accommodative. >> things will be choppy going. >> when they need to act now. >> it's overheating in the fed has to accelerate. >> 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 two/10 of 1% on the s&p 500. we are reflecting on the distressing images from the weekend. tom: truly heartbreaking and i think the ramifications now are there but far more importantly, the ramifications in the coming days are simply unknown. i would suggest this includes covid updating europe, it is

maximum uncertainty. jonathan: is there a way the europeans can respond this week without losing credibility? tom: the credibility is there and part of that with maria taddeo in budapest will be coming up. i believe we will be in paris to cover this but far more importantly, the maximum uncertainty. there is more uncertainty now than there was on friday. jonathan: notes from j.p. morgan and deutsche bank. kailey: they were saying if germany's cut off from oil and gas from russia, that will be detrimental to the economy and they will enter a recession. they also said persistent high inflation underscores the difficulty that germany in particular has. europe talks about ratcheting up sanctions and energy for germany still looks like it's off the table. jonathan: the fed has a hard job to do and let's wish them the

best. tom: this is a long letter. there is discussion of ukraine and discussions of the bed and there is discussion of the banking. what's interesting in the letter is the rationalization of the track record. he lays out what he's done. jonathan: earlier this year, they had a tough earnings call. they announce new spending and now he's talking about a return on that spending. tom: i noticed came up moments go, is the discussion of a mode around fortress balance sheet. the modes are. tickly deep says jamie dimon. jonathan: competition is coming

from all sides. we will talk about that all morning. on the nasdaq 100, up 1/3 of 1%. a 98 handle on wti crude. kailey: that does not at all reflect the risk in the oil market. china has covid zero policies and at 7 a.m. eastern time, the meeting in luxembourg and we expect the finance ministers to start arriving in an hour and we will talk about the macro economic nichter for europe and the war in ukraine is front and

center and has provided inflationary force and growth risk for europe especially as there is discussion of ratcheting up sanctions. also a kind of fiscal report -- policy they may warrant. at 10 a.m. eastern time, factory orders are expected to fall 6/10 of 1% and we will get the final read on durable goods. finally, we are on payment watch for russia's dollar bond. this is coupon and principal payments due today. they fought back about 3/4 so watch to see if they stay current on their obligations. they have but it's a complicated process and it could get much worse on may 25. jonathan: team coverage starts right now.

let's start with the distressing images from the weekend. can you help us understand with the european response has been so far? maria: everyone has seen the footage, the ukrainian officials say they found mass graves of more than 400 civilians and evidence of sexual violence and this would be a war crime under every national and international convention. we had the french president saying that there are clear signs of war crimes having been committed but he did not mention vladimir putin but he said they established it was the russian army and this happened. we heard from the polish prime minister taking a tough line. they said this is a genocide and the question is, what do we do next? what is the response from the european union? it's clear when it comes to the targeted sanctions and the

smaller ones, the conversation inevitably will turn to energy. germany is reticent to make that switch. if you look at the politician response and the economic debate, this debate is shifting. tom: completely unfair question but i will give you a shot at this. this is after talking to elliott ackerman friday. do the russian officers have control of the russian troops? maria: that's difficult to answer because we don't really hear much from them. if you look at how the operation on the ground has developed, the answer would be no. this has not been a successful operation for russia. it costs money for the russian federation and if you look at the key points that they wanted

to subjugate and invade and take control of the ukrainian capital but they have not been successful. the one thing the russian federation still controls is the media, the messaging and i was watching russian tv. in budapest, is not a problem to see. all you can see is a stream of footage that says this is a campaign by the anglo-saxon media and it's all fake. kailey: so the war of information continues as the war on the ground continues. where does the administration come in here? >> weird strong words of condemnation with anthony blank and calling it a punch to the gut but he stopped short of labeling it a genocide stuff president zaleski called what we are seeing a genocide. we all serve from secretary

lincoln taking to twitter to talk about the fact that they are going to pursue accountability. the united states was looking into war crimes the other thing we heard from sec. lincoln was that every single day, the administration is looking to either tighten sanctions or ramp up the sanctions. it remains to be seen exactly what the u.s. could do next. to really hit the part of the russian economy that will hurt the kremlin is going to be oil and gas. this is on europe on that end. jonathan: the administration has resisted the temptation to publicly embarrass their european allies. have you any insight on the discussion between the europeans and the white house on how to ramp up this effort? ann marie: it's difficult and they have not wanted to embarrass their partner since

