>> what we're really seeing at the moment is we are seeing the fed doubling down on being extremely hawkish. >> how far is the fed going to raise rates? >> how is it hawkish if he is trying to make us believe a recession is not far-fetched? >> the backbone of the economy is being impacted by this exceptionally high fuel price. >> this is bloomberg surveillance with tom keene, jonathan ferro, and lisa abramowicz. jonathan: can this equity market keep rallying in the face of what the fed might have to do for 2022? good morning. this is bloomberg surveillance live on tv and radio. i am jonathan ferro. futures down a third of 1% on the s&p. >> the bond market is bringing forward the expectation for a

recession. can equities keep dancing if they think that recession is going to happen in a year and not the next couple months? jonathan: at what point is there an alternative? how high do we need to go in the treasury market? >> how high do we have to go on the front end and how low do have to go on the back end? how much do people revert back to lower yields over the long-term with this bringing forward a recession? in other words, this will all torpedo some of the economic momentum and longer-term we go back to where we were and then some in terms of low rates and low inflations. jonathan: this market this month has done nicely on the s&p since the fed chair's a few days ago. we need to stay on top of russia's invasion of ukraine. you've seen the report by now.

russia will respond to what the polish did early today. kailey: we will have to see what response that takes shape in. we listen to reporting from brussels, this is the relationship to watch, between poland and moscow. i thought the comments from medvedev on social media talking about poland my how their support of ukraine is going to prove extensive and ruthless is really telling, how tense that relationship has gotten and notable that the president will be in poland at the end of the week. jonathan: they coupled days ahead for the president of united states. friday, a meeting with the leader of poland. the deliverables, what are they? kailey: the president is promising more sanctions. the question is what will europe be able to get on board with? we are hearing from germany in

oil and gas embargo is not going to happen for them. jonathan: futures right now down a 31% on the s&p. we talked about the move in the two year. the equity markets over the last several days up 6% since powell started speaking wednesday. caps on rallying, futures down a third. and crude, there it is, up 2.5%. lisa: in the sea, a growing consensus that we are headed toward 150 dollars and not necessarily on the new york stock exchange but perhaps brent. what does don't fight it the fed mean in 2022? at 8:00 a.m., we get a number of central bankers speaking on a panel, including jerome powell

and andrew bailey. this comes as a backdrop of a shrinking pool of yielding data. do these central bankers pushback? are they saying things are overvalued and we need to take the frog out to bring down inflation? do people respond or simile say things are going to be fine if you get inflation down and we can keep playing ball? at 10:30 a.m., we get a sense of how the u.s. is doing in terms of stockpiles of crude. we get oil inventories. i am watching this for the gas prices we have seen roll over. we have seen a little bit of a rollover. we see stockpiles go up or are we seeing a lack of liquidity and idiosyncrasies come as many have said? it is day two of the equality summit. the panelist i watching most

closely, the san francisco fed as well as the u.s. secretary of commerce. does she come out and talk about further alliances fortifying certain relationships to supply us with commodities to get around russia? how much is that a focus is the u.s. starts to remove certain tariffs particularly with respect to the united kingdom? jonathan: given everything going on in the world at the moment, why is the equity market up 6%? this is from kaiser. we are a degree less cautious because price action shows a market more tolerant of changes, challenges. the head of equity deliberative's research joins us. it is the information you get from the reaction in the market.

can you run us through that? >> is a combination of both. there are a lot of challenges out there geopolitically and from a monetary policy perspective, but you also need to respect the price action and volatility market we have seen for the last couple weeks, a market that is far less anxious. when the s&p is up, it is down more than you would expect. that says the markets are getting more comfortable with the risks in the system. i do not want to say they are telling you things are fully priced, but they are telling you the range of possible outcomes has narrowed and positioning was light. you put those things together and you have seen a sharp rally across the risk asset spectrum. lisa: is this pricing in two rate hikes and a federal reserve willing to go faster with reducing the balance sheet? stuart: i think the big debate

