>> inflation is high. inflation is too high for the fed's comfort level. >> inflation is a product of demand and supply. demand has got to slow down. >> it will happen at some point. >> the economy looks good. they have run way to do so. >> can the market still go higher? >> this is bloomberg surveillance with tom keene jonathan ferro and lisa abramowicz. tom: good morning. mr. ferro on sabbatical but kailey leinz joins us. sweden and finland make history talking about joining the eu and nato. is a huge deal with finland. we have weak yen. the dollar is in a churn off the

inflation report. new york city, no one cares. lisa: a lot of people are trying to understand how big of a threat there was from yesterday. you saw that shooting in the subway station. i will say many new yorkers i know are saying things happen. don't let the terror win. nobody died, we are dealing with it and they are working to apprehend the individual. front and center is earnings. we get jp morgan earnings and delta earnings. a tale of two different economic stories. tom: both show the resiliency of jp morgan through the panic and all is well. delta airlines. this goes back to a conversation i had with mr. bastion two years ago. he said domestic comes back and international will take some time. my tone is take some time is now. lisa: that is the message from delta's statement. they talk about an accelerating return of business travel as well. provost consumer demand that

echoes jamie dimon talking about a healthy consumer. what is notable is they say they are successfully recapturing higher fuel prices because that is a headwind the airlines have been facing. delta flying in early hours. a big beat or narrower loss than effective. tom: linking the eco-battle with the reality of how people react. maybe the banks will cut costs. bastion did not mince words. he needs 10,000 bodies. lisa: the airline industry and banking industry are two completely different world which are giving us a similar story, which is a high degree of uncertainty about consumers who want to emerge from the pandemic and travel. the travel numbers are nearly where we were back in 2019. you look at the delta transcript. at jp morgan they are building up reserves for losses because

of the global uncertainty. this raised a lot of questions. yes, it is because of inflation but also because of the geopolitical concern. how do you game that out? tom: by moving forward and staying in touch with the news flow. we will attempt to give you that news flow this morning. for all of you on bloomberg radio in new york city, we are riveted to every new source led by michael barr on this tragedy in brooklyn in the morning after across the five boroughs. i will look at the data. futures up one socks o -- 161. yields. three inflation. a sigh of relief of core inflation. 2.73%. it is a dollar-centric morning. this will be one of my things in washington. dxy shows 100.

japanese yen gives me a 126 print with comments from the bank of japan and the japanese government over the ramifications of weak yen for their house of cards financial system. that's from the late martin feldstein from 30 years ago. i want to point out swiss franc earlier was at 100 level. strong swiss franc as well. with a brief on this unique morning, lisa abramowicz. lisa: there is so much going on and trying to piece it together with a cohesive narrative is difficult. 8:30 a.m. this is what i am watching. following the earnings they posted. how much do we hear a confirmation of the pessimism being reflected in the shares this morning? jp morgan's shares are down 16% year to date. intraday trading down 16%.

announcement of a $30 billion buyback. people are focusing at investment banking underperforming and concerned about the credit loss provision going up, even as they say the consumer is strong. that is not the international -- that is not the issue. the uncertainty is palpable and causing jp morgan to act. we get you march ppi data at the same time. it's important via the data coming in above 10% in terms of year-over-year inflation in based products. this, as the war of ukraine causes costs to go up. how much does this give a feeling to the peak inflation we heard yesterday in the cpi versus a little bit more money story? is it difficult for base comparisons for inflation rolling over? 10:00 a.m., bank of canada meeting. the first of developed targets to raised by probably 50 basis points.

