made a political signal that he supports putin. i don't think that was intended to give a full green light to the invasion, but that is what china's leadership is trying to navigate now. how do they distance themselves? to what extent do they want to distance themselves? it's import for russia is becoming more of a strategic liability at this point. jonathan: that final thing i think is important. to what extent do they want to distance themselves, and how interested are they in having this conflict continue? michael: i don't think china has an interest in seeing the conflict continue. this is the year that was supposed to be about stability for china. this is worsening multiple aspect of the stability drive with the 20th party congress this fall looming in the backdrop. i think beijing views russia as a defective counterweight to a more hostile u.s., and to a

europe that is increasingly aligned with the u.s. but now that putin has started this adventure in ukraine, it is deeply worrying to the chinese side. we don't know yet where they are going to come down on this, but i think what we are likely to see is china looking to provide some degree of economic support to putin and diplomatic support, not to become directly involved in the conflict. for the most part, it can comply with u.s. sanctions and export controls, but if china leans too far to the russian side, it definitely has serious risks for the relationship, for sanctions, export controls, and a number of other measures. jonathan: this could get messy quick. michael, thanks so much for your time. michael hirson of eurasia group. crude turning a lot higher, through $100 on wti. we are up more than 6%. lisa: the volatility in crude,

yes, you are seeing that knee-jerk move up because of the potential for this conflict to be prolonged, but to see things whip around so much in a market that dictates a much people pay not only for their gas and oil, but also for products that rely on the transport of goods, just make me wonder about the consequent as of the financialization of this market. jonathan: a headline just now, vladimir putin, the russian president, saying large russian business banks may work in crimea, too. kailey: crimea is going to be a critical question when we talk about any kind of progress in talks. those territorial disputes are going to be front and center. when the kremlin says little progress is being made, we can forget crimea, we can't forget the donbass, ukraine said it will not cede a single inch of its territory. jonathan: live pictures of the russian president holding a

meeting with top officials ahead of the eighth anniversary of the annexation on march 18 all those years ago. futures down 0.3% on the s&p. your bank of england decision coming up next. reaction with sarah hewitt of standard chartered. this is bloomberg. ♪

>> when we asked consumers what are they worried about, they say inflation is a big issue for us. >> u.s. consumer has lost momentum in terms of settlement. >> we are in an environment where growth is being cut in the future. >> no one has it invented because no one has asked has an advantage because no one has seen this type of market environment. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. jonathan: live from new york city, we got another one. good morning. this is "bloomberg surveillance" on tv and radio.