is if they do 50 in may and follow that up with 50, is that just bringing forward the rate hikes or are you actually going to get more rate hikes? if it is simply bringing forward hikes, the equity market seems well priced for that and it seems to be able to deal with it. if you have more hikes and the terminal rate becomes higher, i do not think markets are priced for that yet. that would be an underlying downside risk in the market. lisa: the bond market has gone to greater lengths to price that in than the equity market. does the bond market matter as much to the equity market as the oil price at the moment? stuart: those are the big risks, the price of oil and the terminal rate. when nasdaq and s&p were both down double digits, that was the market pricing an earlier lift off and the types of hikes we are now seeing in the market. from here, you need additional hikes to be priced in for that

to be an incrementally negative step for equity markets. on the bond side, bond volatility feels like equity volatility, so it is hard to determine with price they are but the big debate is are we increasing the total number of hikes or just shifting the timing around? that differentiation is going to determine how equity markets perform. jonathan: could you reconcile the call number of u.s. banks and tech where it makes sense to hedge on both? stuart: it depends on how your portfolio is positioned, but the logic is if you are worried about a snapback u.s. tech and potentially china are the areas of the market that have underperformed the most, so that gives you upside convexity. if you are worried about rate risk, then owning financials gives you insulation from that. you are choosing from a menu

based on are you looking for the upside if this snaps or something that can work even at a higher rate environment. those are areas of the markets that have underperformed, that we do think there is a snapback ability if we were to get a relief and that is why we are focusing on that. from the bank perspective, that is probably not quite as high data as other parts of the market, but in our framework that volatility is quite cheap, so there is a relative value view baked into that. lisa: how good is cash as a hedge? stuart: it depends on how high inflation is. people are in cash or have taken positioning down significantly. in an 8% or 9% inflation environment, holding cash is not optimal. that is why we have seen folks step into the shorter end of the structure in the fixed income markets. sitting in a zero yields asset

inflation environment is not where you want to be for more than a short period of time. jonathan: good to have you back in the studio. in the distance somewhere. it is good to see you. last time around, at the front end and made sense in a 2% inflation world. maybe we go to double figures if we get to 10%. it is a different world. lisa: which is a reason people are going into high yield bonds instead of cash. what is the consequence of this type of activity not this year but next year, the year after, especially for -- if inflation does not come back to that 2% level? where does that leave the high-yield bond market given that yields are not climbing? jonathan: this is something several of our guests have said this morning and yesterday. at the moment we live in a

relative world between asset classes. do you want to be in equities relative to bonds? at some point, you turn to absolute rate and start thinking about the economy for the next 12 months. is it better or worse than the one we are staring in the face of now? for mohammed and others, it is worse, not better as the world progresses. lisa: the absolute world comes back into play when inflation normalizes. people have to look around and say, what holds value? how do i get my money back? what kind of damage has been done? jonathan: futures down .4% on the s&p. from new york city for our audience worldwide and on radio, this is bloomberg surveillance. ♪

>> keeping you up-to-date with news from around the world, this is the first word. president biden will travel to allies to discuss sanctions to punish russia for invading ukraine. the stakes have been raised by fears that russia could resort to deploying weapons of mass destruction. hawks and doves at the federal reserve are joining jerome powell to call for higher interest rates to fight inflation. powell put a half-point increase on the table for may. the st. louis fed president says faster is better when it comes to higher rates. one of the two flight recorders from the china eastern plane that crashed monday has been found according to china's official news agency. a tornado ripped through new orleans and its suburbs last night, causing severe damage and killing at least one person.

thousands of people were left without power. the tornado was part of an outbreak of thunderstorms that struck the deep south. one of the favorite meme stocks kept going. shares of gamestop surged today after rising on tuesday. the chairman says he has raised his stake in the company to almost 12%. 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. this is bloomberg. ♪

