inflation hedge fund. >> the central banks don't want to be caught too far behind the fed. >> getting of positive growth number for this quarter will -- will be a challenge. >> this is bloomberg surveillance. jonathan: from new york city for our audience worldwide, good morning, this is bloomberg surveillance live on tv and radio. 2/10 of 1% in the eu is considering another step. tom: it's april bozo and we will talk to maria in a moment stop this is a series of steps in this proposal just released but everything else as well. what's important to me is very in nardelli's article would bloomberg is they may ban trucks and ships from russia. to me, that's a bigger deal.

jonathan: there is a proposal to ban coal, not gas and crude. tom: that's true and we so that in hungary with the stunning election. all in all, it is the beginning of micro steps toward really tightening things up for mr. putin. jonathan: this is how we started the week. the deeply distressing images we all witnessed. lisa: if the only measure they can take, the 300 lien dollars that vladimir putin is getting for payments and more. how much will that be the juggernaut that could potentially turn the tide? there is a feeling of urgency in what vladimir putin is feeling in terms of pressure. jonathan: we got to talk about

what's happening beneath the surface. homebuilders, really rough and transport is not looking pretty and throw in yield curve inversion. people are concerned about what's happening in the markets. lisa: people point to transports because this is a demand-side slow down that people are trying to price in. people will start spending less because of the supply chain disruptions. we have not seen this but everybody feels like it's coming so when do we have to see that people to change their view on how much dynamism there is? jonathan: welcome back. lisa: thank you. jonathan: nasdaq futures are down a little more than 1/10 of 1%. little later this morning, a ton to talk about. tom: it's an interesting market

now but overwhelming all of this is the low run in high tech. the bears have been humbled last number of days. jonathan: euro-dollar is just south of $1.09. lisa: front and center is the european response to the war crimes alleged to russia. vladimir zelinski of ukraine addressing the united nations at 10:00 a.m. in the european finance ministers are completing -- continuing to meet in luxembourg. why aren't oil prices higher? we are far below some of the highs we saw before the start of the expansions expanding to europe. not as much on the table and perhaps the barrels coming online are suppressing where things will go and it remains a question as we look at tight supplies and demand is picking up.

we get the kansas city fed president today joining michael mckee at 10:10 a.m.. we have tons of fed speak in my question is how much will they take a look at a labor market and how tight it is and say perhaps we haven't moved quickly enough. you are seeing real yields move closer to zero but there -- but they are still negative and why is that? we get u.s. march ism services and how much are we seeing this fuel the drop in the unemployment rate? people are waiting for the services sector to pick up. jonathan: thank you. looking forward to the data and the fed minutes are coming up tomorrow. team coverage on ukraine starts right now. talk to me about the proposal from the last 10 minutes. maria: you know that once you

put something on paper, you do it because you are sure it will go through. the fact that there is now a proposal to ban russian coal from being imported into the european union, that says that when the european ambassadors meet in brussels, they will approve it. also the fact that the european union is now considering shutting access to ports and shipping and a lot of this would have a big impact for the russian industry and the money maker that it is for vladimir putin. you could argue that it doesn't target oil and it doesn't target gas but we knew that was going to be the case. the way the europeans see this is you go to from coal to oil and then you moved to gas which europeans see as the geopolitical weapon against vladimir putin. tom: coal usage has gone 40% in

the last 10 years and there is a whole climate effort as well in europe. is this perceived as a short-term war in you crane cap or is the real chance of a step back, if you will to use of coal across europe? maria it's the: second one, the climate transition cost money at a time when prices are going up and the other big issue is having you talk about a climate transition put the date on it but we don't know when the war in ukraine will end. we are nowhere near a cease-fire. the russian troops are trying to conquer the east of ukraine and that is seen by the ukraine 30 as a first step to separate the country that will look like north and south korea. we are not looking to a quick

cease-fire in ukraine. this war will last weeks if not months. lisa: from the u.s. side, the treasury department is trying to tighten the screws on russia. what is the goal of the latest measures with respect to russian government funds? annmarie: they are cutting out carveout they made for overseas investors to get paid in these dollar-denominated payments. the treasury is forcing russia's hand to either draw down a reserve that they have within their country to pay for these payments into new funds they are bringing in like selling natural gas to europe or a default which would be terrible for russia. they are forcing their hand into these three options in the payments that russia was due to may, the next few weeks will be

