>> 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 in the

first bombings in odessa in the western black sea, a key emotional city. what an original, difficult weekend. tom: jonathan: deeply upsetting images. how do the europeans respond this week? tom: they will do other things and i think we will talk about sanctions. let me talk about what jimmy diamond said step what do you do about net gas and the utility bills? jonathan: energy issues and the outlook for growth and that's the problem for the french and italians and germans. for the last 15 years, is coming back to haunt them in a massive way. tom: jamie diamond says we need a marshall plan for the european union and their energy security.

the headlines this morning on the use of coal in europe. jonathan: that single name in the premarket dominating the conversation. twitter is searching 25%. kailey: elon musk talked about starting his own platform but taking a nine .2% passive steak. they think this could turn into an active steak. jonathan: is elon musk a passive kind of guy? tom: no, i don't know what to make of it. twitter is such an oddity. i totally don't understand the revenue model. jonathan: that stock is of more than 25%.

the 10 year is up by a couple of days is points. they are calling for more sanctions out of europe so what does that look like? kailey: crude will be a topic of conversation in a few minutes. european finance ministers are expected to arrive at a monthly your group maybe in luxembourg. the focus will be on the european economy and energy has a key role to play in that in terms of the higher prices that consumers are feeling when it comes to their energy bills but what it could mean down the line in terms of growth. what kind of fiscal policy needs to come in. at 10 a.m. eastern, we will get u.s. economic data.

this is a final read on durable goods which is down so we expect confirmation of the huge drop in commercial aircraft orders and we are watching the dollar-denominated debt in russia. pencil payment is due on its dollar bond and they already repurchased on that stop they only have 552 million dollars outstanding. it's been able to state current but it's a tricky path to navigate and on may 5 it will get hard when u.s. treasuries expire. jonathan: haunting images of atrocities committed by the russian army. what are they going to do about it? bloomberg team coverage starts now. what can the europeans do about

it and how can the u.s. support them? ann marie: this comes back to oil and gas and energy with billions of dollars russia is making on the import -- on the export of gas. there is a split in europe how they want to approach that stop lithuania said they will stop the imports and latvia is said they want to stop and they have 90% of their natural gas coming from russia but the issue is germany is not yet there to do so.

they want to act in the face of these atrocities. tom: with maria in budapest, the shock of the size of the margins of the two elections this weekend, the struggle emmanuel micron has witnessed, does biden in america speak to the allies in europe with one voice work do we go olla card country to country? annmarie: it's a little bit of both. kailey: you need another trip to paris. annmarie: i think they will do country to country when they have to enter the same time, you seen a number of meetings the president has helped when he has the top players. you have seen a lot of diplomacy directly between germany and the united states. that was key when olaf schultz

came to america that says to -- this is a lot to germany ditching norge stream to. this administration made it clear and continuously makes it clear that they want to preserve the unity amongst the allies. kailey: it's not just germany pushing back on the idea of an oil embargo. we got headlines out of the austrian international affairs committee say that austria will not act the embargo and russian gas. what cards to the realistically have to play? mari at this point none, this is a reality theya: vladimir putin. going after the oligarchs, it changes nothing.

the war continues in reality so there is an inevitability about energy. this will have to be tackled and debated step we have to make a distinction that for the europeans, they look at oil as a moneymaker for russia but they look at the geopolitical weapon which is gas. russia wants to brush this aside but this will have to be a topic of conversation weather is today or tomorrow. they will have to tackled his head on. russia denies all the atrocities. there is no active fighting in certain places. this is going to be -- this will not be the last of it. jonathan: the u.s. administrations facing questions whether there sanctions are working. because of where the currency is trading and we talk about it not

really being a market. do you sense some pressure building on the u.s. administration to do more than they have done? a senatornn portman talked about the factmarie: about increasing the aid to ukraine. he says they should aid in the tanks moving from the european countries potentially into ukraine. the pressure has ramped up and we should note that secretary blinking said they look at either tightening the screws and the sanctions that are therefore intensifying and creating more sanctions. the elephant in the room is what's going on in europe and they rely on russian oil and gas. it's astonishing how much russia will make this year, likely more than last year, when it comes to their exports. jonathan: thank you both.

