>> the market is still assuming that the fed will be hiking interest rates very aggressively. >> the trajectory for this year is strong. they are very eager to frontload rate hikes. >> if we are able to stave off recession in the u.s., you will get that earnings growth. >> no one thinks we could get too bearish. >> i think they will continue to go on. announcer: this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. tom: good morning, everyone. a most interesting 8:00 hour

into the jobs report on friday. we have adp coming up in 15 minutes. research, george out of deutsche bank is adamant. look for long euro, the inversion you were talking about. it means a strong euro for deutsche bank. jonathan: and it means inflation. we have a second handle all inflation in germany. we had the regional breakdown this morning and we saw some big numbers from saxony to bavaria. germany inflation with a seven handle. just following spain close to double digits. the ecb has a little bit of a dilemma on his hands this year. tom: it may be a different debate but it means nominal gdp up. a 9% earnings growth rate. we will talk about that with troy gayeski. what is so important to me is the growth. is it going to be stable, good, or miserable? jonathan: for the policymakers,

it is the balance of risk and downside risk to growth and upside risk to inflation is the story. that is a dilemma that the ecb has to face. what do you do? you pick your poison. maybe you move incrementally because you are worried about tyneside risk to growth. perhaps that is the story. a rate hike by the end of this year. tom: lisa, may 4 seems far away but chairman powell has the look of jobs report on friday and a fully employed america. lisa: i am looking at this german inflation rate and what strikes me is the median estimate is 6.8% versus 7.6%. the misses are notable. we are seeing the same thing in the united states. it is hard to get your hands around what inflation will be in get the predictions right. how much conviction is there behind the moves we hear from the fed considering they could be hiking into weakness that they cannot even see get. tom: that is a real move and we

get a jump in the yield at the german two yield. this is equivalent proxy. we may go through this bike that we saw early this morning of 0.03. jonathan: cpi in europe. the estimate at the ecb is 5.1%. the estimate for growth is 3.7 present. last year, they had to cut the growth outlook. do they have to do that again at the next meeting? i think the pressure is building on the ecb in a way that they will not want it to. tom: bloomberg radio, a spy in the yield. we will see if we break through that. let's do a quick data check because that is what we do on "bloomberg surveillance." jonathan: a four day run on the s&p. a four day winning streak. we snapped that. the s.a.p. down about 13 points.

demetri coming out and saying no breakthrough in ukraine talks. much work remains. futures are little soccer. yields higher on the 10 year by one basis point. on the two year, yields are lower. we have seen this curve steepness. after breaking through zero very briefly in yesterday's session. tom: the dollar gives it back a little bit. a resilient 131.62. right now, troy gayeski joins us. it all devolves down to a growth called within currency dynamics, yield dynamics, and stock market dynamics. what is the growth call overlay you have? troy: coming in around 2% to 4% real, we have shaved that given the supply shock on energy and food and the drag on the consumer. the best estimate is 1.5 to 3.5. nominal will still be

exceptionally high given how high inflation is. we are looking at 7% to 9% nominal upside surprise. top line revenue should be attractive for equities which will lead to substantial earnings growth around 10% plus or minus. against that, you have multiple compression that has already happened to a small extent. but as the fed continues to slow money supply growth through the bank channel and their balance sheet, we would expect two to three turns of multiple compression in a very similar market environment like we had in 2018 where despite reasonable growth, exceptional topline growth, you end up with slightly down equity market which is where we are today. jonathan: a pretty crazy ending to 2018. troy: that's right. jonathan: will there be the same end to this? troy: so far, it is always hard to think what the fed will do. it is hard when you look at some of the things they have said q3

and q4 about inflation transitory and then, we are serious about inflation. we will start hiking but before we do that, we will expand our balance sheet by another $50 billion plus. all that being said, it looks like they learned the lesson from 18 and they will move delicately on the balance sheet to avoid more disasterous market outcomes and attacked the bank channel. we have seen a get increase in lending growth. in order to constrain that and constrain economic growth and inflation, you would pay interest on reserves and incentivize banks not to lend. we do not expect a bloody ending to the year like we had in 2018, nor do we expect the fed to do a u-turn because they could do a u-turn because of the threat of inflation as opposed to now, they are hiking because we have these eye-popping levels of inflation. but it will be a sloppy, choppy,

