>> 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, the future of g20, will russia

be involved? far more, the relationship of poland with united states of america, there is a deep history here. this is an important meeting with a capitalistic juggernaut of eastern europe. jonathan: the diplomatic effort in china's role in that. president xi had a call with prime minister johnson. we are getting some national headlines. a headline that said xi should promote peace talks in ukraine and china is willing to play a constructive role. tom: my guess starts with communication first. it will be interesting to see how the united states and china communicate with each other. maybe that is job number 14 secretary of state blinken moving into april. jonathan: that is moving into this week to get the chinese to take a stronger stance against the invasion conducted by the russians. kailey: something the president continually pushes for. he had his own conversation with xi xinping.

the role is how active will china be given its friendship with moscow but wanting to avoid any repercussions. we are reporting now that europe is growing increasingly concerned with semi conductors, other technologies to start to fill the void. china is still buying russian commodities. jonathan: we touched on this a couple of times. it collapsed. their word. tom: i'm glad you brought this up going into the final week of march and to start off april. we are seeing it today with a mission in statistics. this economic data. as critical as we have seen back to march of 2020. jonathan: futures up to temps. up one type of 1% as well.

236.35. skyhigh over the last few months. relative to where we were, we closed out last month at 150. this month we added some real weight to the curb. this has gone flatter. crude, 110.44. kailey: still around $110 a barrel for crude. while we are talking about things that are skyhigh, you could say the bond market. he will be greeted by polish president, the humanitarian crisis and the ukrainian refugees. the ongoing relief efforts. also the issue of poland sharing a border with ukraine.

here in the u.s., you guys are talking about the german data, let's talk about the u.s. data. university of michigan consumer sentiment, it will be coming in. already preliminary coming in around the lowest level since 2011. the highest since the 80's. how does the war and the perception of a change how the consumer is feeling. how does it change how the federal reserve is feeling? we have an idea of that after days. we will get more of it today. they will also be giving a speech about how to bring in inflation. jonathan: thank you. we talk about that through this morning on tv and radio. your team coverage start now. maria is in brussels, anne-marie is in warsaw. talk to me about the objectives for today. >> seeing what is going on in

terms of poland as the epicenter of humanitarian crisis. we should remind you of the numbers that the acr has put out about what this war has caused. 10 million people fleeing their homes. more than 3 million in the surrounding countries bordering ukraine. the majority right here in poland. in a couple blocks walking from my hotel to where i am now outside of poland's science institute. ukrainian flag, street corners with people selling ukrainian planks. ukrainian flags all over the city. there is a sense here that is there is a show of solidarity. tom: dwight david eisenhower long ago and far away talked about the domino theory,

particularly with asia and communism. the prime minister of poland has talked about the illusion of the domino theory of russia moving to ukraine and onto poland. is it legitimate? can there be a domino theory in this war? >> it really depends on who you ask. western europeans have this huge drama precisely because of the soviet union and because of the way russia asserted its dominance over eastern european countries. in many ways they are oversensitive. when you speak to eastern european they tell you it is very likely, we have warned you about vladimir putin and his idea. when you go back in the history of russia it is something they have repeated many times. it is not the west, it has to pursue that path to greatness.

it comes at the expense of neighbors. the polish will tell you if ukraine calls -- it is not clear how it is going to end. in areas like moldova, it becomes more aggressive when it comes to poland. if you watch russian tv on a daily basis you know they float -- flowed onto primetime television. all of this for them, there is a sense of psychosis in many ways. when you speak to the european countries, this war in ukraine is almost existential for us. kailey: maria speaking of a potentially reinvigorated to an ad we are getting reported -- reporting that putin is a

cornered animal escalating rather than de-escalating. how is that informing foreign policy moving toward? >> at the moment we have not see the u.s. change their posture. they put putin on morning -- warning. john kirby, the pentagon press secretary said yesterday, this is something that is concerning. they monitor it every single day. they have yet to see a change. there is a sense that president vladimir putin and the kremlin got their quote would call it a military operation that would be done in days could you -- in days. we should remember that president putin has provided air cover for bus are all assad, his ally in syria. this is not out of the realm of possibility for an individual

that has already used these types of instruments or turned a blind eye to his allies. jonathan: a final question to you, something that has been on my mind. the former chancellor, angela merkel, have we heard anything? to what degree has her legacy been tarnished? >> what can she say at this point when you look at nord stream as well. what can angela merkel say that would bring and show germany has taken the right steps over the past 10 years. germany made a fundamental -- it could separate the trade from the politics. they could separate the security from defense. angela merkel stays quiet and takes a step back. jonathan: thank you. the president's wheels up.