this line here from the u.k. spokesperson -- we don't want to be seen as escalatory of the u.k. over ukraine, can you explain that? tom: no. jonathan: without the full quote, i wouldn't be as critical but that line speaks for itself. we heard that a few times. tom: we've herded no less than five times this weekend. this is a war and a huge part of the public is never experienced this. there is not even a sequential script. we are staggering through this. i have no idea what escalatory means. it sounds like a salad i had in paris two weeks ago. the only escalation i can think of rationally is how will they

move military hardware to ukraine, particularly on the battle in the black sea? jonathan: more on russian sanctions and the ukraine? kailey: this is why the use of force has been off the table step nato or the u.s. does not want to put troops on the round internet willing to give them the fighter just they were asking for a monthly go because that would be an escalation and could potentially be a world scenario. jonathan: that's something that comes up repeatedly over the last two weeks. futures are up 1/10 of 1%. good morning to you all. from new york, this is bloomberg ♪. kailey: keeping ritika: you

up-to-date with news from around the world,.twitter is soaring after elon musk announced he was taken a nine point 2% passive stake in the company a week after he asked more than 80 million followers on twitter whether the company violated the principles of free speech. he is asked a federal judges wrote his agreement with the sec which limits his posts on twitter. growing outrage of reports of russian war crimes in ukraine. there are images of people they say are unarmed civilians killed execution style. moscow has been condemned and are wondering whether to impose more sanctions. the ukrainian president made a surprise taped appearance at the grammy awards last night step he encourage people to speak out about the war on social media and tv.

j.p. morgan ceo jamie dimon is calling for more sanctions on russia and warns the federal reserve may ultimately raise its rates more than the market expects. he covered a number of issues in his annual letter and he said the world needs reliable and affordable energy. in hungary, the prime minister got a fourth consecutive term in an overwhelming victory. he overcame criticism that he is backsliding on democracy and is too close to vladimir putin. global news, 24 hours a day, this is bloomberg. ♪

>> i think we have to be very clear, i think there is evidence that putin is taking his troops at of the northern part of the country to redeploy them to these and part of the country to relaunch a battle there. there have been victories for the free and so far but this war sadly is far from over. jonathan: the white house chief of staff over the weekend. futures are higher by 2/of 1%10 step yields are up a little bit.

crude is advancing with a 100 handle, by 3/4 of 1%. twitter is up 25% as elon musk takes a 9.2% interest in the company. tom: because of the importance of this morning, the uncertainty of ukraine and europe, let's get right to it, the managing director of portfolio strategy at oldman sex is with us. i want to talk about equities not in the yield space at the depth of inversion. if we take the u.s. tends or any other number of hairs that you look at, what does the depth of

inversion for the stock market? >> in the last few years, every time the yield curve inverts, it didn't invert that much and you ran into trouble later. you already had an issue because the time between the yield curve inverts in the recession happening is been around 20 months on average. you inverted and the signal was a bit early. we are quite worried this signal might be more early because if you have a high flechette regime, what tends to happen is the breakeven inflation curve would be very high. it would be low on the back end. it's easier for the nominal rate there to invert more. tom: for those of you on radio,

his hands are moving around while he was -- while he is talking. if that is the case and we see these dynamics, how was someone to gauge the amount of equity to own? 60/40 is gone. how do you find percentages? >> you have this dissonance between strategic allocation which is telling you you will have more inflation on more real assets and that also means more exit fees so you have that on the one hand and then you have recession. they kind of send conflicting signals. we would say the yield curve inversion is not as bearish as it sounds, you still have to be careful. economists have put out their

official probability of recession of 20-35% which is above average. at the margin, you want to buffer your allocations. tactically, it might not be that at best entry point right now. kailey: what about commodities? is there an entry when given the run-up we have seen and the come down recently in commodities? would you add to those? >> generally, i like real assets. the commodities research team has incorporatedthe commoditiesm has incorporated some changes with strategic oil reserves and supply and demand changes. iced -- i think they still come out with a good upside for oil over the next year or two. they feel there is more value in diversifying across real assets and what -- and that is what the research has shown instead of

buying a bit of oil. we found that you should add to all of them at the same time. there are different micro drivers. i actually like gold. i think it can be an asset to help you later in the year with some of the geopolitical risks. there is also a case for oil in the commodities space with diversified exposure. kailey: to bring it back to equities, earnings risk when it comes to inflationary pressures, higher wages and all of that puts pressure on the bottom line. do you expect companies will be able to retain their margin or or we reaching the limit of pricing power? >> you're hitting on a most important point for earnings season. equities can only be in inflation hedge if they are able

