>> both consumers and companies have been more resilient than consensus expected. >> that -- of money is out there spending, particularly on services. >> the bigger risk is that the fed loses its resolve in the face of this weakness and allows inflation to become entrenched. >> we are probably at one of those precipices where we are peaking in optimism. >> this is bloomberg surveillance with tom keene, jonathan ferro and lisa abramowicz. tom: good morning. from new york on a monday, radio and television, the markets, yes we will look at equities. bonds, currencies, commodities, but after an extraordinary weekend it is bloomberg international relations for the next three hours.

lisa: everyone wants to understand what happened over the weekend with respect to this march on osco by the wagner group by prigozhin who had been an ally of vladimir putin and what this means longer-term in terms of vladimir putin's reign and the war in ukraine in general. tom: we will go to berea to dale in a moment to give us an update. -- maria taddeo in a moment to give us an update. we are going to focus on the news and reporting as we aggregate the news sources here. bloomberg and all the rest reporting on the facts as we see them on this huge event. i was stunned. the rumors and the back-and-forth. i was looking for you on twitter. lisa: [laughter] that is true. everybody gets to be a russian expert overnight. nobody really knows. what don't we understand right now?

we do not understand what the motivation was on the march on moscow. what was behind it, was it the anger and lack of provisions? was it something else? we do not know the longer-term ramifications for vladimir putin and his relationship at the top of the nation but also with xi jinping in china, these are the questions percolating. the take away is it uncertain -- it heightens uncertainty at a time where people do not understand which side of risks to hang onto. tom: what bloomberg news has done us through the weekend is try to bring the jet experts on this moment. stay with us this morning on bloomberg television and bloomberg radio. lisa going to give you the surveillance names scheduled to join us. later on, this is the interview i will pay the closest attention to. the tank general from the united states army, ben hodges, will join us in the 10:00 hour. i believe that is with alix steel.

alina was one of the few people on twitter with common sense in the heat of saturday night. i cannot remember. i am thrilled to have her with us. what is your observation on this? lisa: i think what i find interesting is the markets are inconclusive about what the applications are. they are just as confused as everybody else. yes, you're seeing a lift in natural gas prices in europe. other than that, it is unclear what people see as longer-term ramifications. my larger observation is our cracks in the armor but -- in the armor behind vladimir putin. there are questions who is behind his leadership and opposing the wagner march. tom: futures at -6%. a stunning and weaker chinese yuan. ruble is weaker back on certain number of months is expected. economic slowdown discussion, yields lower this morning on a

global economy in west texas intermediate, 69.40. you are briefing us of dr. bremmer's appearance. lisa: also joining us around 7:45 a.m. is former retired general on the academy securities advisory board. curious what he has to say. 10:30 a.m., the latest of data we get this week. u.s. dallas fed manufacturing a committee -- manufacturing activity. how much does this continue to point to recession? 1:30 p.m., the central conference, the jackson hole of europe kicks off. christine lagarde is giving opening remarks at this ecb form on central banking. tom: let's get to maria tadeo, she has been working on this tirelessly through the weekend. i and trying to correlate the reporting and news that is out there. maria tadeo is in brussels.

what is the latest? maria: what we know is that now the russian media the past hour has sent this idea that vladimir putin and the russian estate would not launch a probe into prigozhin for his insurrection is not the case, that the probe has not been dropped and is continuing. the idea was that the head of belarus had mediated between vladimir putin and prigozhin to avoid a bloodshed in moscow. there was somehow a peacemaking deal. if the russians decide to go after prigozhin and they do continue this probe, it means there was no such deal. lisa: do we have a sense about what the internal discussions are about vladimir putin's leadership and why there was not or opposition to the wagner troops as they did march on moscow? maria: what we did see on saturday as the russian president to address the nation

has said, this is treason. he mentioned 1917, a crucial date in russian history. he talked about tragic repercussions and critical consequences or this. after that, we saw there would be no probe. now see this morning the russians are saying that probe has not been dropped, that would signal this deal cut by the belarusians -- there is no such deal. the other issue is, we have not seen from the russian president since saturday but did see today what seemed to be the defense ministers allegedly on a helicopter inspecting russian troops. we do not know when this was recorded. we not know when this was filmed. we know russians released tape that was at times work could be filled months prior. it would signal a strong message, the defense minister of russia continues to be sure to have the backing of the kremlin. a lot of tensions over the past few months between prigozhin and

the russian state had to do over what he claimed to be the mismanagement of the russian army by show gout today. he appears on tape, inspecting troops. lisa: can we have a sense of how much chinese leadership is involved right now? we know we met over the weekend, but in terms of how they are trying to push the situation one way or another, in order to keep their alliance with vladimir putin? maria: it is very quiet. we have not seen any major contact between vladimir putin and the chinese leader. vladimir putin was busy saturday on the phone with what he perceives his international allies. he didn't make a call to turkey and said i support -- did make a call to turkey and said i support prudent, but was not on the phone with the chinese at least in a way we know openly. it is interesting, this morning the top european diplomat prigozhin says russia and putin created that monster and that monster is still alive, which by itself is surprising.