messy year. after the recent rally we have had which some are categorizing as a bear market rally and the strongest rallies always occur in bear markets, it is hard to get excited about any type of risk on trade? lisa: where are we now in the economic cycle? troy: we are mid to late, for sure. the question is how much longer can the cycle extend through the tightening period. if you look at the housing market, consumer spending, those are arguably later cycle. if you look at capex spending and inventory restocking, we are still relatively early. there is a lot of cross signals right now. they were highly confident that we could avoid recession in the next 12 months. as we get through that, it will have to be an interplay between how sustainable can consumer spending be and how powerful are those latent and inventory

restocking cycles. we have to watch the data closely as we move into 2023. lisa: how much is this the fed and equity market, keep dancing because we have months before the next recession and there are not a lot of places to hide especially as some of the havens take it on the chin. how much are equities better than cash in an environment where cash is losing value added accelerating pace? troy: fortunately, there are more alternatives to equities and bonds. we had an exceptionally long period of excessive performance of equities and fixed income relative to expectations and so much of driven by rapid money supply growth -- rampant money supply growth. we refer people to trim some of their 60/40 exposure, which sometimes is done, and allocate

two things that are benefiting from the fed hiking whether it is commercial real estate debt, business development corporations, that have floating-rate asset. in an ugly enough market, nothing performs well but as long as we avoid a severe recession, you have a good probability of generating a return. the traded discount that are paying 11% dividend yield, if you can enjoy the dividend for two years, you can have a very exciting total return. we would urge people to not fight this environment, which they are doing in bonds and equities and high-five it and focus on things that benefit from fed rate hikes as opposed to being terrified by fed rate hikes. jonathan: particularly on wall street, no high-fiving chairman powell. go on.

troy: i was saying, we are very supportive of the fed. they have a tough job. they are really in a pickle today. jonathan: who is this? troy: you think about some of the things they have done in the past six months versus what the data was saying, we are less confident than we have been at any time. jonathan: thank you. tom: i have to ask quickly, you went to the massachusetts institute of technology. they are bringing back the sat exam. forget about that touchy-feely. we are bringing back the sat. is that a trend that you see coming? troy: standardize tests have also been important and most higher educators would agree, just to make sure that whichever students you are allowing into the school can actually handle the workload because the worst thing you want to do is have some very talented individual

that might not be as good at math or science get into school and struggle mightily and not succeed. standardized testing has always been important to level the playing field. it is not the only thing that you should look at, but in my experience, you have kids get in and they are really talented, but the coursework is so much harder than anything you have seen in high school and you have to transfer out. having standardized tests, my personal opinion -- tom: at m.i.t., the minimum entry is 795. jonathan: thanks for that, tom. where were you taking that conversation? tom: that is a huge deal. jonathan: was this related to the federal reserve and chairman powell? tom: it is. they all took the sat. jonathan: ok. futures are down one third. in a moment, we get the adp report. we will bring you that anton's

sat score. -- and tom's sat score. this is bloomberg. lisa: keeping you up-to-date with news around the world, i am lisa mateo. the kremlin says there have been no breakthrough talks with ukraine. work has to be done after a meeting in turkey. skeptical members of nato are evaluating whether russians promise scale back military operations is a turning point or a tactical shift. germany has triggered an emergency plan to brace for a potential russian gas cutoff. the issue, president vladimir putin insist that gas should be paid for in rubles. european countries call that a breach of contract. putin is striking back after the eu came up with a plan to cut dependency on russian industry by two thirds this year. tesla found a way to dodge the global crisis in nichols. a critical e. -- a crippled ingredient, -- a

critical ingredient. tesla was out in front of the problem and signals deals with several suppliers in the last year that include a multiyear agreement with a mining giant which has not been announced. corn is out and so it is in due to costs of fertilizer which is up 130 present. a bloomberg survey found that farmers in the u.s. will devote 2 million more acres to soy and 2 million fewer to corn. 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 am lisa mateo. this is bloomberg.