to deliver real cash. they need to roll their earnings after inflation and in the last two quarters, the earnings season has shown resilient margins. this is the first season where we are worried for the commodity imports coupled with supply disruptions will probably hit margins. finding the right pricing power would be more important than it has been the last two quarters. the jury will be out for equities to be in inflation hedge in the next order. it will be a difficult one. we feel equities have rallied maybe too much. they could be a bit more over range but we think some companies should have more pricing power. jonathan: thank you as always.

there was some research over the weekend on the yield curve inversion. he has the 70's experience in mind. you can pick your moment based on what you think now those investigations and those research pieces keep popping up . tom: i love what bob seeger did back then. like a rock. it's not the same. i have immense trouble with comparing and contrasting to the 70's. that was the closest i get to singing.

where's tang? jonathan: futures are up 2/10 on the s&p 500 and twitter is flying. ♪

jonathan: good morning to you all. the shape of the market on the nasdaq of the s&p. the nasdaq 100 up 4/10 of 1%. one thing to watch is twitter. in the bond market we are taking our signal from the yield curve. curve inversion. negative earlier this morning. overnight in the open as well. overnight into this morning, we are negative four basis points. the worries around that getting really interesting. goldman out with a piece saying maybe the early 1970's experience is an example of when -- because of fears about inflation. is that the right parallel?

tom keene can pull -- can take his pick from history across a long time. this is the story for me. morgan stanley telling me the bear market rally is over and they are saying they are more constructive on bonds than stocks because they think growth concerns from here start to take over. your 10 year, 2.3878. tom: lisa has like six favorite yield curves. i think the idea precluded that we can't go lower, more inversion is just wrong. there are all sorts of ample processes or ways you could grit -- you could get to greater inversion. jonathan: bramo is away for a few days but she'll be back and she will tell you why that is really bad. futures up across asset price action. >> good morning. looking at the top of the

leaderboard as far as individual movers. it is all about elon musk today. twitter is up. -- an impressive number to be sure but more importantly, it shows there has been a lot of momentum with these factory openings in the u.s. and around the world. combine that with streamlining production and some of the loftier expectations to hit 2 million deliveries annually certainly seems within reach. all the talk about haslett being overshadowed by elon musk buying up shares of twitter. more than 70 million were amassed as of march 14. twitter shares up 25% in the premarket. it is not quite clear what elon musk plans to do with this stake , now more than 9% of the shares outstanding, making him the largest shareholder in the company but we know he has been a pretty vocal critic of a lot

of the policies that the platform has taken either against him or some of his other interests. some other social media companies moving higher in the premarket. let's take a look at the other movers out there and that includes chinese adrs which rallied on the back of that news report that chinese authorities would actually meet u.s. revelatory demand for more transparency with those financial audits. a filing by chinese reg you leaders on saturday appeared to confirm that. alibaba up 5%. starbucks in the return, howard schultz shares down 2.7%. in the preening -- in the premarket. tom: romaine, thank you so much. right now, and this is important, the -- has written

very carefully considered notes. it was a crack team. stephen gallo at bmo capital markets, they have written an exceptionally nuanced fx note to start the week. stephen, i was amazed at the carefulness of your research note and the summary of visit -- of it is to pay attention for an earlier lagarde. how will she act earlier? stephen: one of the risks facing the ecb is a destabilizing move lower in the euro if there is an extreme increase in geopolitical tension, in the war in ukraine or if we move closer to a severe energy supply shock. in that case, currency

instability will be one of the things that could force the ecb to respond. a sharp fall in the euro and a quicker normalization i the ecb. apart from that, and you can see this in euro-dollar positioning. one of the things that has present -- prevented significant downside in euro-dollar is that fx investors don't want to be called short if there is a cease fire. assuming we don't have those risks develop or materialize, the ones concerning the escalation of the war or severe energy supply shock, then i think the ecb can probably be a bit more relaxed. jonathan: can you run me through how the fed tightening cycle would influence the ecb, especially when the ecb is going to start much later and in smaller increments? stephen: for the most part, as

far as euro-dollar is concerned, i don't think it really is a play on the fed or the ecb. it is largely a geopolitical trait. the underlying fundamentals of the euro are quite weak. the trade fundamentals have deteriorated and it looks like we are going to have prolonged war, moving further away from a cease fire or if it looks like we are moving closer to a severe energy supply shock, i think fx investors will be more comfortable entering short euro-dollar positions, as the fed tightens. that will probably be a second or third consideration for these euro-dollar shorts, the first being geopolitics, but it is certainly something that is in the background that would help the short euro-dollar trade.