and, announcing balance sheet rolloff. how much do your dollar point here is this basically trying to catch up with the fed that is ready to go quickly? tom: there is. 126.50 does not give me much information. there is the hydrocarbon overlay. i take your point. there can be signals from canada and from new zealand of value to the u.s. analysis. lisa, there is no auction talk. lisa: there is a 30-your auction at 1:00 p.m. i could go on. there are lots of events happening today. it's a busy morning in the economic focus very much front and center on inflation and earnings. tom: that is the lisa we know. we have today grass to the cross moment, the dynamics of the equity markets and the signals with amy wu silverman from rbc

capital markets. there is a new volatility around once-in-a-lifetime events like the war in ukraine. what is the exact precise volatility signals you see in the equity markets? amy: good morning, guys. it is very bifurcated. we continue to see large hedges placed more in long-duration. in the near term we see a lot of optimism from option markets. people placing bullish trades. part of that is related to earnings. the environment is interesting. we consider that medium vol. with over 20 and 30 years, medium vol is not great for stocks. lisa: given the fact you are seeing optimism and options does that mean traders are not pricing in a hard landing or

from the risk from russia? amy: that's a great question. the auction markets are short-term fairly bullish but longer-term they are still quite bearish. i think there is an acknowledgment of potential recession, of possible hard landing. all these things we know are in the distant future. memories are quite short. in the next four to six weeks the outlook is not that b ullish. kailey: what is the difference between micro and macro plays? now the earnings season is underway that story may change. amy: absolutely. i was looking at you guys talking about jp morgan earlier when the headlines came across. buybacks is a big part of it. tom keene's favorite word.

it is dampened by buybacks, an artificial floor on the market. that changes micro option behavior. the second thing is, if you look at last earnings season there are implied moves. people think the playbook is going to happen again this time around. there were substantial beats in tech. we will see if it happens again. lisa: in an environment focused on the micro going forward, good or bad time to own volatility? amy: i think the beginning of earnings season is a good time to own volatility when you look across earnings. weeks 1, 2, and 6. we have come at a lot prior to this. given those compared to what stocks usually move on earnings, but the options are saying they're going to move, those

things are quite cheap right now and those are opportunities to own that volatility for earnings calls. tom: amy wu silverman, greatly appreciate it this morning. rbc capital markets. the oddest of oddest things yesterday. a decent spring day with that sun lingering into a longer afternoon and the cacophony of sirens of our security providers, the fire department. the mayor wakes us up this morning with headlines. lisa: coming out and saying at this time to do believe the shooter acted alone, was not part of necessarily a larger group effort. this confirms what they were saying yesterday. they were not treating this as a terror threat. the details are not very forthcoming when it comes to who the person of interest is, the connection to the case and how close they are to an arrest. people are trying to ascertain that to gauge the risk going forward. tom: that subway station is open again.

this is directly south of the brooklyn bridge as you go across the tunnel past governors island, further south away from jfk and queens to the southwestern tip of brooklyn along the shore. that huge subway nexus is open now. mr. adams says he reached out to victims and any number of other headlines coming from his conversation at present with abc. very good news and only four victims are in the hospital. that's according to the mayor of new york city. we will continue with our coverage. extraordinary headlines from scandinavia this morning. we will hear from annmarie hordern in a moment. in the markets, futures up 27. jp morgan earnings are out. this is bloomberg. ♪ ritika: keeping you up-to-date

with news from around the world. the biden administration is preparing to military aid package with roughly $750 million for ukraine. the president is allowed to transfer equipment from u.s. stockpiles without congressional approval to speed up delivery during an emergency. the u.s. provided more than 2.4 billion dollars in military assistance to ukraine since president biden took office. police in new york are searching for what they call a person of interest in the shooting at a brooklyn subway stop. 23 people were injured, 10 of them shot and no suspect has been caught. detectives are looking for a man named frank james. keys found at the scene belong to a u-haul van he rented. in the u.k., inflation jumped more than expected to a 30-year high. consumer prices in march rose at an annual rate of 7%. higher inflation is on the way. they will be a 54% increase in the energy price cap this month.

international energy agency has forecast its global oil demand this year after china reimposed lockdowns to contain the coronavirus. a number of members led by the u.s. have released oil from the emergency stockpiles. google is putting money behind its bid to get more workers back in its buildings as they plan to invest 9.5 billion dollars in offices in the u.s. google expects to create 12,000 jobs as part of the investment. tech companies have struggled getting workers back without causing unrest amongst their stock. 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 am really good to -- ritika gupta. this is bloomberg. ♪