he goes from brussels to poland. with the book -- at the border to ukraine and then over to warsaw. you can't overstate the change we have seen in a single month on policy on several fronts. tom: i think this is something we have spent the last couple days talking to the younger crew about. seismic is the correct word. this is a seismic change. the headlines we saw yesterday, not only are these headline stunning but there are headlines that we never envisioned. i didn't ask maria because of the -- you wonder what mr. schroeder is doing. jonathan: he went for a meeting with vladimir putin without telling the chancellor. we talked for so long about the schroeder reforms and how much chancellor merkel benefited. his legacy is tarnished.

merkel's legacy on russia cast a shadow over her party. a difficult moment for germany and they are standing up and making a big change. tom: what we have seen in the last 24 hours is a timeline on energy independence. i'm hesitant to use that word where we shift from 2025 but we still have to get there. jonathan: it will take time and a lot of effort. futures up two tabs on the s&p. on the nasdaq, of a similar amount. crude down 1.8%. 110.27. onto jet fuel, a fantastic markets desk this morning. on radio and seen on tv, this is bloomberg. ritika: keeping you up-to-date with news from around the world. the u.s. has struck a deal to help europe replace russian gas imports that will lead to

additional imports of liquefied natural gas. this is critical because russia is the eu's biggest natural gas supplier. responding to the ward ukraine by expanding its appointment to the alliance. it will increase the number of groups in the region from four to eight. working with nato to prepare for possible nuclear or chemical incidents by russia. the economy in russia is on call for a deep recession. russia's gdp hasn't trumped and 1.5% in 2023. inflation now almost at 20% this year. the fastest rate in about two decades. the mystery over the evening regarding backlash in china -- crash in china. the boeing 737 well before -- it

could indicate the plaintiff suffered some kind of midair breakup. in shanghai, coronavirus cases grew 60% in a single day. a record of 1600. they have limited access to food and medical help. they remain in lack down -- lockdown. -- using hardware subscriptions would be a stick for a company that has generally sold devices at full price outright. 24 hours a day on air and on bloomberg quicktake. i'm ready for cooped up. this is bloomberg -- i'm a ritika gupta, this is bloomberg. ♪

♪ >> this is a war. we have to cope with the recession. we have to react to that. we have to mitigate and avoid. i don't think we have a recession. i think we have a slowing down of the economy. jonathan: mario draghi, the italian prime minister. have you missed that? tom: i do. doesn't he get high marks usually? jonathan: i think a lot of people are facing down the letter, higher pricing, higher energy prices.

look for the price action quickly. futures up more than 1/10 of 1% on the s&p. a couple of basis points on 10, let's call it 2.35. tom: this just in off the wire, draghi will not coach italy moving forward. we are not done as well. jonathan: my heart is already broken. chief global strategist and asset allocation head at deutsche bank. brilliant notes, in his decades of work this moment is highly unusual. we are readjusting. we are recalibrating into the second quarter. the servitude i hear is tech is not the place to be. for whatever reason, everybody's

conclusion is technology. >> i would argue you want to basically be neutral. that is where we have been since basically june, july, 2020. take the nasdaq 100. look at it relative to the s&p 500. a relatively trends up. we went 20% above. the last 20 months we have basically gone sideways. i don't see any important reasons to change the call just yet. we think it should trade at a 40% premium. it was trading at a 60% review. i would argue the most likely way. what is the character of your revenue growth?

everything is up. everything close to the top. what is the character of revenue growth that is way superior to everybody else? >> a couple of things to keep in mind. number one, your revenue growth and earnings growth over time has been much stronger. one of the things that one should focus on his over that same 20 months that we are talking about, if you are looking at growth and tech earnings relative to the rest of the s&p 500, they are going perfectly sideways. early in the pandemic, there are earnings very well. everybody else's earnings with the cyclical recovery have been rising. they have not really been and earnings advantage. the key question, which is very

evident basically in quarter four earnings is to what extent does the pandemic benefit and to what extent is it going to wayne? kailey: we were talking with jonathan at credit suisse earlier, and he said everybody gets the margin call wrong seeking the higher commodity prices it will translate into narrower margins. the top light is improving, margins will move with higher commodity costs. how are you think about that? binky: as far as equities and inflation, commodity prices, wage inflation concerns, i would separate out the earnings question from the multiple question. i would basically argue that -- this is one history strongly suggest. basically higher inflation, higher commodity prices are basically neutral for earnings. what i mean by that is yes, prices are rising.