the president made it clear he wants to work in lockstep and preserve this unity of working with his european allies in trying to hit the kremlin. you already see divisions within europe. they said they will stop imports of russian oil and gas in poland is calling for the same and the latvian president said he's calling for the same. it will potentially be the east and west divide in europe that will eventually push the likes of germany and france to be tougher when it comes to the sanctions. the u.s. will do anything they can to help them if they were to get to that point. that's trying to get more lng into your from the united states or other parts of the world. jonathan: thank you both. what a tough moment, how do you respond? tom: exactly, i think the response started over the weekend but for those that were

looking at duke/north carolina, there is maximum focus on that this weekend. i believe it will ramp up. i think it indicates more sanctions. jonathan: did you watch the basketball? kailey: it was a great game. what's all that about? unc/duke, i don't favor of them. jonathan: tom was distracted on sunday. that worked out quite well. tom: i don't know what the value is in place. it sets up an arsenal that will be a good game? jonathan: we haven't seen a day for that just yet.

i'm working through the j.p. morgan letter as well. there is a number that jumps out. tom: he lists the fdic's fee, the foreign taxes and dirty to gazillion dollars they have paid over the last decade in taxes. this is a feisty letter as you expect and i want to emphasize that there is a wonderful display contrasting them to other banks. it's a fun thing to do every year in april. jonathan: the last 10 years, we paid 40 2 billion dollars in taxes in the u.s. in 17 lien dollars in taxes to the united states. that's what he says. jamie diamond of jp morgan and much more still to come and futures positive 1/10 of 1%. when bird. -- this is bloomberg. ritika: keeping you up to date,

growing outrage of reports of russian war crimes in ukraine. there were images of people they said were unarmed civilians killed execution style. leaders have condemned moscow and considering whether to impose more sanctions. the kremlin says many of the images are fake. the ukrainian president made a surprise appearance at the grammy awards not -- last night. he spoke out about the war on social media. the j.p. morgan ceo jamie diamond is calling for more sanctions on russia stop he said the federal reserve may raise rates more than the market expects. he covered a number of issues in his annual shareholders note. he talked about supply chains and says the world needs

affordable energy. the hungarian prime minister one the election for a fourth term. carrie lam says she will not run for a second term. -- in hong kong. the next chief executive will be selected by the committee of beijing. global news, 24 hours a day howard bite more than 2700 journalists. this is bloomberg. ♪

>> we are seeing an exodus of every major company from russia. over the long term, the export controls mean they will not have the technology they have to modernize their economy and their future. these sanctions are having a big bike now and will have a big bite going forward. every single day, we are making sure that they are not only tightened but increased. jonathan: an increase in a big way this week, that was secretary blinking over the weekend.

good morning, futures are up positive. yields are higher by a couple of bases points. there is only one stock to look at in the premarket and that's twitter. up 25% and elon musk taking a 9.2% massive steak. kailey: over a week ago, elon musk was criticizing twitter saying that free speech is important. he was asked if he would follow that with maybe starting his own social media platform. jonathan: we are glued to his twitter account. tom: it will be interesting to see. the guy moves and twitter has its own challenges.

tiktok is leading the way and instagram is doing remarkably well where twitter barely played and they were losers along the way. laura has had the courage to be in the market but she has done sector analysis. jonathan: let's start with the energy call. that has popped the time. in the last week, you made a move step can you walk us through what led you to this point? >> our job as a strategist is to connect the macro and the micro. we had the sense that we wanted to reduce exposure to the value trade. we have passed an important mile marker with the fed, we

typically see performance ahead of that. economic forecasts are coming down step consensus is looking for 2.3% next year and we could see value out performer above this trend economy. we think markets are ready to start shifting back to growth and in mid-march, we started to eke out the value. that's the macro. when we thought how we wanted to reduce that value exposure, we turn to our analyst survey. back in december, my energy team had been highly bullish throughout 2021 and was number one in terms of their performance. the survey we just completed, they are number four. it's a better place to reduce