>> we are going to see a global stagflation. within that, we will see depression. we could see a recession in europe. we will see stagflation in the u.s. here and we will see a number of countries running into depth problems. that is the sort of world we are looking at. jonathan: go back to bed and just stay there. the advice from our opinion columnist. futures down .3% on the s&p, on the nasdaq down about .5%. just getting a statement from nestle. a spokesperson says they will suspend the majority of volume in russia. one of the companies that has

been criticized for not moving more quickly. brands such as nest quick -- brands such as nesquick and kitcat. lisa: companies want to exit and they are under pressure to exit. can they exit? how do the exit quickly without leaving assets behind in terms of people and factories as well as investments? jonathan: the only headline i saw first of all was to stop selling brands such as kitkat. i am not a big sugar eater. then kailey leinz told me she had never had one. kailey: why would i start now? jonathan: so you are not even tempted to try a doughnut. what about soda? kailey: only with alcohol. lisa: since when are you a sugar pusher? jonathan: i have at least tried

a doughnut. i have at least eaten one. i have dabbled. the important stuff starts now. maria tadeo in brussels. hearing from a spokesperson that germany plans no new sanctions package against russia. how will this play out with the president running -- lending in europe this evening -- landing in europe this evening? maria: what i'm trying to get my head around going into this meeting is the u.s. delegation says we are going to have more sanctions and going to look at loopholes and close them. in many ways, this was billed as the mother of all sanctions, but russia's banks and all those payments of bonds and dollars continue to go ahead, so clearly there are loopholes here to close. when it comes to the new sanctions, i struggle to get my head around against -- around what is going to be sanctioned. the 20 seven countries are going

to have to sign an approval on any new sanctions that will come through and every diplomat i ask , and i have put this question to at least six officials in the past two days, is are we going to see anything that looks like even a partial energy embargo from russia? come friday, we are not expecting fireworks. what we do expect is a conversation about european membership for ukraine, more weapons, but also how to assist. the conversation on energy, what i hear, what the market seemed to be pricing in is different. you alluded to this, the big announcement from nestle. i want to remind everyone saturday the president of ukraine gave a speech before officials that was broadcast across switzerland and said nestle promises good food. the people of mariupol cannot access food. you can see that resonated and

you are seeing the action today from nestle. this is just one company, but ukraine has threatened at least 50 companies. >> let's stay on the food crisis. this is one of the worst consequences for the broader world aside from the commended terry in disaster in ukraine, food shortages that people are expecting. is the u.s. preparing for that, trying to ramp up production and get around fertilizer that they have purchased in the past from russia? >> on russia specific issues, fertilizer from russia is a broader conversation than anything congress has gotten into. there is a conversation starting at least about basic food aid. you mentioned the world food program. they are looking to effectively double contributions from the u.s. and elsewhere in the world. that has already started a conversation in congress.

the executive director is a former south carolina governor who has been in touch with lindsey graham, the top senate republican for the panel that funds the state department and foreign contributions. he told me a few days ago he is pushing for another bill with ukraine related funds that would come in his view, hopefully include money for food aid, but the broader issues relating to the way the war in ukraine could affect the supply chain and movement of people is something that is difficult for the u.s. were a number of countries to address, so that is in the conversation about funds that the federal government could send to groups, but it remains a challenge. >> we also to consider china, the player that will not be joining these meetings between the president and european and nato leaders this week. how does that factor in?

is there consensus among allies on the friendship between beijing and moscow? maria: we are about to find out by the end of the week because i am pretty sure this conversation will come through tomorrow, when european leaders and the president of united states meet in the central brussels district where they all have their meetings on a political level, and i'm sure that china and russia will feature heavily. for the time being, on the agenda for april 1 in the meeting that is still supposed to take place unless he gets canceled from now until then, you can imagine for the delegation it is important to get european nations to agree on china should not get involved in the military front and should not help russia get away with sanctions. this goes back to the initial point. there is now almost an understanding that the mother of all sanctions is not as big or

has not had the impact they were expecting over the short term and they want to focus on loopholes and preventing help to russia to get away with this. jonathan: thank you. the president of united states lending in europe in a few hours, later this evening. forgive me if this sounds snarky, but surely the time for words has passed and it is about action? if the best we can do is a strongly worded statement, is that enough from nato, a strongly worded statement about china? >> enough to end the conflict? no. enough to create a feeling of momentum? it depends on what is happening behind the scenes, what the red lines are. that is an unspoken reality. there are red lines. if there are biological or chemical weapons used, what is the response from the western world? jonathan: full team coverage out

of europe with the president heading to the continent, already landed, getting ready to deliver reporting from their. i am looking forward to our team coverage for the next couple days. good morning. futures down about .4%. this is bloomberg. ♪

