♪ >> good morning, welcome to markets. -- bloomberg markets. president biden heads to poland. the white house as he has no plans to visit ukraine but as we mark one year since the russian ukraine -- invasion, the focus is on sanctions. the top diplomat of the u.s. and china. to make tensions even worse. everything from the chinese balloon to north korea. and trade mix today as u.s.

markets stay closed. geopolitical tensions and signals. welcome to the program, everybody. it is presidents' day and the u.s., so welcome to a special edition of "bloomberg markets" for today. mixed trade going on in asia and into the european session. the asian session doing pretty well. the european session a little bit lackluster. the asia-pacific is higher but stoxx 600 in europe pretty fraught this morning. crude is another measure of what we are seeing around and we see a higher oil price. natural gas up by 3.5%. we are edging a little bit higher thinking about a late

winter cold snap. a shortage of some, hawkishness at the ecb dominates trading around what is going on in europe on government bond markets. let me get to a headline across the bloomberg terminal. president biden is visiting ukraine. he has met with president zelenskyy. one of the questions hanging over this visit heading to poland was he is going to be in the region, will he go across the border, heading to ukraine? it does seem as if he has met in the past tense with president zelenskyy according to a headline across the bloomberg terminal just in the last minute. let's get a perspective on the wider markets. the head of policy and research,

very nice to have you with us. a lot to take stock of. certainly some of the geopolitical headlines and certainly add to our conversation about what is going on. all kinds of geopolitical tensions. we had president biden one year into this conflict in ukraine. president biden visiting ukraine, it would seem, a fairly big step for u.s. president to make. an hour into the conflict, this is something still having a visible impact on markets and inflation in particular. >> yes and no. 2022 hit markets hard. it was the dominant global macro driver with tightening. that is not the case anymore. if you think about geopolitics right now, there are no longer major macro drivers. by and large, and a lot of it

isn't micro drivers. barring any tail risk escalations, not a macro driver, per se. the energy story is a lot about fundamentals, how does europe cope with new prices? these are the classic stories now. geopolitical impulse has faded. anna: we should have said this is a big state that i suppose. barring any re-escalation of this tensions, that is where we find ourselves. we saw that on display over the weekend at the security council. you say in your notes that counterintuitively, recent tensions about balloons, that could actually be seen as good news. why would you say that? >> first of all, when we had the trump trade wars, those were classic macro drivers. you had appreciation, the shift in risk on and off.

what we're seeing today is obviously relevant, but it is relevant to a slow-moving story. whatever label you want to apply to it, that is not a macro story. that is very much a micro story around which business models are endangered in that world. who pays a higher risk premium, who has a disadvantage in terms of access to financing. these are very much micro stories in terms of the big picture that is shifting. it is not something where i'm fearful of big event risk. anna: not something where you watch the dollar or other currencies for some long-term appreciation around these particular themes. >> right now, that's not what is driving markets. it does drive micro stories about individual names, individual markets across the sectors that have better tailwinds or inverse headwinds depending on what you select. anna: where are we in the

european cycle? some of the challenges we just mention have a hairy european expression. certainly the war in ukraine has had a big impact. we also have a lot of trade flows between china and into europe. how is your of weathering all of these challenges? >> the economic forecast from europe has gone from -.1% to plus 23. that is an improvement, that is still not great numbers. a lot of the revaluation of your assets reflects the fact that the worst-case scenario has not materialized, so that is good, but less bad does not equal good. we have a very nasty policy mix coming in europe with very tight hawkish central bank and a relatively tight fiscal position that will accompany us in the coming years as well. you offset that with worse case

scenario avoided, china and emerging markets doing a little bit better. in mild recession, but not with a huge rebound coming in afterwards. >> how does that translate into a conversation about the u.s.? in the eyes of many, it is stating last week we spent a lot of time talking that how maybe inflation will be here for longer and that rates might have to go higher. how do you see that kind of policy right now? >> this is the debate. utility what you are seeing in the u.s. and i will tell you what personality you have because the data is all over the place. we had crazy strong jobs data but a lot of forward-looking indicators for the bad. still quite negative as i think that we've had this massive monetary tightening. a different type of cycle than we've ever had, not only because of the energy cycle but because

balance sheets are displayed differently. what that means is the interest rate shock comes from refinancing challenges. the past year, this tightening would have hit hard because portfolios would've lost money on their bonds. it is still happening and so i still think a mild recession -- anna: we watch out for those and the impact. thank you very much for joining us. that top story breaking at the top of the hour, president biden is visiting ukraine, has met with president zelenskyy. maria, this was being watched, needless to say. we knew he would be in poland marking one year since russia's invasion of rain, and trying to

show signs of solidarity. i suppose there is no bigger show of solidarity from the u.s. president than a visit to ukraine, aside from further pledges of ammunition which we might get to shortly. >> the images that we are seeing come of the photographs, this is priceless for the ukrainian government, the ukrainian people. i'm sure it also is priceless for the united states. it is also a question of timing that we are getting life from kyiv. remember, tomorrow vladimir putin is set to make his each. the president of the united states was also supposed to be in poland. he sets the agenda, he sets the emotion. he gets to have the first word that overall, the nature of all of this for the ukrainian people, there was a lot of speculation over the weekend. whether or not this trip would

happen, we've seen the speculation that it would be the vp. the ukrainian government and volodymyr zelenskyy, this is a major diplomatic win. anna: that is something that i know was discussed a lot in the security conference over the weekend where you were. that very much is part of the conversation. parties coming forward that there versions of what peace plans might look like. the chinese want to participate in that kind of conversation. the ukrainians have their own ideas of what will be needed to have any kind of peace talks. >> yes, ukraine has presented that 10 point plan. the kremlin has responded saying that plan is a joke and they cannot take it seriously but a lot of this is a game of perception. when you look at the chinese, this goes back to the conference. the top chinese diplomat who was on site to the audience by

surprise when he said china will not present this week. obviously the timing is no coincidence. i did have a top european official who told me "i am curious, but also concerned. china has not mediated in a year, widely want to mediate now? and two, they should not help russia to go for something that looked like a victory or a land grab." anna: the ukrainians have got this visit from the u.s. president, they will be wanting to talk about security and munition and perhaps a talk about fighter jets. that is an ongoing conversation between ukraine, and many in the west. i know a lot of the conversation over the weekend was about long-term support for ukraine. the conversation turning from the here and now to what is going to be required over the more medium-term. >> this two concepts happening almost at the same time.

on the one hand, there is this idea that the next few weeks could be crucial, that there is an offensive already going on. ukraine is waiting for the training, potentially more weapons. possibly to prepare their own counteroffensive that there is also this idea that the war may not end in 2023. this is a contradiction. you care about the next few weeks, that there is a sense that this is not going to emd next year, they told me whoever gets the upper hand may be decided in the next few months. that doesn't mean it ends in 2023 but it can really set the scene for the biggest, strongest part. who has the upper hand? at this point, both russia and ukraine believe that they can really make inroads in the next few months. anna: thank you very much. u.s. president biden visiting ukraine meeting with president zelenskyy on the ground in ukraine.

let's get you up-to-date with other news from around the world. good morning, now. >> u.s. president joe biden has made a surprise visit to ukraine and met with president volodymyr zelenskyy. biden is also heading to poland tonight as russia's invasion of ukraine approaches a one year mark. at a meeting this weekend between the top u.s. and chinese diplomats shows how difficult it will actually be to compromise. they exchange paths on everything from the chinese surveillance balloon to russia and north korea. still, blinken said the u.s. is not looking for a new cold war. 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. anna: thank you very much. coming up of the program, a call for aid. part of our interview with the u.k. prime minister from that

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j.p. morgan wealth management. ♪ anna: this is "bloomberg markets." a special edition of bloomberg markets on a u.s. holiday. whether to put -- in euros while the u.k. prime minister said nato should finalize a security guarantee for the nation by july. maria tadeo at the security conference over the weekend. >> it's clear that the security guarantees, the architecture that was in place before this or has failed ukraine.

i have just stated a fact. ukraine had received assurances when it gave weapons up russia has continually violated those human rights treaties or indeed, arms control treaties. so what happened before has not worked, we should be clear about that. now our job is to look forward and say what is the right thing going forward? stoltenberg has said ukraine will be a member of nato but between now and then, but i think we need to work on is providing ukraine with the means to win the war right now and that means very specifically artillery, long-range weapons, armored vehicles, air defense. that is the most critical thing. but we also need to make sure we are training ukraine on nato standard equipment. that is what we're doing when it comes to aircrafts. but i think what we do need to do is think about the future of how we protect ukrainian security. and we have that conversation with our allies and talk about the long-term provision of ukraine.

that is the conversation i think we should start having. >> so the assurances would come this year. there has been a lot of debate. you talked about fighter jets. there has been a lot of debate about ammunition. also, the long-range missiles. perhaps one of the targets would be crimea. under your watch, we do approve of long-range missiles that could take crimea? >> nato is a defensive alliance. that is the first thing to record. what is ukraine doing? ukraine is trying to defend itself. it is suffering unprovoked aggression. its sovereignty has been violated. it's people are being killed. and it has every right to defend itself. and that is what we should be doing. that is the support that we collectively are providing. and critically, there are things that ukraine needs to gain that decisive advantage on the

battlefield. that is why the provision of heavy tanks is important. those are all the things that will allow ukraine to defend itself and repel russian aggression and indeed, yes, to have a counteroffensive that moves russia outside of its own country. i think that is entirely reasonable and we should be fully behind ukraine in that. anna: that was the u.k. prime minister speaking with our colleague maria tadeo avenue makes it early conference. we caught up with maria a few moments ago. still ahead, ukraine that the central bank governor joins us. we will also talk about the symbolism of what it means to see the u.s. president there in ukraine today as we continue to track that top story. this is bloomberg. ♪

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a bank that knows your business grows your business. bmo. ♪ anna: this is "bloomberg markets." 10:22 in london, 5:22 in new york. the manchester united football club is heating up. the bidders include one of britain's richest people and a member of the qatari royal family joining us in qatar is simone. what do we know about the particular bidder, motivation coming from where you are? >> will the man leading the bid,

you may recognize a piece of that name. his father with the former of qatar. very well-noted investor. he has had large roles on boards of major country companies. he has also been a board member at credit suisse during the time in which the sovereign wealth fund has had an investment in credit suisse. and that gets at some of the heart of what is going to be the issues for the qatari bid. his closeness to the royal family, to the state finances in a place like qatar, mary difficult to draw a line between what is the government and what is the royal family. qatar already owns the french football club, but currently under -- rules. two teams ruled by the same entity or the same person aren't allowed to compete against each other in major european tournaments so that is really

the impediment to the bid. if qatar owns two major football teams, where would we go with that? anna: there is perhaps competition from the bid from a prominent business figure in the u.k., a prominent manchester united's order. both sides playing up their links to the club, playing up their desire to please the fans, if you like. where does this take us in the bidding process? >> appealing to the fans, saying he has been a lifelong manu supporter. he is looking at a bid for 69% of the team, the amount currently owned by the family. at the moment, we've seen a deadline for the bidding going to get more information, confidential information as well about how much revenue manchester united brings in.

in the next couple weeks, they are going to submit their final bid. ratcliff has an ownership stake as well, so that can be important to him. but the big question is whether or not the glazer family, or members of the glazer family actually want to move forward with this. will the numbers coming in behind have to satisfy some of the reports indicating that they look like 6 billion, 7 billion pounds that they wanted for this manchester united team? it is just unclear whether they are actually going to get that. so far, sources say probably not quite. anna: could this end up being the largest bid, the highest valuation attached to a professional sports team? thank you very much with the latest on that football bid. we are just being sent pictures from just moments ago of president biden meeting with president zelenskyy. here are the images we have been sent to. we said at the top of the hour that we have seen president biden in ukraine and there he is

meeting with president zelenskyy. he says welcome to kyiv, your visit is an extremely important sign of support for all ukrainians. we will continue to cover the story. this is bloomberg. go. go brain. no, not that one. go this one. go optimizing data. go efficiency. go results. emerson's plantweb digital ecosystem is the brain for smarter, safer and more sustainable performance. go plant go. go boldly. emerson. i screwed up. mhm. safer and more sustainable performance. i got us t-mobile home internet. now cell phone users have priority over us. and your marriage survived that?

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♪ anna: this is "bloomberg markets," welcome back to the program. a special edition for this u.s. public holiday, 2.5 hours into the european trading session, the asian session pretty much positively up by 6/10 of 1%. the european session flirting with the flatline that managing to stay just above it. the best performing sector. crude prices upset intensive 1%. the focus on commodities continues. the china reopening story outweighing concerns about fed tightening. the natural gas story and focus in europe as ever and the 18 month low from these prices on friday now just answering up by

4.3% this morning. aluminum up by 1.3%. the chinese refining story very much a story there. that is going to be a focus and the german 10 year yield also on the radar this morning. 2.4% is where we yield their as a result of some hawkish talk from officials during friday's session. that is where we are in the markets this morning. president biden has made a surprise trip to ukraine where he met with the country's leader. anne-marie joins us now from warsaw in poland. and you are there because president biden making this trip to eastern europe, he was supposed to be going to poland, but a surprise trip to ukraine, although it had been speculated about because of the proximity. we have some symbolism behind this visit. >> shrouded in complete secrecy, i'm just finding out at the president is in kyiv and meeting with president zelenskyy,

president zelenskyy putting a picture of them on telegram. many thought this could happen. the president did not announce this until he was on the ground and also bringing a very, very small reported pool with him. due to these security concerns is why it was so secret, but it is an important moment as the u.s. president wants to make sure he is keeping the western alliance very united and also showing the u.s. unwavering support for kyiv. remember, we are about to mark one year of putin's invasion of ukraine and there is this risk of fatigue as the war continues to drag on. the u.s. president standing by, talking about more armor and ammunition and eight to ukraine and also he says later in the week acidly here in warsaw he will also be talking about fresh penalties and sanctions against russia. anna: right, so the focus will shift to fresh penalties, fresh sanctions.

when president biden is where you are in poland, i guess the focus will also be on nato, on commitment to article five of the nato treaty. >> and that is so important and prevalent when you're are standing in poland. and they are a border country with ukraine. the last time president biden was in warsaw was much of last year. a month after putin data ukraine, and he went to the border and he met with the u.s. soldiers there. he will also be where he is in poland not just with president -- and polish officials, but also meeting with bluegrass nine. these are the nato members on the eastern flank and this is a show of unity on the eastern flank and on the protection the united states has when it comes to nato. but we should note that this moment is coming as there are concerns about fatigue and about the support that could continue

going into ukraine as this war drags on. this is something the president really wants to make sure he puts a backstop two. anna: as we reflect on the news that president biden has made a visit to ukraine, and very pleased to say for joining us now, ukraine's deputy central bank governors. thank you so much for joining us, really good to have the with us. of course we want to talk about the ukrainian economy, its challenges and where it has been resilient over the past year. but first, as we look at these images coming to us of president biden in ukraine, how much do you think it will mean to ukrainian sissy the u.s. president on ukrainian soil? >> -- that is really important

for us. >> an important morale boost, perhaps. thinking about the economy, and another the cranial -- ukrainian economy shrank from recent that everybody can well understand, other areas that you have been surprised to resilient they have been? >> i would say that the outcome of 30% decline is -- because 40,

45, 50%. the outcome is a result of the ukrainian -- cost and the environment. and it definitely helps to keep the economy alive despite all the physical infrastructure. anna: we are just seeing another headline across the bloomberg terminal that says president biden is saying that the u.s. will announce $500 million of aid for ukraine this week. give us a sense of what difference that kind of money can make.

>> international partners, in addition to the military support , it definitely will help a lot to keep the initial stability. so to allow -- inflation outcomes -- of the population. in order to -- the economy. anna: i know that you had a

mesic -- meeting recently with inf to ukraine. when will the next meeting be? when do you expect to discuss a full program of support? >> last week i reached this top level. in coming months, coming weeks we expect meetings for full-fledged imf -- finding in ukraine. so again, in the coming weeks we are looking very close to have

this result. anna: the coming weeks, thank you so much. the ukrainian central bank deputy governor, thank you very much for being with us. apologies for the quality of the line there. a little bit challenging, it would seem getting to ukraine. let me bring back into the conversation are calling annmarie hordern who is in warsaw following president biden visit. as we can see from these images, he has been visiting with president zelenskyy in ukraine and just after we spoke moments ago, we saw this headline across the bluebird. president biden announces $500 million of ukraine. the national bank of ukraine deputy governor, this would be part of continued welcome efforts to support the ukrainian economy. what else are hearing from the biden team as they make this visit? >> they are announcing this

fresh aid as they have been over the course of the year. there's been billions of dollars being sent as they fight this offensive from russia, but also the president mentioned in his statement and consequential tweets as well in kyiv that later in the week there will also be fresh penalties on russia. we have reported that this may be more export controls, sanctions against individuals in some key russian industries. for ukrainians, i just spoke to a ukrainian government official who said this trip came together at the very last minute. it was really facilitated by the foreign minister as well as under yellow -- and they are saying that the u.s. will continue standing by ukraine until its victory. one thing with the need to take out of this is over the weekend. we heard from zelenskyy and others and whether or not the

aid will continue and biden: and there this week as they are about to mark one year of this invasion is really a show of unity in the fact that the u.s. stands behind that, even though there are even murmurs in u.s. congress about questions of how much aid should be going to ukraine. anna: absolutely, the domestic challenges are also worth considering. thank you very much for joining us from warsaw, poland. keeping you up-to-date, here with first news update is --. -- leeann -- >> secretary of state antony blinken and state counselor -- exchanged everything from taiwan to russia and north korea. the meeting showed how difficult it would be to compromise. now there is a risk of a new crisis in iran over the country's atomic activities. international monitors have

detected uranium-enriched levels just below that needed for a nuclear weapon. the international atomic energy agency is trying to clarify how that happened. iran calls a distortion of the facts. european union members may agree to pull ammunition purchases from ukraine as early as next month. the netherlands and romania have given their support to a proposal from estonia to spend about $4.3 billion on artillery shells. foreign ministers are expected to discuss the plan today. and here in the u.k., richie sunak is preparing for his biggest political test since becoming prime minister. he said to unveil a trade deal with the european union that could lead to a standoff with northern ireland unionists and members of his own party. a solution to the impact would enable the u.k. to reset relations with the e.u., it's biggest trading partner. 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. this is bloomberg.

anna: thank you very much. coming up, we will run you through the events that you need to watch out for this week. that is coming up next. this is bloomberg.

