down. >> if weight continues to strengthen, we will not go back to 2% inflation. >> inflation will come off of these extraordinary highs. >> we are not of the opinion that inflation -- 2% get us to where we need to be. >> it would behoove the fed to get a move on. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. jonathan: live from new york city, good morning. this is "bloomberg surveillance" on tv and radio. futures on the s&p down 0.2%. today is burn your mask day. tom: this actually happened to me on a play a couple days away. i had to do this, take the martini -- jonathan: and then take the mask off. tom: and then take another sip. there's a lot of new stuff going on, -- serious stuff, including

the war in ukraine, but this is "surveillance." you need to watch this morning. amesh adalja will join us and tell us what to do. jonathan: well, he will tell us about the science, because ultimately, we will do whatever we want. uber joins the club, the only place in new york city where i still have to wear a mask that ends today as well. the announced it on their website just moments ago. tom: and pandemic that's now migrating under 500 a day, which is constructive. i want to go to japanese yen. it matters. all sorts of people writing this today, carl weinberg really tearing apart the treasurers -- treacherous moment for the yen. this we bounce back to chairman powell. he cannot ignore a ¥1.28. jonathan: 13 days of weakness

against the u.s. dollar, record street, going back to the 1970's or something. 1.28 is a big deal. the fact is that japanese are pushing back, and it is not making a difference. tom: alan rest channels is in her robert cinch, and he says there is the real story and the trade story. japan, in the last 90 days, 39 of 49 nations in export weakness. not a good statistic when trying to strengthen your currency. lisa: and it seems like jawboning will not work anymore. they have to change the yield curve policy. and frankly, what are the consequences? what are the consequences of a very weak currency or a dramatically weakening currency in a world where inflation looms much more than it has in decades? jonathan: and this thing on mass

mandates, you have something to throw in here? lisa: i think it is a very delicate dance. we are talking about the social and scientific aspect. at this point, there is more of a reason to not wear a mask. but if things tip, how do you go back at a time when there are worker shortages and how do you deal with the fact that pilots could be sent and their are more -- i am not the mask police. jonathan: i am excited for airlines to get away from being the mask police. tom: she -- lisa: honestly, the point is it is important not to swing totally in the other direction and disregard science as new variants, up. i'm just saying there is a way

to be cautious and dovetail into a post-pandemic reality. jonathan: who said anything about disregarding science? lisa: no, i am just saying, going forward, it is a matter of has the science shifted to masks being not as efficient anymore. down one quarter of 1%. yield higher by three basis points, approaching 290. >> today, president biden hosting a call with the leaders of france, germany, romania, and the u.k. in the european union, the focus will be how do they proceed with the war in ukraine as it takes a new tack. what i find interesting is that

gas prices, natural gas prices, in the euro region have come down to near where they were before the conflict. how much do people put pricing out any kind of increase in the bans on russian gas imports? leak at chicago fed president charlie evans, the latest in the roster of fed speak, speaking with economic club of new york. here's what i am watching -- longer-term inflation expectations have risen to the highest levels going back to 2014. this is based on the 5 year forwards rate given rates. even if the fed opens up rate hikes are increasingly aggressive, people do not think it will be enough to curtail longer-term inflation trends. also today, earnings continue. 15% of s&p companies reporting this week, 69 companies. netflix reports after the bell. i will allow you both to rant about the idea of people cutting streaming services, because we are seeing that. netflix shares down 43% year to

date. everyone will be focusing into do people cut subscriptions to "90 day fiancé" or whatever else you watch. jonathan: i am only allowed one rent per segment, so that's it from me. steve chiavarone joins us now. steve: i am just glad that tom can enjoy martinis in the sophistication he is used to. jonathan: at the moment, there is still a defensive live. the outlook for a lot of people is murky. cyclicals have underperformed. do you want to lean the other way? steve: no. we have been one of the most bullish shops on the street for the last 15 years. but we think this is a time for a defensive play. what it comes down to -- the fed

