>> i don't think we have seen the low for the year. there's more pain to come. >> the markets are getting more comfortable with the types of risks in the system. >> the market is underestimating the impact of what is going on now. >> i don't think investors are necessarily convinced we will all of a sudden be ahead of the sunrise tomorrow and be all clear. >> this is bloomberg surveillance with tom keene, jonathan ferro, and lisa abramowicz. jonathan: this is bloomberg surveillance live on tv and radio alongside tom keene and kailey leinz. tom: what i find interesting is the idea will russia exited the g20? that is a signal of the moment. there are other side stories. we will go to maria, to

anne-marie, to aggi. the data is beginning to come in. you mentioned the german data. that means something to brussels. jonathan: german business confidence collapsed. that is their word, completely rolled over in a massive way. tom: what is going on into the weekend. what the pros are watching the middle distillates of oil and that will be the conditions like german confidence where we get a measurement of where we are now. we don't know where we are. jonathan: 216 on the u.s. two-year. kailey: what is the yield curve signaling, especially to a federal reserve that throughout the course of speakers that we've heard through this week,

and will get more today, are pushing the hawkish narrative of 50 basis points in may and perhaps again a month later. jonathan: year end they are looking at yield curve inversion. they have the two-year at 290. they see the curve inversion at the end of this year, and of next year, and end of the year after that. could we have a few years of curve inversion without a recession? tom: we haven't had it before. the answer is no. i'm guessing that the yield curve is a complex study. goldman sachs is able to do that. the key thing is not the inversion, it is the duration of lethargy that they are signaling. jonathan: a ton to get through. features are unchanged on the s&p, no drama on the nasdaq, yields come up a basis point. the front and to lift again on two-year yields at 2.16. crude heading south, 110.70.

kailey: crude heading lower after the energy agreement between the u.s. and eu that president biden announced in brussels earlier. in 50 minutes or so, 6:55 eastern, he will be heading to poland. part of this is to see the ongoing relief efforts when it comes to ukrainian refugees. poland and russia are really a key relationship to focus on in how the biden administrational plaintiff that. on the data front, business confidence rolling over in germany. we will get consumer confidence at 10:00 a.m. eastern from the university of michigan. 59 point seven was the pre-lim are you to. the one year inflation expectations five point 4% come the highest since 1980's. -- 5.4%, the highest since the 1980's. does that alter the federal

reserve's thinking? more fed speak on deck. we have heard for them multiple times. they will be giving a speech literally about containing inflation. will he strike the same tone we've heard from pretty much all of his peers this week? 50 basis points in may? jonathan: team coverage starts now with annmarie, maria, and aggi. how significant was this this morning? >> you can see the u.s. trying to help europe get this applies of lng to loosen their dependence on russia. we have to put context to this. it is a planned deal with a task force involved. two, 15 bcmould potentially fillhe hole of russian

liquefied natural gas imports. when you look at all natural gas that comes from russia to europe it is 155 bcm. that is less than 10% of what they are trying to do. it is a step, but a small step. tom: what does poland want from president biden? annmarie: part of what they wanted was a clear commitment from nato to protect the umbrella alliance over poland. he got it yesterday when biden said that the reality was vladimir putin invaded ukraine thinking he was going to unleash chaos in europe but we are more united than we have ever been. they said it is true, we will see more troops on the ground and we will see bigger nato deployments and operations that get extended over longer periods of time. the other thing today is that the president of poland will really want to get from biden a clear, clear commitment and very clear signal that the united

states will stand by poland and vladimir putin -- if vladimir putin gets close to the polish border. they have a huge land border with ukraine.the other big issue that will feature highly is belarus. the geography for poland is so complicated. they have ukraine at war on one side and on top they have belarus. kailey: when the european union talks about the possibility of tightening sanctions, are we know monger talking about russia ? how does belarus factor into that? maria: belarus has been sanctioned in many ways and there is a real conversation about cutting them immediately. i would say that the leader of belarus, but in many ways now a puppet dictator for vladimir putin, is personally sanctioned by the eu. the red line is if we see belarus with belarusian troops fighting the