tom: see you in the next hour. right now, we turn to the markets. markets are looking for economic slowdown. jeffrey you joins us. how close are we to local recession? -- global recession? >> not super close yet. if i look at the eurozone surveys, we get this notion a technical recession in europe which is not going to be prolonged, i think the ecb métis -- may need to revisit that. by the hocks on the ecb, i think they are going to have to careful with their language. they mount be -- tom: the view of the tightening camp is there. i guess this is a demonstrable linkage between what we have witnessed over the weekend. are the events in the international fragility of russia enough to derail the

tendencies or oomph of central banks? geoffrey: i think right now, they will be observant and see what the wider ramifications are. if this is not the end of it and i think many near markets think it is not, there will be repercussions. central banks will react accordingly. it is about demand versus inflation. in the eurozone on the continent and russia will play into this. we are seeing clear signs of a demand slowdown and i think that is something that needs to be reacted to. u.k. is in a different place. there is the china situation not getting better. you as a eurozone policymaker will have to ask, where is the demand and risk appetite? lisa: i am curious, they came in today about what kind of tail risks were heightened on both sides which would seem the most likely tail risk. it seems to be pounced now --

balanced now what. how are you expecting this to be played out by market? participants geoffrey: i think market participants after last year, there was a tail risk they did not anticipate. they are far more attuned to that right now, looking at geopolitical analysis, the worst case scenario coming through. i think the dollar will benefit accordingly on the back of that. also on top of these developments, i think risk appetite unwinding and -- global growth, this carry trade led by commodity currencies, high yield or's and dare i say ai stocks, that seems to be on the cusp of unwinding. these things cannot advanced much further. they are looking at risk softening in the short term. you do not want tail risk to compound that.

lisa: you think betrayed over the next few months is stronger dollar, weaker tech? geoffrey: i think we need to be tactical about this on stronger dollar, both gains in currency. even with the fed perhaps hiking once or twice more, we are looking at once more at this point, that idiosyncratic nature, u.s. exceptionalism is all in play. tom: i've got to go narrow with you. thunderstruck to walk in, we are distracted by what is going on in europe. i see dollar and mindy out to a stunning 7.24%. you have got to tell me it is a managed move by beijing. where is there tolerance on eager yuan? -- weaker yuan? geoffrey: they will tolerate weaker yuan as long as they are in line with interest-rate cuts and easing.

it is not about levels, it is about the pace. they are going to start sounding like the boj. let's get this straight, we go back to real rates. if you want real rates lower, you cannot have a stronger currency and that is what they are managing now. tom: thank you, greatly appreciate it. lisa, it is hard to focus on the data. we are going to give you what we see in the markets, great guests coming up. i walk in and we are distracted by what is the news low with putin and the rest and there is marin b, a moonshot up to 7.24%. lisa: they set a peg that was stronger than people expected, which raises questions about what they are going for and how they are going to try to play after they achieved retail data sales in china and it was disappointing over the holiday season. tom: they are well behaved, that

does not happen too often. lisa: there are three themes today, on one hand you've got the geopolitical concerns around russia. you have the question of the biggest rally in tech shares for the first six months of the year ever and whether it is fading. you have this idea, what does this due to inflationary pressures around the world? the fact we have more hawkish central banks. as we drive towards the central conference and a slew of economic data, how do we put these together? how do central bankers stick to their guns if they are looking at rate geopolitical uncertainty? tom: i have no political expertise on this. it is more of a distraction and i like the reporting today from bloomberg news, who are desperately trying not to do opinion or speculation but we are just looking at facts. as maria mentioned, there is video of the defense leader shall he go --was it made

before the coup? lisa: we do not know. there is unclear information and that is clouding desertions people can make. it is increasing uncertainty. tom: we've got lots coming up. mark anderson will join us and i believe tina and the next couple of minutes. she was brilliant over the weekend on russia. futures -6%. this is bloomberg. good morning. cheesecake cookies? the chookie! manage all your sales from one place with a partner that always puts you first. (we did it) start today at godaddy.com

>> we have seen some very serious cracks emerge. you have prigozhin, publicly questioning the premise for this russian aggression in the first place. the notion that somehow ukraine or nato presented a threat to

russia. you have someone challenging putin's leadership publicly and openly. we see cracks emerging. where they go, if anywhere, when they get there, very hard to say. i do not want to speculate on it. i do not think we have seen the final act. tom: secretary of state with ebc -- abc on sunday. hearing him scrambling amid the non-news on sunday money. we welcome all of you, bloomberg surveillance. jon ferro is on assignment. we and the team have worked through the weekend, remember the 8:00 hour general hodges will be with us in the 10:00 hour and other extras as well. which headline this morning on russia captures you? lisa: this question around whether there is assurance from prigozhin he is safe and belarus. this is a question, why putin allowed someone he called a traitor to get away with amnesty

