concerned about inflation than was in dissipated. >> there is concern about a slowdown that is consumer led. >> demand needs to be slow. >> i don't think the market has quite made up its mind whether there is going to be a recession or a growth session. >> this is "bloomberg surveillance." tom: good morning. welcome to a monday of jump conditions. kailey leinz is in for jonathan ferro. it is not a normal monday. there are jump conditions. lisa: is being led by the federal reserve expected to respond to them. the 10 year yield shocking, the real yield heading that much

closer to zero as we move towards potentially a normalized fed but restrictive fed. tom: in our travels to washington for the meetings of the international monetary fund, what is important is the correlation of movements. today japanese yen ever weaker. lisa: it has been shocking. yield not just in the u.s. but in europe and it is now a race to see who can tighten most quickly and restrain inflation at a time when a lot of the inflationary pressures on the war in china -- the war in ukraine and with china. tom: the structure's of the weekend, the masters over the weekend and the french election. what is fascinating to me is how washington responds particularly to the threat of further war in ukraine. kailey: we know president biden will address that with india,

speaking at -- with president mode i this afternoon -- president modi this afternoon. there is the economic relationship with energy and also military. tom: lisa, we have to come off of the pandemic lows and i what to go to your credit analysis. the 10 year yield of the factor -- february 2020 low is up 400%, breaking out to new highs, 2.75% . we see it in many things, including gold. what does credit say? lisa: there is a bearishness, but with the bank of america credit survey coming out this morning, if you want to be contrarian, go long. there is enough to give you confidence. it feels like we are headed toward a something that is not great.

eventually there will be eight recession. the issue is when. can -- there will be a recession. the issue is when. 2.75%, a shocking. considering the lows we have seen. tom: jp morgan earnings coming out. let me look at the data before lease that gives you the brief on the morning futures, -15. the vix showing some tension to the vix. oil, still quiet is how i would put it but i don't know what to do with it. gold reaches out over 1900. to the foreign exchange space is where i see real interest. it is still a resilient dollar. lisa: today more optimism about the euro as worst-case scenarios

did not transpire with the french elections. today, it bunch of fed speakers and a slew of fed speak. we will get the atlanta fed and governors pay chicago fed speaks at 12:40 p.m. in a separate event in detroit. i want to highlight real 10 year yields, yields rise to put 75%. the fact that the real yield is just 11 basis points away from zero gives a question of how long can risk assets continue to rally when you have this type of diminishing fed support and backdrop? a visit with vladimir putin, the german chancellor tweets out, even though austria is technically neutral, they are horrified about what is going on and don't want to have a

humanitarian disaster happening so close to their borders. how much do these neutral players play a role? 11:00 a.m., president biden meeting with president modi. how much is there pressure to come out with a more direct stands when there has been a neutral feeling out of india? not only with india, but also with china and that is where my focus is right now, given the fact that isn't necessarily as broad coalition as the united states and frankly the western world would like to see come as a lot of people are skeptical of the u.s. and the traditional old-school western world. tom: i do want to alert you come on the french elections, i am absolutely thrilled to tell you that jonathan fendi, the author, will join us later this morning. really interesting election results.

right now come on the equity markets, starting strong. linda, to cut to the chase, this is rare to say yields have spiked. how do you do equities when yields are spiking? linda: the equity market is much more calm, relatively. they are looking at real yields that have spiked but are still low. it has been very positive for equities. bond markets have been in excellent forecaster of recession when you look at the two to 10 year spread. this year is a strong year so

the equity market is looking at corporate earnings. we are still in a booming economy, even if we are concerned about profit margins. kailey: when will we see that margin contraction, is it in the first quarter or later this year? linda: this is a big concern for right now and what we are watching closely is right now as we learn about the reports from the first quarter of this year, because last quarter it was really impressive, mid to high 80% of companies that gave us earnings were able to push through all of their price increases. the consumer, who never was buying from them, had no problem paying for those higher races. so now we are starting to see -- higher prices. it's a know we are starting to see prices getting high and homes getting out of reaches,

how pervasive will this be? earnings began with a bang in the last quarter they are the ones saying we are having problems with compensation. lisa: how much is this concerning that companies can pass along the prices as the fed has flagged this to be ever more aggressive? linda: it is too much -- too many people chasing too few goods or that is something we talked a lot in the 1970's and coming back in the 1980's. both sides need to be corrected. we want to see people coming back to the workforce which may have something to do with the fed is saying we need the stock market to get hit because as you see bonds getting hit, what about the stock market. if people find it is worse than

