matt: welcome, this is bloomberg markets. here are the top stories were following for you around the world. both stocks and bonds falling as traders react to more hawkish fed commentary. elon musk stands with twitter, another step as the passive investor becomes a board member, the social media giant says elon musk is exactly what the company needs. the g7 art to announce a new round of sanctions on russia, looking to punish the roman of the alleged atrocities we have been talking about in ukraine. jon: let us get to the latest on those sanctions with annmarie hordern who has been tracking these developments. what more can you tell us about these new sanctions we are expecting ahead of tomorrow? >> working in lockstep of the

european union and the g7, they are releasing the sanctions, they go after a similar path they take already, the roadmap will be financial tightening, some of the financial institutional sanctions as well as state owned companies and also individuals. we did hear the european union may look to sanctioned president putin's daughters. not a lot is known about them. putin has gone through great lengths to protect their privacy. the eu could go after them or even the united states. what we do know is that there is going to be an increase in pressures as we have already seen. matt: a lot of these sanctions are really just symbolic. the eu is going to stop buying coal from russia as if they need it.

germany is overflowing with coal. what they need to do, everyone we talked to says is stop buying oil and stop buying gas from vladimir putin. sending him 220 billion dollars a year now -- $220 billion a year now. finance the war in ukraine. >> this year, russia, is telling commodity traders 21 billion dollars, it is up a third of what they sold last year. this is the lifeblood of the russian economy and put in will be able to keep funding this war. the united states has tightened the screws and cut off his access to a lot of reserves he has built up over the years. when it comes to coal, we should note two things. they do export a lot of coal into europe. about 40% or so. that is still a lot. the second thing is that this

kind of starts to break the energy taboo. energy was going to be difficult for western nations to invoke sanctions on russia because they are so reliant. the second thing i would note is a you are correct, russian oil and gas is so critical. europe is not there yet, germany, for one. matt: covering everything out of washington for us, let us move back to the fed. if the u.s. central bank will continue tightening policies and shrinking -- the u.s. central bank will continue tightening policies and shrinking. esther george spoke exclusively with mike mckee about the problems sheet and the path of raising rates. >> 50 basis points is going to be an option we will have to consider along with other things. i am focused on how the balance

sheet moves in conjunction with policy rate increases. >> let us talk about the fed saying that the balance sheet is to shrink more rapidly than in the revis recovery with significantly larger caps and a n increase in maximum caps. >> we do compare this cycle to where we were the last time, we were reducing the balance sheet. we did not go very far because of the needful reserves and the decision around that. -- need for reserves and the decision around that. i think it argues for going faster and moving along at a quicker pace than we did before. we have a ways to cope to get the accommodation out of the economy. i think we are still talking about what the right approach would be relative to last time. we are doing that in the context

of looking at the size of the balance sheet and the condition in the economy. that would likely warrant doing more and going faster. >> what is the anticipated impact of reducing the balance sheet of a rough basis points and rate moves? >> we often focus on the benefits going in on how it pulls duration out of the market and boosts asset values, i have been looking at the estimates the go all the way to 150 basis points on longer-term rates, wherever that is, there is clearly going to be some adjustments that take place in asset markets as well as long-term rates. when i look at the yield curve, i am looking at that issue relative to the balance sheet and what effect it is having on longer-term rates. a conversation -- less of a conversation on if it is predicting a recession. jon: talking about rates,

joining us for more is a global head of rate strategy at td securities. nice to have you with us. let us take a little bit deeper into the market reaction today. how has that commentary impacted the market's thinking on the fed strategy from here? >> we had a really big reaction from the market. the market and the fed had not given -- the fed has not given us a lot of information about timing and the details. what we have been saying is that the market is under appreciating the impact of qt. i think the comments today refocus the market's attention. we get the minutes of tomorrow, we expect to get some clear details. i think what they sent or was it is going to be faster than last time. that is why i think the market

