it's all about inflation and it's been about the fed and bond yields. very unusual hiking this much into the curve. >> move with the times, move with the data. i am concerned it will be difficult for the fed to pull off a soft landing because they have fallen so far behind the curve. >> this is bloomberg surveillance. jonathan: from new york city for our audience worldwide, good morning, this is bloomberg surveillance live on tv and radio. futures are up 4/10 percent on the s&p 500. tom: the difference between the two year ended 10 year, while everybody is looking at the fancy spreads, i focus on this vanilla spread and it's there. we are on the edge of the signal

of inversion. jonathan: do you think you get any pushback from fed officials? tom: the leader of the international monetary fund said the u.s. can handle inflation. tell that to our listeners and viewers. jonathan: the u.s. may be, europe, that's the issue at play with talks between the ukraine and russia taking place today. kailey: lisa: europe says they will not be held hostage for -- by vladimir putin. how can there be support from the u.s. led coalition to supply liquefied natural gas which is a long process. hard to see how they will get away from this crack -- quagmire without a resolution. jonathan: the russians want to

be a reliable source of gas but they want europe to pay in rubles. lisa: these are not coherent statements. you are looking at a situation that's not sustainable for europe but their hands are tied because they rule rely on russia. it's a terrible situation for everybody involved. jonathan: what is wrong with lisa this morning? is it apple's ten-day winning streak? tom: it must be existential tuesday. jonathan: we're just two minutes into the show so relax. it will be ok. futures are up 4/10 of 1% on the

s&p 500. yields are higher by five basis points on the 10 year ended two years so the gap is closing. this curve is flatter. lisa: and when you talk to fed officials, the way to other yield curves that are flattening in short-term yields. it's a feeling that perhaps we are looking at the wrong one and it might not matter in the same kind of way. i hope things resolve and i hope stocks go up and i hope the economy improves. everybody wants to have a better feel after the talks between ukraine and russia because that starts in turkey today with the ukraine saying the minimum goal is to improve the humanitarian condition. how much is there a willingness on the part of ukraine to allow that region to go to russia and how much is russia focused on that to stop this conflict? we will get the fhs home price index.

the home price increases surge the highest on record at nearly 20% year-over-year. do we see a market deceleration as we take a look at people looking at the incredibly high cost of mortgages as well as when it comes to the base price of a basic home? consumer confidence, how much does that cohere with what we are seeing out of the michigan survey which has been pessimistic. the labor market is still strong. does this give confidence to the federal reserve that this is a tight market and they need to get ahead of it? jonathan: thank you. let's get team coverage on russia/ukraine. talk about what's on the table in talks in turkey today. >> this is an interesting situation. president biden was asked

repeatedly yesterday if you would consider sitting down with vladimir putin and it was a qualified answer each time. the white house wants to have some clear expectations. the expectations for today are pretty low as we start talking about the humanitarian crisis, limiting the deaths of civilians as opposed to actually achieving a cease-fire. tom: the president is back and we can talk the budget in the next hour but i want to talk the next step with president macron. >> it's been an evolving relationship. after the nine words were obsessed over for the last couple of days, there were frequent references to emmanuel macron that he was the one most upset about this as the potential deterrence in talks and the potential stumbling block step the president did not walk back his remarks yesterday.

emmanuel macron has called him a witch and a war criminal. it was that look of moving closer to regime change that seemed to spook people. lisa: you been watching what's going on and you had a fabulous interview yesterday. how much can they push against this ruble question? everyone is relying on each other so what's the progress here in terms of how we resolve this? maria: i was struck by that question, are you going to pay in rubles? he said we are not stop i asked if that was a form of blackmail and it is and they will not do it. i followed up with the obvious

question, then what happens of vladimir putin decides to cut the flow? he said he could do whatever he wants and that will not change our minds. if you don't want to take the money, how do you pay for the war? he said how will that affect germany? and he said we will find a way. we know this country will need russian gas but i was struck by how direct he was, he was very frank and he said this is a new administration and we are not going to pay in rubles. he told german companies that if you still operate in russia, you should go to the g7 guidance which is dollars or euros but not rubles. lisa: what about the question of

there is not much negotiating power on the part of the kremlin? maria: what struck officials is that erdogan -- turkey was seen as being the right mediator. if the meeting between russia and ukraine happens in turkey, erdogan said we have done a lot of talks but now we get -- we need to get something within two days whether that means a cease-fire remains to be seen but erdogan is saying we need to get serious. this is my political capital so we need to get something done today from this meeting. jonathan: thank you as always and a great interview with the german finance minister yesterday. i hate to do this but when you start to look at the headlines