war in ukraine that will escalate, the big question today in brussels is are we going to pay rubles for gas? i asked this question to mario draghi in english and italian so there was nothing lost in translation. he told me know, that this is a huge breach of contract and it is up to vladimir putin to decide if he wants to wreck his big oil and gas company to unleash further chaos in the russian economy. jonathan: the president today goes from brussels to poland. two stops. i want to get to aggi. the objectives of today's meeting? aggi: the objective is to fold. he will be having a briefing on the humanitarian crisis that is not only affecting ukraine, but of course poland has accepted to million of the 3.4 million

refugees that have come over the border. it is experiencing a huge flow of refugees and that will be a key focus of the meeting here. and then he will meet with the 82nd airborne. the security factor of this meeting is looking at the fact that not only is poland bringing in more and more troops to the area around the border but they are getting more support from nato. the 82nd airborne is here to meet with biden to discuss the security concerns for poland. jonathan: how is this playing out in washington at the moment? annmarie: at the moment there has been a sense of really rallying behind the president in terms of the tough sanctions. what you would see a pushback from republicans on is that enough was not done soon enough. a lot of them say that there should have been sanctions when the intelligence was that russia was about to invade. you see in a sense

bipartisanship. everyone on both sides of the aisle wants to talk tough on president putin and support the president in that regard. we should note that when you're dealing with a president dealing with a president that is now dealing with a war in europe for the first time since world war ii, a massive refugee crisis, there is growing support in the polls for what the president was doing. i was shocked that this administration that faces higher inflation that 80% of people were willing to pay higher gasoline at the pumps if it meant cutting off russian oil and gas. how long does that momentum last for this president? jonathan: great work as always. a busy morning for the president. the number one question most people have for europe is can the continent avoid a recession this year or maybe the next two? tom: i think like it was yesterday, and truly yesterday the headlines across the bloomberg were historical and i never imagined that i would see

them, particularly on chemical weapons. you did a great job framing that . today is the same except that we stagger to the weekend. -- weekend. the war does not pause on friday. it will be interesting where the work is on monday. jonathan: this week that has changed in a big way. we have been talking about diplomatic rate through's and talks between ukraine and russia. i haven't heard anything like that for days. tom: it has radically changed here, and we have the troops following with the president as well. the president has to come home and resell this. there was careful pulling in the last 24 hours. the american people, whatever their politics, in sum want a more forceful response. jonathan: i'm happy with the way that the administration has

dealt with inflation. but there is support to take a firmer stance. the support in ec with the way that he has handled his relationship, this was not about embarrassing your allies publicly, it was allowing them to do it themselves. getting to the moment they were supposed to get to. the germans were never going to come out and say we were going to cut russian gas tomorrow. this is about slow independence and if we can achieve that in a short amount of time. tom: diesel oil worldwide, singapore and diesel oil study front and center. jonathan: the nasdaq is -0.03%. we have a flat market and a week of gains and store on the s&p. from new york city on tv and radio, this is bloomberg. >> keeping you up-to-date with news around the world. the u.s. has struck a deal to help the u.s. place gas imports.

the issue is critical because russia is the eu's biggest natural gas supplier accounting for more than 40% of its imports. responding to the war in ukraine by boosting deployment in the eastern version of the defense alliance and will increase the back number of battle groups in the region from four to eight. at the same time the u.s. says that it was working with nato to prepare for possible nuclear or chemical incidents by russia. president biden called for russia to be removed from the g20 group of major economies after meeting with allies in brussels. a russian diplomat says that vladimir putin plans to attend the g20 summit this year. the crash of the boeing 737 in china, at least one piece of the plane had broken loose before the impact and was found about six miles away from the main wreckage. that could indicate that the plane suffered a mid air breakup.

apple is working on a subscription service for the iphone and hardware products. that's a move that could make owning devices similar to paying a monthly app fee. using hardware subscriptions would be a major strategy shift for a company that is generally so divisive at full price outright. amazon is facing tougher pushes to unionize warehouses in the u.s.. it would be a rare level of coordination. the groups have been estranged for nearly two decades. global news 24 hours a day on air and bloombergquint take powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. this is bloomberg. ♪

pres. biden: the united states together with our international partners will work to ensure an additional 15 billion cubic meters of liquefied natural gas, lng, for europe this year. >> this will replace the lng supply that we currently receive from russia. jonathan: president biden alongside the european commission president ursula von der leyen this morning. the president leaving and heading to poland. the futures are unchanged and the s&p are unchanged.