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♪ anna: this is "bloomberg markets." a special edition because it is presidents' day. let's listen to some of the things that president biden has had to say whilst visiting ukraine. president biden: before the next president is sworn in the kyiv, so president zelenskyy, you

deeply honor me here in kyiv today. to meet with your military, your intelligence, your diplomatic team. community leaders who have stepped up and help their country in their hour of need. it is a standing stood up. everybody. everybody. women, young children just trying to do something. pulling people out of areas who have been living with war crimes. it is astounding, and the whole world sees it. looks at it. it is the largest land war in europe in three quarters of a century. and you are succeeding against

every expectation against your own. we have every confidence that you are going to continue to prevail. the moment i first received the report about a year ago, we were focused on determining how do we rally the rest of the world? how do i help you with the promise you asked me to make? well, how do you succeed? how do you get a world to respond? to a prosperous economy, competent democracy, a secure and independent state. when united americans of all political backgrounds decided that they would step up the american people, unchecked

aggression is a threat to all of us. a coalition of nations from the atlantic the pacific. nato, japan. across the world. the number of nations is over 50. helping ukraine defend itself against this unprecedented conflict with humanitarian support. the war will impose unprecedented cost, squeezing russia's economic lifelines. together, we've committed over 700 tanks and thousands of armored vehicles. 1000 artillery systems. more than 2 million rounds of artillery ammunition. more than 15 advanced rocket systems.

and air defense systems. alter defend ukraine, and that doesn't count the other half $1 billion we are announcing with you today and tomorrow. and that is just the united states for this piece. and just today, that announcement includes artillery ammunition. more javelins, anti-armor systems. protecting the ukrainian people from aerial bombardments. later this week we will announce additional sanctions against trying to invade sections and -- sanctions and backfill russia's war machine. and thanks to bipartisan support in congress, this week we are delivering billions in direct budgetary support. billions in direct budgetary support which of the government can put to use immediately to

help provide for basic services. the cost that ukraine has had to bear has been extraordinarily high. and the sacrifices have been far too great. far too great. we mourn alongside the families of those who have been lost to the brutal and unjust war. we know that there will be very difficult days and weeks and years ahead. russia's aim was to wipe ukraine off the map. putin's war of conquest is failing. russia's military has lost half its territory once occupied. russians are fleeing by the tens of thousands. not just fleeing from the military, fleeing from russia itself. because they see no future in

their country. russia's economy is now back water, isolated and struggling. putin thought ukraine was weak and the west was divided. as you know, i said to you in the beginning, he is counting on us not sticking together. he was counting on the inability to keep nato united. he was counting on us not to be able to bring in others beside ukraine. he thought he could outlast us. i don't think he is thinking that right now. god knows what he is thinking, but i don't think he is thinking that. he is just wrong. just plain wrong. one year later, the evidence is right here in this room. we stand here together.

mr. president, i am delighted to be able to repay your visit to our country. in washington, you told the congress "we have no fear nor should any in the world have it." you and all ukrainians, mr. president, remind the world every single day what the meaning of the word "courage" is. from all sectors of your economy, all walks of life, it is astounding. astounding. you remind us that freedom is priceless. it is worth fighting for as long as it takes, and that is how long we are going to be with you, mr. president. for as long as it takes. [applause]

anna: president biden making that visit ukraine meeting with the ukrainian president as we see there, ending with those words that the american support is for as long as it takes. that's the geopolitics. plenty of that over the weekend. let's get to bloomberg's cross asset strategist to talk about the things that might be. a lot of geo policy to digest over the weekend but not necessarily setting the tone. data out of europe, but still we are looking backwards actually in the european context. the support promised friday, does that still have an impact on the markets? >> i think they are pricing in a terminal rate that has pushed up to 3.75 which i think is doable because 3% is where they've

already signaled 50 basis points. if you look at everything they want to get done with the rate hikes by the end of the summer, and you got four meetings after march which will mean the five basis points each, so 3.75% 4%, that is in the ballpark now. anna: that is why we are thinking ahead on the eurozone perspective. what about the fed? we spend a lot of last week taking a second look at those jobs reports and the market revisiting some of its pricing around the fed, sending some of those short and yields higher. >> i do think that front-end yields have got to go a lot higher now. the fed is likely to go to 5.25 definitely because that is already in the dot plot. retail sales, the strongest in two years. there's no doubt had the fed met

this month after all this data, i think they would be on 50 basis points, and i think that was a mistake. i do think that they will try to catch up on that and therefore i do think that 5.25 is their fourth port of call but i don't think -- we have not seen an environment where you can tool out even a 6% handle on the rate. two years ago they would have been unimaginable. now, we are talking 5%, 6% plus. that is incredible. anna: when you think about what that does to the u.s. economy, are you increasingly thinking about both long and variable lags, with that is going to do with a lag to the u.s. economy? >> the yield curve, inverted consistently in october, we are looking at the second half of this year essentially for the u.s.

that gives them enough time to ramp up rates. anna: it could be a landing of some kind of this year because the conversation seems to have turned to may be no landing in 2023, pushing that landing out into 2024. but you think there will be some kind of recession. >> by the end of this year i think definitely there will be some kind of landing. whether it is going to be a crash landing or a soft landing, we will see. anna: thanks so much for spending time with us. coming up on the program, we will think about the strategy for 2023. a big day for geopolitics as we see president biden, u.s. president joe biden on a surprise visit e.f.. we've been tracking that visit, bringing you the headlines. he said support from america to

ukraine will last as long as it takes. that is the geopolitics. we will talk about that shortly. this is "bloomberg."

anna: good morning. welcome to bloomberg markets. i am anna edwards live from london. . president biden makes a surprise visit to ukraine. a meeting between the top diplomats of the u.s. and china makes tensions worse. they exchanged, from everything from the chinese balloon to north korea. stocks in asia and europe mixed today. investors weigh out comments

from signals on grace. welcome back to the program. 11:00 in london. at 6 a.m. in new york -- 6 a.m. in new york. let's have a look at the markets. the european stoxx 600 did enter -- territory briefly. one of the best performing sectors this morning. it basic resources up more than 1% -- in basic resources up more than 1% in europe. as we continue to watch chinese reopening versus fed tightening as two of the drivers there. gas prices also stronger this morning, but that follows friday's session where we saw a 18 month low being hit. aluminum up 1.4 percent. -- 1.24%.

the pound and focus as we track the latest on the northern island protocol, one expectations that we have this week that we might could resolutions there between the u.k. and the eu. we will watch that closely. the german two year yield -- 10 year yield at 2.4 percent. let's get a market perspective. patrick armstrong joins us. very nice to have you with us this morning. i wonder if we can think about the u.s. economy and where it is. it seems to be around whether we are going to see a soft landing, hard landing or maybe never never landing for the u.s. economy. what is your current expectation on when we will see the inflation hitting the best recession hitting the u.s. patrick: job numbers is still incredibly strong.

the future heights the fed is going to do is eventually going to impede the employment outlook on the united states? in the new s economy, 70% of its consumption and have a fully employed consumer who is getting wind growth and their spending is higher wage they are getting. the impacts of the fed hikes will matter at some point. it does not seem to matter yet. it is a very strong robust economy. until the employment situation changes, the u.s. economy is not going to slow. anna: what is your assessment on how long that lag will be between the fed hikes and an impact on the labor markets? is the lack indicator the best of times, maybe even more women it is going -- when it is going into this forecast recession. patrick: i probably think they now have another couple of hikes to do.

i do have think they will stop hiking until you see unemployment starts to move higher. it is near record lows. demand is very strong. the cold of the fed hikes to is to -- demand. there still more work to do with the fed. market started to listen last week, acknowledging that the fed probably does have more work to do. you still have a very inverted yield curve. i actually think you do me to see some flattening of that if we are going into a recession imminently. it does not make sense to me at this point. anna: do think a delayed recession, one that takes us longer than previous anticipated? does that mean a deeper recession? will it be harder than we review sleep out russian mark patrick:

? patrick: china reopening very rapidly. that also create some tellings, not also for the global come up with the. u.s. participates in that. it did seem impossible that we would have the soft landing. the fed through some circumstances that were just fortunate. i think maybe to engineer the soft landing. potentially, maybe the economy does not land this year. i do not if it anticipates if you have a very sharp landing because it has been delayed. anna: doesn't mean we should have a short to medium-term focus if i'll of the recession is going to be delayed as -- if all of the recession is going to be delayed as you described? you referenced the nature of the yield curve, that you might see flattening there.

perhaps of equity strategy does not necessarily reflect your it would argue thinking about more sure to medium-term? patrick: the further you go out on the yield curve, you have a lower 10 year yield then to year yield. i call it a flattening. it is called the steepening. i think you want to own the companies and the sectors that performed last year and have done very well in january. energy stocks, material stocks, those are procyclical stocks. i think those 10-year gilts moving higher are really going to take the arrow -- yields moving higher are really going to take the arrow also.

anna: do you expect that they have gone too far? patrick: no, i am not. i am sticking with those. those are the stocks that have performed well last year. discretionary spending is being impeded at the low end because of utility bills, food prices, mortgage costs. you saw the results last friday, incredible topline, bottom-line, raising prices and volume. the luxury consumer is of the growth segment you want, rather than the technology stocks that are up 30 to 40% that have no earnings. those are stocks that are flying this year. if they were decimated last year. i think there are your pockets over them. i go for quality over speculated growth this year. anna: where does the dollar head from here?

loosing the dollar close to raising 2023 losses on that return to thinking about heights -- hikes from the u.s. patrick: the growth of surprise came from europe initially. you saw a rally and everything against the dollar is basically the deep recession in europe we all feared. now you are seeing ongoing strength in the united states. i do not think there's any possible way that occurs right now. probably more hiking to do ahead of them. that should translate into u.s. dollar strength. europe ecb is going to be hiking as well. anna: letter if we see that from the fed and impact on the dollar -- whether if we see that from the fed and impact of the dollar, we got up to sort of 110

levels. where do we had? i think the 107 range it will be choppy if it gets towards parity, it is probably the point where it will get cheap. if patrick: it will be balancing on those ranges of any data points of europe. getting back down to parities where it is going to come. a general downward -- go. a general downward trajectory. anna: thanks so much for joining us. patrick armstrong. let's get to another view on the markets. the fed won't be able to get u.s. inflation down to 2% target without crashing the economy. he spoke to bloomberg's, jonathan ferro. >> it implies, i live in a world where you can bring down inflation without destroying jobs and livelihoods, you do not

need to destroy jobs in my live to bring down inflation. you need to act early enough and have cognitive diversity, broad mindset. of course if he end up following the wrong approach, then have to do much more than what you would have to -- had to do otherwise, then you get a hard landing. jonathan: is that window still open? mohamed: i do not think they can get cpi to 2% without crushing the economy. 2% is not the right target for the economy. when you have so much stuff going on on the supply-side and energy transition, and change into the supply chain, geopolitical issues that go into the supply-side, the way the market functions, a long list of supply issues, you need a higher staple inflation rate, call it

three to 4% to allow for the lubrication that is necessary for the changes on the supply-side. you heard me say this when i was with you last time. you cannot change an inflation target when you missed it in a big way. jonathan: maybe you can tolerate an above target inflation rates and just tolerate it. you mentioned that a couple of times now. you think that is where we go? mohamed: i hope that is a stable world. jonathan: do you think they are going in that direction now? mohamed: i don't know. you would have to ask our colleagues on the fomc. i do not know where they are. i do not think they know where they are. they are two data dependent. it is right to take data into account, but you have to have a view. it is like driving on the freeway. yes, take account how far as the other cars are driving, but you need to know where you are

going. you need to have a view of how you will get to the destination. that is why it is important to have a secular structure to your data dependency. anna: planes college president speaking -- queens college president speaking on his outlook. here were the first mood update. >> president joe biden has made a surprise trip to ukraine where he met with the country's leader, volodymyr zelenskyy, the president announced a half billion dollars of additional assistance to ukraine. zelenskyy said he and president also discussed long-range weapons and it has been almost a year since russia invaded ukraine. president biden is traveling to poland to visit. meeting this weekend we wheaton the top u.s. and china diplomats shows how difficult it will be to compromise antony blinken and

his counterpart met at the security conference. they exchanged from everything from the chinese surveillance balloon to russia and north korea. north korea has fired ballistic missiles. last month, the two countries clashed to step up the scopes of their drills. they are being scaled down and halted under the former president donald trump. right here in the u.k. ambulance workers are on strike again for higher pay. junior doctors in the nhs i the first right in the history on the 15th of 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.

anna: coming up on this program, ,sunak's call for aid. he also talks about domestic u.k. matters. we'll get some of his stories coming up. the big item on the agenda is around the northern island protocol. we will discuss that shortly. this is bloomberg. ♪

anna: a special edition of the program because it is presidents' day in the united states. stateside european markets are trading up 2% of this hour. u.k. prime minister says a security guarantee by july. >> it is clear the security guarantee, the architecture that was in place before this war has

failed ukraine, it is a statement of fact. ukraine has received assurance when i gave weapons up, russia continued violated whether it is for human right treaties. happened before has not worked. our job is to look forward and say, what is the right thing going forward. as i mentioned, nato, ukraine will be a member of nato. between now and then, what we need to work on, providing ukraine with the means to win the war right now. that means specifically, artillery, long-range weapons, armored vehicles, air defense. that is the most critical thing. we can make sure we are training ukraine on nato standard equipment, that is what we will do when it comes to aircraft with their pilots. what we do to think about is the future and how we protect ukraine security. talk about the longer-term provisions of supporting ukraine

. that is a conversation i think we should start having. >> so the assurances would come this year? has been a lot of debate, you talked about the fighter jets, but has been a lot of debate about the writer jets, the risk that they will not have enough ammunition. perhaps one of the targets would be crimea. under your watch, would you approve of long-range missiles that could hit ukraine? rishi: i should start with nato. nato is a defensive alliance. what is ukraine doing? ukraine is trying to defend itself question market is suffering unprovoked aggression. his territorial sovereignty has been violated -- it's territory sovereignty has been violated. it has every right to offend itself. that is the support we are providing. critically, there are things in ukraine need to gain that

advantage on the battlefield. that is why the provision of heavy tanks were so important. inventors why air defense was so critical. that is all of the things that will allow ukraine to defend itself and compel russia aggression and have counter events if -- that moves -- opens that moves russia outside the country. we should the behind. >> in her speech, there's a lot of -- -- your speech, vitamin putin has to lose -- vladimir putin has to lose the war. some would believe you are still looking a geopolitical agent appeared zelenskyy want two london, some would believe to be the really strong geopolitical agents, you need to solve the pending issues you have with the eu. in you have this question is

coming. -- i know you know this question is coming. do you have a deal? does it come monday? does it reflect your wish that you want to have a normal working relish up with your european allies? -- working relationship with your european allies? rishi: there are real issues that need to be resolving, the way the protocol has been implemented. it is causing challenges for people, businesses on the ground . very practical difficulties. there's also a issue have the democratic deficit that sits at the heart of the protocol as it is currently constructed. those are the things we need to resolve. i am working very hard with my colleagues, form sectors in the audience sectors. we are working closely together, we are engaging in the conversations with the european union. maria: next week, potentially?

rishi: they're still work to do. there are still challenges to work through. we have not resolved all of these issues. there is not a deal that has not been done my there's a understanding of what needs to be done, the issues i outlined. james was in brussels yesterday. i was in morgan island talking to parties about the things we need to fix. we are working through them hard and intensely with the eu. we are no by means done. there's no deal that is done. anna: that was the u.k. prime minister speaking with maria at the security conference. a number of subjects addressed in the conversation. let's start with ukraine. britain looking for progress in long-term support for ukraine. he was referencing a commerce that is coming up shortly. he thinks that deals can be -- conference that is coming up shortly. he thinks deals can be done

there. maria: that is a very good point to make. that was the bulk of the speech that he made before the security conference. the conference that you allude to what is coming up is the summit of nato. this is a big gathering nato best every year where they set out there priorities and the working ideas that they have for the year. with the u.k. prime minister says, it is obvious that while the or is going on, ukraine will not be have full member of nato. in the future that can be debated. in the meantime, country needs security assurances from nato. what he told me in his view, if you look at the past 10 years, there is a constant pattern of aggression from russia to ukraine. there needs to be something that is a circuit breaker. that may mean to assure they have the weapons they need. for this to become a long-term

relationship. it was interesting to hear him say we need the security assurances to deter russia, but we need to do it this year. we should not wait until the end of the year. that will send russia a powerful signal. anna: that is the ukraine subject, but was addressed -- which was addressed by many voices. another topic that was talked about a lot was u.s., china relations. even though we saw a meeting taking place, that didn't necessarily do the two sides any favors. do not progress of the relationship, it just highlighted the areas of disagreements. maria: there was a speculation friday's that there will be a bilateral meeting. in the end, we know that there was a sit-down. if you asked me did tensions cooldown, i would say it is the complete opposite.

i was in the room where one of top china's diplomats who was in the security conference told the audience the united states was absurd and hysterical. everyone went quiet for a second one used those two words to refer to the united states. he said taiwan is not a real country and will not be in the future. may have mayor breed up from the u.s. typed saying -- not you have a read up on the site. also, do not have -- help russia in the war. this comes along after the chinese says they have a peace plan they want to present. they is some concern as it is not to be too cozy in russia. the details are still pending. anna: ukraine has its own ideas about the preconditions that it will want to send out for any piece talks. maria: they have this template

plan, russia says it is willing to negotiate on the plan. they say it is a joke and can't take it seriously. with a peace plan are not, for the ukrainians, the fact they have joe biden, the resident and the united states of key, that is already a major win. they have the president of the united states walking around the capital of ukraine. anna: absolutely. our top story. we'll get back to the markets shortly and get a economist. we will talk about the resilience. this is bloomberg. if your business kept on employees through the pandemic, getrefunds.com can see if it may qualify for a payroll tax refund of up to $26,000 per employee, even if it received ppp, and all it takes is eight minutes to get started. then we'll work with you to fill out your forms and submit the application; that easy. and if your business doesn't get paid, we don't get paid. getrefunds.com has helped businesses like yours

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anna: a special edition of the program because it is a u.s. president's day, no trading stateside. european markets are up. let's recap where we are on the markets. the stocks euro, 600 actually up more than what it was. the minor section doing pretty well for london appeared brent crude, 8348. . as we continue to watch, we have the story in china pulling commodities in one direction and sending oil in focus.

the fed, the tightening, perhaps pulling in a different direction. that is where we are right now. natural gas prices very much in focus. we will talk about the european economy in a moment. we did touch a 18 month level in natural gas prices. we see a increase of four and a half percent. we have aluminum prices in focus because of what we are seeing in china. we heard from prime minister -- over the weekend. there is no deal yet. could that move the pound. that is certainly one of the items on our radar for the u.k. this week. the german team year as a watch some of the hawkish coming out of the ecb. let's have a look at some of the events ahead for us this week.