♪ anna: -- jonathan: this has been such a fascinating week. futures right now, good morning to you, down 4/10 of 1%. through tuesday's close, we have talked about the move wednesday, thursday, friday. the equity market on the s&p up almost 6% through yesterday's close. two-year yields, 10, 30, coming back a little bit on tuesday. a move over the last month for the march month has been absolutely massive, by more than 70 basis points. even with that, equities have rallied, seeming ok.

what you are seeing post-fed's financial conditions have become less restrictive in the united states. not tighter, less restrictive. lisa, you have got to ask yourself if that is a problem with the fed, we will have to do more, get the 2%, get to 3%. lisa what is: the instrument for transmission of their policy if markets are not responding? how does the federal reserve effectively dampen inflation? how does this manage to manifest itself in a world where housing prices are still going up? jonathan: on the charts, a small move, not a major move. you would think post-powell, you've got tighter financial

conditions, but that is not what we've had. kailey: you would also think post--powell with the idea of the quiddity being sucked out of the system, you may be seeing less activity in some of those areas like meme stocks. gamestop, of course, is the original, and its chairman said yesterday a 12% stake in the company. shares of 30% yesterday -- up 30% yesterday, taking other meme stocks like amc up with it. general mills earnings out before the bell this morning. the company still sees input costs of a percent-9% this year. previously, they saw the chance that earnings would be down on the year. now they say it is going to be up 2%. really goes to show you pricing power that companies are able to

exercise, something we heard yesterday in the interview with michael mckee. this is the other dictation software company yesterday, reports of a breach. a good deal of their losses from yesterday. down about 3.5%, investors clearly still looking for answers around about. what else are we looking for answers? investigators in china trying to figure out because of the crash in a southwestern province. one of those black boxes has been found, so we will see if more answers can be derived from that. this becomes a trillion dollar company yesterday, six days in a row. part of the optimism in berlin. the stock down a little more than 1% before the bell.

jonathan: what a move. big move in the equity markets, up almost 9% since chairman powell started speaking. brandt on wednesday, some clarity about the futures of the fed and that is why we got some form of a snapback rally. what is happening with this equity market versus what we have seen in bonds? >> thanks for having me. everyone that watches the market thought the fed would be aggressively hawkish and then follow up again on monday as the early conference sounded even more hawkish, using the word expeditiously as opposed to steadily and they describe the rate path. if you looked at the equity market, i think we would all be

surprised. not to mention there is the backdrop of a war, that higher inflation. i think it is telling us something. i do think that this move in equities is telling us that perhaps the fed is not going to be able to go as much as what is currently being priced in and also as much as to us. at least, that is how i'm reading it. lisa: if markets are treating this as though the fed can't raise rates that much, does that give the ability to raise rates that much to convince market that yes, we will go that way? >> we have to think about why they want to raise rates. but we also know the mathematics just because of the way things are going to turn out by the middle of the year, there are

going to be many -- but inflation is going to come back down. lisa: hold on a second. i'm sorry to cut you off, but you are in camp transitory. you think that story is not dead. >> i was never in camp transitory and i am not even now, but today's levels are not going to be persistent. things are still going to be tight, don't get me wrong. we are not going to go back to pre-pandemic levels for a very, very long time. but much of the inflation we are seeing now is being caused by the supply side, not by the demand side if you are looking at food prices, energy prices, auto prices, some of these are running at significantly higher level than we have seen in the past and they are related to supply chain disruptions, or supply disruptions. i don't know that the fed

raising by 200 basis points is going to make a dent on all the supply or energy prices. lisa: speaking of those higher commodity prices, given how far they have run out and your indicating that some of that will begin to normalize, is it too late to start trying to play the derivative of that, getting into materials at this point? gargi: we've been talking about the value and quality barbells, from the beginning of the year, even from the middle of last year. we've been telling our investors that they should be focusing on some of those values in the market, the financials, energies. qual gives you access to that and those are companies that do well, have better pricing power, and a rising inflationary environment. going back to your earlier question around how can you say that despite the rise up in

energy and commodity prices, one of the things that i think investors should continue to focus on is actually using commodities as a hedge. we talked about the need to hedge for inflation, not in the transitory camp at all. you need to be thinking about the multi-asset faction. i've been here before and i talked about that, obviously there has been an incredible run. now is perhaps the time to add commodities as well. again, this is why we paint a diversified basket of commodities. this is not just in energy price story. obviously, i think this is much more around food prices, agriculture prices, precious metals. all of these which are having some supply and demand imbalances as well as structurally, there is a reason to amend going forward. kailey: is there any reason right now to own longer data?