>> this president is dispatching his team to do everything we can to help ease energy price pressures. most notably, a very aggressive release of bear was of oil from the strategic -- barrels of oil from the strategic reserve. tom: jared bernstein, an astute student of our labor economy. providing service to joe biden for many years before the presidency and the council of economic advisers. i want to bring your attention

to the headlines from mayor adams. he will join "bloomberg surveillance" later this morning and we hope to bring you that in the 8:00 hour. exceptionally distracted this morning. there is a person of special interest who is at large within the five boroughs or perhaps philadelphia, milwaukee and other parts of the nation. we are distracted with futures of 26. jp morgan out with what i call jp morgan-like earnings. delta doing quite well this morning. where are we on delta, a 4% at one point. the dollar ascending this morning. my other message is they are 14 things to talk to annmarie hordern about and not enough time. the ultimate mystery for vladimir putin when they look to the black sea and ukraine is he may give up the russian power of

the baltic sea. the baltic states now with sweden and finland with truly historic announcements. tell me about joe biden and the focus on the baltic states, particularly on finland with basically the youngest leader on the planet, a woman who has been in politics since age 20. she is 34. the prime minister is someone we don't know. how will joe biden prosecute the beginning of sweden and finland into nato? annmarie: let's first say this is pretty historic. what you are seeing is massive changes, really substantial changes in the public opinion. even political support, especially in sweden. the social democrats are now potentially moving to want to back a nato entrance. this is very significant. when it comes to finland, we had the president of finland. this is the president.

he was in washington. he spoke to president biden. he has been called upon a lot by a number of leaders because he is somewhat of a putin whisper. this would pave the way, and it has become a debate in parliament about them joining nato, which would draw the ear of president putin. lisa: we are trying to ascertain allegations of chemical weapons. this has been unconfirmed allegations. it is significant because it raises the question of what is nato's response, let alone who belongs to nato. what is the latest? annmarie: we have heard there would be severe consequences. you heard that from the president of the united states and other leaders. they have not yet orchestrated or outlined what exactly those

severe consequences and the response would be to the kremlin . this is something the u.s. is trying to get a hold of. it's difficult now considering the u.s. does not have military presence on the ground. the united states is going to be sending more military equipment. they are having a drawdown. $750 million. it doesn't have to go through congress. it goes right from the u.s. stocks to ukraine. lisa: let's talk about what aid the u.s. is sending on that front. $750 million. where are they drawing the line on what they are willing to send? annmarie: annmarie: annmarie: fighter jets. president zelenskyy asked for fighter jets. he is for a no-fly zone. this does seem at the moment the line the u.s. is drawing in terms of the equipment they are planning to send. although we don't have a readout. this is based on reports. we don't have a readout on what

is going to be detailed in that $750 million worth. that is something we will be watching today and the rest of the week. tom: on the tragedy in new york, the east of brooklyn, you basically live there. the president will be asked today what you will do about violence, crime. i saw one statistic of the homicides over three years in chicago up 49%. whatever the numbers are, doesn't matter. someone will say, what are you going to do about it? how will he respond? annmarie: the president said he does think gun violence and crime, especially gun crime is endemic in american society. he recently spoke about this. two days ago he talked about ghost guns. you can print them off of 3d printers. they are incredibly difficult to track. at this same speech he put the onus on congress to act, to go after more expanding background

checks, after assault weapon sank what he did in the 1990's -- he worked on legislation that was controversial but was needed in society. i'm sure he is going to talk about what the administration has already been doing. he is going to pivot and tell congress they need to do more. there are a number of bills the house has passed. the issue is, with a 50-50 split senate a lot of the bills will not see the light of day in the senate and will not go to the president's desk. that is probably what his message will be. tom: this is a division of america. who was winning the battle right now in this crime debate? annmarie: that's a good question. it's difficult. i think a lot of the world and america lives and their echo chambers. we hear from, kratz. they say republicans do not

support their initiatives enough like banning assault weapons. they say this leads to crime. you hear from republicans. they say look at what americans are attacking get ministry if -- the administration for. crime in the economy. they say the crime has happened under democratic leadership. you look at the polls and it is clear something americans want washington to focus on. tom: the statistics are stunning. we will continue this discussion to the morning. the mayor of new york city will be with us during the 8:00 hour. the headline is a strainer. all of a sudden china to the rescue. this is something you have been out front on. lisa: they will ease further as a result of the slowing growth. they have been observing as a result of lockdowns from covid. they promised to use that rrr rate cut as needed. they said they will try to boost

