manus: this is "bloomberg daybreak europe." these are the stories setting her agenda. joe biden calls for russia's removal from the g20. u.s. officials worry the russian leader may lash out dangerously. biden's visit to europe

continues. today he will headed to poland. more than 2 million refugees have entered the country. plus, risk for the yen. some strategists see room for further unraveling of japan's currency amid rising commodity prices. the heavy lifting has been done. we had monster calls on oil and extreme calls for rates. that gives me a moment to reflect. good morning. francine: i think the market is trying to work through possible scenarios. you look at what traders are betting on, maybe it is worst-case scenarios, but you are right, there has been a shift in the market. they are trying to find the faultlines, what happens to oil if this escalates? a big push on yen.

manus: monster moves. kuroda stepped in. you can interpret that different ways. i want to get to larry summers. you have seen nothing yet. this is what he says. we need a clear signal. they are prepared to accept some slowdown in economic activity. otherwise we are going to make the mistake of the 1970's. that will ultimately create a need for a really catastrophic recession. i put it to you the market is nowhere near the state he says we need. francine: larry summers has been the outlier saying there is inflation, it is sticky, the fed is going to have to do something about it. he was not listened to for the last 12 months and suddenly he is at the forefront of this debate. when he talks, especially now that he called it right, people

listen. it also goes to what we were talking about, the fed has to decide whether to do a 50 basis point hike just to show they mean business or whether they do this gradual 25 basis points. we had a conversation with the federal reserve bank of chicago president charles evans. he is not a voting member of the fed open committee but he says he is comfortable with raising interest rates by 40 percentage point increments, being open to a 50 basis point move if needed. if you do 50 basis points, you have to communicate to the market, what does it mean for the next one? does that mean you're more worried for the economy? is it mean you're forgetting the economy and focusing on inflation? manus: i think one of the best lines is where larry lashes back and says stop reflecting on previous aries of 1994 -- theories of 1994. they were ahead of the curve

then. get your greenspan hikes on. quick cross asset check for you. fx traders could get bored. they could get bored because of the lack of volatility. taking dollar-yen to 150. a bit of a vacillation this morning for brent. jp morgan says you are going to get demand destruction coming into this market. it goes to the heart of the issue. will the fed hikes 50 basis points and how quickly will they do qt? francine: it is really trying for investors to grapple with what the fallout will be from raw materials. we need to work through the second and third round. investors trying to figure out the ramifications for volatility. the yen snapped its prolonged drop against the dollar.

japan's policy divergence could apply to the pboc. european equity futures steady for the moment but could change at any moment. mark: -- manus: some big calls out there. let's bring everybody together that is standing by. biden heads to poland. maria tadeo is in brussels. juliette saly is in singapore covering the latest on market moves. francine: we know the u.s. president joe biden is heading to warsaw to meet with his polish counterpart after back to back summits in brussels. let's start with bloomberg's aggie cantrell. what are we expecting the president to do in poland?

how much assurance can he give? >> before he goes to where i am right now in poland, where he's going to be speaking to the president and there's going to be two focuses to his meeting, first he says the humanitarian angle, he's going to be talking about the humanitarian crisis with poland seeing the tangible effects having accepted 2 million refugees coming over the border from ukraine. there is also the security side. he is expected to meet with the 82nd airborne here and there are going to be talks about the effort to bolster nato, especially places like poland and the baltics and romania and the concern for these areas that are feeling this sense of insecurity around russia's invasion in ukraine to their own borders.

manus: thank you. european leaders continue the diplomatic push. president biden is expected to meet with the european commission president ursula von der leyen. maria tadeo is on the ground in brussels. great work in gathering the leadership on the ground. how higher the stakes? what is accomplished? >> i can testify it was a marathon day, back to back meetings from early morning until very late in the evening. i think the president of the united states summarized it well. he said when vladimir putin invaded ukraine, he was hoping for disarray from europe. he is getting the opposite. we have never been more united behind nato. the french president coda a very similar line of thought.