on belarus. on the other hand, what are his plans? he has a team in africa and various african nations, the wagner troops have an incredible presence around the world. what is going to happen with these potential leadership roles around the world? tom: huge uncertainty right now. we will try to bring you the facts this morning. twitter was different this time around, one of the calm and collected voices saturday and sunday was the founder and geopolitical strategist at foresight, giving perspective not off speculation and perspective off the news. tina, when you look at the news flow that we have, what captures your attention this morning? tina: in some ways i am looking at what has not happened, the counterfactual. i am almost waiting for russian

tv to start playing swan lake, which they have a habit of doing when times get difficult. there is a real air of caution and pause that is prevailing, whether that is secretary of state blinken's comments, which were measured. whether or not the tape of defense minister shoigu is recent were not, we have not seen putin as alisa said, prigozhin, is it a deal or not a deal? we should not assume these are coordinated actions. i think that is important. market participants tend to look for data points forming a trend line and we do not have that yet. tom: tina, when i give speeches on this and the humility of being totally wrong, my great tina ford ham moment was i was

totally wrong on boris yeltsin. he way boris yeltsin collapsed, are there illusions to that with mr. putin in the coming months? tina: absolutely. this is where i think political science is helpful. authoritarian regimes can consolidate around an individual as putin has done over the past 23 years. they cannot shut down all forms of dissent -- can shut down all forms of dissent. that tends to mean they are brittle and break rather than bend. this script, prigozhin has gone off the reservation with his remarks which have blown holes through all the narratives that the west has been fed, that russia was forced to invade because of nato expansion, because of violation of human rights of russian speakers, etc. prigozhin said this is because

they ran out of stuff in don bass. lisa: that is where i wanted to go. why didn't vladimir putin shut him down months ago when he started to release these types of commentary out there? do we have a sense of why prigozhin was allowed to have a voice? very few people in russia have been allowed to have in this war. tina: there are two possible explanations and they can both coexist. one is that putin needs him, that prigozhin provides services which putin still values, which would also explain why he has not had -- yet in exile in belarus. the other is, we have over credited putin as we tend to do with other opaque regimes, with controlling all the strings and playing three-dimensional chess.

it is a rookie mistake, a violation of authoritarianism while one to support -- authoritarianism 101. putin has specialized in kgb style and conquer. having these power centers like the defense ministry and wagner and other militias has suited him because these guys fight each other. it is the bulldogs under a rug as churchill said, rather than posing a threat to him. lisa: there is a question here about china's response to a potential loss of vladimir putin's power. this has been evident over the weekend meetings. what are you watching in terms of what china would like to see and how they are interceding into any negotiations with belarus, vladimir putin or staying out of it? tina: china will not want to intervene. they are sweating. ever since president xi's

remarks, there was buyers remorse pretty soon after that happened. that was early february and the invasion happened thereafter. let's look for statements coming from officials. they have been modest so far, talking about internal, domestic disturbances. as much as putin has caused global destruction, which is something china does not like, whether we are talking about washington or beijing there is enormous concern about who would replace him. i had this moment of terror as prigozhin was getting closer to the kremlin. i thought, what if he actually goes for it and there is a palace coup and i will not be the only one who thought about that? tom: this is in your wheelhouse. i am fascinated by what the intelligencia --that is a fancy word --or the elites, the

oligarchs, the fancy people in russia and outside russia, can they shape the events in moscow and st. petersburg? tina: i suspect they are finding out just how little political capital they have. we assume these are closed systems that are controlled from the top, and they are much more chaotic than we realize. one of the things political science talks about his negative loyalty. that means nobody piped up and said a word in defense of putin, which you might've expected if he still was a going proposition in terms of a power source. what do they do in situations like that? try to figure out how to keep as much stuff as possible. that is what will be happening now. tom: thank you for the brief.

providing leadership coverage over the weekend with the zeitgeist, if you will. i was thunderstruck, this big international dance including in february when the war started -- wow, how twitter has changed. i was bedazzled by what i observed in my lousy feed this we can. i was looking for red sox baseball and it was not there. lisa: there is a drama so uncertain. reading the newspapers over the weekend, regardless of twitter, the newspapers do not have a clue either. but tina said was telling, what we do not know possibly tells us more than what we now. in terms of lack of visibility on putin, lack of visibility on the two generals that hone his troops, the lack of understanding about what the agreement is. all these questions around motivation and goals. that remains the most interesting aspect over the weekend. tom: our bloomberg big take this

morning, mr. putin facing historic threat to total grip on power. the financial times, prigozhin still faces charges, says russian state media, the telegraph of london, russian agent threat to family made the factor leader -- made the wagner leader come off the facts. we will continue with coverage and continue to look at the markets which signal global slowdown. futures -7%. this is bloomberg surveillance. ♪