that these talks look better, russia and these talks is hardly being the reliable partner. tom: you are absolutely dead on. we don't have a schedule of announcements. we will get them when we get them. i would suggest the brave war reporting of many different organizations which show that you train is on the up and up except the further horrific bombing of russia. you've got to ask if there is hope. jonathan: there's been a lot of hope over the last month but it's often been misplaced. lisa: you are right to say that there is hope but we have seen this movie before. the change has been in the rhetoric from russia as in terms of demands. they are not calling for regime change in sticking to that.

jonathan: the focus is increasingly on the dombas. it was seen as a broader effort by russia but the headlines recently around that focusing on the more eastern part of the country. tom: i would do that but what i would focus on is lithuania which is the strip of land they desire to get the little bit they've got west of st. petersburg and south of helsinki. it's no different than southern ukraine. i would suggest that the number one issue for mr. putin is the land bridge to crimea and that's where we've seen so much of this power of bombing -- of this horrific bombing. jonathan: the bond market is shaping up with yields of four basis points on the 10 year.

the two-year is not are behind. how far can the fed go? it's been said if the post financial crisis cycle can be erased from people's memory tanks, markets might be pricing three or 400 percent of hikes. the market still refused to believe the fed can get very far. tom: it's true but i will look at the correlations out there and they are still very tight this morning. we've got to talk dollar-yen at some point and i think that's critical with intervention talkative tokyo. jonathan: also some of the tech stocks. we'll talk about that in the next hour. this is bloomberg surveillance. kailey: keeping ritika: ritika: you up-to-date with newsom around the world with first word. lisa: ukraine once a cease-fire

agreement in talks with russia that begin today in turkey. they set -- they want to set a minimum goal of improvement. millions of ukrainians have fled their homes in the wake of the invasion. brumal -- bloomberg has learned police in london will issue 20 fines to administration officials close to boris johnson stop the police have been investigating doesn't gatherings on government premises including the prime minister's apartment. the senate has passed his version of the bill to help the semiconductor industry. that set the stage for negotiations with the house which has also passed its own version. the measure includes 52 billion dollars to bolster chip manufacturing step house committee investigating the insurrection of the capital is voted to recommend 10 citations against two former president trump advisors, former deputy

chief of staff dan savino and former trade advisor pierre navarro. their lawyers say the supreme court must resolve legal and constitutional issues. actor will smith has apologized for slapping chris rock on stage at the academy awards. in instagram post said he was out of line. the academy of motion picture arts and sciences has opened a review of his behavior and he could face possible consequences. global news, 24 hours at day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. ♪

>> we can't accept any kind of blackmailing. these treaties are based on dollar and euro so we will fulfill the treaties and we will pay in euro and dollar. vladimir putin has -- can decide to accept or not to accept. jonathan: russia reiterating that europe must pay in rubles for gas supplies.

no one is backing down here, good morning, futures are positive. the difference between two year and a 10 year is in single digits. that gap is getting smaller and smaller by the day. tom: the vix is 36 and all that angst we fell which means if you are in cash, you missed it. we have the chief investment officer at federated. you go to the fact that i never got the queen of spades and when you start a game of hearts and you were around the table and you have to pass three cards, good luck. apple looks like the queen of spades. what is the signal we see of the

tech incumbents doing so well? >> it could be just a balance off oversold levels. it could be defense. as you know, i usually have a base case of 8% probability but this time around, because we have this canon on decking the form of vladimir putin, we've got to probable outcomes. europe could be thrown into a recession and maybe drags us with the and the other problem is a quicker resolution. then the markets are off to the races. i think the market is a little bit of investors trying not to get to bearish. in terms of what they are buying. tom: if the fed is short-term at

three years and i'm growing at 12% revenue, i think 36% simple growth. how can anybody not own that? >> the revenue is important. as we entered this second quarter, all of our analysts tell me they think the revenues are pretty good. what we are looking for is what's the margin guidance going forward step who's got the pricing power and who doesn't? the big tech names of that advantage and they probably hold onto a lot of margin. for the long-term term, they look pretty good. the issue is do you get there through a recession or a soft landing? i'm leaning toward the soft landing and i think that's what the market tone is right now but we have to acknowledge the risk of something worse than that.