challenging for the country. jonathan: this pressure is building around a story i think that is building over the last week that the sanctions aren't working in the way that people thought they were. lisa: and not quickly enough stop if they were, the fact that we are seeing those images that were startling and dramatic to many people overnight out of areas in ukraine really raises the pressure on speed rather than something that could eventually work. jonathan: most people didn't think these russian payments would be made. is the conversation in washington growing that the sanctions are not biting is much as they could? annmarie: every day, they talk about the fact that they have a tremendous amount of penalties on russia. russia is the most sanctioned country in the world right now.

at the same time that the united states and its partners are leveling sanctions against russia, you have private companies pulling out, more than 400 private companies say they will not do business with russia but this is not going to happen overnight in terms of potentially changing the calculus of president putin. the u.s. said yesterday, jake sullivan talked about the taxable changes that russia wants to make, trying to make sure they have a strong hold in the eastern region and in the south near crimea and making sure of the water supply to crimea. how long can the war last? we need to remind ourselves that president putin has in in ukraine since 2014. it doesn't look like he's going anywhere. jonathan: thank you very much both of you.

europeans are still buying russian gas and russian oil. there is a proposal to ban russian coal and coal imports. we will see the effect worldwide in many places. protests over coal and fertilizer, did you see what's happening in peru? tom: it has its own confusing political calculus. this is about controls. when do we see price controls? you put in the controls to maintain political stability. jonathan: much bigger tensions for the commodity importing companies as well. lisa: the idea that this is where we are on now with temporary food shortages.

peru is not an idiosyncratic story. it might happen in northern africa. people were talking about how this reflects the arab spring only so this food inflation. this is a geopolitical concern for later this year. jonathan: we will talk with black rock later this morning. yields are higher by five basis points on the tenure and crude is positive by about 6/10 of 1%. this is bloomberg surveillance. ♪ ritika: keeping up to date with news from around the world. the eu will propose a mandatory phase out of russian coal imports.

that's a direct response to russia troops committing war crimes and they will ban most russian trucks and ships. u.s. is increasing pressure on moscow to find alternative ways to find -- two -- to prevent them from paying their debts. the u.s. senate has set judge brown on it path to become a supreme court judge. her confirmation is almost set and three republicans say they will vote in favor. in shanghai, a sweeping lockdown is the city's 25 million residents are under lockdown for

the spread of the coronavirus. daily covid cases went down for the first time in months. in sports, kansas made history last night, beating north carolina 72-60 nine for the ncaa men's basketball championship. they came back from a 16 point deficit which is the largest in a title game. global news 24 hours a day, powered by more than 2700 journalists and analysts. this is bloomberg. ♪

>> i got criticized for calling put new work mental. but truth of the matter is it has happened. he is a war criminal but we have to gather the information, we have to continue to provide ukraine with the weapons they need to continue the fight. jonathan: the president of the united states on the distressing images from the weekend. futures are down about 2/of one1 percent on the nasdaq0 and the s&p 500.

crude is 104 on wti. tom: someone named lisa abramowitz put this out on twitter, the 10 year real yield is important. that's a lesser negative yield than the last 24 hours. lisa: why isn't zero? if we're talking benefit that's becoming restrictive, why is it still negative? jonathan: the question about the fed is that they haven't gone big enough. tom: let's talk to an adult in the fixed income market. buried in your note is the heart of the matter in the yield made up of a subset of three or four

key things. what's happening here is what's not happening. you are looking at expected inflation and term premium and they are not moving, are they? >> no, it's where do you think the fed put the policy rate relative to the inflation rate. secondly, what do you think the inflation rate will be? tom: i have to interrupt, we don't do them on the black -- on the back of an envelope. on the bloomberg >> rico bonin's, what is the inflation rate and as a long-term investor, what is going out on the yield curve and using the term payments negative. it's a very flat curve, it's

more like a yield divine. investors are not asking for much as far as stepping out on the yield curve. you can't use tips to gauge that. it averages in the next two years ahead in the 10 year rise and its distortions of the best way to look at it is the five year. looking five years out, it's above the noise from oil and from prices. got a term premium of -40 but let's use zero for what that should be for something higher like 2.5% for the into -- inflation rate. which of the fed policy rates are above the inflation rate and we presume 2.5% is where inflation will be.