23612 on the 10-year. crude, 111. getting a clear picture of some of the devastation in ukraine, this from last week, some clarity on what happened last week in mariupol 300 people died on an attack on the theater that was being used as a shelter. tom: for those not up, the goal is a land bridge from crimea up to russia. you want a strip of land along the way bordered by the black sea. john, this is about the price of a strip of land. i'm not sure how wide russia wants a strip of land, but that is what they are arguing about, a land bridge. jonathan: it is a conversation

about war crimes, an allegation that this administration has leveled against russian forces deliberately targeting civilians. tom: a war crimes must read. i will get that out on twitter. she has an exquisite piece off of her london desk. what we do on a friday is we recalibrate into april and we do it with someone who nailed the bull market. the chief u.s. equities strategist and quantitative researcher at credit suisse. john, help us with a nominal reality of higher inflation and some kind of growth. how the stock market does when there is higher nominal gdp. what happens? john: tom, when people see higher inflation their assumption is that this hurts corporate profits because costs go up. in reality, companies sell more in a high nominal environments. gdp is expected to be 3.5%, that

is almost double the level that has been out the last 20 years. that is the consensus view. in those environments stocks do well, but certain stocks do better than others. energy, materials, financials, things of that nature do much better. technology, which i love longer-term, is not a natural beneficiary of this high nominal growth environment. kailey: the narrative in the past week that you cannot buy, is that what you subscribe to? jonathan g.: our call is if you think about corporate bond yields that the end of the year will be roughly where we are now. the mix of corporate buy yields will shift. the 10-year treasury probably

goes up 20 or 30 basis points and credit spreads come down because the system will feel less stressed as the year goes on will stop you may get the same bond yields in terms of the total, but how much of that comes from your treasury, your inflation, your corporate spread? those things are moving around a lot. jonathan: you put out a note last monday saying that recession concerns are legitimate bit overstated. he went through piece by piece. let's start with the fed. even at the fed raises rates seven times it would still be too accommodative. to accommodative for the market to well? jonathan g.: the market always wants the fed to do nothing and have lots of money. the reality is that inflation runs away from the fed more than it is now we are a lot worse off. if they raise rates as they did seven times this year, the fed funds will average only 1% over

the course of this year. nominal gdp is expected to be almost 9%. that leaves the fed actually adding liquidity to the market, not pulling it out. i have heard larry summers talk about this, and bill dudley has talked about this, that the level of a neutral fed funds rate that they will need to get to is much higher than right now the market is priced out. tom: are you suggesting to sell apple, amazon, sell this, sell that? jonathan g.: i am neutral on the tech sector is. i think that the key is 20% of the s&p is a really great inflation hedge. that includes the cyclical sectors like industrials. the rest of the market does not do particularly poorly in this inflation environment, they just do not benefit as much. tech is one of those areas that

is kind of neutral in this environment. tech does well -- if you think that we will slow down and the recessionary risk is higher, those people are more bearish in they probably want to roll into tech because it does better when the economy decelerates. tom: i have been crushed and destroyed because i have been triple leveraged in cash when you have been going up with a bull market call against all of us. congratulations on a really wonderful 24 months. we need to bring you forward in reporting. in a number of days portugal will take on north macedonia. let's go to the tape. we need to inform kailey. let's look at the gdp of italy. the gdp of italy, we did our best. we knew that italy could not withstand the match. the gdp of italy is 1.9 trillion

and the gdp of northern macedonia is like lake placid and sort of the north country combined. the population is the size of phoenix. what happened? jonathan: you want me to reply? jonathan got kicked into the closet this morning. tom: this the huge defeat for italy. what happened? jonathan: where do you want me to begin? we dominated possession, we dominated shots on goal, we dominated on everything except for one stat that matters. when it comes to football you're not entitled to a place in the north cap. -- in the world cup. north macedonia did fantastic. they had one great shot and that was the end of it. i was deeply upset because the italian national football team is a significant part of me and many italians too, but good for north macedonia.