lisa: our appleshare is better than cash were bonds in terms of protection? >> in terms of earnings, they look pretty good. in terms of valuation, maybe a little less so. one of the negative scenarios is the war prolongs and that means oil probably goes to $150 and stays there. the fed has an awful lot to do in terms of hiking rates. that is the one problem the big growth stocks is the discount rate going up. then the valuation becomes an issue and that's what they been struggling with. it's an ideal spot for the apples of the world because you can tap out the 10 year. i think the nominal yield curve is telling us we can probably achieve a soft landing and get inflation down to 2.5%.

on the short end, the fed doesn't need to do much more to get us to 275. coming from where we are, what i see is the soft landing scenario. lisa: you said you can see the outcomes as being polarized in a way you haven't in the past. how are you remaining hedged for the downside scenario? >> since september, we've been peeling off our own weight and are balanced folios. we took another point out in the rally last week so we have taken ourselves back overweight equities to 30% of max so we are leaning into equities and we've

taken the money and put it into cash. on the equity side, we are leaning heavily toward value is -- because we think they hold up best. we are trying to stay diversified with more cash than we normally have. we think we will probably get another pullback and we will evaluate the situation at that point. don't want to get to bearish. that's why we are still overweight stocks. we are still leaning in that direction. jonathan: it's good to catch up. thank you. looking at apple, a 10 day winning streak on apple. the longest winning streak going back to 2010. if we go to 11 and are positive

in the free market, that's the longest winning streak since 2003. tom: this is what winning streaks do. there was very little correction last year and i cannot say this enough, corrections are normal. you shouldn't be in the game unless you are going to enjoy a 10% draw down. this is not japanese yen. it's different dynamics but in the equity market,. this jonathan: scars from a certain time and when they see the correction materialize, they start inflated something worse. part of the therapy of being an investor sometimes are being a manager of someone else's money is to try and keep the allocation. tom: i thought you were going to say what bloomberg surveillance.

i'm comfortable. jonathan: this is therapy now, lisa. the irony is that we don't direct the bearishness at you. tom: i feel vulnerable. ♪

jonathan: looking to add to the recent winning streak, the strength in big tech continues on the nasdaq 100. from new york city this morning, good morning. the focus of our attention is the bond market. 250 basis points hike this summer from the bed and every other meeting through may of 2023. bank of america said we get hike it every single meeting. tuesday versus tends, this is

what it looks like. is that helpful? the difference between the two are narrower. tom: this is a plunge. is very sobering. jonathan: it starts to get a little messy. tom: mark howard joins us right now step he earned expertise in fixed income including a mental full of institutional investor awards. good morning to you. -- including a mantle full of institutional investor awards. >> people are grappling with a lot of unknowns right now. they are very nervous about generating sizable negative

returns in fixed income so they are fleeing treasuries but also investment-grade credit most of there is a lot of anxiety because the fed is coming out double barrel. tom: i did a study on the draw down on the price which is a link to some of the things we saw in the late 70's and early 80's step was the level of bear market you see right now? >> it's intense. it's not as long bonds were you expect some volatility. it's the front end of the curve as well. it's not just investors, it's also issuers who had a big conference 10 days ago. there was a lot of anxiety in corporate america about the potential impact on the future borrowing costs.

it's both in the corporate sector as well as on the investor side. jonathan: when i look at europe, i see high yields in a rally in the equity market, in many ways come in economy that's weaker but priced into recovery. do you see a weaker economy on the horizon but a market that seems to be doing something else? >> it is perplexing. greg battle and i were just debating this yesterday. there is this legacy perspective that you have to own equities to be safer than bonds and that's been true to date and overwhelming argument last year. but there season coming up in a couple of weeks but also, as indicated earlier in your show, at some point, the fed will have to slow

its rate of tightening and may actually ease looking out to 2024 in the equity market is looking forward to support from the central bank at some point after they get the inflation genie back in the bottle. lisa: you are saying that equities are pricing in an the fed won't be able to go as far as other asset classes and they will actually start cutting by 2024? >> i'm not saying that but i think there will be a response built over more than two decades that the central bank pushes to a degree and then pulls back. i'm not saying that's what will happen but i think a lot of equity investors believe that will happen again. they and tom has talked about this on several occasions. many people have not been through a proper inflation cycle and the inflation rates are the highest we have seen multiple