it's something like 02 plus one half. the 10 year is close to where it should be but not there there is not enough term premium and that yield. lisa: as you are speaking, i'm trying to do the math on the back of an envelope. hold on a second because if we are about half a percentage point from their in its 2.5% but it's the terminal prize of inflation in the cycle, if you're looking at a 3% overnight rate by the federal reserve, how could the 10 year yield be slightly lower than where it should be? why isn't it closer to 3% this point? >> the yield curve is a sloppy pack of expectations.

looking at the forward rates, there are different views so it was a rapid change of expectations so there are distortions. why shouldn't the 10 year yield the higher? think back to 1994, the less traumatic time of fed rate moves that was aimed at shooting down inflation fears. the ism price index back then got to as high as it was last month which was the high 80's. inflation was still fresh in the 70's and early 80's. the fed had to battle but they did something. it started slowly. it ignited a bond rally in yields kept falling.

this is the george to stanza fed which will do the opposite , georgecostanza did the opposite to find success. the answer to why yield is even higher is the feeling now that the fed will ultimately be successful in knocking the inflation rate down so any move in the policy rate will be short-lived and that's with the forward rate curve suggests. jonathan: we appreciate the clinic, thank you. 246 on tens this morning. lisa: that was a bold call a few months ago but now it seems realistic.

how much will that contribute to a rise in longer-term yields, i don't think people are trying to analyze the effect of monetary tightening even though we are moving toward an announcement. jonathan: fed minutes tomorrow and we will look at them. how exciting is that? lisa: i'm excited to see where their tom will even read them. jonathan: will you read them tomorrow? tom: the data is old and boring so i won't read them. some of us are perhaps several of us care about the minutes. jonathan: when you say you don't to the parlor game, what is that mean? tom: it's the modern media addiction of gaming legitimate bloomberg data in micro analyzing it. i look at the rock economic data, economic growth. some of those numbers are slowing down. lisa: i just googled parlor

game. it's just to say i don't have an opinion. jonathan: he just dumped all of the research on wall street this morning. tom: several glasses of tanning have been less tha -- tang have been less than dark ice cold.

jonathan: live from new york city this morning, good morning, equity futures are slightly down. j.p. morgan out yesterday with a constructive note. they say that we may be near the end of a fed repricing. credit suisse agrees. they say we are underestimating the power of qt. there is your inversion, the difference between the two negative about a basis point. the dollar yen, the somewhat

rapid move in the japanese yen. the aussie dollar is outperforming. tom: you've got an important guest, euro-swissie shows careful movement. john blanche very out with a tweet. blanche flower, too many numbers this early in the morning .he's got the numbers on fear of on women and says why the ecb will not raise rates. jonathan: you mentioned the swiss franc.

they don't need a recession in europe. tom: our global chief analyst is with us. i love what you say about jerome powell, he will be boxed in and you have really good paragraphs, you are looking for is deep downturn in manufacturing, expand on that. >> every leading indicator we have of pmi tells us they are having lower. every key indicator of the economy tells us it is helping -- it is heading sharply lower in the next six months and a lot of the information we have how data was in january. i look at what the fed is facing the next nine months, they will have high inflation but their focus will have to shift back

toward the employment side of the picture. the fed looks like it could go eight or nine times this year. tom: do they say one and done if they go 50 beeps? >> that fit her bubbly happens closer to the end of q3 because they will need coverage to do it. you can't do it until the data has changed but they may start focusing how the nature of inflation has shifted. we are moving from covid inflation to conflict inflation. it's a different compensation -- composition of inflation. it's much more damaging than covid inflation.

we will see much more demand destruction. the fed will have to face that full on. jonathan: given the opportunity and the decision, to curtail inflation, which one would they choose? >> jerome powell has suggested -- it's interesting that it will be the roaring 20's. they will debate whether it's a technical recession or a technical recession or growth slow down. it appears the central bank is willing to sacrifice growth and that's how monetary policy effectively works. it suggests the reaction function of the fed has so far told us is willing to sacrifice growth in order to calm inflation. that makes sense now with inflation high end feels like it's overheating.