is not doing enough. you have to get the real yield or real interest rates, at least, 20 before you can start picking a percent inflation and making it 2% inflation, and that suggests there is upside risk to the amount of hikes we will see over the next 12 or 24 months. as long as that dynamic is in place, we tend to lean more defensively. tom: real yield pulling back to negative zero point 06 right now. i want to talk, in the investment game, what my great mentor said, which is all that matters is profit. we have profit companies, particularly profit tech, and whatever the phrase they use, lossmaking tech -- how does federated discern between those groups and how do you place capital? steve: great question. the issue facing tech is not so much a fundamentals but a

valuation issue. they were trading 40% to 50% more than they had historically at the peak of the pandemic, so as they are repricing lower, that repricing is much more severe for a company that does not have earnings. for companies that do have earnings, we think there are better fundamentals, but we still think they need to read price -- reprice lower. tech cannot trade an environment when interest rights are going from 0 to 3% on the fed funds rate, let's call it. those companies have either taken a bigger hit in terms of price already or have solid streams of earnings. but we do not think the pain for growth companies in tech is over yet. that repricing is probably about halfway done at this point. wake me up when you have the russell 1000 growth trading closer to 20 times, not 25 or 26. lisa: for those of us who do not have our calculators out, how much more of a decline are you expecting more broadly in the big tech space? steve: again, you have never

traded above, really, 21 times prior to the pandemic. you were at 30. average during the pandemic was 2019 it suggests, peak to trough , something in the 20 range. understanding that a buy you make today may require further averaging in the coming months, we just do not think that repricing is done yet. maybe we are halfway done. jonathan: steve chiavarone a federated earnings. one piece of research gets my attention from bfa on the outlook for china. they have cut their forecast on china gdp to 4.2% this year in the base case. in a bearish scenario, can you imagine chinese gdp with a three handle? tom: no. socially, i cannot imagine it.

the basic idea here is debate ceo level growth, 2.8%. someone else the other day, the point -- 3.x percent. we see what the team is doing, but it is not in normal morning for international economics. jonathan: in a great piece to read. they go on to say that china will adhere to the zero covid policy at least until there congress in the fall. and the spillover is a factor in this research piece as well, this bill over to the rest of the world. lisa: not to be confused, but will we get to 4.2% on official data or will we have to derive a 4.2 percent from unofficial data when it is really 3%? my point being that recent data coming out with gdp to the upside was so striking across the street. conspiracy theories mated to the

front pages, where people were openly questioning how this could be at a time when an employment -- unemployment was rising. if they cannot even publish what the rate is, how will they address it? jonathan: i was a look to corporations for a read, look to apple. lisa: and actually, there have been reports that there foxconn said -- factory has been somewhat shelter,ed, but they still have to rely on supply chains inside china. jonathan: the reason -- region surrounding shanghai -- big numbers. tom: huge numbers for a city completely locked down, seriously locked down. jonathan: futures down from -- down about one third of 1%. ritika: keeping you up-to-date with news from around the world with the first word. i'm ritika gupta.

ukraine says russia launched a full-scale offensive to take control of the dundas area. russia has made capture of the dundas its main goal now that it failed to get kyiv. st. louis fed president james bullard says the central bank should not rule out rate increases of 75 basis points to fight inflation in a presentation to the council on foreign relations. he also says the fed needs to move quickly to raise rates to 3.5% and says talk of a u.s. recession is premature. china sees multiple risks to the economy as coronavirus are breaks keep growing. still, it pledges to meet its ambitious growth target and stabilize jobs. the economy still has teaching advantages, the government says. most major u.s. airlines are no longer requiring travelers or

employees to wear masks on domestic and some international flights. i can hours after a federal judge overturned a mandate. the airline industry had lobbied these the rule. meanwhile, uber is dropping its own mask mandate in the u.s. apollo global management is interested in helping finance a bid for twitter. it could provide elon musk or others with equity or debt. twitter posted their biggest shares in two weeks on monday after the company launched a poison pill defense. global news 24 hours a day on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm ritika gupta. this is bloomberg. ♪