>> we have an upside surprise on the adp report in the united states of america.

a small one, but an upside surprise. $455,000. 486 from 470 five, numbers out of adp ahead of the payrolls report coming on friday. the estimate, $490,000. we are down about zero point 4% on the s&p and the nasdaq down about 0.6%. just short of 240. michael mckee is with us. what do you see? michael: this is the most hated indicator on wall street that everybody trades. there is nothing else happening today. you may be move the market is way or another. it comes in line with where you would expect it to be for the idea of the friday payrolls report. this is only the private payrolls. but it was broad-based according to adp and that is the kind of thing that the fed and the market would like to see.

seven 9000 goods producing jobs, 59,000 in manufacturing. there was a story about how manufacturers are having to turn down work because they do not have enough employees. they seem to be finding them. 161,000 people went back in the leisure and hospitality sector. it looks like what the fed thought would happen is happening as people stimulus checks ran out and they started to need more money and they would go back to work. it would be interesting see -- to see the participation rate. tom: the two spread comes out in a little bit. do you think that is important? jonathan: we are down to those levels and we have been there for a while. tom: we can do that on standard deviation in germany as john mentioned, horrific inflation and it felt like a medical chart. it is over seven standard deviations of a boom up in german inflation. that is nothing compared to american housing.

michael mckee, the dallas fed out yesterday with absolutely definitive research on this american housing boom. it is not even measurable within my standard deviation chart, 19% of. what does dallas say about when this housing boom and? michael: they are raising a red flag saying that prices are becoming perhaps unhinged. tom: an exuberance. michael: in a way that reminds them of a run up to 2008. the question is will this continue to where it gets dangerous for the financial system? the banks are in a better place. we make about fewer of the loans, but it is still a question. i did not bring it along today but if you look at some of the recession-induced inflation, some of those numbers are rolling over.

housing is a straight line up. tom: john miller was with us yesterday on "bloomberg surveillance" and john miller was adamant it is a two part housing market. is that how you look at it as that haves are buying property? michael: it depends on where you are. the distinction between haves and haves not will be much different between the midwest and california. the biggest thing that has influenced this is the companies that are buying up and blackstone being one of them, buying up houses to rent, has created a shortage in available housing that helps push up prices as well. an interesting thing, the mortgage bankers association's weekly mortgage index, the number of people applying for a new home mortgages goes down but the number that really caught everyone's eye, refi is off by

almost 15% as rates go up. that means less money going into the economy that people are going to spend. that may be a sign that things will cool off a little bit as well. lisa: that connecting feature between the labor report, the clues that we got out of the adp report, as well as what we are seeing from the housing market is when do we see some of the increase in inflation actually slowing the trends? when does inflation cure inflation and in the housing market with the number of homes on the market dramatically declining, no inventory available. the number of sales also declining. on the labor market, the participation rate goes up, does that mean salary increases will go down as a supply of workers increases? michael: that is what economic theory suggests that we do not know because we do not have enough information. this is a strange situation

where we shut down the economy and a lot of people lost their jobs not because their company had any problem, but because there was no business. now they are coming back. companies have to offer a lot more money to get people over that covid, i am afraid to go back to work hump. does that continue? that will be the real question as we see the months go by and other factors such as gasoline prices and inflation influence behavior. jonathan: what on earth do they do with inflation where it is and growth heading where it is going? michael: she has the one advantage in the sense that her mandate is inflation and so they will have to do something about inflation and they also have such a low base rate at this point, negative 50 basis points, that they can make some moves without really affecting the economy that may affect

psychology. and that is going to be important. when you look at the cpi numbers that are coming in today in germany, 7.6%, that is something that has to scare the ecb because at the same time you have this russian gas story hanging over them and what is the price going to be going forward? fortunately, we are almost to the summertime but it will take a bite out of their income and that is a problem for the central bank. jonathan: and for germany specifically on the day they took the first step in an emergency plan to grapple with limited energy supplies. gas supplies out of russia. this is a big issue. 7.6% cpi out of germany. a tough gig for the ecb to know what to do. tom: it is way simple. it is a fancy study on radio and tv. we will not do it right now. seven standard deviations is a scary shark mathematically.

there is a real fear in the tension. jonathan: lisa, they are still doing qe. lisa: that is the irony. there not only not tightening, they are continuing to ease. what can a central bank do if they are dealing with inflation we had not seen in decades but there is that prospect of a weakening economy and that is a conundrum that none of them want to be in. jonathan: it is not just a prospect, it is a reality. the growth outlook has been cut by the day. tom: michael mckee mentioned germany. it reminds me when they beat northern macedonia. jonathan: why would dortmund be playing northern macedonia? tom: because germany is a powerhouse like italy and it was a friendly. jonathan: a friendly between a club and a country? do you want me to believe that? would you like to clarify for the audience that you are lying to try and wind me up? tom: i am looking at portugal too. portugal got it done.