joe biden has made a surprise trip to ukraine. we have been bringing you photos of him and zelenskyy. we continue to watch that as a developing story today. on tuesday, putin will addressed the russian public. we also get flash pmi's, quick assessments on where we are in the u.k., french, german, and the broader stories also u.s. pmi as well. we'll get to those data points. on wednesday, we get the minutes from the last meeting. on thursday, we will get a turkish rate decision. friday marks one year since the beginning of the war in ukraine. we will have plenty of coverage running up until that point and on friday. we will track the pce data, a

preferred measure of inflation. joining us now, sondra flippin to get a set up for the week ahead. i want to do that by starting to look back slightly. we heard from isabel at the end of last week for comments that were seen as a little bit hawkish on rates that were higher in europe. is that where your focus is a come of the risk that the heights are longer in the rates need to go higher? sandra: that is exactly what we are looking at. the hiking cycle will end at 3% for the ecb. that is also the conclusion from our analysis of, what is really underlying those mixed signals that are coming out of the micro data in the last two weeks. we all know that the u.s. jobs report is the same as one. there are more mixed micro signals coming from europe and

the u.s. we start to check out like, is there really some kind of wage dynamics that could potentially keep both of these economies that were kind of missing in our base view. our conclusion is that, at least for the european economy, there is actually quite some pulling on the cards. that means also that there is a regional divergence in our assessment of the u.s. and human economies. anna: you see some cooling in the european economy. where do you see that coming through? will of the evidence? sandra: if you look at total demand for labor, where that is is pre-pandemic. in europe that is really still below pre-pandemic. in u.s., it is quite

substantially above pre-pandemic. if you look at the changes in labor demand, also in europe it is slowing. it is already at a lower point to begin with and it is slowing. if you look at wage growths, for new jobs wages are setting high. also they are already starting to slow. we think in the short-term, there are indeed some risks of wages accelerating. that will be something very significant to keep into account. if you see that wages are already starting to slow in the new contract, and if you already -- also take into account where the tightness actually is and which direction it is moving, we think the cooling is pretty searching on the cards. anna: does that mean there's a risk of over tightening by the ecb? sandra: that is indeed a risk.

we'll still keep the soft landing, the ecb will do exactly enough. if the come we starts to cool while the ecb starts to keep to be hawkish and in those directions, that will mean it will be doing too much. that will aggravate recession into europe. anna: some of it has been famously driven by commodity prices, we saw them right higher and come down substantially when it comes to gas. how much is the ecb really in control of the inflation? sandra: the issue is, there has been a lot of tightening over the course of 22 already. that is still for a large part to be coming down the pipeline. that will be affected. also strengthening the case of

this cooling economy. there are risks in the short run . that is also related to the fact that there are so much more than wages going on into peoples total income. in the tight labor market, people are job hopping. and lump people are finding jobs . that is also improving their positions -- a lot of people are finding jobs. house price increases. if you look at all of these factors that are basically creating demand, all of these are turning around. that will come down at some point in micro data. anna: you seen evidence of cooling as he sent out in the euro zone. in the u.s., are you seeing something different? sandra: yes. it looks very different.

if you look at where the labor market is coming from, it was a excessive demand versus pre-pandemic to start with. then we see on the labor supply side there are still these massive shortages, not only because people went on a pension, also young people, the younger age populations received labor shortages. we have seen wages -- wage growth coming down. the risk is indeed in the u.s., because there are sectoral locations that have been going on since the pandemic. that will take time to unwind. that has created a additional tightness and may lead to employers hoarding labor. if employers start to hoard labor, that means that wages could re-accelerate. that is a outside risk that we are seeing for the u.s. anna: thanks for joining us.

speaking of the u.s. economy, larry summers says it is too soon to argue for the fed to reaccelerate his interest rates last month, even as inflation data shows a broadening. >> the fed has been trying to put the brakes on. it does not look like the brakes are getting much traction. when your brakes do not get much traction, two things happen. you can be moving too fast, that is the inflation pressure. you can be setting yourself up for some kind of coalition or crash down the road. both of those things, i think our role risks -- real risks in this environment. we clearly have an economy where demand is superstrong, the highest ratio of vacancies of

unemployment we have ever seen. retail sales on fire. the economy creating jobs faster right now. population growth by a factor of five in the latest month. if you look at the broadest measures of inflation, the median inflation component at its highest rates in 40 years, running close to 7%. a general broadening of price pressures. that has got to cause real concern about inflation. it has got to raise a question about the market observers market has had of coming to a five basis point increase is before the long pause and move towards decrease. it raises the possibility that

we are not landing at a terminal rate, sometime in the next several months, or that we will have to go back to hitting the brakes harder by more than 35 basis points. at the same time, the fed has to be very careful. i do not think those who think inflation is slowing, therefore it is obvious we got to hit the brakes very hard necessarily are right. if you look at accumulations of inventories, if you look at what has happened to the savings rate, if you look at what happens to how many people firms have built up on their payrolls, if you look up the signs of a bit of euphoria coming back into the stock markets, you also have the possibility of the weld

coyote moment that i have been referring to that could come, not , but could come sometime in the next few months. i think the fed is going to have to view the situation with a line of humility, avoid locking itself in with any kind of strong pronouncements. it may clear its commitment to ultimately price stability. whether it is accelerating, permeating, getting infrastructure projects done as quickly as possible, to reducing tariffs, to take pressures off

inflation from the supply side. i think we're looking at a very complicated and uncertain outlaw. i think it is too simplistic to view it just in terms of inflation being a larger threat than we thought before. though inflation is a larger threat than we thought before, it is not the only one. anna: larry summers speaking with bloomberg about the fed's next meeting. here is the first word. >> president joe biden made a visit to ukraine today and met with volodymyr zelenskyy. the trip came before the one-year anniversary of the russian inflation. president biden outlined a new package of military assistance. he said later this week the u.s. will announce more sanctions, aim that those warning the

russia war efforts. they top the plants from the u.s. and china came to germany looking to repair -- diplomats from the u.s. and china came to germany looking to repair appeared antony blinken and his counterparts exchanged from everything from russia to north korea. the meeting showed how difficult it will be to actually get a compromise. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. anna: we will return to our top story, president biden in ukraine. this is bloomberg.

when you automate sales tax with avalara, you don't have to worry about things like changing tax rates or filing returns. avalarahhh ahhh >> that dark night one year ago, the world was bracing through the fall of kyiv, one year later

kyiv stands, ukraine stands, democracy stands. america stands with you and the world stands with you. anna: president biden speaking earlier during a visit to kyiv, where he met with volodymyr zelenskyy. let's get a analysis. good to speak to you. huge significance that we see the u.s. president on ukrainian soil. i am sure this matters a lot to ukrainians. a big show of solidarity. what we think this means in terms of global geopolitics? >> it is a very symbolic visit. he was one of the last 27 leaders to make this trip. also the president himself step in front on ukrainian soil, that is the first time since russia has invaded almost a year ago?

. the u.s. can say we are supporting ukraine with financial aid, military aid. we are needing allies to continue to back ukraine asked the war goes into the second year and expected to go on for some time now. that kind of -- that momentum needs to stay in ukraine. the u.s. president is aware of that. the question is, as time goes on, doesn't become more complicated? -- does it become more complicated? we are seeing president biden providing more military aid to ukraine, still not the fighter jets that president zelenskyy has been asking for. you have questions in congress in the u.s. really in the months ahead, very difficult times for ukraine. that is why this visit was

important. anna: thinking about how this place back in home for president biden, he committed there in kyiv to be with ukraine as long as it takes and the longer this takes, the more it plays into the next u.s. election. this is something that the president will be mindful of. rosalind: that is right. a large support. american's have been donating heavily as well. it doesn't come into the u.s. election cycle. you can see -- doesn't come into the u.s. election cycle. -- does come into the u.s. election cycle. those questions will start to become much more real in the months ahead as we get into the u.s. election cycle and republicans may start to say, we are not going to support some of these packages through the lower half of congress.

of course, we have seen things hold up pretty well so far. again, that is really what a u.s. president is trying to board up with this visit today. anna: what do you think ukrainians will want to get out of the visit come apart from the real significance of him being there at as well. clearly, it will be on ammunition and large equipment. i know there were airwave sirens sounding. at the same time, as we hear about training for ukrainian pilots on western fighter jets, we do not see those fighter jets being promised and pledged. what do we see happen on that front? rosalind: there still caution about going about promises to send battle tanks, things like fighter jets, because then you have nato level fighter jets

directly to russia. venice another level entirely. lower range weapons are discussed. they are always discussed. they do not seem to be any type of progress from the travel there today on the front, even though the ukrainian president is still saying he needs these weapons. nothing we had so far on the long-range systems. no promises on fighter jets. anna: as president biden moves from ukraine back to poland come onto poland where he was scheduled to be, i am sure commitments of the nato agreements, that is something that the poland -- focus on. rosalind: poland has a very low

list of weapons it is asking the u.s. for as well. they're looking for the u.s. to supply those. you can imagine on the trip to poland, it will be about the role of nato defending its stakes. it will be about defending support about the applications to join nato from finland and sweden. poland says it cannot send further weapons onto ukraine until it gets resupplied. anna: thank you very much. the latest on the visit by president biden to ukraine. u.k. prime minister is gearing up for the biggest political test so far, to seal a deal with the eu as soon as tomorrow. he spoke with maria at the security council over the weekend. rishi: there are still

challenges to work through. we have not resolved all of these issues. if there is not a deal that has been done, there's a understanding of what needs to be done about the things we need to fix. we are working through those. we will work through them intensely with the eu. there is no deal that is done that has work to do. anna: lizzie, and let over the weekend in the papers and elsewhere -- they lack of focus over the weekend about what could be announced -- and a lot of focus over the weekend and about what can be announced this week. lizzie: he has been on a diplomatic flurry. he has met the northern island political leaders, really try to lay the groundwork for a deal.

even though newspapers have said we can expect a deal today, the telegraph ported last night that those brexiteer mps in the party, it was in the demised by the former prime minister. it is this pragmatism that has so impressed the eu leaders. not that confrontational approach. the eurasia group consultancy has put out a note this morning, saying that it's an increased its odds of the deals in the short-term from 70% to 75%. we also heard from dmp this morning speaking to sky news, saying he does not believe a deal will be struck this week. anna: and a lot of focus on whether we get a new protocol between some new relationship between great britain and northern ireland, which will feed into a much broader story, which is about u.k. relations right now.

the way that he is trying to reset those. lizzy: it matters domestically because he had been repeatedly been called week. if he could get a deal through, he could show he has his hands on government more than his predecessors. it would also potentially help the economy. it would free up breathing space before the next election. it will pave the way for a visit in joe biden in april. in terms of where we go from here, and is the european court of justice is sticking point at this point. there is a democratic deficit to address on northern island. there are three options. the dup can can on board and push this deal to go through. it can remain opposed along with the brexit conservative mps.

is not powerful enough to block it. that seems likely. the brexit is now inside the government. people like stephen baker, it takes the wind out of their sales. the other option would become of the negotiations carry-on meaning leslie. anna: we will -- meaningless. anna: we will see what happens. that concludes this hour of programming. our top story. president biden has made a surprise visit to kyiv. that essentially setting the tone for this president's day as we see president biden in ukraine, heading onto poland to continue his eastern european trip. coming up, barry knapp joins.

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tom: welcome to bloomberg markets. president biden making a surprise trip to kyiv on the one year anniversary since russia's invasion. and reordered joins us from -- annmarie hordern joins us from warsaw. before we get to that story,

u.s. markets closed, cash equities and treasuries trading closed for the day. european mark -- european markets very modest gains. investors looking for some clarity. the minutes coming out wednesday and pce, that index out friday. we know how important that is for jay powell. we are waiting for that data. the handoff from asia, very strong session in china. goldman sachs upping their expectation for china equities to gain 20% by the end of year. that played into moderate optimism. euro-dollar at 1.06. crude $76 a barrel. the china demand narrative outpacing the concerns about a

more restrictive monetary stands for the fed and the slow down of growth. let's get back to the big geopolitical story. president biden making a surprise trip to kyiv on the one you're in a bursary since russia's invasion. annmarie hordern joining us. what we know about the surprise visit? annmarie: clouded in much secrecy. we only found out when the president was there himself in kyiv and we can report he has left. the plan was always to come to warsaw, but the president has talked about the fact he has wanted to make this trip. i spoke to ukrainian official who say it came together in the last week with channels working closely together to make sure the president could get securely and safely to kyiv. he is the last remaining of the wayne -- of the main western alliance leaders to make this visit and he is doing it to mark

the one year in a bursary at a time there is concern there is fatigue about this protracted war and how much more the west can give in terms of assistance. the president, there was air sirens as he was walking in the central city. he talked about the u.s. sending another half billion dollars worth of assistance this week and further in the wiki will be announcing more penalties and sanctions against russia. tom: it is a remarkable moment because of security concerns. there has been speculation as to whether this trip would happen or not. the pledge for further assistance from president biden, what you expect the reaction to be in d.c., whether within his own party or the republicans, will this work in terms of galvanizing the message? annmarie: it is a great question because what you saw in domestic politics in the united states's questions regarding all of the

money being sent to ukraine, especially if it was being sent as beaker kevin mccarthy said, it would not be a blank check. they wanted to make sure there were checks to the military aid going to ukraine. at the munich security conference we heard mitch mcconnell saying there is a great exaggeration that the republicans do not want to be a part of this and do not want to support the american effort in ukraine. we also heard from lindsey graham talking on abc this week that he wants the biden administration to take immediate action when it comes to training ukrainians on f-16 fighter jets. that was a huge show over support from republicans and i think president biden will lead into that. showing up in kyiv is so much about the optics. he was in a country that is in a war, with air sirens going off.

for the biden administration this was a remarkable moment as ukraine will be marking one year of this devastating war. tom: the optics will be powerful. i wonder what the message will be to beijing. the china line significant, the announcement that maybe they will come up with a peace plan. at the same time blinken saying maybe china is considering arms shipments to the russians. annmarie: is a question of what china says and what china does and that is what officials will say to you. china over the weekend saying they want a peace policy, they want to enact a peace policy. certainly they do not love what president putin has been doing, but at the same time there is growing evidence not just of companies that have strong connections to the chinese communist party helping russians in this war effort, but

secretary antony blinken over the weekend to cbs news said they are now seeing evidence of potentially lethal material to russia to help ukraine. a different picture from what they are saying publicly and what we're are hearing from u.s. officials of what they see china is doing behind the scenes. tom: as you look ahead to that speech from the president expected in warsaw tomorrow, what you think the message will be? : one of the most hawkish members of the eu when it comes to russia. at the same time we're hearing reports european countries are looking at collecting their efforts in terms of ammunition purchases. annmarie: two things the president is going to say tomorrow. i was looking back at his speech when i was here in march. one thing he really wanted was for europe to get off of this reliance on russian oil and gas

and they have made a ton of progress on that. the president will talk about collective unity. he wants to make sure there is solidarity and the potential fatigue of support for ukraine does not wane. he will be direct saying the united states will stand with ukraine until the end. poland obviously shares a border with ukraine. for them the strength of nato is important. you will see the president talk about the nato alliance and the expansion of nato. tom: i remember very clearly his warning in poland the last time he was there on not touching one inch of polish territory. annmarie hordern on the ground leading up to that speech from the president tomorrow. thank you very much. a very significant day for the geopolitics of ukraine and

russia. joining us for more on the geopolitical impact on these markets is barry knapp, ironsides managing partner. thank you for joining us. before i get to the question of what is the key geopolitical risk, we look at iran, north korea, china, ed ukraine and russia. what is the most salient geopolitical risk at this point? barry: from a broad market perspective, the main transmission mechanism for all of this is energy and oil. europe was very fortunate this year to have as mild a winter. i live in a ski resort so people are complaining there is no snow in the ski resorts in europe. it clearly has been very fortunate we have not had this risk. energy remains a clear and present danger.

inflation is coming down. spikes in energy from a year ago. the aggregates will push down. the risk of another spike in energy is very clear. we do not have enough supply, we cannot make europe totally independent from russia without even greater supply of lng. we do not have the infrastructure to do it. it is fascinating how quickly the germans were able to build a facility to be able to take this gas in. we still do not have the infrastructure to ship it there. we do not have the infrastructure within this country to prevent new england from burning oil. we have a lot in the ground. the biden administration has not been supportive of getting it out. tom: you think there is a complacency in these markets about another energy shock?

barry: i think anything energy related, the price of crude, natural gas, energy stocks are where you have an upside call if you are long. if you buy energy stocks, there is a much more stable return on investment cash flow than there ever was because of the elasticity of supply related to shale, but you have upside because if there is a spike you will benefit. as an investor, i would think that would be something he would absolutely have to have in your portfolio is an energy overweight. tom: as we talk about the geopolitical tensions vis-a-vis d.c. and beijing, as china's were economy reopens, there is also the energy component, the come bodies component -- the

commodities component coming out of china to factor in. barry: is a fascinating situation. i am a china is on investable person. i think what xi during his regime and during the pandemic was to make the economy even more reliant on state owned enterprises which is degrading productivity further. goldman is probably right, there will be a decent bounce in those stocks, but i would not position that way. i would be more inclined to position in european companies that have exposure to china. there are two shops coming out of china as a consequence of reopening. there is demand for commodities, but there is also a disinflationary shock to import goods prices in the u.s. and even with our price series on friday you can see that. prices are starting to go down

again from china as those supply chains clear. for me, i would prefer not to invest in chinese equities directly. companies that will benefit from that including investors. tom: no direct exposure to china. talk about that exposure you want for european companies. there is the commodities play. what you think are the sectors that have the most upside to china? barry: you just named it. those are the obvious ones. i would not go much more deeply than that. it has been remarkable how in the energy component, how energy prices have not taken off yet. i will go back to the warm winter in europe and the eastern u.s.

i think as you get into spring we will find we are undersupplied globally. tom: we want to get your views in the next couple of minutes on all things fed and the central bank reaction. let's briefly touch on inflation. china is part of that. do you have a level of conviction around where we are on inflation? barry: i have thought for some time that the path from nied to four is very clear. if you decompose inflation into the three components the way chairman powell did on november 30, which is what is now being known as super core, which is services less rent and shelter, and you think about the

trajectory of that through the course of the year, the comparisons from a year ago, goods prices peak in february of 2022 at 12.4%. those are coming down. will be lapping those hot comps and the super core services area and rents in the second half of the year. inflation is headed lower. tom: we are running out of time. we'll will come back you in a couple of minutes. we will have more from barry knapp in the next few minutes and we will also cross to annmarie hordern once again speaking to the u.s. ambassador of poland. this is bloomberg. ♪ use it to set and track your goals, big and small... and see how changes you make today... could help put them within reach. from your first big move to retiring poolside and the other goals along the way

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>> the case for moving slowly is when you move slowly you preserve the option not to do the last move.

once you are sure a move is necessary i do not think there is any great advantage to delaying that move. that is why there are more possibilities open at this point. i think the risk is we will hit the brakes very hard and then when we hit the brakes very hard, that will kick in at the same time some of those negative cyclical dynamics about rising savings and excess inventory and so forth are kicking in. that could produce the dangerous drop off. it is a very delicate situation that the fed is trying to manage. tom: that was larry summers on

bloomberg's wall street week. still with us is barry knapp. what you make of that view or that warning from larry summers that may be you get to a point where the fed will have to hike more aggressively or the terminal rate coming in higher than some market participants expect and you layer in on top of that a pullback in terms of household balance sheets that remain so robust. some of the cyclical components come to play and you get a messy picture. barry: i was trying to unpacked where larry summers was going with that. what i think is fascinating about the increase in the terminal rate since the middle of january -- we have clearly gotten a series of much stronger economic numbers. the inflation numbers last week were disappointing.

if you unpack the move in the 10 year yield since mid-january when it bottomed out. it has been completely driven by the real rate or growth component of 10 year yields. not the inflation component. we all focus on the two and 10 treasury curve as an indicator of recession. what has actually happened is the break even or inflation component is now inverted further and the real rate component has moved up. those that remain varies stable. it is not going up for the reasons dr. summers would imply. if you move on to the cyclical components, he cited inventories , we had the most violent

inventory cycle since the aftermath of world war ii. inventory investment plunged during the pandemic, even though we had the biggest drop in gdp recorded in history. it all recovered in the first quarter one year ago. we had a surge in imports i cannot find since the 1960's. inventory as a percentage of gdp looks like it has stabilized. i do not think he is right about excess inventories. that process took place last year. that is what drove global manufacturing. housing went into recession last year. the two most cyclical components , we already had our contraction. as for the household sector, i think he is wrong. the household sector has as little leverage as it has had since the late 1990's. the same is true for the financial sector.

in a lot of ways this looks like 1995 where we had an under leveraged household sector, and under leveraged financial sector, and when the fed tightened it did not stop that credit creation process or household spending process at all. that is why he is probably wrong about that. tom: you are painting a much more benign picture then larry summers. does that suggest there is more room to run for these equity markets? jp morgan saying there is excess greed within u.s. stocks. is there further to run given that benign view? barry: there is. what happened last year it was not a bear market associated with a recession. it was a fed policy related correction. every business cycle since world war ii had one of them. last cycle we had eight.