>> fighting in mariupol continues. the ukrainians are still resisting. the city has not fallen to the russians. but they continue to pound it from the air and through long-range fire. jonathan: john kirby there. futures negative on the s&p and on the nasdaq. nasdaq 100 down by one third of 1%. s&p 500, we are lower, softer. yields climbing close to 3%. 298 on the 10 year. tom: you are too young to remember the 30 year benchmark, but my childhood is near 3%.

i am sorry, but it is a big deal. jonathan: the dow 34,000. dollar-yen higher for a 13th -- 13 days of weakness. dollar-yen 128 this morning. we will get serious now. joe mathieu joining us and marc champion, looking over to a new war in ukraine. putin saying sanctions are not affecting baloney. a chemical conglomerate in germany has been holding out. moments ago, henkel can't quantify the financial impact of leaving russia. marc champion, you are expert at this. our the sanctions working? marc: they are definitely having an impact on the russian economy.

see unemployment going up strongly in moscow. there is a lot of impact on growth, employment, so on. what putin can point to is that the ruble has managed to recover, in part because of cap -- capital controls and very competent macroeconomic he -- macroeconomic policymaking. tom: joe mathieu, we have a lumber chart this morning -- the amount of support, humanitarian and military, from the united states morphs anything else from any other company. one are those other countries going to pony up and start supporting ukraine? joe: ukraine would like an answer to that, and there will be representatives from ukraine here in washington asking that very question at the g20 and imf meetings this week. they are asking for more help, not just military but

humanitarian. that is the point we are talking about. to your point, it is about managing the refugee crisis, managing a food crisis. the president of the united states will talk today with european allies about the other side of this. potentially, another layer sanctions could include banking, a potential european oil band, but they will also talk about delivering these weapons which is, at the moment, the most urgent situation in ukraine. lisa: the u.s. in particular, secretary janet yellen participating in imf world bank meetings, even though russia is included despite some of her warnings before the events. how controversial is that in washington, d.c.? joe: it is a great question, how many meetings might she skip? there will be some, particularly one on economic architecture where apparently a russian representative will be in the room. this is not exactly janet yellen forte, going head-to-head with representatives from other

nations in a public forum, but that is being suggested i sound, that it may be more meaningful for her to not only get is done with ukraine in spite of russia's attendance but maybe go head-to-head, call them out, show up at a meeting in person and call out russia for what it is doing in ukraine. that would make major headlines across the world. lisa: meanwhile, we are hearing the incursion into the donbass region has begun. do we have any sense of what the ultimatum will be, what new goals are, what the yardstick is , especially as sergei lavrov comes out and says russia will not nuclear weapons in ukraine and tries to make it as though they are still on the world stage in some capacity? marc: the thing we know is that the russians want to take all of the two regions that make up the donbass, donetsk and hansk. russia has been there since 2014, but it and separatist

fighters there held about one third of it. they now hold more than half, and they want the rest. that includes mariupol. that includes an area going right up towards but not all the way to kharkiv. so that we know. what happens then once they have got it, because the war is not over -- we do not know. and exactly what putin's long-term goals are, again, we cannot be sure. tom: we have seen bouts of ukraine surprise, the sinking of the ship, etc. -- we expect that is the only way they will win bouts or will they actually win territory? marc: that is the thing being asked for the first time now, because this battle in the east will be very different from what has been seen before. i've been to the north. it is very forested.

you see convoy stuck on roads, and once they were around kyiv, they were in urban areas and fighting in urban places where the ukrainians could conduct ambushes. now, they will be in open plains. there are trenches along the we hundred us so lines that will be -- there will be heavy artillery, long-range artillery, tanks, all sorts of stuff your that is why the ukrainians are so insistent they need a lot of heavy weaponry now. jonathan: marc champion and joe mathieu, thank you. you can catch up with joe on "sound on" at 5:00 p.m. eastern. on the potential of what you can can do it, their french finance ministers adjusting it is necessary "more than ever" to

stop oil imports from russia. lisa: interesting the focus on oil and not natural gas, and i wonder if that is the sort of shift right now in europe. can they ban oil imports while continuing natural gas imports as they try to get other sources? also, natural gas prices in the u.s. soaring as they consider what it would mean for them to export to the european union. jonathan: the french hoping to -- tom: i thought you were going to lisa on that. jonathan: i am so sorry. tom: i had my mask on, was between sips. the french government right now is in an election. i think the impatience is tangible with germany. that is something unspoken of this week. jonathan: i would love to find out what you were actually doing moments ago. futures down about one third of

