>> there is a momentum to sustained growth at this point but you hit shock aftershock. >> we have to get through these next couple months, and we will be hurt by it. >> the fed will tighten. >> today looks -- >> from a monetary policy point of view it make sense for us to move expeditiously. >> this is bloomberg surveillance with jonathan ferro,, and lisa -- jonathan

ferro, tom keene and lisa abramowicz. tom: kailey leinz will not join us. she is still on sabbatical. jonathan: 2 things catch my attention. utilities are outperforming, the banks are underperforming. back in the yield curve through april a big move for the 10 year. tom: you literally say to yourself " how far are we from a 3 year 10 yield?" you look at the momentum that is here, and a lot of people saying " the momentum pulls back, it ands -- ends." jonathan: much more interested in the back half of this year, many people are. what i'm interested in is how

the fed will respond. i look for guidance from fed officials. respond to a mechanical pecan inflationary year-over-year -- eak -- mechanical peak in inflation year-over-year. tom: end-of-the-year, july 27, september 21 fed, the ecb has the same calendar. it is a total mystery. lisa: they have a more difficult scenario. what a way to start the show. you have" lisa abramowicz, i forget your name-- it is fair the ecb is in a worse position. does the fed to have to get more pessimistic and have a less sanguine view of the economy moving forward to curtail inflation?

tom: i think it is incredible how these 70's gloom after the 1960's reality. jonathan: it's more likely in 2023 or 2024. do you want to talk about the euro? other ways to defer to guy johnson. he is fantastic. tom: he slipped into the german accent. it was incredible. jonathan: an amazing story. [laughter] jonathan: i love winding you up about that. [laughter] jonathan: if people have just turned and they have no idea why that is funny. almost unchanged, up a couple of basis points. tom: we will stop the show now. what we like is -- michelle meyer was with us earlier on

core knowledge. i will ask the first question to matthew horn bok, global head of microstrategy, long ago and far away off the morgan stanley desk in tokyo trading government bonds. off your remit, what -- at what point does yen become problematic for the global financial system? is it 127 weaker yen or is it 130? >> my japanese government bond trading days were quite some time ago but it will take more than just a number on a screen to change the country of japan. people there, consumers have been thinking about unchanged prices or prices that are little

changed for decades now. it will take more than a 130 handle on dollar-yen to get customers thinking about sustainably higher inflation for the goods and services they consume. it is more than just one number on the screen. jonathan: my career advice to lazy college graduates who want to jump on wall street, trade japanese bonds. some days you do not even get a trade on a japanese 10 year. lisa: what kind of career advices that? -- advice is that? jonathan: month today, up 50 basis points on the 10 year, obsessed with curve inversion. for you and the team, what is the read on what has been going on? matthew: the reality is there are only 2 buyers of the u.s. treasury market. one is corporate pension plans,

funds that are putting assets into a book in order to decrease longer-term liabilities. the other buyer is the buyer who believes we will be in recession in 12 months. there are not enough people who really truly believe that. the pension funds are not particularly active in the first half of the month. for people looking for the curve to flatten, as we are, the probability that the yield curve flattens in the first half of the month is not high. that is part of the issue. there are no buyers. those that are there are not there in the first half of the month. lisa: we heard from bill dudley about how the fed is not going far enough fast enough. even though you hear a lot of people say " it is wishful thinking the fed will ever go beyond 2%."

why would you push back with a more appropriate rate being closer to 4% given where we are seeing cpi come in? matthew: a lot of evidence that day 3% said funds rate is that bad -- that a 3% fed funds rate is not bad, you did not see that much slowing in the u.s. economy on your own. you needed the global economy blowing back then in order to put downward pressure on economic activity in the united states. the rate was not doing it. i think people who are looking for a 3% funds rate as morgan stanley economists are or someone like bill dudley who is looking for a higher rate, they have history on their side, in my opinion. lisa: do you agree that the

sooner the fed moves the better it will be in the longer-term and the less pain there will be in terms of how high the fed will have to raise rates? matthew: i do agree. i think the fed needs to readjust policy to the current circumstances, which are different than what they thought they were going to be about a year back. i think the fed needs to get the policy rate up faster, perhaps even faster than the markets are currently pricing in, the markets already have quite a bit priced in i. think it would behoove the fed tom: i want you to go down to go -- this morning i want you to explain to global wall street why japan still matters.