1987 was arguably that as well. there was no recession knock on. the best analog is 1994 to 1995 where the fed tightened aggressively which argues for complete retracement of the selloff last year. and around the same period of time it took for the market to go down. i have 4800, 100% retracement in the third quarter, and i would note that by the time the fed paused, i saw a note on the bloomberg terminal about another jp morgan strategist saying it has never happened the market rebounded before the fed stopped tightening, that is exactly what happened in 1994 today to 95. by the time the fed acknowledged the pause the stock market was up. if may is the last hike i suspect that is where we will be. matt: -- tom: how does the

earning story informed that view? are you seeing resilience around margins? barry: one of the arguments that was made is this marginal cost and marginal revenue, prices paid versus prices received will put massive pressure on margins. that is true but most of that happened a year ago. if you look at the regional fed manufacturing surveys, they were not able to pass prices through, that pressured industrial sector margins and consumer discretionary margins. that process has run its court -- it's course. you heard that ceo of ge say that in his last earnings call that the price cost to dynamic would be a net positive for them in 2023. for the industrial sector that process is complete. it is nearly complete in the consumer discretionary sector. the financial sector is more

complex having to do with the change in accounting laws that happened right before the pandemic. i do think there will be pressure on tech sector margins but that is because of slowing demand, not because of any price pressures. on balance i think the margin story will be better than people think. we had a price shock higher in earnings. we will not revert to the old trendline. i think earnings will wind up being plus 5% or so for the year which is better than most people expect. tom: plus 5% for earnings is a slightly more benign picture being painted by barry knapp. barry knapp, ironsides economics managing partner. thank you for your insight this afternoon in the u.k.. let's get to leigh-ann gerrans for the first word. leigh-ann: keeping up-to-date with news from around the world, i am leigh-ann gerrans. president joe biden made a

surprise visit to ukraine and met with president zelenskyy. the trip came just days before the one-year year in a row three of the russian invasion. president biden outlined a new package of military assistance and said later this week the u.s. will announce more sanctions aimed at those helping russians war effort. president biden is also traveling to poland, visit that has already been announced. the top diplomats from the u.s. and china came to germany looking to repair a relationship damaged by the chinese balloon. instead antony blinken and his counterpart exchanged barbs on everything from taiwan to russia and north korea. the meeting in munich showed how difficult it will be to compromise. here in the u.k. ambulance workers are on strike again today in a bid for higher pay. junior doctors in the nhs plan the first strike in history on march 15. the government says it will not

negotiate beyond increases by the pay review body, which fall short of the u.k. inflation rate. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i am leigh-ann gerrans. this is bloomberg. tom: coming up, annmarie hordern joins the u.s. ambassador of poland. we'll hear from them next. this is bloomberg. ♪ for businesses of all sizes, there are a lot of choices when it comes to your internet and technology needs. when you choose comcast business internet, you choose the largest, fastest reliable network. you choose advanced security for total peace of mind. and you choose a next generation 10g network that's always improving, getting faster; more reliable; and more intelligent to keep you ready for today and tomorrow.

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tom: welcome to bloomberg markets. i am tom mackenzie. across europe the benchmark is flat. we await more data out of the u.s. fed minutes on wednesday. futures in the u.s. currently pointing lower. markets closed stateside for president's day. in china a strong session. gains of close to 2.5%. goldman sachs expects gains of close to 20% by the end of the year as the reopening moves to recovery. let's get back to the big geopolitical story.

president biden making a strong visit to ukraine ahead of his scheduled trip to poland. joining us from warsaw is in reporter who is there with a special guest. desk is -- is annmarie hordern. annmarie: shocking the world, biden went to pf in a sign of solidarity with ukrainian people and i'm joined by the u.s. ambassador to poland who certainly knew a little bit about this secret trip. a testament in terms of the optics. we are about to mark one year of the invasion and he will now go to warsaw as a big speech tomorrow. what can you tell us about the color of the president making this historic trip. >> the symbolism of president biden's trip to pf cannot be overstated. you are in a part of the world that has felt abandoned by the west and now on the eve of the anniversary of russia's invasion of ukraine the u.s. president

joe biden took a trip to kyiv. a lot of risk. the message is do not doubt our commitment to the people of ukraine. that is a glorious message to here in poland because the polls so much want to support their neighbor, ukraine. they want the west to be with it and president biden has provided that answer. an amazing historical moment and a defining moment for president joe biden. annmarie: definitely a defining moment in terms of his foreign-policy. the optics are on full display. he day -- today he talked about another half billion dollars in terms of eight. what else does he plan to deliver? amb. brzezinski: in the words of a polish general who fought for the american side during the american revolutionary war 200 years ago -- for your freedom

and hours. i think that will be the overarching theme of the president's visit, collective security works. we are all in this together. this will not be an easy or short-term ride. in the end we will be with ukrainian people until the end. that is a message in poland that the poles will embrace because for poland the russian invasion of ukraine is 1939. a horrific foreign oppressor attacking a weaker neighbor. this time in poland they feel they can do something about it so they have welcomed into their houses and apartments millions of ukrainian refugees and supported them for almost a year. an incredible humanitarian gesture but they want to know the west is with them. annmarie: what about the

domestic politics in america. i'm sure there it is not lost on you come the officials come to you and say will this support continue? amb. brzezinski: in poland the u.s. embassy has hosted over 130 members of congress visiting poland in almost a year. annmarie: you think that is overblown? amb. brzezinski: what i see is politics stops at the water's edge. i host republican congressman, democratic congressman, all support with the u.s. is doing to support the people of ukraine. annmarie: the e.u. is weighing this plan about joint collection of ammunition. is this something the united states could sign up for? amb. brzezinski: i cannot speak for tactics like that. we are supporting the ukrainian people to defend themselves until the end and i will say the role of poland in that is critical. 80% of all of the supplies that

get into ukraine come through poland. the role of this country is very important and i think europe sees that. annmarie: when you look at what president duda is talking about, collective security for ukraine, it is very difficult outline what that would look like. there are others on the eastern flank there also an agreement, but u.s. and german officials have been lukewarm. what are you hearing from polish officials on what they want? amb. brzezinski: the alliance and the partnership that has been pulled together by president biden to support ukraine spans over 50 countries. these are 50 countries with different self-interest, but with regard to ukraine there is a unity of purpose and a shared definition of the challenge that i hear from polish officials. they see and they trust. there is a disciplined relationship between poland, nato, and the u.s., because there is trust that despite the

different self-interest of these countries we are all in the same page with regard to ukraine. sometimes a great leader has to take a risk to show they are willing to put some skin in the game. today president biden did that. a key message. annmarie: this security guarantee they are looking at, wouldn't it basically be joining nato? amb. brzezinski: joining nato is ultimately up to the ukrainian people. the ukrainian people have a voice in this. let's see what they decide? at this point they are fighting for their lives and winning. who would have known this time last year that the ukrainian people would have defended successfully against an organized russian army? strategically this is been a giant failure for russia. annmarie: president biden also said also coming down the pipeline is more penalties on russia. march of last year he talked about he wanted one thing to

make crystal clear to europe, you have to get off your dependence on russian oil and gas. poland is still accepting about 10% of crude from russia. amb. brzezinski: on energy poland is weaning itself away from the twin addictions of coal and russian sourced energy. one of the biggest commercial deals the u.s. government was involved in around the world last year was the westinghouse nuclear deal to build the first three nuclear power plants in poland. it is a major decision by poland with a value of over $30 billion to choose westinghouse technology for their's first nuclear power plant in poland. the polls are underway -- energy security is national security. this is a change in progress. annmarie: i spoke to the polish climate minister and something

she would like to hear from biden's cooperation on nuclear, but when you talk about this energy security and making sure the penalties on russia continue, we are one year into the war and russian oil and gas is still free-flowing. it is how vladimir putin is able to fund this war. at what point is it cut off? amb. brzezinski: it is making sure sanctions have their effect and making sure all comply with sanctions. there is a pressure and an intensive minimization in terms of russia's economy being able to connect with counterparts around the world. everyone has to participate in that. these things take time, but it is working, including in the energy sector. annmarie: one thing biden wanted to do today is show that unity. you obviously talk to all of the officials here.

there is a ris is fatigue of this protracted war. do you think that for another 12 months the west will be able to be aligned and will continue to send the weaponry and the eight -- and the aid, not just united states but western europe as well? amb. brzezinski: what is at stake is a collision between authoritarianism and democracy. that is the way the president has framed it. the video out of ukraine is reminiscent of world war ii. the question is what is it that we stand for? the opportunity associated is if the ukraine people can win, that will be the biggest endorsement of political democracy and free market economy in 100 years. there is a negative possibility at stake and a positive opportunity at stake. i think that is why all our

joining in this. annmarie: you talk about a free market economy. biden talks about this when he talks about beijing. you see china talking about a peace plan but you have secretary blinken saying they are looking at supplying lethal weaponry to russia. what you make of this? amb. brzezinski: i think that would be a terrible mistake to support russia's cruel and inhumane action in ukraine that way. i am glad it has surfaced and been called out. annmarie: i want to ask you one final question. i feel like i would be remiss not to ask you this question as we have news president jimmy carter is in hospice care and everyone is reflecting on his life and legacy. you got a front row seat to history, your father was national security advisor. what did you learn growing up that you have taken your job now? amb. brzezinski: president carter was willing to risk his

presidency for higher callings. i remember that one of his very first visits overseas as president was to poland. he came here with his wife rosalynn carter, with my father, and engaged with human rights activists, catholic church leaders, all in opposition to the communist regime. that is what president carter fought for as president and following his presidency. proud of the leadership he provided and i wishes family well. a tremendous human being. annmarie: you see similarities between the carter and biden administration? amb. brzezinski: they are very different presidencies. i see a similar value in risking and taking a risk as president for goals that are of a higher calling and that is what we see president biden doing today. tom: thank you so much for it --

annmarie: thank you so much for your time. amb. brzezinski: thank you for having me. annmarie: that was the u.s. ambassador to poland. he is right here on the front line. he will be welcoming president biden when he makes his way to warsaw. the president has left kyiv it is expected to make a speech in warsaw tomorrow. tom: a fascinating interview on this momentous day. thank you so much. annmarie hordern on the ground with an interview. she will be giving plenty of reporting ahead of that speech expected in poland. you are range bound across european equities. the handoff from china not really being picked up in europe despite gains of close to 2.5% across the chinese benchmark. further upside for chinese equities. here there is the concern the fed will have to go higher for longer. we await the minutes on wednesday and the pce index on

friday. u.s. futures lower by .1%. president's day, markets closed. euro-dollar 1.06. euro -- brent crude getting a lift. the china demand push taking a bit more of a factor coming through these oil markets amid continued concerns about the economic trajectory for the global economy. currently you see gains across the oil space after a few weeks of losses. coming up we will look at the outlook for markets with dryden pence. that is next. this is bloomberg. ♪

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oh booking.com, ♪ i'm going to somewhere, anywhere. ♪ ♪ a beach house, a treehouse, ♪ ♪ honestly i don't care ♪ find the perfect vacation rental for you booking.com, booking. yeah. tom: welcome to bloomberg markets. to the u.k., where prime minister rishi sunak has the nato should finalize a security guarantee for ukraine by july.

maria tadeo sat down with rishi sunak at the munich security conference over the weekend. p.m. sunak: it is clear the architecture in place before the war has failed ukraine. ukraine had received assurances when he gave weapons up. russia has violated human rights treaties or arms-control treaties. what happened before has not worked. our job is to look forward and say what is the right thing going forward. yen stoltenberg has said ukraine will be a member of nato. between now and then at what we need to work on is providing ukraine with the means to win the war right now and that means artillery, long-range weapons, armored vehicles, air defense, that is the most critical thing. we can make sure we are trading ukraine on nato standard equipment.

that is what we're doing when it comes to aircraft. what we do need to do is think about the future of how we protect ukraine security and we need to have that conversation with our allies and talk about the longer-term provision of supporting ukraine. that is the conversation we should start having because the summit is a good place to conclude that. maria: the assurances would come this year. there has been a lot of debate about fighter jets, about the ammunition, the risk they might not have enough ammunition but also the long-range missiles. there is concern one of the targets could be crimea. under your watch would you approve of long-range missiles that could hit crimea? p.m. sunak: the most important thing to recognize is dado is a defensive alliance. that is the first thing to recall. ukraine is trying to defend itself. it is suffering unprovoked aggression. it's sovereignty has been violated. it's people are being killed.

it has every right to defend itself. that is what we should be doing. that is the support we are providing. critically there are things ukraine needs to gain that decisive advantage on the battlefield. that is why the provision of heavy tanks was so important, it is why air defense was critical. you're like to mention artillery. longer-range weapons will also help. those are all things that will allow ukraine to defend itself and have a counter offensive that moves russia outside it sun country. that is entirely reasonable. maria: for them the entire country means crimea. in your speech there was a lot of bravado in the sense ukraine has to win the war in russia has to be proven wrong, vladimir putin has to lose the war. you still believe the u.k. is a geopolitical agent.

zelenskyy went to london and sees value in the u.k.. some believed to be a strong geopolitical agent you need to solve the pending issues you have with the eu. i know you probably knew this question was coming. there are reports you have a deal over the northern irish protocol. do you have a deal? i wonder beyond that, does it reflect your wish that you want to have a normal working relationship with your european allies? p.m. sunak: lots of things in there. the first thing to say is when it comes to the issue of the northern ireland protocol there are real issues that need resolving. the way the protocol has been implemented is causing real challenges for families, for businesses on the ground. very practical difficulties. there is and also in issue of the democratic deficit that sits at the heart of the protocol as it is currently constructed. those are the things we need to resolve. i'm working hard with my

colleagues, we are working very closely together, we are engaging in those conversations with the eu. maria: next week, potentially? p.m. sunak: all the time. i would say there is still work to do and challenges to work through. we have not resolve these issues. there is not a deal. there is an understanding of what needs to be done. it is the issues i outlined. i've been a northern ireland talking to parties about the things we need to fix. we are working through those. we are by no means done. there is no deal that is done. there is work to do. tom: that was the u.k. prime minister rishi sunak speaking with maria tadeo at the munich security conference. joining us for a dive into the market reaction to the

geopolitics and the central banking action is dryden pence. i wonder, given where we are with geopolitics, iran and north korea coming through as additional risks. russia and ukraine have been there. the u.s. and china, tense relations. what is the most important factor? is it geopolitics or is it the fed? dryden: i think it is still the fed. in the united states it is driven by interest rates, inflation, and the fed. geopolitical risks are there but overall it is still driven by the fed. we have change the narrative over last couple of years because we have higher interest rates now. tom: what is your conviction on rates?

we were speaking to goldman sachs earlier. saying it is potentially up to 5.5%. you have conviction from 5% of 5.25%. what is underpinning that? dryden: there are lag effects people are not fully taking into account. the big issues are it takes four to nine months for lag effects to work through. we have not seen the last 150 basis points the fed has already done. i think there will be desired to take it a bit slow. we have a little ways to go. that is part of the reason we are at 5.20 5% as a terminal rate. tom: what gives you the confidence inflation has turned? dryden: it is easy to go from 9% to 5%.