1%. on the nasdaq, down 0.2%. yields higher by three basis points. from new york city, this is bloomberg. ♪

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jonathan: we spent a long time talking about some of these big tech names as if there is not an economic story embedded in them. why do we care about netflix? because there's an economic story embedded in that company. our people cutting back from streaming because of inflation? the stock down. the nasdaq 100 is down by .2%, the s&p is down .8%. sit on tens from mom and remember that we were at 23380 to close out the month of march. yields higher by three basis points.

so high yields in america. the prospect is tied to monetary policy from the fed. dollar-yen, what a run. the yen is weaker against the u.s. dollar for 13 straight sessions. the finance minister came out overnight and said we are looking at this with a strong sense of vigilance. the verbal intervention is not working. tom coat the tea leaves of the greater economics, johnson & johnson which is not a small company indicates they are using cash to raise the dividend by 6.6% but they adjust dramatically love you forward out 12 months. -- the view forward out 12 months. jonathan: you know what we don't hear from j&j anymore? don't hear much about the vaccine. tom: they moved on from that.

in the headlines they made clear they are moving on. jonathan: seems to be not a story for them in the same way anymore. lisa: they are trying to find because there vaccine was proven to be less effective some of the other vaccines. -- they are trying to move on because there vaccine was proven to be less effective than some of the other vaccines. i've got some comments on netflix. but let's move on. tom: we are watching the rate of change of all of these. george goncalves. given the affiliation with japan, your official line on yen. i'm fascinated if you people are waiting for 130 or you have a

different target for when the government steps in. >> at the end of the day we are releasing proof positive of central banks divergence -- central bank divergence. it will be difficult to draw a line in the sand of when the yen will go up to. at some point what's happening with the yen and long-term rates in the u.s. are connected. we need to see some stability. tom: fancy guys like you draw around this phrase convexity which for the rest of us mere mortals is acceleration. are we seeing convexity where we get amends into these yield moves or can they reverse and go the other way? >> this is purely a grind higher in rates. we wake up to higher and higher

rates. what's different versus all the other episodes i have experience d going back to the 1990's, erc european rates having larger moves on a day like today more than u.s. rates. maybe not u.s. rates were too low, but european rates were. how high could it go? we are at a point where we have broken a lot of the long term metrics. we are in the snow person's territory where we are three standard deviations from the long-term trend and we are entering into deep value. jonathan: deep value. not yet. i think the character of this selloff has changed and that's what gets my attention.

we got comfortable with this idea of flattening, then yield curve inversion. this month something changed. he had a breakout in the long and of the steeper yield curve in america. trying to get our hands around what's the catalyst? what's been going on the last couple of weeks? >> our markets operate on narratives more so than numerology. we went from a very flat posture and some of those result in large trades being put on. in the public data positioning has started to go the other way. half of the steepening is a positioning unwind. we are clearly seen concern for at some point the fed is going to make a judgment call between accepting a recession and forcing us into one or just embracing stagflation.

lisa: a buyer's from home and this dovetails into where we begin with the idea of japanese buyers and treasuries not stemming the selloff. they may not come in the way they have in the past. can you talk about what you are expecting there? >> japan has been a huge supporter of the u.s. fixed income markets. at the right price but also at the fx hedging costs. we are an environment where the outlook for inflation is extremely uncertain. the fed is more hawkish than they have ever been. it's our view that japan is not going to step in until there is stability in rates. we need to establish a range not just keep moving higher. quite frankly there's still better alternatives to u.s. treasuries from a japanese point of view.