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tom: good morning on a monday, but a different monday. dr. bremmer will join us in the 8:00 our, onto general hodges and the 10:00 hour with further discussion of the events. we will keep you up-to-date on the reporting of these events from russia from de la rue's and -- belarus. right now, the market response. futures -7%. nasdaq with a greater percentage move. we have not mentioned this in the russia focus this warning. yields, i will use a fancy phrase, they are nuts.

the two stints spread up to 102 basis points shows that yield coming in, the 10 year yield. lisa: we are seeing grinding in the same direction we saw on friday. but, we are not seeing a wholesale shift even though the news over the weekend because people go -- to go into their desks and scrutinize every bit of information. to me, people trying to assess, do we go to our playbook we had for a hot second door we have to shift it over again? tom: there was discussion of global slowdown. the economy statement, looking at three years, five years of true lethargy and the global economy. someone has lived this or decades. as the adult in the room, he has focused on the loft kleins of

sintra in portugal, one of the most beautiful towns in europe where the elite will meet to greet. carl weinberg, explained to our audience why sintra matters to you. >> good morning. i am looking at sintra and in opportunity for key central bankers to explain themselves. the big show is going to be on wednesday. we have fed chair powell on the same stage as christine lagarde, andrew bailey of the united kingdom. the latest on the bank of japan. this is a chance where the four can explain not only how their policies are working for their own countries but how policies are working together to bring liberal inflation to a halt without telling the economy. in the background, world trade contracted in april. every time we have seen world trade contracted over the last 60 to 70 years, there have been

five episodes of world trade contraction and everyone has lifted a slowdown or recession in the global economy. there is a lot of stuff on the table. tom: the dynamics right now of traditional monetary policy, it may be something like other theories. does carl weinberg have an operating theory right now, or is the only theory that we are coming out of the pandemic? carl: i have a surprisingly positive outlook. despite the slowdown in trade, i am not sure what the slowdown in trade is an anomaly or whether it is an actual signal. i look at the economy involved, let's x japan out of this, but u.s., euro and u.k. while the u.k. economy and euro land are in a tough mess now, they are at full employment. the unemployment rate in europe is the lowest it has been since ye move.

where at full employment and inflation is slowing. a year from now, inflation will be back down pretty much where the central banks want it to be or very close. i am thinking about a world of employment, a world with price stability and a world with positive, real interest rates. that is the missing piece. i am wondering where the central banks are going. i am trying to be optimistic. we are in a rough patch right now in europe and the u.k., slowing a bit in the united states. a year from now, we will be at full employment and growing again. i have to power my way around this declining world trade and see where it and sub after we slowdown. lisa: when was the last time you were this positive? carl: in the 1960's, maybe. somewhere around the time graduating high school. historically, i have tended to look at the darkside and mute my

role in the financial markets as being the person who thinks about what goes wrong. a lot can go wrong. i have been looking at the u.s. employment data. i look at my bloomberg, i look at the numbers and say we are at full employment. what is the problem? the u.k. data, full employment. everyone who wants a job is finding a job. that is a success story. if you have a little inflation now and maybe we will get less inflation in a year, monetary and fiscal policy are in place to make that happen. maybe policy can finally get us to where we want to be for a change. lisa: i love the optimism. what can go wrong, it would be the big event in sintra where you have powell, lagarde, bailey, a host of central bankers who do not necessarily have the confidence you do that inflation will continue to go downward in a material way.

how concerned are you about continuing with hawkish rhetoric and hawkish actions that curtail the dynamism you are talking about? carl: just looking at the headline cpi's, which are the target of the inflation target -- are the object of the inflation targets we have out there and taking into account the basis affects, doing trend extrapolations, we get inflation back down the target by the first quarter of next year. all three economies i just mentioned, u.s., u.k. and euro land, that is pretty good. that does not involve any economics, that is just arithmetic moving the cpi forward by the seasonal factors only. that is a base case that says unless something goes wrong, we are going to get there in a year and that may not be as fast as the central bank's want to get there and that is what the are telling us and that is why they are continuing to hike rates. i have a personal view, that the central bankers want to get real interest rates in the 2% to 3% range, that is their target,

having been at negative real policy rates for 15 years. a key objective is to get positive real interest rates and at a level that is slightly, slightly deflationary, slightly breaking the economy so we do not break through full employment. but, able to nonetheless support growth at full employment with price stability. that means we have to be around 5% everywhere, because we've got 2.5% inflation targets everywhere. i think we are seeing the three big central banks edging toward 5% nominal policy rates or thereabouts, maybe both and that is why we are continuing to see rate hikes in the u.k., even though they have forecast inflation getting back to target. in europe even though they have forecast inflation getting back to target at current rates. lisa: this sounds like it makes sense and is logical. what the past three years has done is inject humility for all of us in the unseen events that