jonathan: michael mckee has an exclusive with the richmond fed president at 10:30 eastern and when he speaks to a fed speaker, you do not want to miss it, coming up later. from new york, this is bloomberg.

jonathan: some really strong data out of the united states. it is the most hated data point on wall street but people still trade on it. adp, a better revision, 486,000 against for 75,000. in germany, the data is more concerning. it comes with a seven handle cpi in germany. inflation is the highest level since records began after reunification in the early 1990's. tom: seven standard deviations is absolutely untenable. let's summarize. it is about energy costs and it is statistics of that do not matter. tell that to the german people. jonathan: and tell that to the

ecb because i think they are nervous. their next meeting is april 18. this one is a little more interesting. tom: what we tried to do with "bloomberg surveillance" through all of this in these unsettling times is speak to people who are authoritative on military, thinking of the generals and the admirals we have spoken to and now on the nuclear debate due to fears of chernobyl and other nuclear plants across ukraine. ernest moniz is a former u.s. energy secretary, usually associated with decades of work at the massachusetts institute of technology. we are thrilled that he could join us this morning. i want to cut to the chase. how far out of line is mr. putin with the geneva conventions going back to the 19th century, but with the geneva conventions

that dealt directly with weaponry. how out of line is mr. putin? dr. moniz: putin's statements about threatening the use of nuclear weapons are way out of line, as you say, and actually quite reckless. it is interesting that some of the kremlin spokesman have been trying to dial that back to what is the stated russian policy but clearly there is a lot of ambiguity, a lot of uncertainty as to what the russian military would like to do if they are bought down in ukraine, as they clearly are in various parts of the country. it is a real setback in terms of this nuclear saber rattling and let's just hope that they are not planning to use a tactical nuclear weapon in ukraine. tom: take us away from our

amateur hollywood stereotypes of the guy with the little black bag walking near president biden and we all look at it and know he is in charge of our nuclear capabilities. does mr. putin have a guy walking around behind him with a little black bag with a red button on it? dr. moniz: that is called the football. the fact is that putin, just like the u.s. president, has the authority to launch nuclear weapons. in the past, when presidents of the united states have had some emotional distress, there have been attempts by others in the administration to dampen that authority but the reality is we have sole authority and we feel very strongly that this authority should be really curtailed, except in the most urgent situation where you have

no time for consultation. lisa: given the situation that we have and the imminent threat people feel from russia, how important is it for the world to remove russian from the oil equation? what do you think the u.s. ought to be doing to allow germany to become independent from russian gas? dr. moniz: oil and gas are a little bit different. in terms of oil, the russians are clearly having trouble now getting buyers. it is kind of a customization going on and that is affecting the ability -- a customer sanction going on and that is affecting the ability to get oil onto the market. $30 per barrel on their oil. to be honest, in the longer run, and i do not mean years, i mean a month or so, i think the oil markets will basically recover in terms of supply-side.

russia will take a big discount. gas is different. with gas, you do not have the same kind of global market. with cargo that is easy to move around to different places, you have a lot of pipeline gas which goes from a to b and that is it. of course with the unrest and even before the unrest, the invasion of ukraine by russia, gas prices in europe and asia were going off lehigh. to give you a scale -- they were going awfully high. to give you a scale, we are still $4.50, which is high for us. but in europe, they hit $50, $60. extraordinary. i spoke with a friend and the u.k. recently who said his gas bill for heating has gone up by a factor of four. lisa: and it has been a big

concern for policymakers across the continent. i want to go back to what you were saying where you think that the demand and supply will come back online when it comes to crude, not gas, that you think supply will recover in a month. what goes into that? is it the idea that sanctions will be lifted? is it that the u.s. can increase production? is reliant on opec-plus? dr. moniz: it is a little bit of all that but a major part of my calculation is i think with the very large discounts, russiawils taking that oil. china will increase its imports. india is very interested in the big discount. in addition, i think we are making some headway in terms of reestablishing our relationship with the saudi's. they may push opec to somewhat more increase the pace. in the united states, i think

that the president meeting with oil and gas company heads and with the heads of major financial institutions is very important because financial institutions have been pressuring the oil and gas producers to focus more on returning cash to their investors rather than expanding supply. right now, we have a supply emergency in a certain sense and i think it is time to do a little jawboning and have the financial and oil and gas executives come together and recognize we do need some increase in supply. lisa: do you think that jennifer granholm is doing a good job as your replacement from many years ago? dr. moniz: she has emphasized quite correctly and strongly that we need to start looking together at the climate and the energy security imperatives.