channel robbie feldman on this. matthew: you are taking me back to my glory days in japan. japan matters ultimately because it is the anchor of -- the global anchor around interest rates. that is the way i have been looking at it ever since i started my career'tokyu -- my career at morgan stanley's tokyo office. if the bank of japan were to change their yield curve control policy, if we did see materially higher interest rates in japan, that would have a big impact on interest rates in europe, the united states, so it is a very important bond market. there is a tremendous amount of money, investment dollars that make their way around the world every month, and if those dollars decide they can stay in

japan, that will have a big impact on global bond markets and currency markets. jonathan: brilliant. matt hornbach of .morgan stanley -- matt hornbach of morgan stanley. tom: in that conversation, that was just a jewel of a conversation with hornbach. you nailed it. it is an artificial market. i have always been more strident on this. they are yield curve control policy is not in any of the textbooks i have. to me it is a structured fiction. i understand a lot of people in authority would say " you are wrong about that." jonathan: you and i said the

same thing over the last couple of years. we touched on it., joked about it -- we touched on it, joked about it, but there are some days where you do not get any trading. lisa: overnight " recent yen moves has been rapid. is significantly week yen -- weak yen," but he reinforced the need for their policy. jonathan: we were talking about getting out of the last decade, now we are almost 10 years into this experiment too. lisa: we are seeing a shift. jonathan: perhaps. futures down a third of 1%. nasdaq down half of 1%. this is bloomberg. ♪

>> keeping up-to-date with news from around the world, i'm ritika gupta. encircled by russian forces, ukrainians have not surrendered. ukrainian officials have warned of additional airstrikes. many remaining troops in mar iupol are sheltering within a giant steelworks. history suggests the federal reserve will have a hard time calming inflation without causing a contraction. it is not inevitable because those pandemic normalizations in goods prices will help the fed. u.s. and treasury officials say that congress is to blame for internal revenues -- lawmakers

have seriously underfunded the agency and that led to the departure of personnel. there is a new twist -- there is an indication of interest well in -- southwest will now explore a sale of the company and other options. global news, 24 hours a day, on air and on bloomberg quicktake, i'm ready go group that. -- i'm ritika gupta. this is bloomberg. ♪

>> inflation is probably peeking in the u.s. but not elsewhere. you get to the point where there will be debt problems, but it is not because they did not get it right, it is because the world is hard. jonathan: the world is hard to. that is the view of adam posen. futures are down. yield is higher now by two basis points. crew positive about a quarter of 1%. at the moment, just getting some pictures and coming from russia, vladimir putin speaking in a televised link with officials. his view, the ruble has

recovered. tom: very different body language then when mr. put was at the cosmodrome -- mr. putin was at the cosmodrome. the flag behind him, he has papers in his hands, and he is demonstrably and gauged -engaged- -- demonstrably engaged. a photo published this morning appears to show the ship that went down days ago, listing under part under heavy damage. it is out there. alina pollock of which joins us now. since the last time we have seen you, things have changed. the flagship of the russian navy has sunk. how does that change mr. putin's

body language? >> the thinking of -- sinking of the moskva was a big hit to russia. we see the talking heads in the russian state controlled being really critical of the sinking of this flagship vessel. this is the largest ship operating in the black sea. what we have seen since then is putin double down on their attacks on ukraine. today we saw a russia hit with missiles the western city of lviv. tom: does ukraine double down? is ukraine more able to -- do you perceive that they are engaged and ready on this monday? >> they have been getting ready. president zelenskyy has been making his rounds with all the

western capitals. the situation we are seeing now is the window is narrow. we cannot take it for granted that we have been able, the united states and allies, have been able to get those weapons into ukraine. now russia is targeting those military routes switch will become increasingly difficult. ukrainians are tired. they know what is coming -- . they are getting -- they know what is coming, a huge new offensive. they are getting ready. lisa: can you give us a sense of what happens when nora if mariu pol falls? it provides a land bridge to crimea and to the donbass region. how much will that be a game changer when that occurs? alina: it is a tone many people had not heard of on -- town many