emmanuel macron said nato was -- as an alliance. yesterday he said it was back on its feet. it was very clear. leaders here were speaking with one voice. timmy, as of -- to me, as of friday, i cannot tell. we did not get the deal we were expecting. perhaps we hear from ursula von der leyen and president biden. there is nothing new there. when it comes to weapons we did not hear a lot that was new. when it comes to the details, timmy -- to me i am not sure what is new here. >> the u.k., they say boris johnson is the most anti-russia

leader. today leaders continue discussions with energy taking center stage. does the u.s. give europe enough assurance so they can put extra sanctions on russia? >> yesterday we heard again from the head of the commission saying we are aligned with the united states on russia. on china, the u.s. and the eu saying we hope china does not get involved and use -- and should use superpower status to mediate. on energy, not a lot has changed. we are waiting for a meeting between biden and ursula von der leyen. there could be an announcement on lng but it is becoming clear this is the situation they do not have an answer for. they are seeing potentially a difficult winter if there are issues with the supply chain of natural gas into europe. i put the question to mario draghi and asked would europe be prepared to pay rubles to get

gas. >> we consider it a violation of existing contracts. we have to cope with the recession. we have to mitigate the unavoidable. i would not call it recession. i think we have a slowing down of the economy. >> that was mario draghi. should they pay rubles for this gas? the impression we had from a number of officials is that the eu believes russia is playing with fire by asking for that. it could lead to a decision for russia, do you accept the euro payment or do you want to cut flows? francine: thank you so much. maria tadeo in brussels. some great interviews for eu

leaders. for the latest market moves let's bring in juliette saly. the eu refrained from fresh action. >> on the back of what maria was talking about, backwardation. the most active wti contract up by 7% over the course of the week. we are watching to see what will happen again in russian assets today after we saw a floor under the momentum we saw during yesterday's session. you have a stronger ruble today. the dollar dropping by close to 2% against the currency. when it comes to movement in asia, once again i see concerns about potential adrs that have fallen through onto wall street. the china tech stocks weighing on the overall regional benchmark index down 0.5%. manus: so the three words that

frighten the fx trader, we are watching fx closely. >> governor kuroda in parliament today, wasn't that wild? we saw big moves. we know it has been holding at this six-year low. the market has not lost faith in the yen but they are looking to the fact they are saying it is going to be inflated, not yen weakness, that drives policy at the bank of japan. we know it is about this differential between the fed and the bank of japan. we are not seeing such a safe haven. you are seeing the end stronger against aussie and the u.s. dollar. this had been out a seven year low, still seeing momentum in the nikkei. this flows through into the bond market. we did have the bank of japan buying up bonds in today's operation, but it poses the

question of how much further you might see intervention. >> watch out for yen. thank you so much, juliette saly in singapore. coming up, the number of fed officials open to a 50 basis point rate hike grows. manus: later, more of my conversation right here on bloomberg. ♪

>> the russians are going to try to get around the sanctions on their gold and we are taking steps to try to make sure there is no leakage. >> it is hard to imagine such a slaughter can happen without our appropriate humanitarian response. >> it is a war so we have to cope with the recession, we have to react to that. >> it is better to pay in dollars or euros as the ukrainians are doing. manus: the world leaders reiterating support for ukraine, rejecting the russian demand that gas payments be made in rubles. a month ago, you challenged your

inner donald rumsfeld, didn't you? the known unknown on sanctions was what they would become. how extreme a moment are we at in sanctions? how much more extreme can sanctioning become? do you think markets are prepared for a move by europe on gas which is not there yet? >> that central bank freeze was very unexpected. and a very powerful weapon. what that also leads to is -- that leads to the only tool russia really has in its toolbox economically to hurt anybody in the west is gas exports.

that is the fear, that the ruble is one step in that direction. i am not sure legal contracts matter here. it is about the facts on the ground. and the fact on the ground is that half of europe's gas comes from russia, that is the issue here. francine: they have been saying that is not the contract, but it is so complicated. does it go against sanctions? it goes against the spirits of the sanctions. do you assume there will be a cut off of gas and oil from russia? does that plunge europe into recession? >> i was certainly saying that was something i would not expect to happen to her russia so much. -- hurt russia so much.

now we have hurt russia so much economically in this conflict, if it gets worse, if they look like they are starting to lose, this is the easiest economic sanction they have on europe. to your question, in terms of does it mean recession, absent fiscal support, absolutely. that is a huge impact. it is a huge impact to germany in particular. i would expect fiscal support cushion that. manus: i want to tap into asset allocation. rolling over going to bed last

night, suddenly bonds look interesting. from the european perspective, do you think bond yields are beginning to look more appealing? >> it is a relative game. bond yields rise globally. the reality is europe is more appealing relative to here as an economy which -- as rates increase even more it is hard to see the u.s. getting to recession in the same way europe will be affected by gas increase for example. the short-term answer is that the absolute levels are still very low. that is the reality here.