come in to repeat the nicely claimed theories. as we sit here with growing uncertainty about what the resolution will be with ukraine and the ongoing turmoil within russia, how will that potentially shake your current estimation of what is going to happen? carl: when we have learned this weekend is we do not have a clue about what can happen next in russia or ukraine. that, we can only speculate. i can invent a dozen scenarios for you, but none has more than 1% or 2% probability. we have to admit we do not know how ukraine is going to work out and how that is going to affect the world. consider the possible ramifications of what could have happened this weekend. political disarray in the soviet union taking the third-largest producer of crude oil in the world off the market, taking a large dominant producer in major commodities off the market. these are events on the economic side, could shakeup the world

economy substantially. we could see a surgeon commodity prices. i cannot have confidence in them. tom: your china note, i read every word -- it is a trend out of china, what is the misreporting or miss analysis we should focus on with china right now? carl: i think that china believes the senior level, they do not want to make total nice nice with the united states right now. they do see more benefit to a peaceful coexistence then to a cold war or.increase competition the way they received secretary blinken was indicative of their intentions and good stuff came out of that. we did have the slip of the tongue by president biden, which set things up a bit. they breezed back and got to the juicy stuff about blinken's

visit, exchanges between the two countries and how that can only be good. i am hoping for détente in the battle between the two economies, i cannot promise -- the u.s. administration from either party is going to be more friendly to china, but i think we are going to see the chinese try to de-escalate things a notch or too so the world can get back to business. they need to have growth through trade and the trade in the united states has declined, gross exports plus imports is coming down and they probably is those exports. as growth starts to fall short and there desired trajectory they are going to want to do more of it. tom: we have got to cut you short. you have been way too optimistic's. we are not used to this. i have never heard dr. weinberg that optimistic. he has been so right about some

of the shots internationally and particularly in 2007 and all of that. i think we have got to stop and suggest that, boy, is there attention -- is there a tension out there between people cautious on the markets and people like cara weinberg who say, this is going to work out and move on to some form of prosperity. lisa: if you look at the labor market, isn't that a good thing? we want people to have jobs and get wage increases and be able to have consumer spending and be able to pay down debts that are not as big as they used to be. this is a good thing, right? tom: did you have fed speakers in your brief this morning? lisa: there are fed speakers later in the week and it is going to be focused on what happens with wednesday, given the fact we are going to see ecb president christine lagarde, we are to hear from jay powell,

andrew bailey and from the new central banker you wait up of the --new central banker of the bank of japan. they are trying to splinter between the need to double down or take a be back. tom: anything weaker through 146 would be a huge deal. the euro is going unstable. 109.05. tina colored it well given these immense tensions that are out there in the markets, they happen stable, ruble weaker but you would expect that. lisa: this is the biggest question, the fact there has not been more action. which turns this question, do you go to what you do not know and game out the probabilities of different scenarios or look at what you do know? this is the carl weinberg point, and what you know is things look good and it could be the first time in a long time policymakers are able to achieve a goal with disinflation.

what he thinks is taking inflation back to that 2% target possibly, within the next year or so. tom: let's bring it back to the story in russia. bloomberg leading with our team, putin faces historic threat to absolute grip on power. i cannot gate out what absolute grip looks like, but i get the point from bloomberg. lisa: the perversity of this. on one hand there was a chair with prigozhin possibly marching on moscow. you saw the videos of ukrainian leaders eating popcorn and watching this. prigozhin is no saint, he has been brutal in terms of some areas he has taken over. which is worse, who do we want to be a leader? that is concerned with nuclear proliferation. these are some issues the key intelligence agents of the u.s. are watching now. tom: -- saying prigozhin under

investigation for you to any. that is the monday morning headline. there it is, still under investigation. lisa: this is my shocked face. how can he get off without anything? what does that mean for putin? tom: we will not speculate. we will do what bloomberg surveillance does, we speak to experts. in the 8:00 hour, ian bremmer will join us from eurasia group. he was fabulous over the weekend with perspective over these historic events in russia. good morning. ♪

>> i believe that the short term is an issue in europe and the u.s. because we have to work our way through the inflation problem without causing a deep recession. in the medium-term, two years ahead, it is nothing but good news. you have seen major innovation that is going to increase productivity.

out expect three years from now, everything will look better than today. tom: the chief economist at deutsche bank nearly describes as academic research particulate inflows of capital, this interesting relationship between china and the west. we see it this morning in dollar and ming be, the yuan pledging out to -- standard deviations. edge of plunging, 7.23% in yuan. 7.15% was a target for many. lisa, another indicator of global slowdown besides the weakness in china is brent crude 74.23, fractionally higher. west texas intermediate cannot it above 70 which surprises me. 69.44. lisa: the stasis you laid out

highlights how many push pull factors there are now. china's slowing economy sending currency lower after it tried to set the peg at a stronger-than-expected level. on the flipside, this question around oil. what are the consequences of oil that continues to percolate in russia and ukraine at a time russia is still shipping barrels of oil under the field? tom: one of the strands of speculation not reporting is as you mentioned earlier, the heritage of wagner and africa and syria, do they remain and in what way do they remain in ukraine? it is not a conversation for now, but it has got to be a huge uncertainty or at least unknown. lisa: when i was reading the notes over the weekend, every single one keyed in on commodities, whether natural gas, crude or wheat. one person who tracked speculation into fact is will kennedy, senior executive editor

for commodities. what are you watching over the events over the weekend and questions about what this means for commodity prices? >> if we take oil, turmoil in the heart of the russian state is something the oil market needs to be aware of. one of the important facts since russia invaded ukraine is after a blip in the immediate aftermath, that oil has continued to find its way into global markets. russia is getting its barrels to global market, it needs money to finance its war effort and as long as the state remains coherent or is every reason to think russia will continue to see those barrels flow. i think that is why despite the clearly heightened geopolitical risk around russia after this weekend's events, the oil market has taken it in stride. as you said in the beginning, there is plenty of oil supply globally.