people had not heard of until it became a tactical town. it will be a game changer from a military perspective. the main reason for that is because right now the only thing that stands between russia's eastern front and southern front, where they have access from the sea, crimea, where they can do an amphibious landing, the only thing standing between them combining their forces is mariupol. as soon as that happens, russia will be able to then put marines and to and from crimea, and they will be able to combine on the southern and eastern front end cut off any ukrainian troops that have been able to get in so far. lisa: what does this mean in

terms of the longer term also? vladimir putin says that was game over for peace talks. given the humanitarian crimes the west is looking at have been stark how does this move the conflict forward in terms of nato's involvement? alina: it would give russia a big upper hand. it also makes the options for negotiations more limited. they were already limited to begin with, but clearly we are uncovering in areas where the russian troops did leave around kyiv, -- it was atrocious. it is likely not even the tip of the iceberg. i think it will be a prolonged

conflict and general milley's said this a couple of weeks ago. we are not looking at weeks or months -- we are looking at years. jonathan: thank you. alina, center of european policy analysis. we heard from bank of america this morning. this reduction of russia exposure from 90% at its peak years ago. many banks, bank of america being one of them, have backed away and a big way over the past decade. tom: i had a conversation with ken lewis in singapore about this. bank of america was the least reticent to say " we have to be number two and belgium. let's go!" they were the most reticent to do that. maybe this russia markdown is paying off.

i do not buy it. no. i do not by the gloom. i think we will stay globalized. the conversation you missed on sabbatical, they nudged that conversation with their immense abilities towards a new globalization. jonathan: i had no idea they were married. lisa: they are adorable. tom: you have a choice -- watch the view or us! jonathan: i like the view at times, tom. tom: i like will be goldberg. -- i like whoopi goldberg. the highlight of the week, we do not have the photograph for it, wearing the jersey -- it is out

there in the zeitgeist. she emailed me the photo. jonathan: what does she say? will we have a group outing to the u.s. open later this year? tom: i don't know. you can come. lisa: i would love to. let's do it. ♪

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jonathan: good morning to you all. kicking off a brand-new pudding week stateside. futures are negative by a quarter of 1%. following last week's losses of 3%-ish points, bank of america is up around 1% bank of america is up around 1%. , a little soft -- their stock has struggled. today, positive by 1%. only one day this month they have traded positive. tom: we will have all that coverage for you.

thank you for your comments on their coverage on thursday from the pre-meetings of the international monetary fund. there is so much going on. at least jon and i in transit felt like we had to get out in front of the spring meetings. when you have juergen and others, some guests have to wait. john lipsky has waited for us this morning with johns hopkins school of advanced international service. dr. lipsky, thank you for joining this morning. john, we are drowning in once in a lifetime events, and you write as only you can do with your years, of the new breadbasket threat. frame the breadbasket threat for all of us. >> very simply, the war in

ukraine is looking like it is going to make a serious and potentially large disruption in bread markets. russia and ukraine are large bread imparts -- exports. this is a potentially serious threat long-term as well. right now we have to deal with the disruptions in food markets and the rise in food prices that are putting strains on many on many. tom: you gave a famous speech i want you to give that same speech this morning about what our new fractured globalism looks like. dr. lipsky: that is an open question and one that was put

starkly by treasury secretary yellen last week in which she said it is time for countries to line up in the context of the current war and talked about reframing the world trade system on what she referred to as a pl uri-lateral friend basis. countries politically get together. that is very much a new message from the expansion of the wto to a virtually global organization. this is really an unknown. the g20 finance ministers and central bankers are set to meet wednesday and thursday. the international monetary committee meets thursday. we saw president biden saying

earlier that russia should be thrown out. of the g20 -- thrown out of the g20. lisa: what is the calculus for imf officials as to who to keep in the club as they transition into a pluralistic, not globalist tick, world? -- not globalistic, world? dr. lipsky: they have legal obligations. the decisions of these institutions have the force of international law. in the short run, the russian authorities will be participating in the meetings this week. how that goes will be interesting. more questionable, the g20 is simply a voluntary group. it is 19 countries plus the european union.