it will not make much sense in six months. jonathan: can you run us through what make the mechanical peak means? >> gets around march or april but i did took con -- comfort in that. covid inflation was always going to be transitory. we have to move away from the mechanical piece of inflation. we have been complacent about the damaging impact of inflation on growth because where it was coming from is not necessarily good but the help them asian will create a much bigger drag on growth that's why the fed will have this covered for a pivot later this year. inflation will look a little bit different on the surface but we will feel it more in our day to day lives. lisa: i'm trying to game at six

months from now. the fed will be more concerned about the labor market so how high do you expect the inflation rate to be if we get those numbers going the other way? >> prior to russia's invasion of you crane, we had inflation in the 2% range at the end of this year and that was closer to 5%. when we look out five years, our inflation forecast is back to 2% next year. chair powell was asked how much inflation is expected to come how just come down because of the rate hikes. he said we can't combat this year's inflation. he's dealing with the next couple of years. there is very little the fed can do about the present inflation. lisa: the fed got inflation wrong on many levels in terms of what their policy was in a lot

of academics. where does the ability come from for the federal reserve to make that pivot at a time when inflation is still 5%? >> what a challenge in all central banks understand that they will not bring down energy prices. central banks will continue to try to convince us they have some control over that. the fed will be focused on deep globalization, much more global. there is going to come into question how much control new central banks have on future inflation. let's hope they can control the long end of inflation. i suspect we will your more

comments about their standing mandate, that would not surprise me. jonathan: what is the big market call? >> we are more -- moving more defensively. growth will slow pretty significantly and that means moving more defensively into the growth slow down. we could see some upside and yields especially as we see hawkish and is from the fed. we look at the 40 year downtrend and i believe we can break out of it. jonathan: there we go, thank you very much. we could be very close to a peak in the long end. the 10 is 247. tom: what i love is that we have a huge debate going on. jonathan: we've been complacent on the damaging effect of

inflation.this is what the lisa: lisa: fed is contending with, they want to be patient but people take a look at their balance sheet but what francis is saying is there is a distinction between the pandemic here inflation and the crisis here inflation, conflict driven, which is more damaging to growth and how did they parse that out after the months and years of saying it was transitory? jonathan: trying to get to the back half of this year, have we fully clarified reaction function in the federal reserve? if they face a growth slow down and inflation is still high, what will they curtail, inflation or support growth? that will be a real test for the federal reserve. tom: also going into an election as well. jonathan: typically, they have

avoided those kind of scenarios. it will be tough. tom: under any scenario, it will be tough. when it's tough, what do you do, you wait for the data. every central bank, this is everyone, they wait for the data , that's what they will do. jonathan: i suggest the fed will have to take a step back. i would also suggest the political question which is a tough environment in the backend of this year. lisa: do people start to get concerned that the fed is losing that ability in terms of controlling inflation over the longer term or can the convince markets they have a handle on it and they have of -- faith that this will roll over? tom: can we stop the show? i'm embarrassed.

i talked to mr. leavy they have a conte-cam. we need the artwork on that for the bramo cam. jonathan: can you imagine the sponsorship? i think tom: vivian westwood would probably go for that. get the team of j.p. morgan and find out why there bullish on equities. futures are down about eight third.

-- about a third. from new york, this is bloomberg. ritika: up-to-date with news from around the world, ukraine president vladimir zelinski will address the united nations security council to day. speech is scheduled to begin at 10:00 a.m. new york time. he referred to the killings of civilians by russian troops. the black boxes from the china going crash of now been sent to the u.s.. the two flight recorders have become central to solving the mystery of why the jet went into a sudden nosedive before crashing. any information could be critical for boeing in china. after the hours after elon musk said he took a passive investment on in twitter, they say his investment may lead to

another management change. >> i will say this could be setting up for another leadership change at twitter. you never know but i am not jumping to conclusions. i'm saying is one of many possibilities. they could change the policy to open source. i don't know what's going to happen. ritika: the ceo replaced jack dorsey in november. this is bloomberg. ♪