focus is on rate hikes and how much it is, that is why the focus has shifted. the five year and the 10 year is starting to respond. we are expecting about 700 billion of treasuries once a qe fully ramps up. we are talking about a trillion more in duration supply that the market will have to take. that long end, have done a bit of the pricing and there is more room. closer to 3% on the 10 year, by the time that it is fully priced in. it is about qt. i think she was not that hawkish on rate hikes. she did not talk about going neutral. >> esther did, she said we may have to go above neutral to bring inflation down. she says we will see gdp step

down and fiscal policy waning. that has got to be worrying to markets or economists who do not want to see recession. is it a question no longer of if we have a recession but when and what kind? >> i think it is right. they are working so hard to get this off landing and maintain credibility. will they be able to do them both? how much tightening does the balance sheet bring about? the balance sheet will tighten financial conditions and impact longer-term rates which impacts the consumer and the corporate sector. if that does a look on the tightening, the fed may not have to raise rates above neutral. the other big question is does inflation actually decelerate, is the supply chain allowing the fed, if inflation has decelerated, maybe the fed dollar rate is higher inflation

in order to achieve the soft landing? i think it is too early to say that the recession is on the cards? if it goes above neutral, it is inevitable. right now, the just wants to get to neutral. let us start the balance sheet runoff. look at the momentum in the economy. matt: all of the speakers that we saw today, they had some interesting comments on inflation. daily says inflation is as harmful as not having a job. he did not go as far as ronald reagan, not as deadly as the armed robber and as violent as a mugger. daley said the labor market is extremely tight. it is interesting how quickly we have gone from worrying about for employment to it is extremely tight. the fed hasn't it? >> look at the environment.

the labor market is tight, we have been noticing chair powell calling the labor market unhealthy. there is the supply and demand this match -- mismatch. the fed is terrified that this becomes a price spiral and gets harder to put the inflation genie back in the bottle. that is why they are sounding as hawkish as they can be and they say it is not a choice between inflation or growth. inflation is a harmful thing to the consumer. we are trying to do this for the society as a whole. control inflation and hopefully not the economy into an recession -- hopefully control inflation and not the economy into a recession. matt: twitter is gaining for a second straight day. elon musk named to the board a

day after he was called a passive investor. he is going to have controlling voice. this is bloomberg. ♪

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jon: this is bloomberg markets. time for the start of the hour. shares of twitter continuing to rally as elon musk is named to the board following the announcement that he is the largest shareholder. ed ludlow has been tracking this very closely from san francisco. it is feeling like there are plenty of cooks in the putter kitchen. jack dorsey saying that i wanted a lot on the board for a long

time. what have you made of all of these -- [laughter] tell us about what is going on. >> it is effective through the company and shareholder meeting in 2024. his ownership interest is tapped -- capped which is interesting, there are some stipulations in that he can use swaps or derivative to get past the 14.9% cap which i thought was interesting. a 30% gain over the course of two days is the biggest two day jump. stocks are trading at the highest level since november. retail volumes in trade, there is an intense interest in the story. the balance it seems positive. matt: he has an agreement to cap

his holdings but he was a passive investor. today he is the boss of the company. how does that make any sense? >> prior to elon musk, look at the function on the terminal and the existing table or a spread of shareholders, jack dorsey was the single biggest individual shareholder at 2.7%. elon musk has blown way past that. you see that and you use the rich function on the terminal and issues of the pie chart, the overall network is a drop in the ocean. from twitter's perspective, the conversation turns to what actions he will take, whether it is the edit button or the feel-good effect around elon musk. i think we have a chart showing that the average analyst price

target is below where we are trading on the share price. analysts cut price targets following the news yesterday. what is going to drive the stock here seems to be intense retail investor action. twitter is the number one stock on the fidelity trading platform. what does institutional wall street make of this? they did not love twitter or tesla. matt: they questioned the valuation of that as well. it does not stop it from being a $1.1 trillion company. ed ludlow covering technology for us. president biden and the vice president and barack obama are beginning remarks on the affordable care act. otherwise known as obamacare, and medicaid.