there is no treaty underneath it. there is no formal obligation. let's see if there is a willingness to keep this institutional, which was the institutional result of the global financial crisis. lisa: what are you looking for in terms of how the imf directs funding? what is the most effective use of imf funds to combat hunger and some of the inflation we are seeing in certain nations? dr. lipsky: already in response to covid the fund well epsom short-term lending -- developed some short-term lending schemes. before the fund right now looking towards the longer-term strains, the imf has created a

resiliency trust, providing support for the lowest income countries. this will be funded by donations of special drawing rights. there was a new distribution of $650 billion. much of it went to the wealthier countries. they are being asked to donate to this new imf facility that will provide new funding for low income countries. let's see what happens. to qualify however for this funding, countries have to head the a traditional fund stabilization program. it is not just a handout. you have to put policies in place that will be sustainable. tom: long ago and far away in a book that sold 12 copies, u.n.

jim glassman absolutely nailed the labor transformation that was to come from technology. we are now at a point where it is stunning the need for technology and the technology haves the technology has nots. what do the next 10 years look like in labor and technology? dr. lipsky: great question. there is no obvious right answer. let me say one thing in response to the current short-term situation in the u.s. -- with wages, the labor sector, and inflation. a few minutes ago you spoke to bill dudley about what is happening in the prospects for the u.s.. so far what you have seen is wage agains lagged behind -- wage gains lagged behind

inflation. people expect inflation to come back down to previous rates. if inflation expectations and the general public deteriorate, they will have a different view about wages and we will have a different view about inflation. in the near-term is the need for climate, for energy, shifting energy sources is going to require massive infrastructure and other forms of capital equipment. where the funding is going to come from is an open question. it is not going to be coming primarily from governments. there is going to have to be a major restructuring from capital sources globally from private sectors basically. this is going to be a discussion of great importance, not just of

this week in washington but ongoing. how to make sure capital markets direct the investments to their most effective long-term use. jonathan: deeply thoughtful stuff. john lipsky, the former imf managing director. we caught up with bill earlier this morning, the former new york fed president. the headlines on that piece are available on the bloomberg terminal. lisa: we have heard him come out and say that the fed is long behind the curve. matthew hornbach seemed to echo what stanley was saying. that still may not be enough. when you take a look at where inflation is and how slowly it will get lower from 8%. jonathan: abramo, you teed up

this morning. lagarde -- simply this is a wide-open, wide open for them to address what needs to be addressed. lisa: how did they shape the policy response to inflation at a time of slowing growth? it is what central banks do not want to have to do and yet both central banks find themselves in a similar place with the ecb facing slower growth than the u.s.. jonathan: are you watching the easter egg role at the white house? lisa: he has participating. tom: the easter egg role yesterday for me was swiss chocolate. jonathan: can you explain what an easter egg role is? tom: it is a great tradition that goes back to george washington. you go out on the lawn and the

young cherubs go after. to be serious, this is people working backbreaking hours who do not see their kids enough. it is a great excuse. it is a great tradition. with sitting room, publishes reaffirms bank of america went up with a 3% price target. jonathan: do someone in the administration still dress up as the easter bunny? we have an easter egg in the u.k.. what is an easter egg roll? you can't explain it! i will expect at history from you, tom. tom: it was a scarred childhood. my mother stole them all. jonathan: it sounds deeply depressing. tom: traumatic. jonathan: it clearly had a big

effect on you later in life. tom keene, lisa abramowicz, tom farrell -- jonathan ferro. this is bloomberg. ♪ >> keeping you up-to-date with the news from around the world, i'm ritika gupta. in a bid to restart peace stocks between russia and ukraine, they met with ukrainian negotiators. they talked after evidence of war crimes emerged. the central bank found no clear world turn it is to the major reserve currencies. the bank of russia holds only gold and yuan. that made it possible for international governments to seize half -- jerome powell may

reinforce bets that the fed will raise interest rates by half a point next month. the fed's pre-meeting begins at midnight friday. china and its allies have resumed flights. the airline is working to put its entire fleet of boeing 737's back in the air. the cause of the disaster has not yet been determined. powered by more than -- i'm ritika gupta this is bloomberg. ♪

>> it's vital we do not fall >> we do not really know how

aggressive this will be, but if the fed delays all that means is that inflation will get more entrenched and they will have to do more later. tom: william dudley, senior advisor writing for bloomberg opinion. i still have not had time to get it on twitter, but i well. he harkens -- i will. he has been dead on for 12 months. you really wonder what kind of inflation and duration we will see. part of that is the global economy and the shock and estimates of china gdp has pulled over the markets. >> china's yield premium to treasuries has completely disappeared. treasuries offer more yield than their chinese counterparts. there is two reasons for this.