for asset allocators who are forced to allocate to government bonds here, yes, in absolute terms it is good, but it is not that great. francine: thank you so much. azhar hussain stays with us. in the meantime we are getting breaking news. traders in china have struck a rare aluminum deal with russia's roussell. this is a huge aluminum producer, ukraine hitting help from traders in china to keep its smelters going. as a sanctioned company. -- and this is a sanctioned company. manus: this place to the point

with biden. this time last week he had a two hour call with xi jinping trying to get more support from china for the west position. that did not go according to plan. if china does more via companies to support russia, there will potentially be consequences. this is the first step in that. we are good -- going to get back into the treasury yield story, the fallout from war is a new crane. we continue the conversation with azhar hussain right here on bloomberg. ♪

manus: it is "daybreak europe." i want to bring up a quote from larry summers. we need clear signals the fed is prepared to accept slowdown, otherwise we are going to make the mistakes of the 1970's that will create the need for a catastrophic recession. our guest this morning is azhar hussain. larry goes on to say really that we are living in a world where we are trying to have this immaculate condition of inflation and it has not happened. how much more aggressive does the fed need to be than the markets currently assume? >> the markets are pricing in a 50 basis point move at some point.

does the fed need to get ahead of the curve? yes. is larry correct in terms of -- it is hard to say. the inflation story is murky enough. most than the markets believe it will slow grow by itself. perhaps that is the key here. the central banks have an unenviable job here. francine: they always do. it is terrible being a central banker. they are the smartest people in the room may be a central banker in this environment?

>> i think bonds are saying recession -- are not saying recession yet. even the fed's preferred indicator tells us there are upward slope three months out. bonds are saying maybe things will get worse and the direction is that way. bonds historically are proven to be more accurate than stocks. i think the bond market is right . from the u.s. economy perspective it is hard to see a recession in the next 12 months. manus: we are going to have to leave it there. azhar hussain,

francine: this is "bloomberg daybreak: europe." these are the stories that set your agenda. joe biden calls for russia's removal from the g20. u.s. officials worry the russian leader may lash out dangerously. biden's visit to europe continues today. he will go to poland after 2 million refugees have entered the country.

you had some great interviews yesterday. interesting to hear you talk, the president not condemning the war because he wants to serve a some kind of moderator. i don't know if investors believe that but it is a support for the south african economy. manus: it is difficult to get political leaders outside of the framework happening where you are at nato and across the pond, but ramaphosa stuck to his line just to make the point, when apartheid was crushed in this country, it was driven by sanctions from the united states , but more importantly, the ussr. if you try to understand the framework of south africa's position, it goes back in history.

neutrality is what they are pushing. my question is what this could cost you in the medium-term. it was a great conversation. francine: a great conversation. you spoke to raw materials producers. you are caught between a rock and a hard place. it is war. you look at the shelling and it is horrific and you look at what leaders have to take. manus: this all piles on markets. i saw a call for $150 oil, $150-yen. these are monster calls. and larry summers going for it all. let's have a look at the quote. slowdown in economic activity. we are going to make the mistake of the 1970's and create the need for catastrophic recession. that is a heck of a call.

. francine: i never thought i would say it, but after the many times larry summers has called for the fed to do something about inflation, if you look at the market pricing, it has been catching onto what he has been saying the last 40 months. investors have really boosted bets on this half a point move at the fomc may 3 meeting after jay powell already on monday -- and this was the turning point for the fed. he said the central bank is prepared to take such a step if necessary. we heard from charles evans saying he is comfortable with raising interest rates by a quarter of a percentage point but he is open to a 50 basis point mead -- move if needed. manus: absolutely and i think -- take the markets away, take them away. francine: let's have a look. we could talk forever. this is why this is so much fun.