decades. i think there is some misperception on that but it's contributing to a poor sense of enthusiasm toward equities and asset classes and i think that will be obvious as the year plays out. the street is coming around increasingly for a deborah -- a double barrel 2% hikes. lisa: what will be the response if the fed goes through with this? >> it's not just about rates for earnings, it's about the flows. one of the responses is the u.s. and the bed is catching up and is no longer going to be behind the curve with regard to inflation. the flows will keep coming. that's what we saw in q1 is that while there was an initial surge of news he has europe which has reversed for obvious reasons but investment opportunities have become relatively less

attractive some money that was -- dedicated that to go to asia has come back to the u.s.. you will continue to see flows into u.s. assets and that will generate a potential return. tom: spring comes like the third week of may. you are sitting in a classroom at colby college and you had to learn about the international trilemma and the dynamics of fixed income. what does the signal to you that mr. yan is back. we are now jawboning en dynamics. what does that signal to mere mortals in the market? > it's one of the examples of d-link edges for material shifts

from with the old normal we saw for almost a decade was. the move in the yen over the past month has been dramatic and combine that with the move and energy prices and i think there will be a fair amount of pain for many companies in japan for example and that will weigh on performance and that marketplace. we've seen a step function change in the energy market and a concern for other commodity markets and a negative 9% return that you alluded to for u.s. treasuries. that's a really worrisome number. we see breakouts from historical trends and that tells us investor should be careful and they should be thoughtful about quality and look what is he and they should stick to the core and not be chasing more extreme investments. we are in a time of real transition and turbulence, not just because of war but other

pressures like social and others around the world. i think that makes the markets challenging and you have to be careful on your quality investment selection and that's why we are seeing the blue-chip text operate the way they have been. jonathan: tom mentioned japan. if they get increasingly lonely and they want to get this cycle out and keep their yields capped, what is that number going to? >> i think it will go higher. the japanese financial institutions are massive. even the regional financial institution so there is capacity couldn't -- to continue to buy. japanese investors are global and they can -- and they can bring some funds back home to

deploy if they come more -- if they become more compelling a nominal yield basis. jonathan: thank you as always. to draw your attention to a note, a note came in from bill dudley. the fed's application of its framework to control inflation has made a hard landing virtually inevitable. that's the line from bill dudley. tom: short and brief and as a former public official, it's quite something. i don't recall decades ago where you would see this angst from a former president of the fed. what's important is this is not an academic exercise. dudley has been dead on taking a new stance. jonathan: former fed officials

have been very outspoken this time around about what they think the fed should do and very clear about criticizing of what it hasn't done. lisa: the situation looks bleaker and bleaker. the fed has been able to avoid a recession but this time, we are coming from such a low base from the unemployment rate. it will be more difficult because it is a sub supply-side issue, how much will we have to dampen the demand side in order to do anything about inflation? jonathan: fascinating quotation this morning. the equity market is up 4/10 on the s&p 500 stuff apple has 10 straight days of gains and it could become a 11 and if it does, is the longest winning streak since 2003.

apparently apple is cutting back on production because demand is so high but this stock is shaking it off. the market is as well and many people are impressed by the resiliency of an equity markets tearing down risk and it keeps on rallying. tom: the growth we have seen amidst the emotion of the war is confounding to many people who were skeptical. jonathan: counting down to payrolls friday. 500,000 is expected. from new york city, this is bloomberg. ♪ lisa: keeping you up-to-date with news around the world, nato allies are split on whether they

should talk to russian president vladimir putin. leaders are divided whether discussions would be helpful and their other disagreements coming into play with the war in ukraine now in its second month. among them, what weapons to send to ukraine. president biden has renewed his efforts to persuade congress to squeeze more tax revenue from the largest corporations and wealthiest households. his new budget calls for $2.5 trillion in tech sites which includes a modified well tax and eliminates the carried interest tax breaks. key members of opec have a message for the u.s., trust us. they say oil prices would be more volatile it wasn't for the cartel strategy. opec including russia will decide and output levels thursday for may but so far they have responded to calls from the u.s. to pump more oils. lockdown continues in china.

they are locked down for four days and then shanghai will be locked down but there was a record number of almost 4500 covid cases today. bankers in hong kong are reaping the rewards. they are getting the 5% raises for walking across the street, moving to a new company. those who stay with their current firms are getting more money and promotions. the crypto sector has added to the battle for talent and a bigger paycheck stub global news, 24 hours and day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. ♪