consumption. this has been a mystery. how is the chinese economy going to persist given the lockdowns? tom: the wto with a 3% global gdp statistic. coming up, mike schumacher of wells fargo. stay with us. ♪

tom: bloomberg surveillance. good morning on radio and television, event phone morning, syria's morning with the sound of sirens nonstop last night. we will continue to give the headlines. the mayor of new york making the media rounds. he says we do not know enough about the motivation of anyone shooting in this instance. we hope to have mayor adams with us at 8:45 this morning. a lot going on including china, speaking of accommodation brent . oil is higher. dollar strength, take a look at that in a moment. jp morgan and others.

kailey: let's focus on those earnings stories. you had big trading beats on fixed and equities were jp morgan, but investment banking came up short. one of the standouts, $1.5 billion in loan-loss provisions. that is contributing to the miss on the dps is the bank is facing these headwinds like inflation, the conflict in russia. $30 billion buyback that the bank is announcing. shares are obsession lows but still down 1%. not too much read through for peers. citigroup and wells fargo unchanged at the moment. delta one of the performers's in the early session here. narrower loss than expected, sounding bullish in the statement, talking about a return in business and international travel, robust consumer demand, and the ability

to be cap sure how to fewer prices. they are confident that they can charge you more in order to offset those higher fuel costs. delta is up 5.5%. positive read through two other airlines. american and united each up about five percentage points. tom: michael schumacher joins us now from wells fargo. wells fargo getting some sell side love recently, maybe a big ascendant. you have in your research note the question of the moment which is the study of this terminal rate, the rate we are heading for out there. management is really focused on that. what do you tell them about where our rate is heading? mike: it is interesting.

we think the terminal rate has to go up and a fair bit. the markets estimation of the tightening cycle, currently middle of 23. we think that number has to be around 350. the inflation backrub is so challenging and there are so money crosswinds, it will be difficult for the fed. we think the terminal rate has hired to go. lisa: how much does inflation have to come down to give comfort? we have been talking about peak inflation after yesterday's cpi report. can it go down to 4% and be comforting or is that above where it needs to be? mike: well above where it needs to be but let's say inflation is running at 4% annualized at the end of the year. is that ok for the fed, the economy? no.

that is not going to work. if inflation dropped to 4% by september 1, that would be good progress. it's really a question of how quickly inflation drops. until we get to that 4% number by the end of the year, that is an open question. lisa: what are you looking for going forward? we were talking about yesterday's cpi, today is ppi. we are getting all of these data points and people are saying we cannot rely on one data point. when do they add up to when the fed has to be more hawkish or when they can back away? mike: it is a function of a couple of things. the flow counts. labor market indicators. they are tight. i think if you had to point to one single economic variable, a

measure of how tight fed policy is, for me it is we'll rates, real yield on the 10 year treasury. right now it is -20 basis points. that has to get substantially higher, well above zero, and the fed will have to calibrate that. kailey: when does it get above zero? mike: it's been moving pretty rapidly. i would say any time the next few weeks. what does the fomc deliver? does it step up with 50 basis points, start the balance sheet runoff? kailey: as we talked about where rate hikes will ultimately get to, he jim bullard out in an interview talking about how they need to go above neutral. what is your understanding about where above neutral is, does that lineup with what the fed

is? jim bullard things to percent, not 2.5%. mike: mr. bullard has been pretty hawkish, let's say. as far as neutral, it is flexible. the fed announced an average target a couple of years ago. never divide what average meant. neutral being around 2%, i suspect higher than that. i would turn it around a little bit and say, where does the fed declare victory, what is a good result for the fed? 2, 2 .5? is it ok for the cycle? tom: on the construction of the real yield, we have a nominal rate with a second derivative up, some real convexity in the 10-year yield.