i wish we were face-to-face but it is something we will have to wait a little bit longer. global stocks are set for consecutive weekly gain. given what we have seen in terms of metals being taken out, some would suggest equity investors are too optimistic on the future. they do see economic growth. high inflation and the fed campaign against price pressures working. the bond market is different, but we are seeing optimism across futures in europe but also the u.s.. manus: jobless claims at a 53 year low. when you look across the market you have socgen -- look at dollar-yen. down came the dollar, up went the yen. i wonder what intervention they might use. oil is prevaricating because

there was no appetite for the eu cut off. then you have other moves from markets as well. let's see how this frisky friday goes for dollar-yen. francine: eu officials concerned china may be ready to supply tech hardware to russia. beijing's aid could soften the impact of sanctions the west imposed on moscow over the invasion of ukraine. china's stance on russia was a central issue between president biden and allies from nato and the eu. let's bring in our greater china editor. traders in china are trying to strike this rare deal on alumina. i guess a small amount to see if they can bring it in some terms of logistics and circumvent sanctions. is china going to be the lifeboat for russia economically? >> that is what europe now and joe biden are worried about.

they have talked about watching what china is doing. if you look at who is following the sanctions and violating them , china might secure -- supply russia with high-tech components they cannot get so easily. things like chips. there is no evidence china has done this. beijing has been very careful about how it navigates this crisis. jake sullivan said they have not seen evidence so far but are monitoring everything will day. -- every single day. manus: china's foreign minister is on his way for talks today

with ukraine. what do we expect to come from that? india is in this gray zone like south africa. they have not voted at the u.n.. what does that look like? >> this is the first time since 2019 when there were deadly clashes along the shared border, that is a tense area. they are going to be speaking about that but they are also going to be speaking about the war. india and china are in a similar position as russia. they did not condemn russia's actions. they abstained on the yuan resolution. -- the u.n. resolution. for india it is all about weapons. for china it is more about the u.s.. this is difficult because of

other major democracies around the world, particularly the quad. francine: thank you for joining us. bloomberg greater china editor jenni marsh. with us now, timothy ash. as always thank you for coming on. will china really save russia from sanctions? >> good morning. i kind of doubt it. china is in a delicate position. my concern was that china would use russia's invasion of ukraine as an opportunity to do something similar in taiwan this year. that now seems unlikely. the chinese are looking at this as an opportunity to improve relations. they are no longer in the doghouse, no longer number one enemy for the u.s..

what we have seen in terms of chinese banks, they have been very reluctant to pump lots of cash and russia. they are worried. -- cash into russia. they are worried. manus: one of the things that came out of yesterday was the lack of galvanized unity on commodities, buying oil and gas from russia. you would say energy experts need to be stopped and the next two weeks will be critical. the lack of cohesion, this is the fisher -- fissure putin is banking on. do you think the markets are ready to stop taking gas from russia or vice versa? >> they are likely to stall this initiative. the markets have got this crisis

right from the start. if you look at conflict on the ground, it stalled. i would argue putin is losing. he needs to do something different. the question is if there is another escalation from putin, what does the west do? the next option is energy sanctions. what we have seen is sanctions for things that were unthinkable. like swiss sanctions. momentum gets behind ukraine on the sanctions front. those in europe opposing different actions get rolled over. it is a possibility. francine: what do you think vladimir putin will do next? are sanctions working? i don't know if sanctions were imposed on the possibility he backs down which he has not done at all. >> russia got the calculation wrong. they did not expect ukraine to put up the fight they did and

they did not expect the west was going to imposed sanctions. look at the collapse of russian financial markets. russians have lost a huge amount of wealth due to sanctions and many will be questioning what he is doing. lavrov this week suggested they were not prepared. they did not expect this level of sanctions. i think for ordinary russians there will be a massive impact. the question is will they do anything about it? will this make putin worried? in terms of escalation, he thinks he has escalation dominance as they call it. he has things he can go through. nato has made it clear there are worried about battlefield nuclear weapons. he could just go to the playbook

he is going to, which is hurting civilian targets until they roll over. they have not so far. we will have to see. manus: it is quite a protracted process. let's pivot briefly to the flow of money and the consequences. a great story that abramovich is in my hometown trying to find a new location for himself. that is our big story. there is flow of money. positive yield curve here. three rate hikes. money into emerging markets. so your take on the flow of money and the consequences of escalating tension with russia and ukraine? >> you mentioned dubai. high oil prices are good for some economies.

gcc is one of them. one of the winners. the gcc and the gulf region is flush with liquidity because of oil prices. the question is where the money flows out of dubai. russia is interesting. many russians will be trying to get money out. the question is where it goes. the assumption is dubai or turkey. opec -- sanctions will be all over turkish banks and uae banks. they need to be very cautious unless they want to go on the blacklist or further deteriorate the relationship. russian capitalist struggling to leave. russians themselves have imposed restrictions on capital outflows.