they go on to play portugal and hopefully get a spot in the world cup at the end of the year. is that it? can we not do this again? tom: you don't have to do this for the next four years, jon. jonathan: from new york, this is bloomberg. ♪

♪ jonathan: what i was a kid and italy was playing football my mom would call into school and give me the day off. she would say, do you want me to call mike? it doesn't matter how old you get in life, we still feel the same way, like a child. futures look like this for the s&p, good morning to you. of about 1/10 of 1%. heading for a week of gains. let's talk about bond surge. the call from goldman year ends now, the two year at 2.90 and the 10 year at 2.70. curving version, not just the end of this year but next year

too, what does that mean for risk onset? what about the economy we are in? about 20 basis points. some significant already. tom: the distinction here is goldman sachs is going out further. a lot of people, speed majors writing yesterday who said what does this get solved? the answer is a gets solved later this year with this great uncertainty or maybe early 2020. jonathan: he comes back to 150, pushes that out for 2023. how we go from 22 to 23 and what it looks like on the bond market. tom: publishing moments ago as she is with us first for wells fargo. sarah, i will make it real clear. how do you bring out inflation,

recession or no recession? let me start with the basics, do we do it on the good side or the service side? sarah: it's going to take more balanced spending without causing a recession. we see there is a path where the fed can bring down inflation without hurting growth in the labor market. what we look at how fast the fed is looking at tightening but also the sheer speed a bit. the chance of over correcting is certainly elevated. tom: when you look at your path from a nominal, to adjusted gdp, where is your normal point? is it this year or will you wait for next year to get nominal gdp be down to 4% or 5%? sarah: real gdp, we get that

glide pretty soon here. we think we are set for a pretty sharp slowdown this year. real gdp, just 2% year-over-year. not significantly below what the fed is expecting. the nominal gdp is looking relatively elevated. the nominal gdp basis, somewhere between 2024. jonathan: could you give us some detail on how you put this together and what happens abroad? if there is a recession in europe, what would that mean for u.s. growth? sarah: certainly we get the overall demand, it would reverberate back. ultimately, the u.s. is very inflated economy. the impact in what we are seeing

is somewhat limited. as we see continued pressure on inflation, we would seemingly be a part of that recession. lisa: when you expect that to start reflecting more in consumer behavior and spending? considering we have seen confidence deteriorate. sarah: we think they will continue spending at a pretty decent rate in the near term. it should help drive spending, household balance sheets are still in great shape. we pick the slowdown comes more in the second part of this year and that inflation continues to bite. we have already seen them declined for six straight months.

it's pretty covid rate, we really don't start to see more of that until later this year as you get into these dynamics adding up more. >> what about the fed tightening? when you think you could actually start making a dent and hanging in inflation? can it? sarah: immediately it is more of a signaling device. i pick are beginning to see this. it is going to be probably more towards the second half of this year. as we see the fed demand, we can't see inflation rollover. maybe quarter two or quarter

three. tom: what does the consumer do given this new inflation? some deciles spend, spend, others do not. right? sarah: you have the top 20% in terms of income account for 60% of the consumer spending. the wherewithal to keep spending strong over the coming months. as we see, particularly when they have the components, we are very energy driven. housing costs are putting that larger squeeze on middle and lower income households. tom: at the end of the day,

particularly for market participants recalibrating, it is about how corporations adjust. all of the fuel and commodity dynamics. we see debt under 1000 in the last 24 hours. what you model corporations will do when you model your economics your analyst? sarah: we look at the overall factors, something there is an excellent case for his business acumen. we are looking at a tight market. yes, we are seeing rates rise. we are still at strong financial shape. we are looking at the case for capital investment. it is still a really supported factor.