expectations of slower growth in china, the idea there is consumer strength in china, and the covid lockdowns in shanghai alone, you had a push to restart factories there. tesla also looking to restart its factories amid this router punch -- broader push. they were expected to cut their reserve ratio. they did not reduce rates. they only cut the reserve ratio. the fed is hiking far more aggressively. that is causing the field differential that is disappearing. tom: after our visit with the managing director of the imf last week, damian sassower joins us. i want to talk about the sri lankan rupee as they are economic and political experiment collapses.

every single guest at the imf was focused on their meeting with sri lanka in washington. we have to go to china. his china growing? >> it was not constructive -- is china growing? >> it was not constructive. it is the activity data that has gotten everyone's attraction. it is sad that we have unemployment at the highest in two years in china. new home sales, 29% to year-over-year and property investments are now back down in contraction after rising the last 2 months. tom: china's 6.37 is immovable. is there a chance a goes like the sri lankan rupee? >> no.

tom: lisa, help me! >> i'm just making a joke. if you look at debt gdp in china, it jump to the highest since 2020. if you look at leverage in the world's second-largest economy, it does not bode well. they have to make payments on $92 billion of debt. that is a lot of money they need to come up with. lisa: when you talk about how it was not necessarily a good luck, we still had outperformance when it came to the official gdp numbers. you think chinese officials recognize the degree of stimulus will be necessary in order to get near their growth charter for this year? damian: they do not care. if there is one thing we have seen from beijing is the thoughts and views of investors

are the last things on their minds. the interesting thing about the differentials on the board, if you look back over the past 3 years we have seen investment into the chinese local bond market. now that those yield differentials have flipped in favor of the u.s., that is a pretty big deal. we have heard a lot about the decline in the dollar and the fact that everything going on with russia has -- if you can make more money by keeping your money in dollars, then moving at abroad into another currency, investors will take a notice. lisa: china is a lot less investable because not only do you have the covid 0 policies and what might happen with supply chain, but how often do you hear that in conversation with investors?

damian: it is a risk and frankly it is a risk from the perspective of foreign creditors who might realize some of the businesses there doing business with in china might be susceptible to sanctions from the u.s.. oil prices, at least heating oil prices out of russia -- china is in an advantageous position to buy those commodities on the cheap from russia. we are not seeing the same pace of activity between china and russia since the sanctions set. tom: mr. putin with an appearance this morning on economics. is he talking within a market where pros like you presume a default? damian: no one is talking about the derivatives committee on russian rail. they ruled it was a default last week. what is interesting is they did

not have the option yet. it was only $41 million outstanding, so there is still a a lot of uncertainty about what a default really is. the eu will not allowed the major rating agencies to rate russian debt. can they even put into default remains to be seen. russian sovereign cdf is priced visibly. it is priced at a 99% chance of default in the next year. the corporate cds is coming along. tom: black-market argentina is way up. what is the real ruble? damian: i don't know what it is. tom: can we say that? damian: gray market. i have some gray hair coming in. tom: 81 right now. what is the real number?

damian: i would be guessing that i would say somewhere in the 120's right now. tom: always illuminating there on the sri lankan rupee. lisa: he talked the whole time about china and russia. tom: that was the number one topic out the imf. next 00--the meetings begin monday with sri lanka. lisa: to provide background for people sri lanka decided not to pay certain payments in order to save money in order to buy food and gas, and that i think is the underscore here. they made this calculus. they will not be alone going forward. tom: just look at egypt. egypt is the real deal.

we will have an international bet this week. much more coming up on earnings as well. stay with us. futures -13. this is bloomberg. ♪

jonathan: live from new york city this morning, good morning. the countdown to the open starts

right now. >> everything you need to get ready for the start of u.s. trading, this is bloomberg be open with jonathan ferro -- the open with jonathan ferro. ♪ jonathan: live from new york, we begin with the big issue, wrapping up earnings on wall street. >> the underperformance of banks -- >> banks seem to go down. >> you have to watch those costs. >> it is the r word. >> now it is not an issue of statistically higher rates, giving banks breathing room. >> banks are emblematic of a broader issue. >> a strong resurrection of the