in the short term there is no reason to think that is going to change. lisa: we have time since the war started, there has been a big discussion around resilience and energy dependence. how much progress has been made on that level and potentially removing some geopolitical risk in this sphere when it comes to oil prices? will: there was huge concern the flow would stop and that would hit those countries in europe, especially they were reliant on russian hydrocarbons. the wider energy market has proven to be incredibly flexible and resilient partly because of the way that policy has been constructed to try and limit the price that russia gets rather than the flow of barrels. those barrels have been directed to india, that has happened remarkably quickly and effectively. tom: an unfair question but you are so briefed on this i am going to take advantage of your cyclopedia technology. i believe -- of your cyclopedia

-- your encyclopedix knowledge. the amount of cash shown was almost as large as the advanced javier boss got for his wonderful book for sale, the movie rights for that. millions of dollars in cash, did that come from barrels of russian oil? will: i have no idea, tom. i have no idea. one thing we know about wagner which you mentioned earlier is that it does have oil overseas. one country people are interested in right now is the be a, where wagner has been a factor of the oil industry. keeping oil out of that country has been volatile, oil experts from libya. tom: how does turkey play into

this? turkey is not an oil power, but i saw lira print 26 today. is a commodity nexus --as a commodity nexus, where does turkey fit in? will: the black sea is incredibly important here. a lot of the events over the weekend unfolded, that is at the heart of the week industry, the agriculture industry in russia in particular. grains out of the black sea is important. turkey has been important in brokering the continued flow of grain from turkey. a lot of russian oil comes from the black sea. it is an area of focus if we were to see more chaos in russia in the future. that black sea area, turkey is a central player, is incredibly important for the flow of grains and oil out of the russian federation. lisa: it is interesting to ask about resilience and what has

been transpiring the past couple of years to offset interruption. there was this aaa survey put out overnight talking about how have seen this in the u.s., even though we are going to see a record amount of demand for travel that used to be fossil fuel intensive, it is going to be less consumption of gasoline then in the past. do we have a sense of how much electric vehicles and other types of renewable energies will offset again any kind of potential influence from what is going on in the turmoil? will:8 it is a very interesting question. do not know all of the answers yet. in the u.s., ev's have a much lower penetration than some of --, especially china. in the u.s., more vehicles are becoming fuel-efficient so gasoline needed for each average mile has tended to trend

downward and that is feeding into aaa estimates. in china, we are seeing a lot of penetration of electric vehicles. an interesting discussion of how consumption of economic growth in china which is weaker than people would like to have energy intensive economic growth is and how the economy grows as people drive more, how much that feeds through into oil. i think there are some indications of that equation is starting because of the eeev penetration in nature. tom: terrific brief, thank you. with west texas intermediate 69.48. i want to go to the bond market now, off our radar this morning with news we are seeing from russia and speculation. i've got further curb and version up to -1.02%, to the

march maximum inversion we have seen. the 10 year real yield has come in and that is something new. we went from 1.54 to 1.47, it is new to see further inversion with lesser inflation metric. lisa: people are gaming out a real slow down. how much of this is on the heels from what we saw in germany? the phone institute gauge falling significantly in june, is this coloring people's view that perhaps we are going to see in the data and ongoing slowdown reflected in the yield curve becoming more inverted? also, a lesser real yield? that said, are we flipping and flopping from the euphoria of the first six months, people are now retracing a bit? tom: i've got euphoria out there. carl weinberg is killing me with his optimism.

i'm fascinating to see what michael dart's says. i would point out the bloomberg total return index is aggregating in a u.s. total return. it is an indeterminate pennant formation now. i do not have a break of price appeal down or price down, yield up. within the noise of your world, i do not have a break yet. lisa: it sounds like something you would find at tiffany's. tom: used with a book on your lap, yeah, it is actually. it is a pendant. let's not go there. it is like you said, look at chart formations. it is like white smoke coming out. lisa: it is like astrology? tom: it is like astrology. better said. marc anderson coming up. bloomberg surveillance. good morning. ♪