even as the consumer continues to get squeezed. >> you talk about how tight the labor market is almost to an unhealthy extent. what about what this data is going to look like moving forward? considering we thought we would be some tightening in the labor market about six months ago. sarah: we have seen remarkable growth in terms of jobs over the last couple months. remaining very steady and strong. a big part of that is at increasing in the labor force. we expect the labor force will grow. other workers staying in the lord -- the workforce longer. at the same time, the financial incentive is increasing in the environment given the strong wage growth we are seeing. a big part of our outlook is

bringing these workers back. that will take the edge off wage pressure and allow overall consumer incomes to continue to grow. it is still not going to quite keep up over the next few months. jonathan: thank you, good to catch up as always. all of the banks made such big moves. now looking for a 50 basis point move in may. may and june, back to back. lisa: goldman first on that following -- the thing about it is we don't seem to be pushing back on that idea. they are not pushing back on what we are hearing from economist on the street or market pricing. they are running with it. jonathan: 50 basis point in may and june.

qt to start in may. tom: could we stay to the 100 beats in two meetings? jonathan: goldman getting on board with that kind of idea. most people see -- tom: you think jerome powell is on board? jonathan: i haven't seen chairman powell pushback. tom: i would go to german confidence. you see u.s. confidence, i have trouble seeing 100 in six weeks if you see those kind of standard deviation. jonathan: u.s. consumer confidence at a decade low. he said the data is screaming for a 50 basis point hike. where are the geopolitics? where is zero for that matter as well in the next few months. he just said it could be

damaging to europe. ultimately the u.s. economy is insulated -- inflated. when we came out of the debt crisis in europe, could the u.s. do this for how long we talked for? tom: was that before or after v-shaped. jonathan: that was a few years ago. for the market it was v-shaped in a big way. what are you drinking this morning? spike tang? welcome back. 2.3648 on 10's. crude down 1.2%. tom: when you say tang in french -- [laughter] jonathan: this is bloomberg.

♪ ritika: u.s. officials worried about russian president vladimir putin may lash out dangerously. they say his tendency when boxed in his to escalate rather than back down. russian troops have found themselves bogged down and western sections have begun to take a bite. speculation that he might use chemical and even nuclear battlefield weapon. european union officials expect china may soften the impact in russia. they may be ready to supply semi conductors and other hardware to moscow. it was a central issue in talks of a nato issue and g7 summit in brussels. in the u.k., consumer confidence felt with lowest levels since 2020. the fourth decline in a row for the monthly index. it talked about the rising cost of living and the war in

ukraine. former president trump has sued hillary clinton, the democratic party, and several others claiming there was a conspiracy to malign his character in the 2016 election. the former president says he had his real estate company racked up at least $24 million in legal expenses. global news 24 hours a day on air and on bloomberg quicktake. 2700 journalists and analysts in 120 countries, i'm ritika gupta. this is bloomberg. ♪

>> the security environment in europe has changed and will stay changed given what mr. putin has

proven what he will do. 80,000 troops in europe on permanent orders. another is one -- more than 100,000. we are not ruling out the possibility you will send more troops. tom: brilliant interview yesterday with the pentagon press secretary. live pictures coming in from brussels. the president of the united states has boarded air force one. he will go from there to near the border with ukraine. tom: friday morning american tv. it is further east then you think. that is the heart of the discussion. the g20, seriously, over to this war in ukraine is berlin, warsaw, kyiv. further east than we imagine. air force one, 76 passengers. two of them, they are over 30 years old. the president sitting up front in seat 61b.