>> in russia, we have only 70 employees there. we don't do any business in

russia. we see that the payments get protested we've been -- reducing our exposure there over the last few weeks. jonathan: the outgoing chairman of ubs. good mornings, futures up 4/10 percent on the s&p 500. 250 on tends into 41 on the twos, that cap just nine basis points in single-digit is through most of this morning. talks taking place in turkey between ukraine and russia today. vladimir putin will speak with emmanuel macron later today. tom: we have a headline service out of istanbul and we will have to see. it was clear to me that there is

no schedule here. everybody in europe is just waiting. jonathan: the zelenskyy tour of european column -- parliament continues today. tom: we've seen some of that overnight. karen franks with the ontario teachers pension plan. that's a huge deal. there are people out front and to give you an idea what the ontario teachers pension plan does, they are opportunistic, not buying 100 shares of apple and 42 shares of ford motor. they are doing unique private investment. consider the toronto maple leafs. it is without question the greatest transaction of all time in sports for some 200 gazillion

dollars and they sold it for $1.3 billion. do you have tickets for me believe gardens? >> i don't, i'm based london but every member very team in canada does. tom: welcome, private equity and private transition in the zeitgeist is the trillions and trillions of dollars that's out there. how do you do this day by day knowing there is a wall of money out there you are competing against? >> this is not new to ontario teachers. we've got a long history of investment directors that those up in the expertise has been filled up over decades. 80% of all of our assets across the entire plan are managed and

how so we work with external managers but the focus is building the internal capabilities and expertise along all of our asset places which includes venture and i focus on equities. tom: there is a university of michigan confidence gloom and the montreal canadiens gloom and they are the same. it's grim to say the least, is that an opportunity for you when there is a societal lack of confidence because of a or or in nation? >> we have to pay attention to what the market confidence is. we are long-term capital. tom: what do you mean by long-term? >> we have owned some equities for 10 years. we are very flexible in terms of where we look.

we've got a good global presence. the majority of our assets are in north america with canada and the u.s.. we invested and 50 companies lectured locally. it's a very large presence and a large mandate. lisa: has your long-term expectation for returns going up or down over the past couple of years considering that removing to a yield environment is a huge economic pitfall? >> we think about risk reward a lot and to tom's point, the amount of capital in yields is important. we evaluate each yield and have benchmarks we compete against to make sure we deliver proper value to our stakeholders measure ourselves in terms of what good looks like step it's very much the question of we invest heavily in her team so we

have sector expertise. we try to be decided as to where we are investing within regions. we are trying to build a right to win in terms of how we partner with management terms. lisa: a lot of people have been lamenting the fact that pensions are looking at 8% for decades over the longer term and that had to be cut dramatically. has that changed? are we looking at 5% or 4% returns to increase the contributions to your members? >> last year, the pension fund delivered over 10% returns. we ended up with $240 billion. the reality is the returns of the planet fell and took into

account the asset classes. in historical times, when we had a bigger devotion to fixed in come invested heavily in infrastructure. we invested 12 dollars in infrastructure and last year and it goes back to risk-adjusted reward. generally, we would shoot for something north of where we are. tom: are you in russia and do you need to exit russia? >> we are not direct investors in russia and we have no intention of weighing in. tom: how do people extricate themselves? you just take a hit? >> you take a hit and stop production and terminate contracts. we have had some portfolio companies that have made those decisions and close down factories.

we believe it's the right thing for our stakeholders. we are of values in principle-based organization. we think those actions are aligned of what people would expect from us. that's a wonderful way for us to support. jonathan: you did a good job tom and you didn't offend her. tom can buy his own tickets. >> when he is in canada, we can do something.i think my team would bend over backwards to help you. jonathan: karen frank, thank you. i can get you 240 on a two-year deal now. tom: what is nine basis points on a two-year yield? jonathan: it's quite a move over the last month or so. we've gone from the one 40's to the two 40's. futures are up 4/10 of 1% on the

s&p 500. tom: the romance of the ccm strike. jonathan: can you explain that?

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>> i think this is fast move in the bond market has cut people off guard. >> it's been about the fed, it's been about bond yields, very unusual to be hiking this much. >> move with the times, move with the data. >> i am concerned it will be difficult for the fed to pull off a soft landing simply because they fallen so far behind the curve. >> this is bloomberg surveillance. jonathan: from new york city, for our audience worldwide, good morning, this is bloomberg surveillance live on tv and radio. futures are up 4/10 percent on the s&p 500. the difference between the two year and the 1