are there any comments pertaining to ukraine, we will bring them to you. go to li fico -- livgo. hot wheels got to $1 billion in sales with the head of mattel. this is bloomberg. >> passed legislation that allows a medicare to directly negotiate prescription drug prices with pharmaceutical companies. ♪

matt: this is bloomberg markets. time for today's what it is worth sacrament. we are focused on the toy industry. although it is facing supply chain issues and inflation hurdles, cells are expected to exceed $100 billion by 2023. what i think is interesting is we are about to talk with a guy who runs hot wheels and they

have reached $1 billion in sales. jon: it is pretty remarkable, our charts tell you the story. during the pandemic, toys were very popular. when we started having a conversation on economic concerns of slowing growth or even recessionary concerns, toys do pretty well because their price points are reasonable by comparison. it has been a hot time for the toy industry. matt: there is going to be continued rose and bloomberg intelligence says mattel's share is going to grow as well. let us bring in the key executive, the number one way company globally, richard dixon is the president and coo. i was going through our own analysts' view of the company and she thinks that your market share is going to grow not just because he wheels, but you also have other car products with fisher-price and your bribery --

barbie franchise growing as well. what is it that makes these products -- i had not thought about it until i was a kid, now it is back big time. >> we have a huge portfolio of brands. last several years, we have spent time driving the ip driven part of our business into a high-performing toy company. we have an incredible franchise brand, you know, pictionary, it goes on. we have really positioned the company for robust growth. the toy industry has been fantastic and mattel brands -- matt: how much of that is pandemic driven? a lot of kids are playing at home. i need to set up a track in here. >> the pandemic and families spending more time at home reinforced the assets and the

play value of traditional toy play. digital, a playground that is not changing but complementary has been physical toy play. parents, dads, getting on the ground and playing with their kids, seeing the value, cognitive, emotional, social, and the unlock of imagination when a child place with a physical toy. it is great reinforcement of the value of traditional toy play. jon: i know you have the hot wheels legend for, he has been busy in his garage trying to be one of the winners this year. in all seriousness, we started this hour with commentary from esther george. there are so many businesses navigating through supply chain issues. for a business like yours, huge and plastic, you need to be watching the price of oil. >> we are dealing with the

supply chain. at mattel it has been a competitive advance of -- advantage. we have been consolidating our facilities, reconstructing our global footprint, applying cost savings and providing a much more flexible model. despite inflation being an issue for all of us, between pricing and cost savings we expect to expand margins over time and mitigate. most importantly, making sure that we continue to provide our consumer with the best product in volume that we can. -- and value that we can. matt: is it revitalization of the brand? >> over $1 trillion in sales in 2021. it has had a record growth trajectory and we continue to see incredible growth ahead. the hot wheels legend tour is one great example of bringing the brand to life through live events and design innovation. we have one of the biggest

international customized card wars in the world. matt: basically custom car builders compete to get hot wheels versions of their actual machines made? >> they compete over 13 different countries in five continents, we have thousands of automotive enthusiasts rating their own versions of hot wheels. we have an steep set of judges who pick the winner and -- an esteemed set of judges who pick the winner. the winner gets to have their original car built into the diecast line that will globally be recognized around the world. matt: hopefully i can get that location. i will ask scotty after the show. it has been great having you in here. i want to ask about your outlet. you are available at walmart and target, massive retailers. with the demise of toys "r" us,

what does that do to your sales? >> we are unbelievably widely distribute it. over 488,000 points of distribution around the world. anywhere you go around the world, distribution is bar none, the best in the world. matt: thank you, richard dixon, mattel president and coo. this is bloomberg. ♪

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mark: the united states european

union and group of seven will announce a new round of sanctions on russia tomorrow to punish their chrome and for atrocities in ukraine. the measures will include a ban on all new investments in the country. the sections are intended to integrate instruments of russian state power outlet impose acute economic harm on russia. bloomberg has learned other vladimir putin's daughters may be among those sanctioned. it is largely a symbolic move since it is unclear whether they have significant assets outside of russia. it is designed to get the president's attention. his daughter's lives are shrouded in secrecy. there, and has never confirmed their names or release photographs of them as adults. the two feet -- the deputy chief of staff assess a direct meeting between his boss and the russian president will be difficult