we are directionally in the right way where i think it will be harder to move lower because the services sector of the economy. the supply chains have opened up a bit. i think directionally we are right, but the rate of decline will slow down. we are certainly past the peak. tom: what is your regional preference at this point. the pe discount of europe versus the u.s. is attractive to many. do you align with that view? dryden: as we get later into the year europe becomes more attractive to the u.s.. if you look at asset allocation, for the longest time in the united states it was a there is no alternative market, and that we call it a baby market and that stands for american vernacular bonds are back. you can get a 4.6% on the two year. that changes how investors begin to look at long-term asset allocations. tom: on that point, six-month

paper for 5%. cash is back with rates at those levels. what is your bias in portfolio composition? dryden: we are still in the shorter part of the curve on fixed income. we like health care, defense companies around payments, and luxury goods. u.s. consumers spend money and they have a lot of money and everybody has a job. when you think about that, luxury goods are in attractive place as well. we think europe gets attractive to u.s. investors in the later part of the year. tom: what is the china view? goldman sachs putting out a note you can see further upside for chinese equities. you want to have direct exposure to china? dryden: we invest purely through adrs, but the key thing is china

is opening up and there is opportunity there. one has to be very cautious because it is not a pure linear move in china. there is still a lot of tension going on. china opening up is a big deal and there are opportunities going forward. tom: briefly, your views on investment grade credit. his u.s. ig looking good? dryden: we like things in the united states. we really do. our economy is quite strong. that is one of the good things about it. consumers have money, consumers have jobs, they will spend it. tom: there you go. preference for u.s. assets at this point. the second half of the year you start to look to europe. dryden pence. coming up we will speak to mark downing. we will talk more rates. this is bloomberg. ♪

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>> welcome to bloomberg markets. president's day stateside so

u.s. trading and equities on hold until tomorrow. futures up .1%. waiting for additional data out of the u.s.. the pce index coming out friday and fed minutes wednesday giving more clarity on where the fed will be going on rates. europe with optimism but not flowing through to the markets. chemicals stronger by a percent. brent and wti up after losses from last week. president biden taking a surprise trip to kyiv as a security conference wraps up in

munich onmaria tadeo joins us. the significance of this visit by the u.s. president, rumors about it. you are close to people on the ground in kyiv. what do you think they will be taking from this? marie: i had a text message from a ukrainian official who sent me a lot of smiley face emojis. that reflected the mood in ukraine. this is exactly what the ukrainian government wanted. they have a president walking around the capital. it is the video footage they wanted. a lot of it has to do not just with the symbolic nature, but the president of the united states going to an active war and conflict area to show

support to ukraine in the strongest possible way by going there, but also it sets the wheels in motion for a week of diplomatic talks with the united states and nato and also, to some extent, takes away the spotlight from vladimir putin. he was expected to give a speech to the russian people tomorrow. tom: interesting. biden said further military assistance seems to be coming down like. and also a european plan, potentially, to join forces and buy ammunition collectively and the importance of this for the ukrainians. marie: there has been a lot of focus on the fighter jets and tanks and the leopard. these are huge and would show

the west is serious about arming ukraine with top modern technology. there are the practicalities of the daily war and that has to do with things that are more simple, the ammunition. it is key to what seems to be now the most pressing issue to make sure there is a restocking of ammunition because you can't have soldiers fight a war without ammunition. it was a lot of debate but at this point, a lot of the practicalities have to do with ammunition and with the europeans our suggestion -- suggesting is to bring in a pool so they can buy in bulk for ukraine. tom: you talked about the visit to biden -- of biden to ukraine taking away from the vladimir putin conference. i wonder if it takes away from

the chinese as well, from what we heard of the planned peace proposal over the weekend. marie: i was about to say, it is not just russia. it is china. remember at the munich security conference the top official to people by surprise telling everyone in the audience that china now has a peace plan that it will present that was met with a lot from the west. the top official said it is strange that china has now decided to do it. there are concerns this may be a plan that is too cozy to the russians. europeans are worried it will allow russia to cement control of the area. to answer your question, it really sets the scene for the united states. it is setting in motion a very important week. it is the one-year mark of the

war. the spotlight is now led by the u.s.. tom: thank you very much indeed. the implications of the president biden visit to kyiv. we expect the president to give a speech in warsaw tomorrow. let's bring in mark dowding. are the markets underestimating some of these geopolitical risks? it is also china, iran, and north korea. mark: i would say that we are operating in a very uncertain environment, iran geopolitics and also uncertainty around economic data. what we have seen in terms of a shift over the course of a past -- the past couple weeks, markets were talking about a soft landing here there seemed to be certainty priced into

asset prices. i think that has given way to increase, elevated uncertainty over the last several weeks. have seen a situation for the bond market has seen higher yields, reconnecting with the fed messaging. i think it is interesting that increased uncertainty hasn't fed through much with risk premium at this point. that could be the potential source of data not coming out on a supportive side. tom: are the bond markets getting this right? is the pricing looking more fair given the potential higher terminal rate? mark: you are back to a situation where the bond market

through 2023 in the u.s. is pricing rates going towards five or 5.25. i think where the disconnect is sitting in the bond market is the assumption that you have a period of higher rates and going to see inflation go conveniently back to target and if we turn to a world where inflation is at 2%, rates can go to two point 5% and it is happy days again for markets. it is the idea we will return to the norms of the past decade, which i think is a factor that is supporting valuations. if there is a risk in markets, the risk is very much that at some point the idea we are returning to the old orthodoxy that comes challenged. what happens if inflation in the course of the coming decade just

stays -- stays a little higher than we have been used to in the past? that will have an implication for higher terminal rates and a higher discount rate when it comes to long-duration cash flows in the light of growth equities. tom: that was the point of our bloomberg contributors saying we need the fed to be adjusting to a rate target of 3% to 4%. they are nowhere near revising their mandate. we are not seeing the fundamentals in play to get down to 2% anytime soon. is it fair to say the market should not be pricing in cuts year or that they are pricing into many cuts next year? mark: i would say the market is going too far in pricing and rate cuts with a degree of certainty. if there is complacency, that is

where the complacency sits, the idea that inflation going back to target, interest rates coming down is a view that maybe challenged. the honest truth is we are in this uncertain environment. in the market we don't know what the data is going to do from one month to the next. we are in a time when there is more uncertainty and there isn't any forward guidance in central banking. we have ended up with a situation which is incredibly inverted. i contend that an inverted curve has nothing to do the economy looking like it is in recession. if anything, it seems like the economy is speeding up over the course of the last few months. this is all in inversion which is based on this idea that we are going to return ultimately to a world that mirrored what we

saw in the last decade and there may be some naivety on the part of some investors who maybe have cut their careers when the world existed after the global financial crisis that what happened in the last decade will be a reference point for what normally is. those who have been around longer, once upon a time i had here on my head when i was an investor, but you could remember when valuations for different than when they sit today. tom: mark dowding on the morning of looking at whether it can come down to 2%. mark dowding is staying with us. annmarie hordern is joining us from warsaw. she is on the ground ahead of the u.s. president visit to warsaw and the important speech tomorrow expected. for now, it is the announces --

analysis of the visit of the president to kyiv. your take? annmarie: it was a huge moment. he was the last of the western leaders giving support to ukraine to make his way to kyiv. you asked him over the last year if he would go and he said he wanted to but security wouldn't allow it. we heard from reporters that they found the security risk would be manageable in the president wanted to mark this moment. he wanted to make sure he was approaching president zelenskyy with the right dialogue and he wanted to send the signal. i spoke with the u.s. ambassador to poland, and he said this is a defining moment of the biden administration also sends a strong signal not just to the people of ukraine but the people in the border countries, like

poland, taking in a mass amount of refugees that are sharing this order with a war-torn country trying to so -- show their support. he said it is a monumental us moment and the optics for people is very encouraging and the president will bring that message when he gets to warsaw. tom: given your knowledge of d.c. politics, how do you think this place in washington? do you think it does enough to shore up the port, particularly among the republican ranks? annmarie: i ask the ambassador about this and he said he has had over 100 members of congress visit the u.s. embassy in poland this year and said it is both democrats and publicans. we are on the heels of the munich security conference and we heard from the leader mitch mcconnell that it is overblown for of the republican wariness of sending support to ukraine and then lindsey graham was

saying he thinks the biden administration should start training ukrainian pilots on essig teens immediately -- on f-16s immediately. tom: annmarie, thank you very much. still ahead, we will continue our talk with mark dowding on some of his calls on credit, bonds and where the central banks from here. he has interesting views on currencies as well. in the european markets, modest gains. stay with us. this is bloomberg. ♪

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tom: -- >> i don't think they can get cpi up to 2% without flushing the economy, because 2% is not the right target for our economy.

when you have so much stuff going on in the supply-side and energy transmission,, change in supply chains, geopolitical issues on the supply-side, the way the labor market functions. it is the wrong list of supply issues. you need higher stable inflation rate, call it 3% to 4%. tom: mohamed el-erian on the inflation rate. i want to go from one central bank to another. the ecb, we have had hawkish country from madame lagarde and others. i wonder, given that we haven't seen blowout of the sovereign yields, i am looking at btp's for example, does that give the ecb confidence to push further with rates? markets underestimating of the european central bank will go? mark: the central bank in europe

is serious about bringing inflation down and releasing the crushing inflation after supply is on the upside. the fact that the european economy is doing much better than everyone was thinking just a few months ago in the wake of a mild winter and other factors and the china reopening story, the fact that things are getting better is giving the ecb a green light to be more forceful. it would like to restore price stability as quickly as possible. we see the rates going to 3.5% in the next couple of months and that we may end up at a higher rate than that. so yes, it does be -- bring a big -- a bit of a green light. i think we have a lot of supply

and also italy, which is sustainable and then suddenly doesn't become stable when you find yourself at 5% or 6%. i think the questions around debt sustainability, a lot of people were short in btp's coming into 2020 three. you have seen a lot of people have a lot of pain in those positions. i think that explains some of the price action. if i was the ecb, i wouldn't be complacent. the risk to stability in the euro zone could resurface. tom: are you shorting italian btp's at this point? mark: we have moved short. we have been through the back end of last year. we thought george and colleagues

would be saying and doing the right things when they took office and that clearly has been a positive catalyst to date. we have this ongoing concern that when you see this much monetary tightening happening, this amount of monetary tightening is the sort that always ends up breaking things and exposes weaknesses in the system. the harsh reality is in a world where we have not completed fiscal and monetary union to go alongside the monetary union, there will be that vulnerability in spreads. i am not looking for a big blowout in the course of the next couple of months. i think that we need a political catalyst that we don't have at the moment but still on a risk reward basis. i don't find bte's -- btp's attractive. tom: 120 on sterling.

there is the view that the boe will have to hike. mark: for the pound, it looks dreadful. i had a fit of a catch-up and sharing views within the bank of england and i felt depressed about the outlook in the u.k. i almost needed to end the meeting in prayer because the outlook for the u.k. economy looks particularly weak. we continue to underperform, even with russia who is in a complete mess. the dynamics in the labor market and the u.k. are problematic and inflation continues. i just got a text as i was in the commercial break moment ago

saying my mobile bill for my mobile phone is going up 13% and we continue to see second-round effects on inflation in rates are not high enough to bring inflation down. historically the u.k. is not been able to stay with rates lower and the whole problem is the u.s. consumer is largely shielded from high rates because everyone has the fixed rate mortgage for the next 20 or 30 years. in the u.k., everyone has floating rate debts and we don't have long-term mortgages. the pain coming through, i think the bank of england knows the housing market craters if rates go to 4% and they just can't afford the financial risks in that, which is why it have to allow inflation to go above target for some time. tom: mark dowding on the awful

pound and shorting italian btp's. there has been consensus from the guests that u.s. grade is where to be in the environment. mark: i would say that at the beginning of the year, it wasn't obvious trade because everyone said 2022 was so awful that you would end up with a better 2023. there was easy money to be made. at this particular juncture, it would become more cautious. we have actually been working profits because if you pivot from the soft landing on to know landing, the next place you might end up is pivoting back towards a hard landing scenario. if that is the case, we are probably going to see more volatility in spreads. i think making money this year

will require some tactical expertise. you won't be able to sit on all year. tom: mark dowding, really fascinating insights. thank you very much. it is time for a look at some of the biggest business stories in the news right now. leigh-ann gerrans joins us now. leigh-ann: a facebook and instagram. -- parent is launching a service that will have peaks -- perks and features including account verification badges for those who pay $11.99 a month, targeted toward content creators. now, a plan to let retail investors trade digital tokens like bitcoin and others, a major step toward becoming a crypto hub and a policy shift that goes along with a cracked on the u.s.

bank of america is joining a number of investment banks and investors involved in the race to take over manchester united. the bank will advise the bid and it could value manchester united at over $6 billion. that is your bloomberg business flash. tom: coming up, blake when -- we are seeing a 10th of a percent lower. futures gained just under .2%. euro-dollar currently at 1.06. more coming up. this is bloomberg. ♪

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tom: welcome back to "bloomberg markets are for -- "bloomberg markets." futures up under .2%. in europe, the benchmark under .2%. goldman sachs has a target over the next 12 months of four point 65. debbie t -- wti gaining .9%.

getting a lift after pressure on brent and crude last week. european markets with the potential to be on the publication of the fed meeting on wednesday. we will be getting the cpe index friday era joining us for analysis is our number markets reporter. it is a choppy session in europe. patrick: in the short term, there is a lack of conviction. we had strong conviction going into this. we had a hawkish tone from the

central banker. look at the earnings season and make the next move. tom: talk to us about the divergence, particularly highlighted when it comes to growth we are seeing in terms of the valuation picture, europe versus the u.s.. there is a call for a time to add exposure. jan-patrick: if you look at the sector, every sector in europe has a cheaper valuation than the u.s.. you have a strong china story helping europe. everything that was speaking against europe, growth stocks and lack of opportunity are being more conservative and defensive area in and also growth.

some say the transportation sector could be the next growth leading mark:. -- next growth leading market. tom: are you hearing from sources that people are taking more seriously the geopolitics? jan-patrick: it is difficult to price in risk because you never know what will happen. but it plays into the whole picture of the market. our risks from the geopolitical front and the market is considering that and listening to it and we will see if this is running out. we will see if it and ignore sit -- ignores it and puts it on the side. tom: your view on the earnings season. what has stood out? jan-patrick: i would say the bar

was low so it was easy for the market to jump over it. what surprised me was everyone expecting more cautious tone. if you look at earnings and the notion of economic slowdown or inflation dropping, it seems like the managers are not too concerned. the books look good but now it is what is the consumer doing? will the market be healthy in that area? overall i would say we can take a positive tone from the earnings season so far. tom: interesting. thank you for the analysis on the markets. let's bring in the head of rate strategy at rbc capital markets. what is the rbc call? how are you adjusting?

blake: the terminal rate has to be higher. it has taken us back into the 2022 trading environment where people work unsure about where the terminal rate would end. december into january, markets have consolidated that they would be stopping around 5%. with this data over the next -- last few weeks, clearly markets are concerned about that, which is impacting the weight rates and the curve have moved. tom: are is the concern inflation will remain sticky and moving for goods and services. labor market tight. what is your view in terms of

the component? is or anything you are seeing that gives you optimism that there is sustained turnaround in inflation or are there elements that cause you concern? blake: we think the overall trend is toward a gradual slowing. coming into the year, we had the view that the data was going to be volatile and not a straight line down to lower inflation. it is early to draw too many conclusions from the data over the past two weeks that mostly cover january. do we completely rewrite the path of the outlook or economy because of one month for a few sets of choppy data? we know the data was suffering from issues. there is a lot of residual seasonality problems going on. it is difficult to collect data in the post-covid period. that will cause volatility in data and probably true that

january was strong. we are not saying january wasn't a good month but both of those things can be true and it is not enough for us to really think we are on this accelerated trend. the fed is not going to read too much into this one month. they will see how things go over a few month period. last week, markets reinvigorated the 6% terminal scenarios and rates have moved back. that may look overdone if the data comes back to that trend as we move into february. tom: we have the pce index out on friday. we know that jay powell and his team will be looking closely. how does that form your view? blake: for the fed, it is very important. they are focused more on the pce figure. they told us they are focused on

core services and thing that develops will be important for determining the fed path. one thing is true that they are probably more tuned to the labor data. we have seen several months of slowing in the inflation data. we had the months where we saw slowing in the cpi. we had some reversal in that in the last months data. what has reinvigorated this about the terminal rate which raised the fed concern was not so much the data on inflation itself, but the data on labor and what that says about inflation down the road. if we see a hot labor market, will that continue to put upward pressure on prices they are clearly looking much more closely at? i don't think it is going to be seen in the print coming up, but

more concerned about what happens for or five months down the road if we continue to see labor prints like the one we got in january. tom: given the uncertainty, how challenging is it to take a strong view on yields, whether looking at the 10 year. do you have a conviction call or strong view on where yields and? -- yields end? blake: i think things will back to a tactical environment. last year, people knew inflation was high and the fed would be on a hiking cycle. we all had disagreements about how fast it would occur and what each meeting would look like but overall the direction was very clear. this year it is more difficult as we get closer to that terminal rate. we have started to consider the risks. it was nowhere near what we talked about last year. i think the fed will stay on the 25 basis point path.

each meeting, we are taking off the 75 or hundred basis hikes. i think the big moves where you can position on a longer-term basis, it is a lot harder to do that. everything has moved to short-term and tactical. that has been very difficult as we revisited the terminal rate discussion. it has caused pain. if it was a fundamental, longer-term view, it is the steepening view but very difficult to trade. when we look at the short-term tactical positioning, we are probably near the top and. it is most likely we get relief rally, leading into long positions, is where we would expect that to outperform.

it is very short-term. it is difficult to have these longer-term views. tom: lean into the belly of the curve. do you have transparency at this point of the impact of qt and how far that can run? blake: i am a bit of a seller on the impact of qt. i think it has run in the background fairly effectively. if you look at what it actually means for markets and supply, the amount of treasury supply and duration and who is holding it and the changes on the balance sheet, it is not easy to say it is just qe and inverse. happening is with force by the active. when the fed is doing qe, tenure year and thirty-year is moving massive amounts out of the duration market. and now it is gradually rolling

off and the way treasury is responding is to issue more bills. that does not add duration back into the market. we have over 2 trillion that is cash that wants to be parked in the front end and easily moving into bills if those rates were attractive. if we have this $2 trillion sitting that would happily go into bills if the supply was available in the treasury is starting to issue more bills because of that qt, that does move longer-term rates or moves risk assets. it is shifting the composition of what the money market funds and shifting what they hold. tom: what else do you like at this point, before we let you go? blake: i think the curve, i still think when you look at things like twos, fives, tens we are too early to see the steepening and that has been a very popular trade. we have seen that bounce back in

the last few sessions. we do get those steeper, but i don't think pricing is dead. i think a lot of people want to see the fed cuts we saw into 2024. i don't think it requires hard landing or hard recession. i see them more as an adjustment process. right now, over the last few weeks, we have taken out a lot of cuts so those are starting to look attractive. tom: very interesting. blake gwinn, thank you for joining us. the chaotic return of global travel. more on that still ahead. this is bloomberg. ♪