manus: it is difficult to get the money out and relocate. thank you. that is timothy ash at bluebay asset management. let's get across to juliette saly for the first word news. >> the officials are concerned russian president vladimir putin may escalate the war and ukraine as troops get bogged down. bloomberg has learned officials -- nato leaders have promised to step up defenses against the threat of chemical and nuclear attacks. we have had more details on china's worst aviation accident in decades. the latest findings suggest the plane may have started raking up in mid air before hitting the ground.

at least one piece has been found six miles from the main crash site. the highly unusual dive has -- and experts. apple has long had subscriptions for software but a bloomberg scoop says it is working on subscriptions for hardware. the move could see device owners paying a monthly fee. sources tell us the services are tied to applecare and some service bundles. shares fell 2% this year. most of the world's largest banks and asset managers are failing to set climate goals for 2030 raising concerns that global finance is kicking the can down the road when it comes to greening the industry. just a third of the largest banks have robust goals for slashing greenhouse gas emissions. global news, 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. francine: thank you so much.

coming up, renewables, the ukraine war, and nickel. more of the exclusive conversation with the chief executive officer of anglo american. this is bloomberg. ♪ .

manus: the energy transition is likely to stall -- racing like hell. we caught up about renewables, the ukraine war, and nickel.

>> i might not have agreed with some of the things they need, but at the same time, it is easy to say in hindsight. to be fair, i think they responded in an appropriate sense of urgency. whether they did the right thing , maybe a bit too tight. manus: biden has just landed, he is in nato. what we are trying to work out is the risk of energy supplies from russia into europe and europe and the demand from russia. do you think we might see a fatalistic moment of when russia may risk gas supplies into europe? >> the risk -- if you look at the issues in the world, battles

of natural resources unfortunately can lead to extreme behaviors. i hope for all our sakes both sides take a deep breath, consider the issues, and work out how to deal with the transition. the one thing i will say is the transition to renewables and green energy is going to stall for a short period of time and rush. there is a negative consequence in the short term, but long-term , everyone is going to push to get renewable strategies in place. manus: which renewables are going to race and when? >> we are going to get smarter in terms of how we apply technologies. batteries will win in the small leaders, hydrogen will win in the large leaders. you will have different implications.

we have to think very differently about the way we are applying these. manus: is this stagflation? is that where we are right now? >> i am not sure. i still think, and i'm hopeful an agreement will be sorted around ukraine, russia, europe. the world cannot afford -- we cannot afford to kick the can down this road. we have to find solutions that work for everyone and that means dialogue. the one thing i hope is this reaffirms the need to keep alliances strong, that we are making sure the world talks is a global community. what we are having now is not sustainable. as a business, we have our role to play.

manus: mark cutifani. a leader in his last month of tenure starts to talk in a more relaxed manner. it was a great conversation. very truthful. the lme did their best with what was in front of them but he does worry about longer-term implications of the decision to shut the trade. francine: a great interview. it is all about timeline. if you are going to go through this energy transition we will get to renewables but it takes years. if you are trying to wean yourself from gas and russian oil, it does not match. that is where the cruxes. great work on the ground in south africa. still to come from chelsea to dubai's swanky as neighborhoods, abramovich is among the russian tycoons scouting out and rowdy

properties. emirati properties. ♪

francine: welcome back to "bloomberg daybreak: europe." property brokers in dubai's swankiest neighborhoods say requests from russians are skyrocketing. let's bring tom metcalf who leads our finance coverage in london. i also want to get to the swa nkiest places with manus cranny. he is going around trying to buy a house we understand or a flat, whatever it is. it is probably nice. with what money? >> that is the interesting question. he has been sanctioned in the

u.s., the u.k., the eu. he has moved money around. dubai is a natural place to start looking for a new home. manus: certainly some friends of mine said he has to by an apartment -- that was last march. they are double what they were last march. he did not -- i did not do the trade. why is dubai so popular? >> it comes back to this stance the emirates have taken with regards to russia. no sanctions against russians, and then in terms of practicality, it still has direct flights from moscow and it is one of the places they will look as a global financial center. there are other places like london that will not have them. manus: tom metcalf.

tom: welcome to bloomberg markets europe, i'm tom mackenzie live in london. mark cudmore joins me in singapore. the cash trade is less than an hour away. here are your top headlines. bloomberg reports u.s. officials worry vladimir putin may escalate military operations in ukraine. president biden cal