gargi: i would say that if you are a penchant client and you are looking at your funded status and you have had a huge improvement in your funded status, then yes, maybe you want to be owning 10 year treasuries as opposed to 2% just a few weeks ago. outside of that, outside of actually needing it for your liabilities, i think interest rates are still going to move higher, especially in the longer end of the curve. so i don't think so, no. outside of that, i don't think so. however, i will say that the front-end of the market, and again, i started off by saying that i don't think the fed will be able to go as much as what is priced into the market, which means that the front-end is reaching some exciting levels. that part of the treasury curve

is beginning to look rather attractive. jonathan: thank you, as always. when you are around, don't mention the t-word. kailey: inputs, inflationary inputs, the rollover. the transitory argument was... jonathan: face effects didn't kick in the other way until this year, and it just gets harder to accelerate from there. kailey: maybe, although we are seeing energy prices surge to new highs. i'm just wondering at what point the base effects work in the opposite direction given some of the shots we have seen from the ukraine war and the fact the labor market aims to be slower to catch up. jonathan: it gets harder to accelerate from where it is. 4/10 of 1%.

the nasdaq down three quarters of 1%. i'm open to ideas. in the bond market, yields are lower. crude at 112.18. later, a ton more fed speak. have we heard enough already? lisa: clearly we always enjoy more. maybe. jonathan: you want more balance sheet talk? lisa: i want more talk about the stock market. is it consistent with their goals? jonathan: this from the bank of russia, they will ban short-se lling in russian shares. 33 shares on march 24. that's tomorrow. from new york, this is "bloomberg." ♪ >> keeping you up-to-date with

news from around the world. ukraine's president says about 100,000 people remain in the deceased -- besieged city of mariupol and are under constant russian bombardment. about 6000 people were able to flee the city on tuesday. more than one third of coronavirus cases in the u.s. are caused by the omicron subvariant, a noticeable increase from a week earlier. it is most common in new england and the new york region. it isn't believed to be more dangerous than other strains, but it might be more infectious. in the world's largest food maker go quit making food in russia for now. nestle will quit selling brands like kitkat and focus on baby foods. multinationals are being pressured to fully exit russia following the invasion of ukraine. and judge ketanji brown jackson

is being closer to the first black woman on the supreme court. she held her own against a barrage of republican attacks centering on crime and race. republicans have all but conceded that she will get confirmed. the top ranked player in women's tennis is calling it quits. ash party is deciding to retire at age 25. she has won three grand slam titles including the australian open in january. she says she no longer had the physical and emotional drive needed to play at the top anymore. 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. this is "bloomberg.'

>> i don't think 50 basis points should be off the table.

if you do the math, i think we are going to probably need to lose some of that, but we are going to go into every meeting looking at the data. jonathan: the cleveland fed president, his testimony before the actual meeting. they clearly do. he basically said the other day what would stop you to go 50 basis points? he said nothing. lisa: how much are people looking at this? if the fed actually makes these moves, back to back 50 basis points rate hikes, do you think that stocks ignore then? jonathan: we will see. on the nasdaq, down a 10th of 1%. this comes from the bank of russia. trading at 33 stocks on march 24, that is tomorrow. what they won't allow is

shortselling in russian shares tomorrow. lisa, this is an improvement over the last few weeks, because you haven't been able to sell at all. that market opens tomorrow. you can't short sell, but there's going to be a lot of people who want to sell. lisa: if you sell at two low of a price, do you get called out for not being nationalistic enough? at what point is this not a market that can be representative of what market values are? lisa: do you remember when the chinese equity market bubble popped and the large investors were banned from selling? the large investors were. interesting to see what happens to your point on the patriotism of the large russian investors based in russia what they are allowed to do. lisa: they get thrown in jail if they sell. people thrown in prison if they protest. is there a similar move in markets? i just can't see this as really being free market. jonathan: the bank of russia to allow trading tomorrow, but they