i think expanding that conversation out of the silos, which some want to talk about climate, some about security, some about geopolitics, some about infrastructure, some about environmental justice, social equity. they are very important when energy prices are going up. what we need is a coherent discussion across all of those areas and they are in many ways synergistic. when you go to low carbon electricity, for example, that helps energy security. on the other hand, it a bumpy road and we will have to have some trade-offs as we optimize all of our objectives. tom: i want to go back to silos and that reminds me of 1964 and dr. strangelove. we all have frameworks of nuclear power. maybe it is the tragedy of japan. maybe it is something else.

if mr. putin has narrow, short-term, smaller nuclear weapons, what do they actually do? dr. moniz: first of all, the so-called tactical nuclear weapons, we should not think of them is really small. we might be talking five kilotons of explosive yield as a metric or a standard. hiroshima was 15. but oklahoma city, a chemical explosion was to tons. we are talking five kilotons. if that were to drop in the city, it would do enormous damage and kill a lot of people. the question is would the russians follow a doctrine, which is debated, about whether a small nuclear weapon dropped in a place that did not do too much damage relative to a city.

would that lead to the escalation of conflict or escalation? we think that the circumstances would determine that in ways that are very difficult to calculate. our concern is that if this were to happen, the situation could get out of control through miscalculation, blunder, misunderstanding, bad data, very quickly leading to a much larger nuclear conflagration. obviously, very bad for everybody. very bad for human civilization. it is very important that nuclear weapons continue to be unused and to be focused fundamentally on the deterrents value in terms of not being the victim of a nuclear attack. jonathan: deeply thoughtful

stuff this morning. thank you. ernest moniz, the former energy secretary. coming up in 20 minutes, the chief u.s. equity strategist at goldman sachs. his price target, 27 hundred on the s&p. we are not far away, harvey? tom: it feels like we are two thirds away -- two thirds of the way through the year. we are not. jonathan: looking forward to being with you. tom keene, lisa abramowicz, and jonathan ferro. this is bloomberg. lisa: keeping you up-to-date with news from around the world with the first word i am lisa mateo. u.s. supreme court nominee ketanji brown jackson will get at least one republican vote for

confirmation. senator susan collins tells "the new york times" the second meeting with jackson alleviated her concerns and she will vote in favor of the nomination. jackson is the first black woman ever nominated to the supreme court. the u.s. warns that ukraine's capital remains under threat despite russia's promises to scale back military operations. a pentagon spokesman called the russian move a repositioning, not a withdraw from the area around the capital. moscow is likely to focus on taking control of two eastern provinces. the world's largest commodity trader glencore will not seek any new deals in russia but it will continue its valuable business ties there. glencore just completed a month-long review of operations in russia. it says there is no realistic way to exit russian stakes. a team of u.s. investigators is headed to china to determine what caused a china boeing 737 to crash. the group includes experts from boeing, the faa, and the

national transportation safety board. the jet plunged from a cruising altitude of 29,000 feet. volkswagen has picked a bank to be global coordinator for the plan ipo. the banks include goldman sachs, bank of america, and jp morgan. more banks will be added to the deal. the car brand is likely to be one of europe's guest listings this year. 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 am lisa mateo. this is bloomberg.

>> we are just beginning to start to tighten at a time where inflation is above the target and the unemployment rate is low.