and european rates when you do the fx calculation favors those markets more than u.s. treasuries. lisa: can you give us a sense of how much a buyers strike from international buyers -- how much that's going to contribute to a further rise in longer-term yields? >> it's going to keep rates elevated. the idea that we really back is going to take u.s. fundamentals and u.s. investors to really step in. we have had a terrible first quarter. we were going to at max to get to a drawdown. -- 15% drawdown. tom: total return aggregate index is like -8% and you just said a draw down to -15%. what happens in a bond bear

market? our viewers have never enjoyed this drawdown. what's the behavior in a bond bear market? >> unless you look back to the 1970's, it's a much stiffer marketplace than it was back then. and more interconnected nowadays as well. we are in a bond bear market. let's just table that for a second. let's bring in financial conditions tightening which will be the only respite that might eventually stop this bond selloff. tom: did he just call me an old part? jonathan: beginning to speak cannot thing attention earlier in the hour. i'm joking. i'm just joking. let me talk about the german mom -- german bond market just briefly. i wonder if a new element is

present in this market as well. i wonder how much of an anchor the german bond market has been around the neck of the treasury market. this move we have seen in the german 10 year is bigger this morning. we've had a big move they are, too. i just wonder that european dynamic. how important is that going to be in the coming months. the fed is making an effort to do something similar at the same time. >> its supercritical. the global right phenomenon, birds of a feather flock together plays in reverse as well. we are seeing evidence of that as rates are rising. i do think it forces local

investors to stay in their own jurisdictions and at that point you're competing with other asset classes more so versus benefiting the global rates market. his credit-rating where it is supposed to be trading. the downside of this if it gets too bad -- i'm not calling that our forecast, but if we did, then you would have -- to viable other asset classes. i'm not sure the fed wants to cross that bridge and at some point they will stop tightening. jonathan: george goncalves, great stuff. the ecb is trying to wind down qe. tom: i look at the fed exercises

as differential equations. i really want to emphasize, it's not a lot of media certitude about what any central bank is going to do in this modern original economics. we really don't know the flows and the stabilities over the next 18 months. jonathan: they've got a plan. tom: their plane is to get to the next meeting. lisa: what is going to be the consequence of them all doing it at once. japanese bond buyers matter to the u.s. treasury market. jonathan: the 30 year in the u.s. getting very close to 3%. with tom keene, lisa abramowicz and jonathan ferro. this is bloomberg. >> keeping you up-to-date with news from around the world. i am ritika gupta. a long anticipated russian

offensive has begun. russian forces are said to be targeting the region in the eastern part of the country. the assault is taking place along the front of more than 300 miles. it's a fresh blow to russia's billionaires. president vladimir putin signing off on legal amendments -- to reconfigure the structure of businesses they hold by overseas shares. u.s. treasury secretary janet yellen will participate some sessions. they are backing of any suggestions that they would boycott meetings if russia takes part. she will attend others focused on the economic fallout from russia's invasion of ukraine. china is grappling with a record

financial outbreak. 25 million people living in shanghai. the company is currently interviewing banks in march. 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. ♪

>> cdc recommended the order for continuing the time, two weeks.

keeping with its responsibility to protect the american people. this is obviously a disappointing decision. the cdc continues recommending wearing a mask in public transit. jonathan: good morning. yields are higher by three basis points. getting very close to 1% on a german 10 year. very close to 3% on u.s. 30 year one airline said we are relieved to see the mandate lifted to facilitate global travel as covid-19, here's the line from them, has transitioned to an ordinary seasonal virus. that statement out just

yesterday. tom: that's the airline people playing physician. he has become and the only equivalent in media i can think is peter hotez. one of the most interesting academic paths to excellence and epidemiology and virology. thank you for joining us on this important day. is that bastian and dan to -- delta airlines correct that it's a seasonal virus? >> that's its ultimate destiny. it's shocking because people haven't transitioned to that in their thinking. but it's going to join the other members of its family and be something that always has a baseline number of cases, hospitalizations and deaths. probably accelerates when it gets colder, decreases during the summer and becomes something that we can treat with vaccines.