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smooth. kriti gupta reports. ritika: -- kriti: it has been chaotic. it goes beyond the usual woes. hundreds of thousands of southwest pilot -- travelers stranded. the ceo asked for patients. >> we are doing everything we can to return to normal operation. and please here that i am truly sorry. kriti: they were blamed for not updating their software sooner and a few weeks later a grounding of all flights was ordered when the air mission system when out. >> the pre-lim and findings it -- is that files were unintentionally deleted for synchronization issues. we have found no evidence of a

cyberattack or other malicious intent. kriti: it grunted one of the largest airline fleets from tokyo to new york. just last week, a power outage at john f. kennedy airport close down an entire terminal and one flight had to turn back in the air. a 16 hour flight to nowhere. the problem isn't new and is getting worse. the airline industry set a record for canceled flights. some say it comes down to a lack of investment in technology and people. >> there is opportunity for the fda to get controllers -- fta to get controllers staffed. what will happen if there is a shortage of controllers, more delays and cancellations. the faa has a multiyear upgraded

program. we have to get that finished. kriti: the faa agrees and wants to speed up but airlines have issues of their own. there just aren't enough pilots and that can lead to delays and cancellations. and now at on a lack of ground staff, none of the problems can be solved quickly. if you are planning on flying, be prepared to wait. tom: let's get back to blake gwinn, still with us. i am thinking about a comment you made around having to factor in are not completely close the door on the prospect of 6% or seven percents in terms of the terminal rate for the fed. is it that level that is most important for the duration they are held at? blake: i think it is both. until you get to the level, the most important thing is where

the level is. over the last few weeks with the cpi print, determining how high that goes drove most of the price action and drives the shape of the curve and pushes the front end of the curve of as it has to be taken into account with the terminal rate. when you move past the terminal rate and get certainty, then it becomes all about how long they hold it and that is the second phase. it looked like we had moved into that and made that transition from the terminal rate level driving things and moving to an environment where it was more about how long it holds there. i think interesting right now over the past few weeks, we have seen the terminal rate move higher and cuts priced into 23 and 24 come out of the market and push forward into 2024 and

also come out to some degree. usually when we see the terminal rate higher, market would take it that we would hit hard landing. the harder the fed has to pump the brakes, the more likely we get a slowdown later this year. we would see terminal rate move up and get priced into the market and now we are seeing a different reaction where we are getting the higher terminal but the market saying it looks like it will last a long time. tom: that opens up an opportunity. you think the markets have swung too far in the other direction? blake: i do and i get a lot of pushback. i think some of the cuts priced into the market as recently as three or four weeks ago, i thought were justified. think there was a little bit of a misunderstanding where people think you are expecting eight recession. this was more to me an adjustment process.

a lot can happen in the data in a years time. the narrative can change a lot. if inflation is 3% and continuing to trend lower, unemployment rising, not recessionary but slowing down, the fed would want to hold that a want to adjust back to something closer to neutral. we are not saying 75 clips but. back the terminal level to something closer than -- to terminal. if you think about things in a real basis, the fence 5 -- fed fund rate is falling, when you account for that it is getting tighter and tighter if the fed holds. holding it through the year, they would passively get higher and higher -- tighter and tighter through the year. tom: i am not in the u.s. but remarkable resilience of the

u.s. labor market is a surprise week after week and month after month. how important is that informing your view as to when the cuts potentially come through. you will have to see cracks in the labor market and so far there is no evidence. blake: when you say it was a surprise, i don't think you were the only one surprised. when you look at the economic forecasts, it surprised everyone. no one was calling for that. our view is still that labor markets will continue to slow. we had the understanding saying that the data will be noisy but the overall trend is to some slowing. i think that remains the view, but if it doesn't slowdown to what we expect increases, absolutely -- increased,

absolutely. when i think about the cuts we were just talking about and rates, every time you get a strong print, it resets the clock on how long we would take before we see cuts. coming into the year, i thought they could come into q4 but every time we get a strong print, we start the ticker again. i think it is right that markets have pushed cuts further into the future. but getting rid of them or a fed curve where we expect additional hikes or the terminal rate to maintain into 20 for four, i still don't see that an aerial, but the risk of that has grown over the last two weeks. tom: i wonder if the cuts call

gets the catalyst in terms of the debate around the debt when it. are the markets overly complacent around the risks of this debt limit and is there a response if things go down to the wire? blake: they will never say this and be very hesitant for guidance but you have to imagine there are plans at the federal reserve and treasury for what happens the day after that potential default date, when treasury runs out of cash and can't make good on obligations. there has to be plans in place but we just don't know what they are and they are not going to tell us but it behooves them to keep pressure on congress. you are not going to hear it but have to imagine there are some plans in place. will they be perfect?

no, but also the uncertainty and the impact will drive the market response. i worked on debt limits. and every time we have gone through this since then, you thought about the mechanics of how this happens there are multiple levels and failsafes we have to get through before we see mechanically some bad effects. what will drive markets is more the uncertainty. it is almost like a y2k issue. there will be potential problems but we don't know what they are. but it is the uncertainty. tom: you have been very generous with your time. thank you, blake gwinn, the perfect person to talk about the debt limits. coming up, jay hatfield. this

is bloomberg. ♪ we all have a purpose in life - a “why.” no matter your purpose, at pnc private bank we will work with you every step of the way to help you achieve it. so let us focus on the how. just tell us - what's your why?

tom: welcome to "bloomberg markets -- guide: welcome to "bloomberg markets." bidens surprised -- biden's surprise visit to kyiv and unwavering support for ukraine as the country nears the one-year anniversary of the russian invasion. stocks searching for direction. optimism over china's economic recovery fading earlier. we will discuss all of this with jay hatfield from infrastructure capital and our chandler. richie sunak preparing to unveil

his plan for northern ireland. we will discuss the hurdles facing an agreement and hear from the prime minister himself. it is presidents' day in the united states. markets are closed stateside. european stocks, volume is light. we are a little off when it comes to volume. you have luxury stocks fading a little. s&p futures fading in earlier up move, rent crude -- brent crude up by 1.4%. as i mentioned, it is presidents day. what we should really be talking

about is president biden making a surprise trip to kyiv as foreign's rep of the security conference in munich. the visit comes on the one-year mark since russia's invasion of ukraine. here is a little bit about the president had to say earlier. pres. biden: putin thought ukraine was weak and the west was divided. as you know, i said in the beginning, he is counting on us not sticking together. he was counting on the inability to keep nato united. he was counting on us not being able to bring in others. guy: annmarie hordern joins us with the latest on the president's trip to kyiv. how big of a surprise was this trip? annmarie: there lots of questions about whether or not the president would go.

and over the past 12 months we would ask him, when will you be the next leader to go to kyiv? he has always wanted to make the trip but he was citing security concerns. it is not like when you see a u.s. president show up in iraq in the past because there was strong military presence and airbases. this is a president who had to travel by train to get to kyiv. and this was incredibly difficult in terms of security logistics. he traveled with a small group of individuals for aides and reporters. this was shocking, but because it was a one-year anniversary, we know he had the appetite to do this. it was less of a shock but because we were preparing for him to land in warsaw and not kyiv, he took us by surprise. he came with a strong message and 500 million going to

ukraine. guy: do we know if there are any new weapons within that program, or are we talking about an expansion of existing programs? annmarie: what it sounds like when you heard him speak, nothing new was announced in terms of military aid, but we do know the ukrainians are asking for more, most notably have been the f-16 fighter jets saying it is needed and something they have been asking the united states for. at this moment, there seems to be nothing new in the package but more aid. the big takeaway and also from the u.s. semester to poland was the optics of it. the u.s. president making sure that he wants to show he is there in kyiv and making sure that when people are talking

about the fragility of the western alliance as many see this going into a protracted war of attrition, that the u.s. remains firm in supplying and aiding ukraine. guy: in the past, we have seen a very substantial response from vladimir putin when trips similar to this are made and we saw president zelenskyy in london, with hours there was a big response from moscow. we saw a fresh bombardment. how do we think the russians will respond to this trip? annmarie: the president was walking around in kyiv there were sirens going off. with maybe some sort of surveillance equipment being used by the russians over keefe. what we do know -- over kyiv. we do know that they were warned that the president would make the trip.

one thing to look out for is president biden will be in warsaw tomorrow making a speech to mark the one-year of putin's invasion. we are also going to hear a big speech from president putin. this time last year is when he was talking about the annexation of those regions in the donbass, a few days before he invaded. it was this time last year that u.s. officials warned with the 180 thousand russian troops on the border they would make their way in. many didn't believe it. it remains to be seen what response we will see from putin. we know for sure there will be a war of words when he makes the speech. guy: when he is in moscow, the chinese are traveling in that alliance is getting stronger, it seems, judging by the tone we have seen in washington. there is serious concern the chinese will provide weapons.

in terms of the trip today, what kind of statement does that make to beijing? annmarie: i think it makes the statement it is making to moscow and around the world that the u.s. stands united and wants to show -- the optics are huge -- they want to show solidarity and that the u.s. remains onside with ukraine and as president biden has said himself and what the vice president has said at the security conference, until the very end. when you are talking about china, it is a very difficult moment. you have secretary blinken sitting down at a moment of tremendous acrimony between the two countries with the alleged spy balloon, and at the same time china is talking that they want to front a peace proposal and the united states is saying have reasons to believe china is preparing to supply lethal

material support. not just any support to russia but lethal material support. u.s. officials will say that china is saying one thing but doing the exact opposite. guy: that is the concern. thank you for updating us this presidents' day. she will be back in the next hour to keep us abreast. breaking news. the israeli central bank was expected to raise interest rates today and expected to raise to 4%. it has done more than that, for .2% is the rate that we have. a little reaction with a little spike on the back of that news versus the u.s. dollar and then a fade. not much of a reaction. coming up, back to the markets. we will talk more about what is

happening on the inflation remark -- on the inflation. we will talk with jay hatfield. pres. biden: that dark night one year ago, the world was bracing for the fall of kyiv. when your later, kyiv stands and ukraine stands, democracy stands. the americans stand with you and the world stands with you. this is bloomberg. ♪

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>> we can't control what the fed does, we just model with they themselves are predicting and it is a rate of around i .25%, which is slightly higher than the assumptions we made and in november and as you said recently, the market has reacted recursively -- aggressively in the past few weeks. guy: the market re-rated

significantly, which market you need to be specific on. bond markets yes but equity markets, maybe not so much. we are joined by jay hatfield, infrastructure capital ceo and portfolio manager. we have a discrepancy. bond markets the signaling the fed will have to do more and potentially talking as high as 6%. you have the equity market being reasonably resilient. how does that discrepancy get resolved? jay: we think there is a big misunderstanding about inflation right now. a lot of people interpreted the last cbi print as being bearish, we look at cbi-r. it was flat for the month. so we think the market got ahead

of itself and think the labor report was misinterpreted as being hotter than it was. we think this uptick in rates is temporary and when we get pce core, that will be a data point that supports our view versus what is happening in the markets. guy: what do think the number will look like? jay: we are estimating .3%, the bloomberg consensus is .4%, but we are also bullish about long-term pc core and forecasting we get to write around 3% by june and close to 2% by the end of the year, driven by commodities and those are the key drivers of high inflation, not the labor market, like the fed believes. we are from her bullish than the fed and to a lesser degree the market. guy: just to boil it down, you

think the fed is wrong to focus on the labor market, because jay powell is spending a lot of time talking about it. jay: absolutely. they believe in the phillips curve, which is that inflation is driven primarily from the wage market. the wage market is stable and sticky and particularly high inflation, it is almost exclusively driven by the two factors i mentioned. if you look in the 1970's, we had an unimaginably large energy shot by 20%, but we have only had 70% from the ukraine war. they learned long -- wrong lesson. guy: is this a no landing, soft landing? jay: we have been more bullish

about growth for the same key factors and that is housing. normally, and by the way, in a normal deflation, you would have high unemployment. what happens in every situation, post-world war ii recession, you have a crash in housing, huge unemployment because you lay off of the construction workers and autoworkers, but because of post-pandemic tailwinds, we have a shortage of housing and autos and workers. so the normal cycle is not operating. that is why the fed is -- has really missed every turn in the cycle since the beginning of the pandemic. guy: you have arrange for the s&p, we are right in the middle of that right now. buy or sell? jay: that is the short-term

reach here at we are a farmer bullish at the year and feel we are likely to be the 4500. we feel it is good to be cautious so we are more neutral because of the fact that we are not in earnings season. be long stocks during earnings season and less long when you're not in that season because you have economic and political news less. the market is acting like it needs to go above our 4500 target but we need to get data. guy: final question, larry and thinks it will -- valerian will -- thinks it will be a. do you agree? jay: we agree that the 2% target is arbitrary and if you listen to the fed chair he has no

justification for it other than global groupthink because other central banks have 2%. trying to look at the realities of inflation isn't driven by the wage market. given that the housing market is in a deflation, we think we can undershooting the 2% markets in the short run. we are not as bearish about inflation because of that volatility of monetary policy in the housing market. we think the 2% target is very damaging to particularly the middle class in the u.s. guy: on that note, this presidents' day, thank you very much indeed for your time. jay hatfield, ceo at infrastructure capital advisors. manchester united, the bidding heats up with the royal and the richest man going head-to-head. this is bloomberg. ♪

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guy: time for the bloomberg business lash. -- flash. united airlines has delayed adding extra flights between china and the u.s. china has reopened for international travel after it ditched the fed zero policy. the number of u.s. fights to china is at 12 per week per country. hong kong has decided to allow trading of cryptocurrencies. it is a policy shift that

contrasts with policy shift in the u.s. investors would be allowed to trade large coins lessons by the sec. facebook and instagram parent company met is launching a service that will have perks and features including account revocation for those who pay $11.99 per month. it is primarily targeted toward content creators. that is your bloomberg business flash. america joining investment banks and investors involved to take over manchester united. we are discussed by bloomberg's alex webb and simone foxman. we have two competing bids. one out of the u.k. from jim radcliffe and the other is coming from qatar, following the world cup. can you walk us through who the

qatari video is coming from? simone: the lead bitter is a piece of his father's name and it and he is the former of the country and goes by the initials hbj commonly. he has not had an international -- and was on the board of credit suisse for many years. they count the sovereign wealth fund as one of their top vestments. he is involved in the big initiatives. his company and the sovereign wealth fund have invested in it.

we do know the bid seems to be debt free and also for 100% of the team as well. guy: how does it compare and contrast for the offer from radcliffe? alex: the shares carrying greater voting rights, which is a capital investment and no one of the club -- and no running of the club. it looks like there will be a debt component to that, which the qatari bid, the same as they made is quite keen to play up because the big bone is that manchester fans have is that they are hemorrhaging money to service debt obligations. it was debt funded. so the qatari's are trying to play that angle up because they say they will invest in the things they like.

guy: he is a local fan? alex: he is. fans for the better part of the decade have been going after their rivals, also owned by others and they said it is funded by oil money. if they are owned by qatar, they will also be owned by oil money so he has said in his favor. guy: is see a manchester united fan? simone: that is what we understand. we have seen that the ruler of the country is a manchester united fan. rules indicate that two teams owned by the same entity are not supposed to play against each other in major tournaments. you wonder if they don't allow

to happen, who goes forward? then you have competing interests within the country. guy: there are workarounds and similarities with other owners having multiple teams. alex: if they can somehow demonstrate the ownership is maintained differently and that is a big if, they might be allowed forward. if you look at red bull come which completely owns rebel but also another, technically 51% is owned by the fans. they have managed to find a workaround and allowed to compete in european competition. i am sure there are a lot of lawyers doing work to make that case. guy: thank you very much indeed. coming up, a closer look at what is happening in the currency markets with mark chandler.

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♪ >> i don't think they can get c.p.i. to 2% without crushing the economy. but that's because 2% is not the right target for our economy. when you have so much stuff going on in the supply side, and energy transition a. change in the supply change, geopolitical issues that come on to the supply side, the way the labor market functions, it's a long list of supply issues. you need a higher stable inflation rate. call it 3% or 4%. >> he believes we'll struggle to get to 2%. what does that mean? what does that mean for the u.s. economy? for the u.s. dollar? let's talk about that with mark

chandler. strategist at global f.x. for a look what's happening in the currency markets. guy: mark, if we struggle to get down to 2%, if the fedex sets 3% to 4% inflation as suggests would be a smart idea, what does that mean for the dollar? mark: i think this is highly unlikely. the federal reserve's credibility is 2% inflation market. i think the idea of changing it when we are having high inflation would be a disaster. a policy disaster. even if it makes economic sense. i do think if the fed would give up on that 2% inflation target, articulate it as such to the market, we see the dollar sell off. i'm in the camp that thinks the dollar peaked last september and october. what we see this month is the dollar bouncing, partly on technical issues. partly because the market expectations have converged with the fed, with the fed funds rate

somewhat about 5, call it 5 and a quarter. something higher than that. the fed's credibility, the 2% inflation is an arbitrary number. what strikes me is many countries have adopted 2% inflation target. they measure their inflation differently. the 2% inflation in the us sus different than the 2% inflation in europe. 2% inflation in japan. guy: get on the conversation and talk more about conversation, p.c.e. friday. say that print is hotter than we anticipate. there's been some conversations swirling around the market that maybe the fed reverts to 50 basis point hikes. again, how likely do you think that is? marc: we have to pay attention to what officials say. the way i understood two regional presidents, bowlard and master did not talk about that he they would -- that they would 100% back ago 350% basis point.

i think they were talking about the position in the february meeting earlier this month. how they supported 50 basis points. i thought it was a good case to be made for 50 basis points then. i see less of that now. i know that we have had strong employment data. strong retail sales numbers. we had a strong bounceback in manufacturing output. i'm still concerned this time might not be different. we have to have this soft hand landing or no landing kind of view. we have to say the inversion of the yield curves, including the part that chairman powell mentioned, the three-month bill compared to the three-month bill 18 months forward. we have to assume that's irrelevant this time. we have to assume less of the yield curve inversion is irrelevant. we have to assume the rising bankruptcies of businesses, the default race of auto loans of all things. we saw last week on friday further weakness in the leading economic indicator. it's off about 7.5%. annualized pace. this never happened without a

recession. what concerns me to hike rate 50 basis points to the march meeting. another batch 67c.p.i. and jobs data. secondly, let's not panic over one set of numbers that while stronger than expected are not necessarily clean given the benchmark rescissions and method logical changes. the u.s. economy contract in the first half of last year, bounced back in the second half. very weak in november and december. and part of what we have seen in january data is bounced back from that abysmal november and december. i would like to see more economic data. i think that the funds most likely raise 25 basis points at the march meeting. guy: then what? do we carry on? where do you see the terminal rate? when do you see the first cut coming through? the data at the moment as you say is bouncing around all over

the place. we have a little reacceleration in certain areas of the inflation metrics we watch. consumer as well. it will be interesting to get wal-mart numbers tomorrow. the consumer still feels fairly strong. if all these metrics hold up, and don't decline in the way the fed is looking for, we still have high employment. we have a consumer that still feels fairly good. inflation is reasonably robust. it's coming down but slowly. when does the fed start to think about cutting rates? is it 23 or 24 phenomenon? marc: up until about a week or two ago, the market was -- by market the fed fund futures, overnight index swap market was pricing at a very strong chance of a cut. the least economic data have gotten the market to reconsider that. i think looking at the strip the market's only about 50-350 chance after cut this year. i think not only did the fed but

many of the central banks get done with the tightening that began last year. late 2021. i think most of the major central banks get done with the tightening. whether it's midyear or early q-3. that holds for the federal reserve as well. guy: what about the e.c.b.? how does that fold into the narrative? comploorng the same -- marc: what's unusual is the e.c.b. used to say they don't precommit but they have precommitted to about 50 basis points hike this month and 50 basis points in march. they move back to 25 basis points. they, too, finish up whether midyear or early q-3. i think this monetary tightening cycle is largely but not completely behind us. guy: great to catch up. thank you for joining us this presidents' day. appreciate your time. marc chandler, chief market strategist. coming up, we'll talk about the

latest development over the northern island protocol and what the prime minister had to say about t let's talk about -- about it. let's talk about what's happening here in the u.k. look at the pound. the pound absolutely unchanged today. it will be interesting to see what the economic impact of a deal would be. european stocks are drifting sideways. follow is ok. the one area of strength we are seeing today is within the mining stocks. up by 2.49%. what is happening in china, the real driver for that move. as i say the basic resources area up by 2.49%. the luxury sector, also been a big china play in europe fading today. we'll talk more about that later on. this is bloomberg.