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and you want people to be saved and to have a better life, then you don't stop. the idea that we have saved five million people's lives, it's overwhelming. it's everything. >> consumers and companies have been more resilient than the consensus expected. >> that money is out there, we think the headwinds are going to catch up with us. >> the fed loses its resolve in the face of this weakness and allows inflation to become entrenched. >> we are at one of those precipices where we are peaking and optimism. >> this is bloomberg surveillance. tom: good morning. jonathan ferro, lisa abramowicz. jonathan ferro is on assignment.

it's a historic monday after the shock of weekend. to bring you up-to-date would take 30 minutes. we've got 30 seconds. the uncertainty about russia seems to center around where are the people, are speculations over the weekend still in play? we don't know. lisa: how do you play the crosswinds that leave us in a stagnant uncertainty. you look at the now, which is the most optimistic since 1960. do look at the potential how this transpires? if you are just joining us, we are hearing that for goshen may or may not have immunity and dollars after attempting to march on moscow. with this means we don't know. tom: we are going to keep

briefed here. also what bloomberg news is reporting. the basic idea here of mutiny, not a coup. that is the wrong word to use. maybe it's what we use in the fervor of saturday. on what is a mutiny or an insurrection act, is this gentleman still under investigation it? that is the one colonel we can grab onto. lisa: this is what we don't know. we don't know what his motivation was. that's the reason why you can't say a coup. he was questioning vladimir putin's authority. he has been a vocal opponent of some of the tactics as well as the rationale for the war in ukraine a. he has not been prosecuted because vladimir putin needed them. how is vladimir putin trying to navigate his allies? tom: we will have to see.

we are doing this wrapped around economic slowdown. it continues this morning. the 10 year yield, we were on the 4% watch. 3.68%. lisa: we did get that data that was disappointing with respect to germany. we are expecting to get signs from manufacturing in the u.s.. things are slowing down. how do you game that out with hawkish rhetoric from central bankers? wednesday is a big day where you get the ecb president, jay powell, as well as andrew bailey. tom: is this pre-jackson hole? this is a philosophical question. lisa: deep thoughts i john.

honestly, these are the seminal speeches. how different is it now versus late august? tom: my observation is francine is going to get better food then chipped be on toes. -- beef on toast. bitcoin has done nothing for us. we have to have another bitcoin quote. futures are negative eight. shields are in. even the 30 year is on a global slowdown. curve in version, oil is under 70 area currency is a jumble. the ruble is weaker, i'm going to call it the year of resilience. lisa: people are game out the unknowns, saying we will settle with the nones. we will do with the fact and the knowledge of a wonderful cast,

including a retired general. that is going to be at 7:45. ian bremmer, later on we've got ben hodges. we will be very well versed on this. the latest with respect to these manufacturing recession. this could be important. even carl weinberg was saying this is leaving him the most optimistic since the 1960's. kicking off the jackson hole preview, christine lagarde giving opening remarks on the tcb form. tom: we've got a lot coming up in brussels.

right now, we will consider what to do forward, less away from international relations and much more about your portfolio. mark anderson joins us. i thought your note was exceptionally interesting. looking for a lower rate of return on leave. what i find interesting is the search for durable income. describe what arable income is. mark: i think we find economic activity is slow in the second half of the year. it's a bit like you mentioned. investments are out there and coming down. we can't be too safe in our portfolios. we are looking for durable income that is trading more attractive.

we are looking for a year yield in emerging market currencies. we find current yields are around 5%. tom: i look at the portfolio. it seems like you are distant from 60/40. what is your equity allocation? mark: it is slightly below 50%. the value of diversification has gone up tremendously. with the latest developments in russia, it's a great reminder that political risk is there. we have to think about diversification. equally when inflation might be sticky, it will be a theme consistently. woody to find some of these diversification's in the portfolio.

we do have something that is quite different. lisa: diversification has a very unclear meaning at a time of audit correlations. our big tech stocks acting as an equal kind of hedge against geopolitical risk? are you looking at equities being inversely correlated to bonds? mark: i think the way we like to think about diversification is something we can see in correlations through historical analysis. i think the one concern we would have around something like ai, which is a great diversifier. having the shorter term, we look for the diversification. we might get a bit more of a deep recession.

it is opposite to some of the ai related stocks. i would only agree. in many ways, it is very expensively valued. lisa: how have you shifted your view as we head into the second half of the year, that it has defied all expectations? mark: the global economy is a lot better. we see not only manufacturing, some of the service ones. there are around 50. we are likely to get a confirmation that the economy will be slowing. those are the signs we have

taken into account. tom: help me with your commodity call, particularly with oil. where is ubs? mark: we think we could get brent around $90 a barrel. there are a lot of interesting dilemmas. the slowing economic global economy would suggest the demand for oil would be going down. whenever prices are falling, on top of it we have very limited risk in the market around russia. we know that strategic reserves are very low. we suggest that this would lead to the buildup of some of these

inventories. we are basically selling volatility is a way of generating income. that goes to the income you mentioned. tom: thank you very much, greatly appreciated this morning. there was one point where the allocation stock, you make the joke about good bad news, there was a point last week. my head was spinning. i literally say that, there i was with my head spinning. lisa: a lot of people feel that way. there is utter confusion about what transpired over the weekend. the potential tail risk could be incredibly positive for risk assets or that's the reason why

this turn you are seated markets represents the spinning this of everyone's heads. tom: it goes back. 6944 on west texas. i should point out gold is up $12 this morning. in the equity market, the nasdaq is down a little bit. the standards and pores is down 2/10 of a percent. lisa: the head spinning this of markets has left the question around the leadership. this is coming out from catherine doherty. goldman sachs is planning to add tom montag to their board. that's a really interesting move at a time when they are cutting managing directors.