you actually overlay out put prices, you cannot really tell the difference. on average, companies have been able to pass things on. on average, i would say higher inflation is neutral because it has been passed on. i think the cyclical context of where you are in the cyclical recovery doesn't matter a lot. earlier in the recovery you have a lot of operating leverage. as the cycle progresses and growth slows down, that operating leverage basically diminishes. you get more vulnerable. as far as the impact of inflation on the other aspect of equities, which is multiples, history is also very, very clear. they have historically been very

negative for multiples. you look across asset classes, there is very little gold -- very little price in relative to history. i would say it is definitely expensive relative to inflation. that is the case across all asset classes. we do have this strong consensus on inflation looking at the consensus economic forecast or priced into markets across asset classes that this is largely temporary. it will come down. i would say market outlook is pretty critical on whether that happens or not. jonathan: that is pretty constructive. there is a bank that on the fed side of things making the call there on rates with the team. energy production close to 2 trillion from may going out to the end of next year.

tom: it is one that is multiple opinion. what i love about deutsche bank is trying to get to a margin. binky has it easy. the one that is aged of this crisis, what is the dollar going to do? focused on his boxer screaming they will have to do a coordinated evaluation. what if they say something about this. jonathan: would you like to be morgan stanley, too? tom: every house is different. steve of morgan stanley and deutsche bank, they fight like cats and dogs. i love it. they fight like cats -- jonathan: morgan stanley, not very constructive. over at j.p. morgan at the investment bank, pretty much always constructive. someone will look very wrong by the time we get to the end of this year. tom: we will keep, that is what

we do. jonathan: futures up one quarter of 1%. the euro is not a couple of basis points. from new york, seen on tv and radio, this is bloomberg surveillance. ♪

jonathan: two hours away from the opening down. good morning on tv and radio. up .4% on the s&p. the nasdaq 100 up .5%. we are heading for a week of gains. 2s, 10s, 30s. bank of america is saying 50 is the new 25. we are looking for some big moves. goldman looking for some curve inversion. the two-year pushing 3%. yields up a little bit. 10s down a little bit. that is the bond market. here is the fx market.

the euro-dollar. the survey out of germany, they said it collapsed, confidence collapsing for german businesses. euro-dollar, this is a problem for the ecb. have we clarified the reaction function from the european central bank? tom, what on earth do you do with this one if the ecb is hiking at the end of the year into recession? tom: i will go to the german confidence numbers we saw today, this morning, 10:00, michigan data, as well. a lot of the readjustment forward hinges on that confidence report. jonathan: kaylee t up those numbers. let's get to kailey leinz for those single names. kailey: we'll is down about 2% on the day.

that is translating to some of those single names. diamondback, shale player in the u.s., off more than 1%. on the flipside, you have the u.s. and the eu providing lng exports to the european union. that is benefiting lng players. cheniere is a big one here, up 1.7%. bed bath and beyond in talks to get new directors at the company. the stock is up about .7%. it's a much bigger move to the upside for one group of stocks, cannabis stocks. the house saying that a committee will be taking up a bill to decriminalize marijuana at the federal level. 20% plus moves for tilray and

sundial. etf's that attract those stocks are higher by 7%. tom: right now we focus on the euro with the president attending warsaw. jane foley joins us from rabobank. we have the news of the moment. what does euro signal and what is your prediction of how it will move? jane: i think it is signaling some optimism in the market that the euro will avoid recession but there have been some nasty indicators. we can look at the pmi and see in those input prices, much higher prices coming through. that is one of the reasons why business confidence is beginning to flounder in the euro zone.

higher prices for energy will be difficult for firms. this is not a scenario where we can afford blackouts. there is still the energy security threat for europe. there are significant headwinds. the market is taking an optimistic stance on that for now. tom: what is important is the belief, hope that it will not happen, that financial authorities will follow the confidence data. when is your reading of how central banks adapt to diminished confidence? jane: if you look at christine lagarde's comments, she said even under the worst case scenario, stagflation will be avoided. i would say that is not the worst case scenario. we know there are question marks over energy supply, nobody can interpret what putin will do. we know that he needs that money from selling energy, but at the same time, there is still a

small prospect that there could be an energy crisis within german industry. that could certainly bring on recession in germany and europe if not further afield. for now, the central bank is playing the market with this optimistic tone that stagflation can be avoided. the market seems to be happy to go along with that. kailey: we were having a conversation about the potential bleed through of recession from europe to the united states and what that would mean for the federal reserve. when you think about the dollar, its status as a reserve currency, where does that leave you? jane: i think the dollar will certainly be stronger this year than it would have been otherwise, that without this war. the dollar status, as the payment system currency, makes