you get a residual which is the inflation-adjusted yield. which of those three numbers is the most interesting to you right now? mike: real yield, inflation-adjusted yield. that is why if i'm investing for the long run, getting a negative number for the treasury curve tells you that policy is still very accommodative. the bond market is not very attractive for most people. you are putting money to work on an absolute return basis, individual investor filing into bonds, only if you are really risk-averse. as far as the prospect going forward, they are not real appealing. lisa: one reason people have been saying the fed can afford to raise rates as they are not predicting is because earnings remain strong. we are getting a slew of earnings.

delta is a demonstration of that, jp morgan left so, but they are doing just fine. bed, bath & beyond comes out with disappointing results, shares tanking. how much to bad results mean something significant for the federal reserve for some reduction in the momentum in order to orchestrate something more like a soft landing and not over tighten and commit a policy error? mike: you hear a lot of talk about financial conditions being tightened. that means equity prices need to come down a little bit. does it mean sector by sector? i don't think so. i think the fed would be happy if stocks held their own, maybe dropped a little bit. but that backdrop where risk assets tread water, high-yield bonds do the same, treasuries backup, you take a lot of the steam out of the system, that is the result the fed wants.

but they want to proceed cautiously. not to cause a ton of damage. i think that is incredibly difficult, skeptical anyone can do it, but let's hope the fed can get it right. tom: michael schumacher on the dynamics of the fixed income market. the 10-year yield from a 2.80 off the angst. 30-year bond auction, not the new benchmark, to me is almost a pension purchase. lisa: this is an interesting point you raised recently about how pensions have money to put back into the bond market. if you are getting the most young going back to 2013 for 30-year notes, why not jump? maybe because you think the benchmark rate for the fed will go beyond that. it may not be so good over the

long term if you think it could stick. this will be the interesting conundrum that we will be getting details on. tom: kailey leinz, what do you see out there? kailey: earnings. we have been focusing on earnings, monetary policy, the war in ukraine, it is getting more micro. all of those things are likely to show up in reports, they showed up in jp morgan this morning, but what kind of support will they provide to an equity market that has been confronting somebody macro risks for the duration of the year so far? tom: i want to go to the japanese yen. lisa, this is really important. i cannot say enough over the years about how i find global new york wall street tends to ignore japan. it is over there, it is different, it doesn't matter. i looked at trade-weighted yen, looking back 25 years.

what an ugly picture of depreciation. lisa: have you ever heard someone on wall street say, japan is over there? literally every note this morning is talking about the yen and this incredible move, what this means were trying to control a yield curve, when the fundamentals are taking over. kailey is right to bring earnings. if you don't have the momentum, you cannot hike. but if you have inflation, what do you do? tom: moving from 110 to 126. this is our conversation of the day on foreign-exchange. steven englander will join us from standard chartered bank. thrilled to have the expert across rates with us. this is bloomberg. ritika: up-to-date to date with

news around the world. police are looking for someone they call a person of interest in the worst attack in the history of the new york city subway system. 10 people were shot, 13 others were hurt in an early morning attack naming. they say keys found that a u-haul at the site of attack belong to james. president biden has wrapped up his condemnation of russia's invasion of ukraine, now describing the actions as genocide. meanwhile, the u.s. is preparing a package of 700 $50 million worth of military aid to ukraine. treasury secretary janet yellen well-worn governments [indiscernible] she says the coalition of sanctioning countries will not be indifferent to actions that

undermine the sanctions. she also says the sanctions are not motivated by one country's foreign policy objectives. in china, another sign that covid is having an impact on spending. imports fell last month and exports slow down. imports declined 1/10 of 1%, the first decline since august 2020. exports beat estimates but still lower than the rise in the first two months of the year. global news 24 hours a day, on-air, and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. i'm ritika gupta. this is bloomberg. . this is bloomberg.