this is an important trip. my guess is he will sleep and that it will be a working hour or so to warsaw. jonathan: takes about an hour and 20 minutes. there are about 3 million ukrainian refugees. almost two thirds have gone to poland. that is a conversation. from there you go to warsaw. we have to think about foreign policy. tom: the form -- the prime minister is out of kellogg. really in touch with capitalism and maybe the anglo-saxon way is how you would put it. this is also a guide with a lot of pull. there is a domestic constituency the president will be playing to in america. right now an update. dan tannenbaum with us today. just a general update on where we are. he has been hugely helpful to

us. can there be more sanctions? dan: there definitely could be more sanctions. i think the announcement from the u.s. on the official around -- round of sanctions are a little underwhelming. they announced sanctions on more members of the russian banks. they clarified the goal transactions are impermissible under these sanctions. more direct energy sanctions. more banks could be subject to asset prices and sections -- secondary sanctions. countries like china and india who continue to purchase russian products. tom: the main focus this weekend for me will be a study of not gasoline but diesel. if we sanction refinery

capacity, could we actually control what part of the refinery process we actually could do something about? dan: the sanctions we are talking about more broadly with russian oil, we already saw the u.s. ban the importation of russian oil a few weeks ago. we are focused more on broader energy restrictions. that being said, sanctions have been imposed on companies that supply these refineries and limit their abilities to operate low output. it is more broadly by third-party countries. kailey: russia has a requested hostile countries pay for gas in rubles. given the sanctions in place, is that something that is possible? how would that work. dan: we have already heard from

a number of european countries that they will not be paying for the energy they continue to purchase in rubles versus the currency they have been using either in dollars or euros. it is certainly possible. i think it is unlikely you are going to see the west begin to take up that mantle. we have that situation of trying to continue with energy purchases in the currency of choice where the seller is demanding payment and they are not willing to send you. kailey: let's talk about russia's debt payment as well. they wanted to pay, citi would not let that transaction go through. they needed clarity on whether or not the person that runs it was a sanctioned entity in the united states area could you run us through what some of the consequences are for some of these intermec -- intermediaries

are? how will that includes transactions as the crisis is ongoing? dan: that is the struggle. what we saw last week with the russian government default, they allowed those payments to be made. they have the authorization to make payments and accept payments related to those outstanding bonds. in this instance when you have companies that might not be explicitly covered through the general licenses. you have risk appetite that may not allow them to make those payments. the u.s., u.k., and eu sanctions at some point police trades outstanding in the infrastructure providers. that is one of the bigger issues.

inadvertently, that could be violated as a constitution of law. that being said, there is so much movement in the situation, that is what happens. you make one of these payments that may be deemed impermissible. jonathan: how does this work internally at the bank? when you have a payment to make, do they call the government? what did they do in some institutions we will follow the letter of the law. we are looking to shy away from being in the middle of any of these transactions. there is a lot of risk appetite. it is not always the second rack -- same criteria.

whether with the u.k. government and treasury, or the u.s. government. those discussions are ongoing. jonathan: thank you, sir. you know how you do the phone sign establishes how old you are. kailey: i do pinky and thumb. jonathan: don't do what i do. that is the phone. the kids these days do this, this is what they think the bones of the year is -- ear is. tom: i never did that. we did have this and we didn't have what were called party lines where you could hear the lady next door screaming. jonathan: did you? tom: this is just after the photograph came in. finland announces they will stop

the trade from helsinki to st. petersburg because everyone that they know of has left. jonathan: amazing. the president heading to poland. from new york, this is bloomberg. ♪

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♪ >> what has been remarkable is the market, the risk assets have really discounted the worst case scenario. >> we have seen this for years. >> the markets are just getting a lot more comfortable with the types of risks in the system. >> the market is underestimating the impact of what is going on right now. >> i don't know investors are necessarily convinced that we will all of a sudden be at the sunrise tomorrow. >> this is bloomberg surveillance with tom keene, jonathan ferro, and lisa abramowicz. jonathan: live from new york city for our audience worldwide. this is bloomberg surveillance on tv radio alongside tom keene and kailey leinz, i'm jonathan ferro. from brussels to poland, the president on the move. tom: air force one on the move. on the greater european front,

th