won't allow the shortselling, they will ban shortselling in russian shares. >> you were just talking about who is going to buy russian stocks. if you actually look at the discount is offered for russian oil, we are looking at the russian euro great for oil. we are looking at the discount to bread. it is a steep drop, about a $30 discount to international benchmark. what it really tells you from the west or even from china, there are some folks who are actually buying at a discount. india really keeping that relationship with russia still alive. in fact, dependence on oil, the need for oil which is increased in the last year or so, they are taking advantage of that discount. keep an eye on this discount. i wonder what other buyers show up. jonathan: thank you.

that chief emerging markets credit strategist, damien, what does tomorrow look like? >> tomorrow could be very different from today. we are still waiting to see from russia, a $66 million bond payment. 6 million bond payment. >> we will see if it pays onto bondholders. and then one of the largest openers russia has an increased period of bonds. that was due back on the 16th, today is the 22nd. it is not paid by today, they might be in technical default. lisa: meanwhile, we've been talking about what it would take for russia to default. how are they preparing for this and how much do they actually want russia to default so they can start to recover some of their investments? >> i was just on the phone

yesterday, they had a whole litany of -- a playbook, really, for foreign creditors with money trapped in russia. foreigners are not permitted to repatriate. first of all, they are not permitted to sell any russian securities and they are not allowed to receive coupons and dividends. and they are not allowed to wire more than 10,000 u.s. dollars offshore. even if you were able to sell, you can't get your money out. that is the quandary facing most russian investors. lisa: is that contained to just russia? will there be any broader contagion effect? >> i believe there may be, but right now we just want to take a step back. there are 80 $2 billion of russian bonds outstanding at the beginning of this year that has all the markdowns zero. if you want to look at something like china, they had a lot of problems on the property side, something on the order of one or $20 million in market value going into 2021.

this property developers have lost $100 billion of their market value. $200 billion of market value has been wiped out into all of the default we are seeing in china and the property sector and certainly what we are seeing with russia. jonathan: you touched on something and we'll talk about tomorrow specifically. local equity that dollars dollars? picture of how trapped some of these assets really are? >> look, if you are a foreign investor, and unfriendly foreign investor as pressure likes to call it and one who has an interest of more than 25% in the russian equity, get about it. government may actually repossess those holdings. they've already made the statement that is what they are intending to do. flip to the u.s. side, u.s. creditors who basically have no

recourse might very well look to seize russian assets held offshore. we talked about this last week. it is not just russian assets, we mentioned russian railways, you name it, they all have assets offshore. those are the assets that dollar creditors and offshore creditors are going to be most focused on seizing. jonathan: thank you, sir, as always. a timely conversation. they will, however ban shortselling in russian equities. tomorrow, he might have a mark on what the market actually looks like. >>-the difficulty of transacting in the dollar-ruble trade, companies want to exit but don't know how.

jonathan: what did the ceo say, that my peers couldn't get out even if they said they want to get out? lisa: he basically said the u.s. and u.k. major oil companies are going to have a much harder time estimating their russian assets. he said none of my competitors has left russia or knows how to leave russia and how much of this is just an excuse for them? jonathan: how to leave is the big question. earlier on i said that his quarterly earnings season for these energy companies is going to be one of the most controversial earnings seasons for these energy companies in a long, long time. lisa: how much pressure is there to take some of the profits and put them back into supporting consumers and how much they are paying out? how much do they then justify it? at a time when people are calling for more investment, it can be tricky. jonathan: i'm sure certain

politicians are booking their media appearances right now. lisa: you are actually looking forward to this. jonathan: i'm interested to see how some of these companies will manage the pr of it. futures down half of 1%. from new york, "this is bloomberg."

♪ >> the markets are starting to play huge catch up to the fact that there is a real big moment of truth the bond market. >> it is the inversion. >> it is getting a lot harder and harder to imagine that we are going to have a truly soft landing. announcer: this is bloomberg surveillance with john keene, jonathan ferro and lisa abramowicz. jonathan: live from new york city for our audience worldwide, good morning, good morning.