>> i think the federal reserve is in a tightening mode. a stronger dollar acts

consistent with that, helps the federal reserve tighten policy. there is nothing standing in the way of a stronger dollar as long as the fed is on this path toward an aggressive tightening cycle. tom: very important conversation yesterday. we are going to do what we do best at bloomberg surveillance, and that is speak to someone truly expert. steven englander is the global head of g10 fx research at standard chartered. looking at emerging markets and the pacific rim up to japan. thank you so much for joining us this morning. the ramifications of a weaker japanese yen now at 126 out to 130. what does that due to the degrees of freedom that powell and lagarde have? how does weak yen, unraveling

of the yen affect america and europe? mike: the yen is exceptional along with the euro where central banks have some ambiguity with the back to how hawkish they want to be. the boj is dovish, ecb is on the fence. i don't think it will change very much what the fed does. i don't see the impact on u.s. inflation or global growth is that strong. the yen weakness is probably reflecting chinese economic weakness. the governor's insistence that they can continue this same policy with japanese rates drifting further away from everyone else. tom: it is such an

artificiality, particularly with the phrase of buying their own paper. the standard chartered view on this, is japan summing that will amend in a malleable way to the shocks of yen, and this experiment of ycc, or do you worried that something could snap? steven: we are excited about the continuation of ycc under current circumstances. we don't see a huge benefit to japan with a weaker yen. in a world where growth is limited by supply, having a weaker currency does not really increase your ability to provide more. you just pay more for imports. in the case of japan, they wanted to get there inflation up for many years, a decade or more. the problem is they want to get domestic inflation up, not make

the population poorer because costs are higher. we don't see where this is headed. lisa: i'm looking at a confusing picture when you look at the words from the bank of japan governor versus other authorities that are concerned about rising cost. the governor is doubling down and easing policies, yield curve control. at what point will there be a break and will he be forced to back away from the purchases tom was talking about and pay attention to the yen? steven: it may not be immediate. in a number of places, the limit of how weak the currency can be, in some cases, how expensive it is to travel abroad, possibly the erosion of real wages in japan will become a political issue down the road.

that may end up being the limiting factor. as many have discussed, ycc is great if it is demand shock that you are trying to control, if your forecasts are good. when circumstances have changed as much as they have, it is not clear that ycc is the tool that gives you the flexibility that you need. kailey: you mentioned that part of yen weakness may have to do with the growth story in china. the boj is not the only central bank we are talking about keeping policy easy while everyone is out there ha wking. china talking about further rrr cuts if needed. why are we not seeing weakness for the renminbi that we are seeing for the japanese yen? steven: lots of moving parts for china. the entry of china into the

financial system, opening of china markets, there is capital inflow into china. it is very basic, but the fact that they have such a large trade surplus on an ongoing basis, they are not spending much abroad, they travel a lot, current accounts are strong and they have capital inflows. that is a good sign for the currency. there are some concerns about the impact of the latest covid wave and their ability to grow, how aggressive policy easing will be. but there are some tailwinds that you cannot ignore. tom: steven englander, greatly appreciate it. i really want to emphasize the stir domestically in japan about the week yen.

it is something global wall street is focused on. headlines coming out on new york city, we will try to bring you clarity. the mayor of new york will be joining us at 8:45. jp morgan earnings marred by a loss leader to ukraine. lisa: it's a rounding error but the trajectory was the wrong direction. credit losses failed to increase by $900 million because of the risks to the downside, not only russian exposure, but inflation more broadly. looking into the story of japan, at what point will inflation hamper growth? that is why i go to jp morgan and bed, bath & beyond. they missed dramatically and they blamed supply chain disruptions.

i am looking at this and how much of this is a smokescreen for poor performance? when can you back out the kind of economic ramifications this will have versus poor execution of a company? tom: that brings forward tomorrow, 15 banks reporting. kailey: basically everyone else other than bank of america, which will report on monday. what is the readthrough from jp morgan to the others on that investment banking weakness, greater loan loss provisions, even as you see talk of a healthy consumer. interesting to see color from jamie dimon. what is the commentary from the man himself and how does that readthrough to tomorrow? tom: so much coming up and we will monitor that. futures giveback. up nine on s&p futures.

yield, 2.7%. brent crude, 106 a gallon. i will try to get that in a bit. stay with us. this is bloomberg.

>> it really jumped the rails in terms of growth and inflation. >> we have the peak of inflation and are likely to see things come off. >> the broader picture there is not too much that has aggressively shifted. >> these inflationary pressures mean central banks will have to respond. >> the federal reserve will raise rates until something breaks. lisa: literal nuts and bolts of inflation, the readthrough in earnings. this is bloomberg surveillance.