that value explosion -- exposure. jonathan: why maintain the overweight on financials even the growth slow down you seem to be talking about? >> when we think about economic forecast, we are making the assumption we are heading for a below trend economic backdrop but not a recession. the risks have grown. i think financials have been suffering from the growing sense of recession fears and has the market transitions and settles into the idea we will hit growth significantly but not enter a recession, you can see some relief on the financial side. i think the heaviness of this reporting season has been pretty dour which is the opposite of what we saw ahead of the last reporting season. i think we have a better set up going into this from a sentiment

perspective. tom: earnings grow and then they don't in the market goes up and then it doesn't. nominal gdp is pretty good and then it's not. have you determined that point when earnings turn low single digit or negative? >> that's a great question. as a forecaster and someone, earnings have gotten much harder to forecast. there are models that we looked at like labor costs which have been brilliant and forecast earnings but haven't worked as well. it's specifically about margins and i think i'm a transcript junkie and we read everything we can. what we have seen is companies have gotten much better at

combating margin pressure. new software, new cool -- new tools and new recording strategy are good for people like me. when you think about the models from a top-down, technology has been the structural margin winner and it accounts for a disproportionate share of earnings. it's a bigger impact now than in the past. i think by site has ratcheted down expectations for margins into this season so we don't expect to be fantastic but we think there is a lot of upside. jonathan: we love catching up with you. two weekends ago, this is what elon musk had to say about twitter. it's failing to adhere to free-speech principles. then this morning, they are up

9.2% in that stock is flying. kailey: top 25% and it shows you the star power of elon musk and anything he touches gets a boost. two weekends ago, he was talking about creating his own social media platform but instead, he's an active user. jonathan: given that twitter serves the de facto public, failing to adhere to free-speech principles undermines democracy. you wonder what he will do with it in the future. tom: is it leverage for management? i don't know. i'm looking at the financial statement and the net income is there but it doesn't feel like a tech stock most it feels like it's just a company.

is that sophisticated enough? jonathan: we will catch up with our next guests after this short break. this is bloomberg. ♪

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jonathan: coming off the back of a stellar jobs report, from new york city this morning, futures are up 2/ of10 1% on the s&p 500. the stellar jobs report just about squeezing out a week of gains on the s&p but another kick higher in the two year yield. two-year yields have been higher, up almost 20 basis points. the inversion gets a little bit deeper in friday's session with the curve steeper this morning with the 10 year up a basis point or two. there is a call for 450 basis

point hikes this year. how does your respond to russia and reclaim some credibility? what can the europeans do on the energy front. tom: you saw the outrage and it comes down to how mr. putin will respond. seven standard deviations, natural gas is the benchmark from back when it was normal is up seven plus standard deviations. that's undoable. that must be addressed. jonathan: anything short of energy sanctions is a loss of credibility for the europeans. tom: we are at that point.

this is what we covered so well on the continent. the imagery of this war is something i'm sure that mr. putin has done to all of us. that includes the horrific imagery this weekend. the most studied economist in america in the last number of days, the chief u.s. economist is with us. i want to talk about the underlying theory at ucla. if we get the persistency of a non-measure rate rise, what are the responses within the system you are most focused on? the ones that are absolutely original given the move, which ones matter? >> thank you for having me.

it's a great question. when people first saw our calls for 50 basis points, it seemed aggressive if you think about the underlying theory you were mentioning, it's a fed that has a neutral range at about 2.5%. we are living in a world of almost 9% inflation depending how you calculate it. the idea that fed officials want to get to 2%, that's not -- that's not that aggressive a call. tom: let's go to the core economic function. if we get a move, which partial differential moves the most?