>> i would focus really on the kinds of changes we are trying to bring which are really not

about stopping trade or trade divorce. really about bringing reform and more strategic approach to trade. jonathan: they really person -- a really interesting person to listen to. futures are negative by a third of 1% on the nasdaq as well as the s&p 500. crude is positive by more than one percentage point. this came from a travel operator in europe. they see summer, 2022 bookings to return close to summer 2019. they will hire more than 1600 new staff. tom: five people i ran into in

the span of monday complained about the price of airfare. jonathan: you and i included. tom: we don't need to bore people. we are all living in here we are . in 2019, he was less known to sending the medical message to the media. has tried to be smart when other people are panicking. let me talk about a word in the medical textbooks that we don't hear about and that is verily and's -- violence - virulence. >> i think we have some idea of what the vera lens virulence

level is of the new variant. it still another version of omicron and assess -- and it seems to be less verlin then omicron and other forms of the virus and that's because the mutations does not cause as much disease but it's less likely to do that on a pound for pound basis versus delta and its especially less likely if you been fully vaccinated. tom: away from people with serious medical issues, when you look at healthy people, is there something to fear? >> if you are somebody that's fully vaccinated and you don't have high risk conditions and are not immuno compromise, it

will be more of a nuisance to you. you've shifted the disease spectrum to the mild size so it will be like the common cold step if you are sick, you need to stay home from work but it will be something that's increasingly manageable and not as disruptive as it once was. lisa: when do we stop testing? >> that's going to be organization specific. many companies don't want to have any cases of covid. in general, if you are symptomatic, you should be tested because you might qualify for monoclonal antibodies or antivirals. student -- screenings of college campuses will go away eventually. we should probably reserve testing for symptomatic

individuals. people do things outside of their workplace or school that is a higher risk than being in the school or wherever the testing is going on. lisa: i feel like you are referencing china. are you starting to see signs that they are relaxing in a new way? is there a new way to look at what covid zero means in china? >> not really but there was article about child separations occurring in shanghai were apparent test positive and they remove the parent from their child and isolate them separately so there is this proclivity to use draconian measures something that's not sustainable. i don't know if they will pivot from it because they've invested so much in it but it's damaging those individuals because they know how -- they have no idea how to risk calculate and they

did not vaccinate their high risk population. you have to give them a failing grade for what they did and they squandered the time they had because there is not enough vaccine put into people and did not use the correct vaccine. jonathan: how do you see it going in china? >> i don't know how long they can handle this covid zero policy. we are reading about some pushback in shanghai. the vaccines are available and we have antivirals and monoclonal antibodies. new zealand has a banded covid zero and they are doing well

because they have vaccinated. they've got some of politics invested in china and so much prove ocean -- promotion of the covid strategy that it may be hard to move away from this. jonathan: thank you so much. there were record cases in shanghai step record covid case for monday in shanghai is 13,000 plus. for a city that runs in the tens of millions, that's the story. it's only just over 13,000. tom: i'm not a medical professional but i would advise with the doctor just said and to me, the tragedy here is they simply will not accept pfizer and maternal science as a solution. that's all this come down --

that's all this comes down to. lisa: it's not just us asking, think about the companies. when we see the de-globalization or the removal of shipping factories out of china to areas closer to home. jonathan: i defer to tom on this. the teams are getting sent out. tom: it's under the radar and its delicate i will state this as clear as i can stop when you come out of hong kong, you go south to singapore. then you realize how far away it is. geography here is the key point. jonathan: the conversation continues on the equity market with blackrock shortly.

the equity market is down about a quarter of 1% with yields higher by seven or eight bases points. crude is up by 1.4%. from new york city, on tv and radio, this is bloomberg. ♪

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>> investors one higher yields but they don't like the path together. >> jury would be out for an inflation hedge. >> the central banks don't want to be caught too far behind the fed. >> getting a positive growth number for this quarter is going to be a challenge. >> this is bloomberg surveillance with tom kean, jonathan darrow and lisa abramowitz. jonathan: from new york city for our audience worldwide, good morning, this is bloomberg surveillance live on tv and radio. futures are negative 2/10 of 1%. the pressure is piling up on the europeans. tom: the grim headlines are something. danny blanche flowers is t e