they thought they would do, they may come back to work and this may simmer down. tom: i think of the young turks and when you look at the earnings season we are going into, are we setting ourselves up for a constructive and positive surprise on revenue, earnings, the forward view? linda: we would love to think that. we have been very bullish that corporate earnings like they did in the last six quarters they did do. market analysts have brought back -- brought up expectations to meet that. in recent weeks we have pullback are expectations without we might see 10% growth earnings and now we think maybe only 5% because we think margins are going to start to see pressure.

tom: linda, thank you so much. 10% down to 5%. as evercore at 9%, that is the parlor game and the jp morgan earnings we see on wednesday. lisa: it is going to be an awkward earnings season. companies are not going 20 to come out and say we are making so much money and doing so well against the backdrop of crises and people dealing inflationary measures. how do they mask it? what will they do to make them look less good at a time when the fed is concerned they will pass along price increases and consumers are getting resentful of the prices they are paying. tom: lisa nailed it with awkward. how successful do you want to look?

what about big industry or big bank? kailey: is going to be more contentious for these energy companies, especially because they are the focus of legislators. we saw them testifying on capitol hill as gas prices are rising. it will be interesting to see the read depending on how sensitive they are to the economy here at what is there view on recession? tom: jonathan emailed in, and thank you so much. i am on the 0% watch on the 10 year real yield as of this morning with a 0.14. that is a change since the beginning of the pandemic. we did that bond talk just for jonathan. lisa: how about the dow? tom: stay with us on radio and television. this is bloomberg.

♪ ritika: keeping you up to date with news from around the world. i'm ritika gupta. president macron in a runoff election. it will reverberate across europe. micron -- micron -- macron receiving -- of the vote. he is leading le pen 54-46. the ukrainian president expects russia to turn to larger scale attacks. he has been warning for days of a new offensive. he understands there will be much more russian weaponry than there is now. a twist in the week long saga of twitter and elon musk. winter said he decided not to join -- winter said he decided -- twitter said he decided not to join the board.

in china, the country's largest covid outbreak in two years continues to spread, whether 26,000 new daily infections reported in shanghai sunday, an all-time high, despite an extended lockdown. frustration building amongst the population cost they struggle to get food and -- the population while they struggle to get food and medical care. global news 24 hours a day, online and at quicktake on bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i'm ritika gupta. this is bloomberg. ♪

>> we are going to get ukraine the weapons it needs to be back the russians to stop them from taking more cities and towns where they commit these crimes into squeeze the russian economy and on vladimir putin and the kremlin and the russian government. tom: mr. sullivan, the national on abc managing the messages for lots of messages this morning. our message is,juckes says the

markets are on the move. forget about bitcoin. 10 year yield up to 2.76%. we have to go to it. negative .0189. lisa: remember when we used to talk to people and said what level do 10 year yields have to go to before it disrupts equity trade? said is not the level it is the speed. now we have both. have we reacted enough in a market that seems skittish? tom: kailey leinz and for jonathan ferro. right now -- kailey leinz in for

jonathan ferro. right now, across the landmass of ukraine and the sea of ukraine, the black sea, is maria taddeo in luxembourg. what is the body language of the ministers in luxembourg? is it like 1939 frankly of pending more? maria: well, i would say the war is already happening and they are very aware of it. they worry about this potentially spilling over from ukraine and that has been clear. there are two things happening, one is we have the austrian chancellor going to moscow to meet with vladimir putin. that is making a lot of things -- people nervous. until now the european union has been united in their message or they worry this could change. i have an official who said this

is not a time for amateurs. they also worry about the battle for donbas. tom: what is so important is quietly over the weekend, and mr. stubbs, the former prime minister, and friend of the show, made clear, i am shocked at the discussion of finland, of eu, finland, of nato. could that happen? maria: it could happen and it could happen very quickly. there is speculation there is something we can see by the summer. after years of saying they are not neutral, but now being involved in nato as an active member, that could change and get to something that looks like a vote before summer. this is a major implication on the war in ukraine.