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♪ guy: 9:40 eastern time. get you up-to-date with the news around the world. here's the first world news. president biden making a surprise visit to ukraine today. he was meeting volodymyr zelenskyy. just days before the one-year anniversary of the russian invasion which i think is friday. outline agnew package of military assistance. he also said later this week that the u.s. will announce more sanctions aimed at both helping the russian war effort. president biden is also traveling to poland to visit. we are expecting him to speak there tomorrow. north korea has fired a barrage of suspected ballistic missiles. it warned the united states against conducting more joint military exercises with south

korea. last month the two countries pledged to step up the scope of their drills. they 4 been scaled down or halted under the former president. president trump. in the united kingdom, workers are on strike again today in a bid to win higher pay raises. meanwhile, doctors in the national health services plan their first strike in the history on march 15. the government says it won't noash negotiate among the raises recommended. sticking with the u.k. over the weekend, the u.k. prime minister spoke with bloomberg at the munich security conference. here's what had he to say. >> it's clear the security gairn teerks the architecture in place before this war has failed ukraine. that's a statement of fact. ukraine had received assurances when it gave weapons up. russia is continually violated, whether it's human rights treaties or arms control treaties.

so what happened before has not worked. we should be clear about that. and now our job is to look forward and say what's the right thing going forward. as i mentioned nato, ukraine will be a member of nato. between now and then what i think we need to work on are providing ukraine with the means to win the war right now. and that means very specifically artillery, long-range weapons, armored vehicles, air defense. that's the most critical thing. we can also make sure we are training ukraine on nato standard equipment. that's what we are doing when it comes to aircraft. with their pilots. i think what we do need to do is think about the future of how we protect ukraine security. we need to have that conversation with our allies and talk about the longer term provision of supporting ukraine. that's the conversation that i think we should start having. the summit is a good place to conclude that. >> the assurances would come this year. there has been a lot of debate, you talked about the fighter jets. there has been a lot of debate

here about the am by nation, the risk they may not have enough ammunition, but the long-range missiles. perhaps one of the targets would be crimea. would you approve of long-range missiles? >> the most important thing to recognize, nato is a defensive alliance. that's the first thing to recall. what is ukraine doing? ukraine is trying to defend itself. it is suffering unprovoked aggression. itspele are being killed. and it has every right to defene doing. that's the support that we collectively in this room are providing. and critically there are things that ukraine needs to gain that decisive advantage on the battlefield. that's why the provision of heavy tanks was so important. air defense is critical. you are right to mention artillery. and longer range weapons also help. those are all the things that

will allow ukraine to defend itself and rappel russian aggression. and, yes, to have a counteroffensive that moves russia outside of its own country. i think that's entirely reasonable. we should be fully behind ukraine in that ambition and want it to succeed. >> in your speech there was a lot of bravado in the sense that ukraine has to win the war and russia has to be proven wrong. putin has to lose this war. some would say you make it clear you still believe the u.k. is a big geopolitical agent. zelenskyy went to london. he sees value in the u.k. some here would believe to really be the strong geopolitical agent you need to solve the pending issues that you have with the e.u. i know you probably know this question is coming. there is a frenzy of reports you do have a deal over the northern irish protocol that could come monday. do you have a deal? does it come monday? beyond that, does it reflect your wish that you want to have a normal working relationship with your european allies?

>> lots of things in there to unpack. i think the first thing to say when it comes to the issue of the northern ireland protocol there are real issues that need resolving. the way the protocol has been implemented it's causing very real challenges for families, people, businesses on the ground. very practical difficulties. they need to be resolved. it also is an issue of the democratic deficit that sits at the heart of the protocol as it's currently constructed. those are the things we need to resolve. aim working very hard -- i'm working very hard together with my colleagues. we are working very closely together, we are engaging in those conversations with the european union. >> next week? potentially? >> all the time. we have been for a while. what i would say is there is still work to do. there is still work to do. there are still challenges to work through. we have not resolved all these issues. no, there isn't a deal that has been done. there is an understanding of what needs to be done. it's the issues that i outlined

and james was in brussels yesterday. i have been in northern ireland talking to parties there about the things that we need to fix. we are working through those. we are working through them hard and will work through them intensely with the e.u. we are by no means done. there is no deal that is done. there is work to do. that's what we'll set about doing. guy: the prime minister richie sunak speaking there bloomberg over the weekend in munich. focus on the latter part of that conversation. the brexit portion of that conversation. how close are we to a deal? much speculation over the weekend in the british newspapers that a deal could be announced today. doesn't look like that will happen. when could a deal be announceed? joining us now is bloomberg's dublin bureau chief. the issue of timing here is really interesting. there was great expectation over the weekend coming into monday that maybe we are going to get a deal. now looks like it's going colder on that story. what do we know about the

timing? how close could we be? >> it would seem the timing is still quite fluid. you heard richie sunak saying there is no deal. we have heard reports of there being anything definitely concerned. it depends who you ask. the d.u.p., democratic unionist party, person in charge of party management has said he doesn't expect there to be a deal this week. but other sources are saying that things are very intense at the moment. we do have u.k. foreign secretary meeting this afternoon with the european commission vice president. there is a lot of progress. we have had that continually noticed. guy: is the issue of european court of justice, if so what could we do to resolve that? what can be done to resolve that? >> that is certainly one of the outstanding issues. we heard that sunak has secured

90% of his demands in the talks with the e.u. that is the issue he hasn't convinced the blach that the european court of justice wouldn't have a role no northern island. the e.u. has assured the states that the integrity of the single market and the e.c.j. will be respected. and it's really up to the government to decide how -- which way they want to move on that. guy: how could relations with the e.u. change from a british point of view were this deal to be done? it has been a thorn in the side of the whole brexit story for a very long time. it has been something that boris johnson took a very hard line on. were a deal to be done, how would that change the tone of the relationship do you think? >> i think it really does depend on what the deal is, of course. whether the d.u.p. agrees to it. whether that damages the

consensus in westminster. whether the deal proceeds unopposed. or whether people try and block it. i think how the communications proceed will affect the relationship going forward whether the e.u. feels that it's being put into a corner or vice versa. guy: is the expectation that were a deal to be done, as you say, we don't know exactly what the nature of that deal would be and whether or not we see the e.r.j., european research group, and d.u.p. backing it or not remains to be seen, but if a deal can be done, is there an expectation certainly in dublin, is there an expectation in northern ireland that richie sunak could get that deal over the line? does he have the political backing in london? is there expectation he does have the backing to make it work? >> it is expected that he would win any vote in the house of commons because the opposition labor party has said they will

give him political cover to get the deal over the line. there is consensus that most parties they do want this to be resolved. it's not in anyone's interest to leave it hanging. particularly the consensus is very much people want this resolved. they want to have a government sitting in northern ireland again. guy: you'll be back later to update us. thank you. this is bloomberg.

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♪ guy: 353 minutes past the hour. time for a bloomberg business flash. get you caught up with some of the biggest business stories in the news right now. export orders in taiwan fell less than four past last month. the reopening of chinese factories. overseas orders to taiwanese companies fell more than 19% from a year earlier. orders of information and communication goods bounced back almost 10%. first increase since september. a plan to hire 300 to 500 staff in hong kong this year. the british bank plans an increase in wealth and lending as the city reopened its boardtories mainland china. borders in mainland china. disney's antman and the wasp has become the first big movie

release of the year. the film brought $104 million in the box office in america in the first three days of the opening weekend globally. globally, $225 million. sorry about that. bloomberg business flash. check in the markets. start first of all with a quick look where we stand with u.s. futures which to be honest are going nowhere in a hurry. it is presidents' day in the united states. earlier we were more positive. on the asian session we were bit more positive. we faded that subsequently. crude brent crude still rising. it's incredibly range bound at the moment. what breaks that? do we get to ninth. we'll talk about that -- 90. we'll talk about that. europe doll a. trading flat as well. 106.87. the year of -- 1.0687.

first stocks 600 -- stoxx600. mining stocks. mur rid within that is the story what i want to show you next is ttf natural gas which has come down sharply. today we are bouncing back. the reason i'm showing you this is carbon prices have hit a record today. gas prices have come down sharply. demand will be driven up because you can consume more which is driven up by extension carbon pricing. fresh record on carbon pricing today. we also had a slightly stronger than tis pated swedish inflation data. you have had fairly positive comments coming through from the bank as well indicating they would like a stronger kurncy it is going to have an impact on inflation. the swedish one of the big outperformers today. plenty to discuss this presidents' day as we look ahead to a busy week of earnings. of course we'll wrap up this

week, the big inflation number a huge focus. this is bloomberg. ♪ the first time your sales reached 100k was also the first time you hit this note... ( screams in joy) save 20% with the lowest transaction fees and keep more of what you make. with a partner that always puts you first. godaddy. tools and support for every small business first. the eagle has landed. with that's one smallways step for man... hey, what's up? uh... houston... we have a situation. how did you get here?

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guy: welcome to "bloomberg markets." i am a guy johnson in london, and here are the top stories we are watching this presidents' day. biden's surprise visitor kyiv, this as the country nears the one-year anniversary of the russian invasion. stocks looking for direction. equities in the red, but not by much. investors are raising for hire for longer from the fed. we'll discuss all this with callie cox of etoro. rishi sunak facing his biggest

political test since taking office, unveiling his plan for northern ireland. we will hear from the prime minister himself wasn't before we do all that, let's look at where we sit with markets right now. european stocks drifting sideways. it is presidents' day in the united states and markets are closed. i'm surprised that volume is holding up as well as it is fulton's down a little bit, but not much. futures were positive early overnight and navigated since then. there was optimism on the chinese market that got christ into u.s. futures. -- price into u.s. futures. brent crude has been trading in a range recent months. and little optimism around china. we are up by let's call it a percent. you have the chinese reopening story, demand-positive, vs. a third story which in theory should be negative because of it is the push and pull that is kept brent in the range it has

occupied. it is presidents' day in the united states, and it appears appropriate that our top story today mentions president biden. president biden making a surprise trip to kyiv as foreign ministers wrap up their security conference in munich. he was not anticipated to go to kyiv. the visit comes as we get ready to mark the one-year anniversary of russia's invasion of ukraine. here is a little bit of what the president had to say in kyiv earlier. pres. biden: putin thought ukraine was weak and the west was divided. s you know, mr. president, he is counting on us not sticking together. he is counting on the inability to keep and nato united. he is counting on us not to be able to bring in others. guy: bloomberg's annmarie hordern joins us for warsaw

covering the trip. the secret service must be very relieved that he is out of kyiv and back in western europe. annmarie: certainly, spending five hours on the ground, guy, and as a mention to you earlier over the course of the last 12 months, while we have seen this for play out and we have seen the number of western leaders make that trip to kyiv, and the president of the united states was asked multiple times, when will you go, he has always alluded to the fact that he is more than happy and wanted to go there, but it was the secret service this is in modern times, you don't see a u.s. president really show up to an area where there is a war and the u.s. military doesn't have control of the critical infrastructure or doesn't have military personnel on the ground or military airbase, not like in iraq or afghanistan in the past. for this president, who is 80 years old and many are questioning his age as he looks of potentially make this.

-- make this bid for print 24, this is a show domestically and for the world, moscow, beijing, that the u.s. is standing united with ukraine as they are about to embark one year of putin's invasion. alongside doing this, with the united states would call remarkable support, they announced another $500 million in terms of weapons and military, and then later this week, what we can anticipate from the u.s. administration, more penalties on moscow as they mark this one year. guy: as you say, what we have seen today is announcements regarding more weapons, but no new weapons, no f-16s. was this more about optics than substance? annmarie: i think at the moment the message was in the pictures and in the videos and the president walking through the central square in kyiv, which i

visited myself in the past. air rates going off, -- air raids going off, a reminder that this is a war zone. there is concerns that the western front is fragile in terms of western allies now starting to realize that this is going to be a prolonged war, and they have already sent so much money, so much weapons, how much more can they really give. you hear that in washington, d.c., you also hear that in capitals around europe. from that point of view the president wanted to make a very gigantic message, and this wasn't just about announcing new military and potentially new penalties on russia later in the week. it was about being there in the present in ukraine, something ukrainians -- i spoke to a ukrainian official this morning, saying that they have been pushing for months and they were able to make it happen to what

we saw the extent of today over the course of the last week. guy: when zelenskyy visited london, there was a quick russian response. our ukrainians expect in summing similar -- are the ukrainians expecting something similar? annmarie: many talk about the fact that they expect a fresh russian assault as they go through marking this one year. there is good air defense in kyiv, but eastern ukraine is where the heart of this conflict is, and the donbass, these are really where the heart of the conflict is. the concerns are remains to be seen of what the russians will do. we know from jake sullivan, the national security advisor, that they did alert moscow that the president of the united states would be making this trip, probably putting them on guard to make sure that nothing dramatic was going to happen while the u.s. president was on the ground. but also, we need to see what

president putin is going to say tomorrow. you will be giving this address in moscow, that he will be giving his address in moscow, and it will be around the same time the president of the united states will be giving an address in warsaw. according to the u.s. ambassador in poland, the central support, because this is not just a place that is at the border of ukraine and quite concerned of the conflict, but also a place that has taken in so many of these ukrainian refugees that had to flee their country. guy: annmarie, great reporting. bloomberg's annmarie hordern joining us from poland. we have been speaking with annmarie and receive data out of -- and we see it out of russia relating to its economy. gdp falling 2.1% year on year. to give context, the prime number was plus 4.7, which will be revised higher to 4.6. this number -2.1%. coming up, back to the markets back to inflation. callie cox will be joining us.

this is bloomberg. ♪ pres. biden: that dark night one year ago, the world was bracing for the fall of kyiv. when you later, -- one year later, kyiv stands and ukraine stands, democracy stands. the americans stand with you in the world stands with you. ♪

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>> i don't think they can get cpi to 2% without squashing the economy, but that is because 2% is not the right target for the economy. when you have so much stuff going on on the supply side, an energy transition, change in the supply chains, geopolitical issues that come onto the supply-side, the way the labor market functions, it is a long list of supply issues. you need a higher stable inflation rate -- call it three to 4%. guy: that was mohamed el-erian, bloomberg opinion columnist,

with his take on what is happening with inflation and how the fed may be is going to struggle to get it down to 2%, and may testedly except -- tacitly accept something higher. let's talk about what we will get the rest of this week. callie cox of etoro joining us. thank you for your time this presidents' day. we have a whole bunch of regional earnings this week that will tell us about the consumer. walmart tomorrow, pce on friday. what are we watching out for this week? callie: well, i think you just told me. you tell earnings will be the focus for a lot of people, and not just on the consumer side. i think retailers the poster child for how companies are managing costs right now -- cost and inventories. obviously we have pce on friday, the fed's. inflation gauge, although we focus on cpi. i'm looking on surprises on cpe,

because the fed wants to get the services side of inflation down. that is the sticky side of inflation that is more job-market-sensitive. those of the two big things in my mind. guy: the bond market is starting to pay attention to what the fed has said. the equity market not so much. why? callie: well, i think this is been nothing this past year, the back-and-forth between what the fed says and what the market things will happen. i don't expect that to be the end of this. we are in the next phase of what the market is trying to recalibrate and is super serious about getting inflation down. i think that investors are trying to balance the optimism. the optimism over the fact that this economy doesn't look like it is in recession, but at the same time that could push the fed to keep rates higher longer. guy: is that a soft landing, or is that as we talk about apparently a no landing? callie: well, i'm learning what

a no landing is no. i still think a soft landing is possible. i don't think we should discount that yet. and the fact that the economy is strong is a good story, i don't want to get that twisted. but at the same time the fed is going to lean into this to get inflation down. that requires a prospective change from investor that i'm not sure is happening in. guy: given all of that, what do i want to talk into my portfolio right now? i have a two-year u.s. yield that is 4.6, just below 5%. that feels quite tasty at the moment. callie: well, i think your timeframe matters, and shorter-term there is more quality chief cyclicals. and thinking industrials, thinking financials. i don't think it is the worst thing to put a little bit of risk down. prices for growth are far from their highs of the moment. i think you have to be especially attuned to financial strength and where the cash flow

s are coming from. guy: do you not worry that tech will suffer if rates go significant higher from here? let's say the fed is underpricing let's say the number is closer to six. do you think the tech investment still makes sense? callie: i think when you're talking about tech you have to realize the different flavors of tech. there is a speculative tech and big tech, which has the strongest bounds sheets on the street. you have to be very discretionary when you look at tech. different flavors of tech have rallied to this year and some are more cautious. but at the same time, big tech in an era of high interest rates, you cannot get financially stronger than that, even though big tech is going through its own sector-specific stories. guy: you have a good idea of what retail investors are doing right now. how have they played it over the last few weeks? we have seen some of the froth coming back into the market.

that tends to attract the retail investor back in. what are you seeing? callie: retail investors never left the market, and that is something people discount. they diversified a little bit more but they never ran away. i think they are leaning into the optimism. the job market hasn't broken down and the consumers feeling good. when you talk about the consumer, that is your retail investor right there. they are leaning into the more speculative names. we have urged customers to get more cautious around that and understand why they are investing. at the same time, i would not rule the retail investor out. of course they are investing as well. guy: that is the point, isn't it, because the fed is increasingly looking at what is happening with the stock market. because of the reason that you just laid out, the consumer feels good. the consumer is looking at a portfolio that is holding up. is that going to be a problem?

is this one of the metrics that the fed pays more attention to, that the consumer is in and holding up? callie: this is the tricky dynamic for the fed. at the same time, this is a good story. the fact that the consumers holding up as a good thing. you want retail investor engagement in the markets. but it does make the fed's job trickier because spending is keeping inflation higher. the fed knows the economy is out of balance and we need to lean on the side of the consumer and the job market. we hope they don't lean too far in that direction. guy: ok, but how bumpy do you think it is going to be, callie? callie: our theme of the year's portfolio purgatory, so i don't know if that tells you anything. it is going to be harder to get to record highs with inflation so i. we are telling people to expect

that focus on quality is here. a little bit of picking up on risk. at the same time, not to get risky. guy: callie, thank you for joining us this presidents' day. callie cox from etoro. still ahead, despite a resurgence in travel post-pandemic, he has been a less than smooth path so far. u.s. air travel has been experiencing some turbulence. more on that story next. this is bloomberg. ♪ thanks to avalara, we can calculate sales tax automatically. avalarahhhhhh what if tax rates change? ahhhhhh filing sales tax returns? ahhhhhh business license guidance? ahhhhhh -cross-border sales? -ahhhhhh -item classification? -ahhhhhh does it connect with acc...? ahhhhhh ahhhhhh ahhhhhh ♪ we all have a purpose in life - a “why.”