sure that people just need dollars. if they want to buy commodities -- back to basics, what this is about for many -- they will need dollars to do that. if we look at the shape of the yield curve in the u.s., conversations about whether or not we will have inversion, whether the fed can be successful in taking out inflation without creating a recession, there have to be medium-term risks for the dollar into next year. but that assumes that europe can avoid recession. that is something that by the end of the year we will know whether we have managed to do it. by then, europe will have had to secure more energy supplies. but right now while it is still using russian energy, there is some concern over the direction of europe. jonathan: you touched on something important. if we are going to build out this energy relationship with

the u.s., the europeans are, how long does that take to take an on the trade flows? is that enough to make a difference? jane: they are significant. the energy relationship will get bigger and bigger in terms of the u.s. and europe. for the european's sake, i hope that comes off. us trillion did promise -- australia did promise more lng for europe, but there are concerns that they may not be able to do too much of that without breaking existing contracts. it will be a long time before we can really be sure about the energy security situation in europe. certainly, flows to the u.s. will be imperative to that. jonathan: how important is it to ask how people feel? when i speak to my friends and

family in the u.k., they feel it is absolutely dreadful. we still have an outlook of 3% plus gdp in the u.k. does that matter? when kailey leinz talks about sentiment numbers, does that matter? jane: it will matter eventually. right now i'm finding it difficult to reconcile what i am seeing in the mainstream press about the struggles that people are having with higher energy and food prices, and the data i see. if we look at that statement from the bank of england last week, yes, they did hike interest rates, but the outlook was fairly pessimistic. they talked about slower growth, rising unemployment by the end of the year. that is becoming reality right now. what we see in the consumer confidence data this morning in the u.k. is plunging levels of

confidence. retail sales far lower than expected. this is the impact on the consumer from rising inflation. finally it is having that impact on containing demand which will bring prices down. kailey: you mentioned the boe tightening, the fed tightening, the ecb may get there. the boj is not moving. you are seeing that widening divergence. where does it stop? jane: there is a lot of momentum behind there, more than i anticipated. i had expected 1.20. 1.22 has taken me by surprise. there are a couple of aspects here. the bank of japan remains extremely dovish. japan is a massive energy importer.

if you look at the pattern that we see in g10 countries, energy exporting countries performing really well, and the commodities importing, the japanese at the bottom of the pile. just above the yen, we have the european currencies. this is a real re-think of what we would generally think about safe haven currencies. the yen was a safe haven, is right down there. this energy importing nature of japan is part of the reason why. it is difficult to see what will that. there could be further to go on the upside run in dollar-yen. jonathan: jane, thank you as always. crude, energy, gas team to be at the epicenter of everything we talk about. kailey: all of the inflationary forces. the food point is a good one.

we focus so much on energy but the world could be heading toward a serious hunger crisis. when we talk about ukraine and russia and the commodities at play, this is one of the great bread baskets of the world, and that is something that is may be felt less in western countries, but in the emerging world, it will be a serious crisis. jonathan: the call from mohamed el-erian, recession in europe, stagflation in the u.s. for commodity importing countries, they could be facing a debt crisis. tom: the em issue is really important. i am looking at the turkish lira with the importance of the black sea. jonathan: an important conversation coming up with michael spence. the nobel laureate joins us next. ♪

ritika: i'm ritika gupta with bloomberg first word news. u.s. officials are worried that vladimir putin may lash out. his tendency when boxed in is to escalate. russian troops have found themselves bogged down in ukraine and sanctions have begun to bite. speculation is that putin may respond with chemical or nuclear battle weapons. they say beijing may be ready to supply semiconductors and other tech hardware to moscow. china's influence on russia were central to the talks thursday in brussels. canada will help nations shift away from russian energy by increasing oil and gas exports. they say energy producers can boost shipments by the equivalent of 300,000 barrels a day. he says the u.s. and canada

already has the capacity to handle those extra volumes. three groups of mainly american investors have made it to the final round of bidding for chelsea football club. global news 24 hours a day, on-air, and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. i'm ritika gupta. this is bloomberg. this is bloomberg.