this war has already changed the european dependence -- the european defense. lisa: can you give us how important him speaking with president biden? annmarie: you have the defense and foreign ministers of new delhi and washington meeting and it comes as you have almost contrary reporting what is going on. you are seeing warnings from washington to india about how strategically they align themselves with the west. you have india not outright condemning what is going on and abstaining from the number of votes in the united nations that would do so, most notably next week, that kicked russia off of the u.n. human rights council. you have the real dichotomy happening, but behind the scenes, the reporting is there have been a number of meetings

and there have been discussions about the united states making sure they can help india and fill the gaps. the biggest issue will be india still buying russian crude. there is reporting they are trying to set up a system that india can pay in rubles. there is the fact that india is incredibly reliance on russia for weapons. kailey: you have your importing oil and gas as well. as the administration is focusing on countries that have yet to take an active role sanctioning russia, what about europe that has gone to a certain extent but not all the way? annmarie: maria knows this intimately because she is talking to everyone in europe, but they are in europe trying to ban or go forward and figure out how to potentially start going

after russian oil first, and lastly would be natural gas, which will be incredibly difficult for russia good the for europe is this could potentially lead to many countries having a recession are also having demand destruction, telling consumers they have to use less. it is difficult for the administration and they have been kind of hands off. they are aggressive in terms of trying to help europe and fill the gap if they were to ratchet back buying, but you have to remember domestically, the biggest issue this administration is dealing with is inflation. if you have europe, india, other countries eyeing less russian crude, that means supplies have to come from somewhere else. we will seek prices fight and that will hurt them domestically. they are hands off for a reason. tom: thank you so much.

maria tadeo, thank you. we will join you again in luxembourg. lisa, at the economic data. tomorrow we get the important cpi report, and i believe i am looking at a new statistic on survey, 8.4% topline inflation. lisa: it will go to a .5%, the highest since 1981. this is a huge -- it will go to 8.5%, the highest since 1981. do people care or will it be an old story we have to look to the earnings to figure out, how long does it last, when do we see some kind of end and roll over, given the fact that it is not just the conflict in europe, it is that china is in lockdown again. all the base effect is not rolling the way people expect. tom: videos of shanghai and the

skyscrapers were something. we will touch on that later. we are thrilled you are with us on a monday. wednesday into thursday, thursday, the meeting of the world bank and the international monetary fund. stay with us. yields higher. ♪

tom: good morning, on radio and television. jonathan ferro in needed sabbatical. kailey leinz doing double duty. she picked the short straw. it was a disgrace that kaylee had to come on. kailey: i am happy to be here. tom: we are set for washington. this is not a normal meeting of the imf. lisa: especially given some of the social unrest. giving -- given what we are seeing from sri lanka and images from peru, how does this become a precursor with what we can expect with food shortages and food inflation. tom: i looked at u.s. corn breaking up to new highs and pandemic lows come up 150% on

u.s. corn, one indicator is much worse nationally. group economist for capital, neil shearing, is joining us. the amount of constraint within the american labor system, he says has been overplayed. neil: when you look across the globe, one thing that stands out is how policymakers are facing challenges. in the u.s., it is the labor market, how to be cool the economy without creating a session. it is how tight it is but also what is happening with participation because the employment has not gotten back

to pre-pandemic peak. some measures, how much of that is permanent and how much of that is just a temporary effect of the pandemic? tom: from the first day of capital economics, the sense of yields spiking is not so much instability but out of controlness, with two standard moves with the yen eager as well. is there a frenzy right now? neil: the moves that we have had over the last week, it does seem like it. and also inverted curves have gotten -- over the last few weeks. it seems that the central question to the u.s. economy is, can the fed cool the economy and have a soft landing without

creating a recession? everybody is trying to invoke 1994, but that is the exception rather than the rule. these things are much harder to achieve. lisa: are you saying it seems very unlikely there will be a soft landing? neil: if you are glass half-full on this, you would say at the moment, it is manageable and there are not a lot of large imbalances in the macro economy. there is some pockets of fraud but in the macroeconomy there do not seem to be large imbalances. that creates conditions by which you think actually a soft landing might be possible. the question to my mind is the extent to which the fed is behind the curve and will have to tighten more than the market anticipates to play catch-up.