consumption or business events meant or will it extract -- expressed in the trade balance? >> i would watch the housing market, that's the important sector. that's where interest rates have a direct effect. if you look at the thirty-year fixed rate mortgage rate, that has moved up from around 3% to above four and a half percent. as an economist, is four point 5% mortgage rate that high in a world where you see inflation much higher? i think that is the first sign we are getting some traction as to what the fed is doing. it should feed through the housing market. tom: that really rings true. the mortgage rate adjustments have been huge. jonathan: house prices in this country and the u.k. are obscene

at the moment. let's talk about the economic data. you got faith in this economy and to restrain this economy, you think rates have to go higher. there was a little crack friday. can you walk us through what's been happening and why the ism may be a blinking flashing light on your dashboard? >> you have to watch all the signals. there is strong demand and receding the supply -- receding supply. you will see prices slowed down. we are watching these and ism

slowing down, that would be raising our level of concern somewhat. people talk about the yield is another sink -- signal. the fed may need to slow the economy down significantly to get inflation down. they are thinking about scenarios where the economy slows down. the other number friday was the jobs report we are running on average above 500,000 new jobs per month, wage inflation above 5% annualized, he put those numbers together and you have numbers that are running about 10% year on year. probably see a lot of spending power behind that step in kailey: the face of higher oil prices, how long can the american consumer go before demand destruction really kicks in? >> i think we are seeing that to some extent.

would demand for housing be even stronger? the combination of higher prices and higher mortgage rates, we have higher oil prices, higher gasoline prices at the pump and that hurts consumers on a day to day basis. you are coming cap that from so much nominal income power, hitting the increase in prices but i don't think that will be enough. you watch the consumer sentiment numbers and the numbers dipping because people are concerned about prices moving higher, as they should, but so far, it looks like an economy that's running well above 2% attentional growth. it could be slowing down closer to that 2% level during the year. kailey: how does the balance sheet factor into your assumptions of 200 faith -- 200

basis points of moves? what influence does the fed have? >> economist like myself are spending time right now figuring out what interest rates will look like. we should probably be more focused on the balance sheet which is an incredibly important tool. we talk about a flat yield curve. the fed is a large owner of long-term treasuries and mortgage-backed securities and that will put downward pressure on long-term yield. i think the fed will put it on all of -- on autopilot where they have securities reinvested to bring the balance sheet down slowly. it's something to watch because if the fed needs another lever to pull on with inflation

running too high, should the fed think about sales and be more aggressive with the balance sheet? all those things are on the table right now. jonathan: we appreciate your time as always. he's looking for some big moves from the fed. look out for the minutes on wednesday. the chairman told us this in the last meeting and look the minutes and we will break down the details for you. kailey: when it comes to the balance sheet because in the press conference, he didn't get a lot of questions about that step everyone has been focused on the rate hike and the trajectory of that and where the terminal rate ultimately is. the balance sheet is hanging in the background. does that come to the forefront in the minutes? jonathan: you have to believe that 50 basis points will be made.

the case of 50 ordering any negative surprise before the next meeting has grown. tom: we go to fomc on the terminal and it amounts to may for his so what but how about july 27? what will they do september 21 after the rate increases? where will the mortgage rates be? jonathan: at the moment, the data is fantastic that you look at unemployment, that's a green light, do what you need to do. if the price for the next move is a recession, is that a price worth paying to get inflation down? tom: also important is sporting

traits. he played back yesterday. he was not out front. jonathan: they are looking good. they have no consistency. tom: for you and me to show up at the derby in london would be great. jonathan: you want to go to the north london derby? tom: the reaction in paris is fascinating. this is a huge deal. jonathan: up 1/10 on the s&p 500 24% higher on twitter.

we will come back to that. this is bloomberg. ♪ ritika: keeping you up-to-date with news from around the world. twitter is soaring after elon musk said he took a nine .2% passive stake in the company a week after he asked 80 million followers of twitter whether twitter violated the principles of free speech. he asked a federal judge to throw out his issue with trading. there are reports that russian troops have committed war crimes in ukraine step there are images of people they say are unarmed civilians killed execution style. the kremlin says many of the pictures are fake. inflation rose in turkey to a decade high last month at an

annual rate of 61%. they were in triple digits for a second month. turkeys interest rates around the world are lowest when adjusted for price exchange. howard schultz is mark -- -- howard schultz said the cash could be better spent on stock. starbucks is searching for a permanent ceo step global news, 24 hours a day, powered by more than 2700 journalists. this is bloomberg. ♪

>> we also made very clear that china should, if not for, at

least not interfere with their sanctions. >> the promulgation of the war and the disruption it brings to the world connie is therefore in newman's interest and certainly not in china. jonathan: the european commission president, from new york city this morning, futures are positive 1/1 of 1%. 0 the 10 year yield on the week was lower. the connection is the likes of morgan stanley saying headwinds to growth are happening. tom: we are inverted in the vanilla's red eye basis points, point 05% basis points in every tick down is a big deal.