i think that foretells what was always going to be the case. tom: we are under 500 deaths listed by any number of surveys including the great math of johns hopkins. we were there before. is that all clear or do you have a trepidation like we had under 500 deaths before? >> i do think at this point that 500 deaths is more sustainable in the past. we are dealing with a population that is heavily vaccinated, has access to antivirals and monoclonal antibodies. cases may go up again. we may see deaths increase to some level that i don't think we are going to go back to the bad old days when we didn't have tools, we had so many people without immunity that were high risk dying. the virus can surprise us and i

think we are on much stronger ground than we were in the paths -- in the past. lisa: what's the science behind needing to require masks for everyone and not needing to? >> we are talking about when the government requires it versus when they recommend it. if you are a high-risk person, there's always going to be a covid-19 risk. i don't think airplay the movements themselves are as dangerous but remember that one way masking works. you can get access to an n95 equivalent. just because the government doesn't require it doesn't mean the airlines themselves can't require it. i think we have to come to a point where we know that there is some risk. masks work and for those people at that want to wear masks, they

can wear a mask. we are talking about two weeks because the biden administration was set to let this expire in two weeks. lisa: what's the damage to the health care industry and frankly to health security going forward that tasks are more political and have become more political than they are a tool of science as they were originally intended to be ian cook >> that's the story of the whole pandemic. everything we've talked about from antivirals to monoclonal antibodies to masks have been abused through the lens of whatever political tribes someone belongs to and we are increasingly tribalists about everything we do and that's what masks have become. and it does make addict friends -- it does make a difference. they are not going to listen to the recommendation that people do certain protective actions for covid-19 or the next pandemic when it occurs.

that's the long tail of this pandemic could we have created this breach between public health professionals and the general public. they will never trust us again. tom: i'm going to rip up the script. that's such an important statement. how does the medical community get the trust back of the american public? >> i think we have to be transparent about how politics got infused during successive administrations into this response and people have to go back to their primary care doctors and think about who they trust and why they trust those primary care doctors and we have to take that lesson and extrapolate it to us when we are on television or pontificating about the state of the pandemic. we see that people trust their doctors, but they don't trust the doctors on television. we have to really rebuild the entire thing and make public

health agencies independent of the administration that they are serving and they have to be more like the fed chief than they do a political appointee managed through the white house. that's what the problem is. politics has gotten so infused into public health now that it becomes something people only think about as this is what the democrat position is on this, this is the republican position. jonathan: do you think that the people that worked through the pandemic are the wrong people to work out of the pandemic because they just can't move away from it? >> i think people are sick of seeing some people's faces on television probably including mine. i do think there's a lot of people that have expertise in pandemic preparedness that are going to be who we need for the next pandemic because many of us have been working on pandemics prior to this. i think people have to think about their communications and

how they may be being viewed politically and try to steer clear of it no matter what tribe they are in. jonathan: we are not sick of seeing you. some important comments. one way masking is something that jumped out to me. tom: this is a guy with a prestigious degree from carnegie mellon in industrial management, huge program, but then says i'm going to go out and get an empty -- an md. jonathan: the idea that i'm wearing a mask for you, not for myself. that is something the doctor is pushing back against. lisa: that is key to getting to the endemic phase. the question we will be asking for a long time is how do we build trust. jonathan: futures on the s&p

down .1%. bravo is hosting a mask burning party at her house later. selling stocks live. this is bloomberg. ♪

>> so far, people still expect inflation is going to come back down. >> we are not going to go back to 2% inflation. >> we are not of the opinion that 2% gets us to where we need to be from an inflation slowdown standpoint. >> i think it would behoove the fed to get a move on. >> this is bloomberg surveillance with tom keene, jonathan ferro and lisa abramowicz. jonathan: live from new york city, good morning. this is bloomberg surveillance. alongside tom keene and lisa abramowicz, i'm jonathan ferro. the united states taking another big step away from this pandemic. tom: it really says that things are getting back to normal. it was great to have the doctor on with us from john's hot ins