the labor market is extreme you type. if you are going to try to get inflation under control, you will have to push up the rate and as you push of the unemployment rate, it is almost impossible to avoid a recession. tom: it has been a set of bloomberg opinion pieces by william dudley, the former president of the new york fed. he has been dead on about rising inflation and the need to adapt and adjust and be a new short essay which says simply, let's go. the only way is to slow things down. with perspective on this, nouriel roubini of roubini macro associates. associated for years with giving us wisdom. do you buy the idea that the only action that will bring down inflation is to dampen economic growth and increase unemployment? nouriel: yeah, i have that same

view. the inflation rate is at the level we have not seen in decades. many inflation expectations are also rising. the other thing that happens is on top of everything else, a tighter monetary policy would slow down economic growth. now we are faced with a negative supply shock coming from the russian invasion of ukraine with increased commodity prices, also slowing down the global supply chain. that becomes even worse before we can get good monetary policy into the picture because the negative supply shock implies higher inflation. in terms of monetary policy, inflation, sooner and more, but that as the growth slows down, maybe it would be more severe. then you norman eisen -- then

you normalize inflation expectations so that policy trade-offs become even more severe. lisa: you wrote an article recently that i thought was really insightful. it is a new stagflation policy proof. where does policy fit into the next year when a lot of people say inflation is inevitable as we try to come out of this period? nouriel: again, there is a wide range of policies. monetary policy, fiscal policy, sanction policy, regulatory policy introduced -- regulatory policy being introduced. you also have very contradictory goals. there are goals that push down inflation which is now significantly higher but you also have a mandate about maximum employment that goes against the target.

you want to keep interest rates low and long-term rates, formal mandate of the fed. of course, the hike in commission. and then you want sanctions to punish russia and deter other people from doing the same things. all these things implied that reaching an optimum policy equilibrium is very hard. suppose you want more sanctions and more fiscal stimulus. sanctions to punish russia and stimulus to support economic activity. sanctions and stimulus increased demand and inflationary pressure and the monetary policy is trying to achieve lower inflation so there is a contradiction. lisa: what do you see as the likely outcome of this? nouriel: i think it will be very

hard for the fed to achieve a soft landing. you have to tighten more than otherwise when inflation is high. the fed is not realistic. around 1.8 at the end of the year when corporate fees will be more likely around 4%. and then you have two choices. either you tighten monetary policy by the end of this year, which can cause a recession, or you are worried about the drop because the public and private debt is so high and you destroy the debt market. they are connected and you end up not doing as much and hampering inflation expectations. yet to choose between a recession and inflation expectations. tom: i love to end with you because it is always so

construction. you and i were in a bar once and we were talking about four standard deviation moves as being a shock. german inflation is seven plus standard deviations. italy reporting tomorrow, looks like a six plus standard deviation move over the long-term dis-inflationary trend. nouriel: you are already a standard deviation away from a black swan event. also in europe, we have had the major geopolitical shock with the war. and there is a much broader geopolitical depression. china, russia, iran, and north korea. the war in ukraine is only the first of this cold war 2.0. the question is whether it will

be a cold war or it will be warm. we are in a very difficult situation where there are things happening and from the eve of world war i, the financial markets did not factor in at all and then stuff happens. tom: i will tell you what we will do. we will continue on radio and bring this conversation over to myself and dr. roubini. lisa, jobs day on friday. lisa: how much are we looking for a strong number being a strong sign and how much of concerned about the market. jay powell says the market is likely overheating in certain areas. i keep going back to the misses in the inflation calls from economists from the u.s. to europe that we saw this morning. tom: the momentum is extraordinary on inflation. nominal gdp in america, fourth

quarter, 14% plus. stay with us. mr. kaufman of goldman sachs will be on television with jonathan ferro. michael mckee this morning. >> the joint masters 1000 event hit top gear tuesday at hard rock stadium. raining u.s. will be in champion medvedev to reach the quarterfinals. the 26-year-old can return to world number one if he reaches the final four in the sunshine state. >> what i remember the first time i saw him was rushing him. he is a great player so i knew it would not be easy. i am trying to do the same as him. >> naomi osaka coasted into the

semi's with an impressive win over daniel collins. the four time winner will meet blinda bencic for a spot in the finals. do not forget tennis channel's continues at 4:30 p.m. eastern. i amiethew.

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>> jobs data in america, decent. numbers out of germany, worrying. futures -1%.

good morning. countdown to "the open" starts now. announcer: everything you need to get set for the start of u.s. trading, this is "the open" with jonathan ferro. jonathan: live from new york city, the big issue. hope for a diplomatic breakthrough fading fast. >> i don't read anything into it until i see what their actions are. we will see if they follow through on what they are suggesting. jonathan: the pentagon echoing. >> we believe this is a repositioning, not a withdrawal. we should all be prepared to watch for a major offensive against other areas of ukraine. it does not mean the threat to kyiv is over.