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passengers have taken the brunt of it. kriti gupta has this report. kriti: it's been a chaotic few months for the airline industry and it goes beyond the usual baggage woes. over christmas, hundreds of thousands of southwest airlines passengers were stranded or delayed. the ceo asked for patients. >> we are doing everything we can to return to normal operation, and please here that i am truly sorry. kriti: critics weren't inclined to give jordan a break. they blamed southwest for not updating scheduling suffer sooner. the unprecedented grounding of all u.s. flights was ordered when the faa air message system went out and send safety notices to pilots. >> the p luminary findings are that contract personnel unintentionally deleted files while working to correct synchronization issues between the primary database and the backup database.

we have found no evidence of a cyberattack or other malicious intent. kriti: it took a little more than 4 snap internet cables to ground one of the world's largest airline fleets, with passengers from tokyo to new york left stranded when hundreds of flights were grounded. a power outage at john f. kennedy airport closed down and untied her normal -- an entire terminal. and a 16-hour flight to nowhere. while the recent incidents grandpa headlines, the problem is a new -- grab they headlines, the problem is into new and it is getting worse. some say it comes to a lack of investment in technology and people. >> there is an opportunity for the faa to do two things. we have to get our controllers fully staffed. that is important. the system is safe, but what will happen if there is a shortage of controllers? you will see more delays and cancellations.

the faa has a multiyear technology upgrade program. we have got to get that finished. kriti: the faa agrees and wants to speed up the process for the in the post-pandemic world, there are not enough pilots. that can lead to delays and cancellations. add on the lack of ground staff and none of the problems can be resolved quickly. if you're planning to fly, be prepared to wait. guy: bloomberg's kriti gupta reporting. time for the biggest business stories in the news right now. facebook and instagram parent meta-platforms launching a subscription service which includes a handful of different features including account verification badges for those who pay $11.99 a month. the service is primarily targeted to content creators. bank of america is joining investment banks and investors involved in the race to take over manchester united. b of a will advise the qatari

bidder's bid for the english football club. the opening offer could value manchester united at $6 billion. hong kong has outlined a plan to let retail investors trade digital tokens like bitcoin and either, a major step towards the city goal of becoming crypto hub, in contrast with a crackdown in the united states for individual investors would trade larger coins by the securities and futures commission. let's look at what is happening in the markets. clearly a slower session today. it is presidents' day in the united states, hope you are enjoying it. volume in europe is a little on the light side. i say a little deliberately because it is only down attach, which surprises me a little bit. s&p futures currently are just taking a little bit lower. we saw a little burst of

enthusiasm overnight as we saw a strong session out of asia. that has faded as everybody refocuses on what is happening with the fed and where it takes rates. brent crude is cracking the chinese story. we will talk about that a little bit later. currently trading at 83.93. you have a pull and push happening in the brand market at the moment. the manager out of china, but the fed is trying to slow down the u.s. economy and the push and pull and that story is being represented by the printed story. euro-dollar, 1.0687. plus, we have pce coming up at the back end of the week, the fed's preferred inflation gauge. light volume in europe today. only a little light. we have stoxx 600 training fairly flat.

money starts having a fairly good day. marjorie starts fading a little bit -- luxury stocks fitting a little bit. you have got natural gas taking a little bit higher. what is interesting today is that carbon credits in europe are hitting fresh records. you bring gas prices down and that brings of demand. this brings up -- and that brings up demand. slightly harder than anticipated inflation data. the idea being that if you have a slightly stronger currency, you may see inflation coming down a little bit more as a result. as i say, commodities from an center. we are going to take a more detailed look at what is happening. we will be joined by francisco blanche from bank of america. this is bloomberg. ♪

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guy: welcome back to "bloomberg markets." i am guy johnson. aluminum prices are taking higher, amid reports that higher electricity prices are forcing the chinese to cut capacity. other metals are higher on the demand story as well. as you anticipate that we will be seeing a quicker pace of recovery for the chinese economy. that seems to be the dominant force in the commodities market. numbers coming out tomorrow. joining us to discuss how it is going to be weaving its story into the water commodities is bloomberg senior executive editor for energy and commodities. what are we expecting? >> bhp what amounts good sets a

result, -- will announce a good sets a result, but investors will be looking at many things, how much they pay in dividends -- everyone expects it to be lower. the question is how much lower. probably that is because of slightly lower commodities prices. i think the second thing we are looking at that we saw with glencore last week is that mining is more expensive. most things become more expensive and you gotta pay more in power and people and all the inputs you have. investors will be focused on how fast costs are rising. guy: australia-china connection is still there, and a strong one. given the fact that the chinese economy is back, how big an impact will that have, and how positively will that tell the story? will: that is a very good news story for bhp. the biggest part of the

businesses supplying iron or especially to china. anything that looks towards industrial recovery, is very positive news for bhp, and china is half of copper demand. likewise, strong chinese economy is big for the other big miners. with a stronger economy in china and hide it -- i middle demand plays out. guy: the fed is trying to slow the u.s. economy down, and by extension that will have a big impact on the global economy. china is trying to come out of covid and speed the economy out. in terms the gravitational force that those areas have on the commodities market, talk through how the balance works. will: as the fed raises interest rates and gets the u.s. economy under control, and not only has

a downward impact on economic activity in the u.s. and beyond, but it tends to be positive for the dollar. we know the relationship between the dollar and commodities often tends to be an inverse one. there is also a big headwind. if the dollar goes higher and interest rates go higher compared to the rest of the world. that is a strong headwind for the macro story of commodities demand beyond the u.s. and china to lean into. guy: thank you very much indeed, perfect set up as ever. will kennedy, thank you. let's continue the conversation with francisco blanch of bank of america. let's talk about that push and pull out the moment in the global economy. china reopening. it looks like the chinese economy may be re-accelerating faster than many anticipated. at the same time, we are becoming increasingly aware of the fact that the fed may go further. how does that balance work, do you think?

francisco: i think it works in favor of the commodity markets, mostly because china is the world's largest commodity buyer. it is the largest commodity consumer. we see a big impact from china in international markets. number one importer of commodities. also the largest consumer. as china reopens you are going to see meaningful uplift in commodity prices. also, the u.s. economy slowing down, but i think rates are maybe in a perfect tool -- an imperfect tool. are far will the fed go to slow the economy when, frankly, fiscal policy in the u.s. and elsewhere remains lax? that is the big issue. politicians are realizing that they are putting too much of a burden on central banks to adjust macro conditions, and i

think ultimately rates will only go up so much, because it is a fiscal side you need to adjust. for the time being, no apology is prepared to bite the bullet and start slashing spending. guy: absolutely. that seems to be playing out at the moment with a relatively mild slowdown we are seeing in the united states. what does that mean for oil? if the balance is in favor of china, what does that mean for oil? boyle feels like it has been range bound for a while. if the chinese economy does re-accelerate more quickly than anticipated, are we going to break out of the top side of that range? francisco: look, guy, we are -- the answer is yes, we are. the reason is simple. prior to the pandemic, we used to have 40 million chinese tourists roaming around the world every quarter. that is 160 million a year, about half the u.s. population.

all of these tourists have been in full lockdown for the majority of the last three years. there is pent-up demand. it is the definition of pent-up demand, i would say. the chinese have $2.6 trillion in savings, not far off from the roughly $3 billion we see in the u.s. at the peak of the pandemic. the chinese have essentially it large pool of savings to be deployed domestically and internationally. on top of that, chinese banks are seeing a change in risk-weighted assets that is going to skew their lending towards consumer-related activities. we are going to see not just more mortgages, but more credit card. the chinese will be out and about pretty soon spending money and flying and driving. guy: this shows of the most in jet fuel.

francisco, initially the way we think about is that people after covid from is drive now and fly later phenomenon. most u.s. airlines are not back to full force. i think the limit is 12 flights a week or something like that between the u.s. and china. the biggest economies have 12 flights a week connecting them. that is less than two flights a day. we are talking about the two largest economies in the world and all the cities in china and the u.s. it will take a few months to change. certainly whether it is by the summer, winter, and it's 124 we will see a big pickup in jet fuel. for the next six months or so you will see it in the gasoline market. guy: ok, let's fold russia into this. there was an expectation we would be seeing less aggression crude on the market. significant redistribution of

russian crude. how big a factor is russia going to be? how much crude are we going to see? russia has been the biggest producer, certainly one of the biggest producers. is he going to remain so? i cannot believe i'm saying these words just how much of a stabilizing force will russian crude be in this environment? francisco: the realities russian oil exports have increased from november to december and january to february. your we are in february with more russian oil in the market that we did three month ago when sanctions were kicking off. part of it is the way the sanctions have been engineered. we have seen lax sanctions or relaxation of sanctions from the eu, specifically the price caps on russian crude oil has been generously set above the marketplace. there is russian oil flowing out more than expected.

on top of that we've seen relaxation of bans on shipping, which essentially went from lifetime bands to 90-day bans. and then we saw relaxation of sanctions in terms of rules of origin. if you take russian crude oil and make diesel with it that can easily go into europe. we have essentially been shuffling the musical chairs around the table not really taking any chairs out. to your point earlier, this is a very important reason is $85 a barrel. sanctions or for that purpose. what happens next? annoyed that is a different story. russians are leaving a lot of money on the table.

we are seeing the fiscal impact on the russian government. maybe what we see from russia trying to tighten up the markets and reduce the amount of supply and bring prices higher that may or may not work. the russian summer funding issue. -- the russians have a funding issue. 8 million barrels a day are going somewhere. some of the to shippers and some of it to traders. there is a lot of money on the table for the russian government all stop sorry. guy: that is amazing and it is amazing given the backdrop we're looking at, elongated war and increasing sanctions, judging by what the president had to say. was fantastic to catch up -- always fantastic to catch up. francisco blanch joining us from bank of america. coming up, it may be the prime minister's biggest political

test yet, breaking a post-brexit impasse. a solution for northern ireland and his stance on the war in ukraine. that is next. this is bloomberg. ♪

guy: the british prime minister rishi sunak says the war in ukraine has reached an "inflection point." he is calling on prejudice and more military aid to fend off the russian push which is expected around the one-year anniversary of the invasion. he sat down with maria tadeo for a tent at the munich security conference over the weekend. let's listen to what the prime minister had to say.

prime min. sunak: it is clear that the security guarantees and the architecture in place before this war has failed ukraine. that is a statement of fact. ukraine received assurances when it gave weapons up and russia has violated human rights treaties and arms-control treaties. what happened before has not worked. we should be clear about that. our job is to look forward and see what is the right thing going forward. jen stoltenberg has said nato -- you green -- ukraine will be a member of nato, but between now and then, what we need to work on our providing ukraine with the means to win the war right now. that means artillery, long-range weapons, armored vehicles, air defense. that is the most critical thing. we can also make sure we are training ukraine on nato-standard equipment. that is what we're doing with the aircraft with their pilots. what we need to do is think about the future of how we protect ukraine's security and

we need to have a conversation with our allies and talk about the longer-term provision of supporting ukraine. that is the conversation we should start having. maria: so the assurances would come this year. there has been a lot of debate as you talk about fighter jets. there has been a lot of debate about the ammunition and the risk they may not have enough but also the long-range missiles. there is concerned that one of the targets would be crimea. under your watch as prime minister can would you approve long-range missiles that could hit crimea? prime min. sunak: the most important thinker ignites is that nato is a defensive alliance. what is ukraine doing? ukraine is trying to defend itself. it is suffering unprovoked aggression. its territorial integrity, its sovereignty has been violated. it's people are being killed. -- its people are being killed. and it has every right to defend itself all the does this

probably collectively in this room are providing. critically, there are things ukraine needs to gain the decisive advantage on the battlefield. that is why the provision of heavy tanks was so important and why your defense is critical. you are right you mention artillery. those are things that would allow ukraine to defend itself and have a counteroffensive that moves russia outside its own country. that is entirely reasonable. we should be behind ukraine and one that ambition to succeed. maria: in your speech, there was a lot of bravado in the sense that ukraine has to win the war and russia has to be proven wrong. vladimir putin has to lose this war. some would say you believe ukraine is a geological agent and zelenskyy sees value in the u.k., but some would believe that to be a strong geopolitical agent you need to solve issues

you have with the eu close of you probably know this question is coming. there are reports that you do have a deal over the northern irish -- they could come monday potentially. do you have a deal? does it come monday? beyond that, does it reflect the wish that you want to a normal working relationship with your european allies? prime min. sunak: lots of things in there to unpack. the first thing to say, when it comes to the issue of the northern ireland protocol, there are real issues that need resolving full the way that the protocol has been implemented is causing very real challenges for families, people, businesses on the ground. very practical difficulties, and they need to be resolved. there's an issue of the democratic deficit that is at the heart of the protocol, as it is currently constructed. those are the things we need to resolve. i am working very hard to get with my ministerial colleagues and foreign secretaries and the secretary of state for northern ireland. we are engaging in those conversations with the european

union. maria: next week, potentially? prime min. sunak: all the time, and we have been for a while. there's still work to do. there are challenges to work through. we have not resolved all of these issues. no, there isn't a deal that has been done. there is an understanding of what needs to be done, the issues that i outlined and james in brussels yesterday, northern ireland talking to parties there about the things that we need to fix. we are working through those. we are working through them hard and we will review them intensely with the eu. we are by no means done. there is work to do, and that is what we will set about doing. guy: british prime minister rishi sunak speaking at the munich secure the conference over the weekend to bloomberg's maria tadeo. let's continue the conversation about what is happening with brexit and what specifically northern ireland. within the last few minutes, headline crossing the bloomberg other foreign secretary is going to address the u.k. tory

backbenchers on the deal being proposed. that may happen as soon as tomorrow, tuesday. adam is in london and marin in dublin. what do we know and what is a signal that the minister will talk to backbenchers tomorrow? >> we note james -- james clevelry has been talking the last 20 minutes or so with the european commission. there's been a further diplomatic push between the u.k. and the eu to advance the prospects of a deal today. that is potentially focusing on those areas of most friction -- the will of the european court of justice -- role of the european court of justice. that is a sticking point between the u.k. and northern ireland, who are keen for that to not play a role in northern ireland

after this deal. the eu has given some ground already. interesting that cleverly would talk to him today and begin what looks like the process of outreach to some of those more reluctant holdouts of the government benches. an attempt to get a deal of some form towards the finish line. guy: a little bit of arm-twisting going on. let's look at this from the irish perspective, from the eu's perspective. is there a belief in dublin that the dup can be persuaded to accept this deal, can be persuaded to rejoin the government? how big a sticking point will the dup be, and what are you hearing in dublin about what their views are on this potential deal? >> -- the dup, they are a sticking point. they have been the ones that

have been fundamentally opposed to the protocol. they feel it undermines their british identity, puts effective barrier in the irish sea separating it from the rest of the u.k. they have been refusing to take part in the assembly since last february on account of the protocol. it really -- people really want to see them accept whatever the deal is, so that the northern irish government can function. in dublin, the mood is very supportive. it is very optimistic that there has been progress and we will see something coming out of these talks. i think there is a lot of hope that it will be something that the dup will be able to get behind and feel that they have been heard and respected. guy: the two main groups opposing this are the hard-line brexiteers within sunak'

s government and party, and also the dnp. the opposition is actually supporting such a move and what back such a move. that puts rishi sunak in a really difficult position. adam: it is quite an interesting move by the opposition. you don't normally team up to offer government support here stammer, leader of the later-- kier starmer, leader of the labour party, said he would support and deal sunak's deal comes up with. anything could pass with labor support but that would cause real problem within sunak's own parliamentary party and festering resentments would be reopened. it would probably be seen as politically toxic. all the signals are that sunak's first priority is to win over the dup, as morwenna says, unlock the power-sharing in northern ireland. there's the tempting offer of

backing from labor if he wants to go into uncharted territory. guy: uncharted waters potentially for rishi sunak. thank you very much indeed for the update. we will monitor this story maybe tomorrow, maybe the next day, maybe the day after that. we don't know in terms of the timing. thank you very much indeed. we will continue our path to the european close next. this is bloomberg. ♪ go. go air that runs factory. go sensors and software. go find leaks. go fix-em.

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guy: counting you down to the european close. we have light volume today, but not that life u.s. markets are out this has been -- this presidents' day. below the surface, things are interesting. mining sector on a bit of a tear . numbers coming out tomorrow in terms of corporate reporting but also metal prices and surging on

the back of a stronger chinese economy. keep an eye on the pound. the brexit deal could be interesting. close is up next. this is bloomberg. ♪ when you automate sales tax with avalara, you don't have to worry about things like changing tax rates or filing returns. avalarahhh ahhh

guy: it is monday, february 20. european equities going nowhere in a hurry. london outperforms. mining stocks having a good day. the countdown to the close starts now. announcer: the countdown is on in europe. this is "bloomberg markets: european close" with guy johnson and alix steel. guy: a couple of things to say. one of which is alix steel is on a well-deserved vacation. the second thing is it is