kailey: so that is the fed relationship with the ecb. what about the boe versus the ecb? stephen: if you are talking about the fed and boe, the primary one you have to look at is cable. this issue of the boe not having monthly meetings is a bit of a headache for the mpc right now because there is a clearly a risk of the bank falling behind. if the fed goes an additional 125 basis points by the end of july and the boe moves in increments of 25 basis points at the next few meetings, it will be something like 50 basis points or so below the fed by the end of july, which is going to mean that one of these next meetings of the boe, there is a considerable risk of a 50 basis point move and this situation

for the boe also ties into the dynamic for the ecb. these central banks do not want to be caught too far behind the fed if the fed is going to tighten faster and not going to pause anytime soon, that potentially puts these currencies under pressure versus the dollar. if we have other factors a line, which prompts fx investors to get more along of the dollar. they certainly don't want to be too far behind the fed. . kailey: the fed is tightening, the boe is tightening and the ecb might get there by the end of the year. the boj is decidedly not, becoming even more supportive in the bond market. dollar-yen at 1.22. what is your best guesstimate on the trajectory, given the bank of japan being really committed

to easing policy? stephen: easing policy and at the moment, inflation is not a significant problem in japan and that is certainly the way the boj has behaved. rather than position for a massive breakout of the 125 level in dollar-yen, our preference would be to continue to buy the dip. down toward the low one 20's, positioning a move to 124, looking at the pretty tight relationship between dollar-yen and the usd five-year rate. not a bad relationship to be looking at, but you are right, for the moment, the boj is in a position to defend the upper end of its target range for the 10 year and we think that is what it will continue to do. it looks like japanese officials have put 125 as a line in the

stand -- in the sand for the time being. jonathan: stephen gallo of b mo. the ecb, next week, just around the corner. that is going to be an interesting meeting for sure, given the recent data and developments across the continent. kailey: 7.5% inflation in europe. what does christine lagarde do in this situation in which you are seeing really dramatic pricing powers and consumer across europe -- at the same time that is potentially posing a risk to growth? how does a central banker walk that line and what does fiscal policy have to do with that factor? jonathan: i don't know what she will do but i will

two year yield has changed in germany. tom: -- central banks too slow to counter inflation and i look at the dynamic in europe and frankly it is more interesting than the fed. jonathan: german yields come in three or four basis points. coming up, 8:15 eastern time, 35 and its away, this morning is going so quickly. global sanctions had other weinmann joining us very shortly -- oliver wyman joining us very shortly. this is bloomberg. ♪ ritika: keeping you up-to-date with newsom around the world, with the first word i am ritika

gupta. leaders around the world are condemning moscow over multiple reports russian troops have committed war crimes in ukraine. russia could face more sanctions over the matter. images -- images were shown of people killed execution style. the kremlin says those photos are fake. more than 9000 new cases of coronavirus reported sunday. thousands of medical staff arrived. meanwhile there were reports in china that a new sub strain of the omicron variant has emerged. president biden is calling on congress to act on gun related issues after a deadly shooting in sacramento, california. two shooters open fire. six people were killed and 12 others wounded. the starbucks founder -- by suspending a share buyback plan. they said the cash could be

better spent on stores and staff. they are ticking over on an interim basis. in sports, south carolina defeated -- to win the ncaa championship. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm ritika gupta. this is bloomberg. ♪