that should not be taken lightly. jonathan: the argument for growth should not be taken lightly either. on china, they say the covid locked and were in you rain means it could darken further even with stronger policy support. the baseline the growth will slow to 5% in 2022 in china, can they get to a five handle this year? tom: and particularly in shanghai with much of their trade focused on the disruption as well. josh joins us from bloomberg school of public health from johns hopkins. good morning. john was talked about china, caleigh wants to talk about china but i have to go to the site guist over the weekend -- to the zeitgeist over the

weekend that covid is back with a new variant in europe. can you say it's back in america where does that need more time and data? >> covid never went away, we still chart 30,000 cases per day step it has gone down parts of the country but it could go back up again. we do not know how much the new variant will affect the united states. we should be prepared. tom: let us go to china as well. your colleagues have been hugely critical of the china method to the pandemic. is china getting it more wrong because we've gone from epidemic to an endemic with this virus in asia? >> you can look at new zealand which had a zero covid policy and got everybody vaccinated with high-quality vaccines is

now opening up the in as the potential model for how to handle this. it's very hard to stay at zero covid forever. especially with these incredibly infectious variance and that's what china is finding out. china might consider things inappropriate but with that, they are having trouble with this contagious variant. kailey: what is china's best recourse if it's not covid zero? do they have any real choice to stop a sweeping outbreak other than locking densities? >> i think they should thinking about vaccinating with high-quality vaccines and whatever that point is where they can get that done, that gives them a chance to be more flexible. i worry if they open up, they have a tremendous amount of

risk. they are stuck between a rock and a hard place right now. the key to get through this is high-quality vaccines, a high percentage of people vaccinated and opening up. kailey: i want to call attention to a twitter thread from a doctor at baylor who says long covid is not at the forefront of the conversation and we may experience an unimaginable level of mental health issues as a result. do we have any real clarity on long covid and what that could mean in the longer term? >> i think the mental health issues are partly caused by long covid but also all the disruption and challenges of the pandemic and that's why we see things like the homicide rates and other challenges increasing. it's a terrible disruption that the pandemic has caused so mental health is part of the

rices. we need to learn more about long covid because their implicate is not just for mental health but for different physical elements people are experiencing and understanding the natural core and starting to think about what kind of therapy can be helpful is important. jonathan: thank you for being with us. we will catch up with them more this week. we all know someone is got a case of covid at the moment. the good news is there is a disconnect in a way there wasn't a couple of years back between cases and hospitalizations. tom: we don't know. the urgency in europe is greater right now than in america. i don't know why but you look at the maps.

there is a greater tension there. jonathan: let's pick up on the fact that jamie dimon watches ted lasso. jamie diamond watches ted lasso. tom: wait a minute, that wasn't in the letter. jonathan: i could show more gratitude. tom: is that chelsea blew the same as the j.p. morgan blue? jonathan: i think it's similar.

tom: one single sentence, we are not a conglomerate. that's the single most important sentence away from behavior in the letter. jonathan: we get distracted by things like mentioning ted lasso. what matters here for the banks and shareholders is just how poorly the call went after earnings on the new expenses, the new spending and how productive that spending would be. tom: does he mention the senator from the commonwealth of massachusetts? no, but he says our problems are neither dimmick attic nor republican. he says he does not want crony capitalism. jonathan: they also mention how

much they are spending on taxes. $42 billion? tom: 42 gazillion. jonathan: i'm real numbers from that company. the conversation continues, this is bloomberg. ♪

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>> aftershock aftershock, aftershock, the economy is adapting. >> conditions are extremely accommodative. >> the equity market will be externally choppy going forward. >> it's less likely that we have a recession. >> the economy is overheating in the fed has to accelerate. > this is bloomberg surveillance with tom kean, jonathan farrell and lisa abramowitz. jonathan:jonathan: from new york city for our audience worldwide, good morning, this is bloomberg surveillance. futures are up 1/10 of 1% in europe and in -- in the markets and in europe it's not business as usual step tom: all of us are appalled by the news flow