the financial conditions is another unknown in all of this. also, what has so often from the rest of the world, what is happening in china is of major concern in terms of facing another wave of supply chain disruptions. lisa: i was weaning over the weekend some of the developments in shanghai and some of the protests of people living there saying, we are not getting food. don't have the shipments the government has promised us. have supply chains sufficiently broken down to be irreparable over the medium term? how many years and this go on before companies have to rethink and regroup, especially even the geopolitical tensions between u.s. and china at the same time? neil: indeed, and you have russia and ukraine to factor in on top of that. the geopolitical issues is what

companies will have to factor in to figure where to have supply chains. we focused on supply shortages but it is how resilient the supply chains have been due to the enormous consumption in the world major economies, massive spending toward goods. by and large, supply chains held up. there were some spikes but by and large they have held up. they have been found to have held up fairly well. in a world where it looks like globalization has peaked, three or four years ago without we were in a world of deglobalization and everything has supported that and perhaps accelerated that come up but does that focus on trade or focus on other areas of decoupling around finance,

purity, and investment in technology? kailey: we have been talking about decoupling from china. his five-and-a-half percent growth achievable as long as the covid zero policy stays in place? neil: no. short answer. it is partly zero covid. i think 5.5% is for the birds with or without zero covid, and the reason for that is china's growth in our estimate is about 4%, and it may be a bit lower than that. it is the trend rate of what is sustainable in china's economy. partly because it is richer, partly because it has this huge demographic challenge that is

mounting with a decline in population. but also because and most importantly because we are starting to run into the chinese growth level. it is at the stage of development are the market needs more work in allocating resource. over the past several years, we have seen a centralization in that decision-making process away from the ark and towards government -- from the market and towards the government doing that work. 5.5% is not sustainable and isn't achievable when you layer on everything else having with omicron and zero covid and that makes it more challenging. kailey: you also have policy getting easier on the monetary side in china, whereas tightening for other central banks around the world are how do you think about that divergence? neil: the other point with policy in china is there is

something of a black box policy doesn't work in quite the same way that it does in the u.s. and europe. i think what we will see is, and indeed we are starting to see the first signs of this, is as policies loosen, things like property sales recover. the question though is come what happens on the construction side? we have seen a big overhang of construction in china. there is a legacy of that. it will take a long time to work through that. construction in particular is going to remain extremely weak and there might be a bit of improvement in issuing of credit and we have seen some data on that today, but it will be quite difficult to move the needle on the chinese economy in the coming months. tom: neil shearing, thank you.

it is sport in shanghai. it is so important, i'm going to describe it. we need to the scope and scale of the 10 year real yields. from a giant enormous -1.19, look where we were moments ago, -0.13%. lisa: earlier this morning, it was even higher, given that fact. it is still negative, the pace of the increase has been dramatic, but can you believe we are still talking about negative real rates, incredibly accommodative conditions at a time when we will get a cpi of 8.4% westmark it makes sense for them to be zero or even positive

real rates. one from state street said when you start getting more positive real yields, it starts to crimp the relative value argument of stocks. is that what we are seeing, has that been priced in? this is what i am watching right now. tom: what is so important is the german two-year is going to a positive statistic. the behavior of corporations and incentives of the central banks all change moving from negative to positive good we have never done this before. kailey: especially for companies that enjoy richer valuations, technology in particularly. -- in particular. earnings season kicks off in earnest on wednesday, the ability to exercise pricing power, is that going to be enough as you have real yields looking like they will enter positive? that is one of the components

that has upheld. how much will it change when we see that? tom: travel update, it is april 11, they open the restaurant that jonathan ferro cares about come out by the lighthouse on capri, like opening date in baseball. annmarie hordern is watching the yankees. lisa: i love it that he leaves andy i was planes about the fact that we disclose his every move, and now we are going to put a map up. tom: he has a chip in his shoulder. it is not on his shoulder but in his shoulder. safe travels, jonathan ferro, capri looks good. coming up, marilyn watson at blackrock. ♪ ritika: keeping you up-to-date,

i'm ritika gupta. in french, emmanuel macron and marine le pen will face off, the top two vote getters in sunday's first round. le pen has been downplaying previous support for putin. the world bank says russia's invasion of ukraine will cause the ukrainian economy to shrink by 45%. the russian economy will contract by 11%. lawmakers set to choose opposition leader as the prime minister who will replace the previous who was forced out here he lost a no-confidence vote over a range of issues. shares of a cybersecurity

company soaring. a deal has been valued at $6.9 billion, a 32% premium on the closing price. in golf, scottie scheffler won the tournament. tiger woods appeared for the first time since he was involved in an accident where he almost lost his leg. global news 24 hours a day, online and at quicktake on bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i'm ritika gupta. this is bloomberg. ♪

tom: bloomberg surveillance. there is a view that it is a time of autocracy.