>> companies have gotten much better at combating margin pressures. technology has been a structural

margin winner over time with much bigger impact now than it has in the past. jonathan: much less constructive own energy, a little bit more so on technology. an interesting conversation this morning. nasdaq up a 10th of 1%. crude up more than 1%. yields higher by a single basis point. a jamie dimon letter to get through over at j.p. morgan. something for everyone in this. this line on russia, not worried about direct exposure to russia that we could still lose about $1 billion over time. tom: i would emphasize $1 billion over time for j.p. morgan isn't that much money. he made that clear in the letter, when you look at the

scale of what we normally see from james dimon. it is something about that most bankers could write this letter and we will not dive into that right now but we are going to dive into the financial tone set by mr. dimon. marcus is an expert at doing that. he writes for bloomberg opinion but he is encyclopedic on bank and particularly bank culture. about 30 pages in, mr. dimon reaffirms that he wants to do a global consumer bank. he does not mince words about it. is he effecting european banking just as one example right now? marcus: not just yet in europe but definitely using u.k. as a launchpad. we have chase over here with the credit card offering 1.5 interest rates. that is about as good as it gets for us if you have money to put on deposit.

big operations down on the south coast, processing retail banking, so they've got scale and goldman sachs came in with the markets products a couple years ago and i think chase's going to make more. jonathan: let's talk about how much this costs, the spend was something that dominated early -- earnings season for j.p. morgan. have we had sufficient clarity on what that spending is going to achieve? marcus: not yet. i am fascinated what he said about russia but there is a lot of room to grow in the euro markets. particularly if interest rates do rise in europe. i think j.p. morgan will be very well-positioned and likewise in the u.k., being dominated again

by the big banks of the u.k. as conditions have been -- kailey: obviously j.p. morgan serves this kind of dual role where it is it a -- where it is a very consumer facing bank and also a very large investment bank. jamie dimon talked about the excellence shape that household -- excellent shape that households are in, still flush with cash from the pandemic stimulus. how large is the risk for j.p. morgan and other banks of deterioration in the american consumer? marcus: not just the american consumer. it is something we will have to keep a close eye on. we've got to keep a very close eye on u.s. housing and i think that will be the canary in the

coal mine. a lot of savings were built up during the pandemic. j.p. morgan has been a beneficiary of that. i think jamie dimon was very right that you could have it both ways. tom: doug kass will be joining me later and he is heated about the tone of the dimon letter with the technology that jonathan ferro mentioned. -- the end of technology and the internet, the ethernet culture. his j.p. morgan at risk of being so dominant that nobody else can win? marcus: that has for sure been for quite some while.

any of the decent ones tend to get snatched up. there is a much a risk of that, and we should be very aligned to that risk. j.p. morgan has the muscle and the money to spend. normally you can keep throwing money at it and j.p. morgan has -- and that will benefit exponentially more as we have to watch out for that risk. jonathan: it would be rude not to ask you about the ecb and what it might mean for the banks in europe, to get back to zero on the deposit rate. how big would that be. ? marcus: it would make me very happy man. i am a big fan of negative rates , just being paid to borrow in europe, it is just madness and

the whole loan dynamic, you need to have it. stop qe, gently stop they have a lot of risk on that side anyway. it would be absolutely transformational for the european bank, particularly by germany. there is no savings incentive at all and they need to be able to make some money. jonathan: we have turned finance upside down in the last few years in europe. marcus ashworth, thank you. this from austria this morning, responding to the deeply concerning pictures out of ukraine over the weekend and they say the following. russian war crimes require consequences. very reluctant when it comes to

gas sanctions. that is europe this week and unfortunately that tension is not going anywhere. tom: austria is one of a select three or four. i've got one published view, 10% of their energy comes from norway. 80% from russia. jonathan: we started the conversation this morning with a basic question. can europe respond to this without losing credit ability and if anything is short of energy sanctions, do they lose and ability and i think ultimately that is the conclusion this morning before we have even seen the week play out. tom: i think the news flow will dictate it. the gentle men from austria mentions the outrage of the weekend but to me, the key out lying here -- outline here is where looking at more traditional energy like coal and that is fermenting this morning. jonathan: crude a little bit higher this morning.

positive on the s&p and up on the nasdaq. crude, $100 and $.50. this is bloomberg. ♪

>> this is the markets readjusting to a much faster pace of fed normalization. >> financial conditions are going to tighten, that is the point of fed hikes. >> do they wait long and they have to move higher and quicker? >> they have this blunt instrument they can't control where the demand retracts in the economy. >> recession risks are higher. >> this is bloomberg surveillance with tom keene, jonathan ferro and lisa abramowicz. tom: good morning everyone.