>> in the use of chemical weapons, it will totally change

the nature of the conflict. it will be a blatant violation of international law. and it will have widespread consequences. jonathan: clearly a concern for nato. that was the secretary-general. futures look like this on the s&p, up .4% on the nasdaq. crew to almost 2%. down more than two dollars this morning. tom: kriti gupta has a chart on american next might. kriti: we talk about who will make up for the commodities coming off the market, whether it is agriculture, oils, metal. the u.s. is poised to make up some of that market share. a little bit scandalous on the tom keene scale. i am getting his approval, a

good day already. total u.s. exports. also overlaid with the s&p 500 in blue. when exports go up, the stock market does, too. it seems like the u.s. is poised to weather that storm, not just because of the strong consumer, but they are also an export economy. that is a bold case for the equity market. tom: thank you so much. he has done so much for economics and all of american graduate education, nobel laureate michael spence joins us. thank you so much for joining. i want to talk about two things, go back to your iconic work on signaling. i was talking about pandemic

signaling. how has our behavior changed since the pandemic? is there a permanence to however labor market, investments may change? michael: yes, there is. i think it is unambiguous. the accelerated option in digital, the conditions of work, the impact on the pandemic, what kind of jobs people want to have, when they retire and so on. all of these changes will pave the way to one of the worst bets possible. actually seeing in detail how this will play out over the next five years is very difficult, but i don't have any question that it is permanent, at least some of it. tom: in your latest essay, there are two paragraphs that are classic michael spence. i can see you with a piece of

chalk, ready to throw it at somebody who does not know about the theory of magnitude. you talk about the uncorrelated risks. all of our viewers know that uncorrelated risks are off the chart. what does that mean for our society, for our capitalism? michael: it means a major shift in priorities both for countries and companies in the direction of diversification. it will be portrayed as a costly move, will probably increase inflationary pressures, but anyone who operates in the financial markets, has taken a course in finance knows that when you have rising risks, and they are uncorrelated, the proper response is diversification. when you add in the pandemic, blockages of longer-term

effects, war, all of the climate shocks that are getting more frequent and so one, i don't have any doubt that that is the direction of movement we will see. kailey: speaking of the supply side, you talk about the ship to supply constrained growth. what does that mean to the impermanence of the inflationary pressures we are seeing? michael: i think this is a fundamental shift. the deflationary pressures we had in the global economy came very substantially from the fact that we had underutilized productive capacity in the emerging markets. we have used up a fair amount of that. at the same time, we have created hundreds of millions of new middle-class consumers on the demand side. it is a secular trend, does not happen overnight. but that, plus all the things

that we talked about, means inflationary pressures are likely to last for an extended period. tom: you have made a study with the pacific, with your great book, as well. potential talk about a move back where we have a triangle between the u.s., russia, and china. do you agree that we could launch back to something early cold war? michael: i don't think it is the most likely outcome but it's a possibility. my take on what china is trying to do -- and they are in an awkward spot, not to sublet to the spot that central banks are in. china understands something that president putin does not seem to understand. any economy, even a big one like china or the u.s., cannot perform at anything like its full potential in isolation. i expect china to move carefully, try to thread the

needle, but avoid a scenario in which we start dividing the world up into blocks. it is completely inconsistent with their rather determined domestic growth agenda. jonathan: can you describe for the global audience, the mood in milan, the morning after, italy fails to qualify for the world cup? can you convey that for us? michael: i don't think that i can convey the depth of despair that we are all feeling as a result of bowing out of the world cup. it is a shame. we have a lot of talent here, i don't know why this is happening. we had some success before. tom: let me pick it up here, jon. why did these things happen? jonathan: these things happen

when you play against a team that puts everyone behind the ball, you cannot break through, they get that one chance and they score. it is just one of those games. chiesa was injured, one of the better players, but that is not a reason to go out to north macedonia, but there we are. michael: i didn't know you were italian. anyways. jonathan: half. jonathan: which side of milan is yours, inter or ac milan? we may actually win our first title in more than 10 years. tom: when we take the show to milan, we will have to arrange around that derby. jonathan: i believe the first title outside of the berlusconi era. you don't remember berlusconi? i was in the san siro. tom: i went to a party with

berlusconi. jonathan: would you like to tell us more? we have some time. give it a miss? i am sure he had a lot of tang at the party. from new york city, this is bloomberg. ♪

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>> even though this war doesn't feel like a direct hit to u.s. growth, the implications of the inflation stock can be major. >> we are preparing for tighter myla terry policy -- tighter monetary policy. >> we don't know how much of the inflation is transitory. >> the fed is very concerned that they are behind the curve. >> they certainly don't want to cause a recession, but if it is necessary to slow the economy to get inflation down, it seems like they would be willing to do so at this point. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. tom: good morning,