the vote in france over the weekend. in hungary, we saw a week ago the stunning win for mr. or ban. emmanuel macron fighting for his political life. the first vote which is literally like a primary, and then it is head-to-head. mr. macron is out in the streets. tell me about his need to campaign right now. what is number one to do to defeat the right and le pen. caroline: he is already hitting the campaign trail in the north of france today.

this is a region where most of the votes went to the rival, marine le pen. something he hasn't been able to do because he was too busy dealing with the war in ukraine. meanwhile, during le pen has been complaining -- marine le pen has been campaigning and talking about the issue of inflation. this is how she has managed to gain so much ground in the first round. tom: what charles de gaulle invented and others of the center right, they barely exist anymore, that she got 5% for the basically party of the gall. how does -- of de gaulle. how does he get them to vote for

him? caroline: the traditionals have elected every president up to when macron was elected. less than 5%, is historical and means that because it is below 5%, she is not even going to get her campaign financed by the state because she will have to pay back everything during the campaign. emmanuel macron has managed to grab the center-right voters. but for this runoff, he will need to go and get the hard left and centerleft voters, because if they stay at home in the runoff, then marine le pen has a

chance to get elected. lisa: one of the reasons why so many people are watching and concerned is a much greater proportion of the french public have been voting on the fringes, if you take a look at the turnout, which is lower than a lot of people expected. marine le pen is trying to be cast as being pro-vladimir putin, russia, kremlin. how effective is this? how much does the average france individual make any difference or does it matter to them given the fact their primary concern is cost of living? caroline: you are totally right. it is clearly about putin. le pen is being cast as a prudent ally. he actually met with vladimir putin during the campaign and had a loan from a russian bank. with the war in the ukraine, she

has been trying to distance yourself from vladimir putin. but the french have not paid attention to the sympathy with russia. perhaps this is what the macron voters will have during the next round. four days before the runoff, it will be key. lisa: this is the reason so many people are watching this election because they are worried about a marine le pen victory and what it would do for nato and the western order. kailey: that threat, as we know and understand, is not over. there is still two to three weeks until april 24, and a lot can change in electing -- election cycles. we are talking about where the candidates who didn't make it

will go, what about jean-luc melenchon? caroline: it showed how far left voters will be crucial. 22 percent of a voting is very high and better than what he did the last time. if we look at polls, one third of his electorates are planning to vote for macron, but one third also planning to vote for marine le pen. jean-luc melenchon did not officially endorse macron. for le pen to get elected, she we need to grab some of his voters and get more of the far right pundit who made her seem

more normal in this election and she would also need the centerleft voters to stay home for this runoff. tom: this is really important, it is about turnout, right? caroline: it is about turnout, and in fact the turnout, tom, last night was not as high as in 2002. remember when marine le pen's father unexpectedly made it to the runoff, the turnout was not as bad as 2002, but still it was lower then the last time -- than the last time around. this will not help the incumbent, emmanuel macron. tom: caroline connan , thank you so much.

i look at this as the witness. with a week yen, but look at the euro with a stronger micron -- macron move. lisa: this is the sense of relief because it was also the margin was wider, macron winning by a beer margin that people expected. it is an outlier chance. those people think there is not really a chance that marine le pen will be victorious, but that does seem to be a bigger chance then there has been in the past and frankly you are seeing that in the euro in a significant way. tom: this underscores our need to be in paris for the election. kailey: keep making the case, tom. didn't you just get back from paris? tom: strong euro, week yen, one of the moves in the 10 year,

2.76, up six basis points on the 10 year yield. the 10 year yield, negative 0.12. stay with us. this is bloomberg. ♪

♪ >> part of the reason why growth is going to be slower is that the fed is trying to slow things down. >> the fed seems to be a little more concerned about inflation then i would anticipate. >> there seems to be a concern about a slowdown. >> demand needs to be slow. it is simple supply and demand here. >> i don't think the market has made up its mind whether it is going to be a recession. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. tom: good morning everyone. mr. ferro on well-deserved sabbatical. kailey leinz doing double duty this morning. thank you for joining us this morning, on radio and tv. with the news flow, the inflation report tomorrow come our trip to washington scheduled for thursday. you know