tom: this is a really interesting york story. for those of you worldwide, i don't think it is incorrect to say the total chaos of the. montag showing up with three cups of coffee before the financial crisis. this was moynahan's guy. i think it's not off the mark to say this guy single-handedly saved the bank with great respect. lisa: is he trying to shore up his leadership? tom: absolutely. this is a huge deal. given all that's been written about in the last three or four days, i wouldn't underplay this. for those of you in new york, that is a huge deal.

lisa: he is known for keeping a spreadsheet during the pandemic of people who work from home. tom: can i say he is a hard ass? he is old school. please stay with us. someone from sparta emailing and. i am in the timeout chair. futures are negative. we will consider russia in moments. this is bloomberg. ♪

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what exactly the nature of pagosa march to moscow was, how much this weekend's vladimir putin's power, who potentially

is advising who? who is backing who? what the potential ramifications are in terms of the war in ukraine. all of these are not necessarily resolved in any way, shape or form, at least in the public eye. right now. we're going to canvas from washington to london to brussels. anne-marie horden with us, our bloomberg washington correspondent. and tirelessly over the weekend, maria, today in brussels has tried to coalesce all the different tones. maria, i haven't asked this yet. if this guy goes to belarus, what will the greeting be like north of ukraine? and it's a very good question because we don't know the terms of that deal that alexander lukashenko, who remember, he is the president of belarus, although the international community says he rigged the election and they do not consider him the actual president of belarus, but he is very closely connected to vladimir putin. the only reason why lukashenko is still in power is because

vladimir putin supported him in 2020. so i presume that lukashenko will treat prigozhin in the way that vladimir putin asks him to. so within all your reporting, the linkage of moscow in belarus is still intact. putin and lukashenko is still a relationship. it's one of the foundations things we can believe in in this uncertainty. are they friends? no. do they trust each other? probably not. do they need each other? yes. is this a transactional relationship? absolutely, yes. but for the time being, it works for both. and now we're

point across. he felt like he was not getting the support needed for the wagner's troops. >> we have a lot of questions. do we have a sense of how important this is given that some people are saying this is the biggest revolutionary act going back to 1917. others are saying we don't know how to categorize this. we don't understand this significantly.

maria: there is one individual i would .2. that -- this is what she said. she previously voiced that this was a powerful blow that has been dealt to vladimir putin and the state. this will affect the regime. she said i want to point out the issue of image is always been secondary. optically, this is a massive low. you had prigozhin with his troops three hours away from moscow city center. vladimir putin as we've seen in the past, when there are individuals and cracks, he gets in the last minute and secures it with a deal. that is what he did here. it shows he still has massive power. there are cracks.

tom: help us in our ignorance. there have been some good articles of the icbm missile pointed west. are those right over the border? should we be concerned about them? maria: when it comes to russia, there was speculation yesterday about what to do with nuclear weapons and how to respond. every eastern european leader i reached out to actually said the situation is good for eastern europe because it means they will get more troops. germany announced they are sending more to with winnie. whenever there are situations like this, russia likes to bring up nuclear concerns. it thinks it will scare them.

they say if anything this was an embarrassment for russia and the situation has the escalated. i did speak to a very good contact in ukraine. is this good or bad news. they said it is good news for ukraine. russia is not invincible. tom: thank you so much. i will have an update here on the delicate discussion on nuclear weapons. this is a quote from reuters. he called them invincible weapons. i've got to get more briefed on this. lisa: geopolitical leaders would not be that concerned about this if it weren't for the nuclear weapons question.

a vacuum of power in moscow is a problem. even if it says that if it ukraine in the short run. tom: futures are pretty much stasis. it is like we open and there is an opening statement on where the markets are. we are waiting for more information. you mentioned germany, statistics showed weakness to say the least. lisa: that is going back a year. there is going to be a slew of data, including homebuilder sentiment. are we still on the theme that hawkish central banks are going to kill the dynamism of the tech

trade and some of the other positive trades? tom: apple, this is under the radar. friday, near a record high. i think i got the number of zeros right on radio. there are eight zeros before all the fancy numbers. it's coming right up on $3 trillion futures at negative six. good morning. ♪ e talking to her. i just could not hear. i was hesitant to get the hearing aids because of my short hair. but nobody even sees them. our nearly invisible hearing aids are just one reason we've been the brand leader for over 75 years. when i finally could hear for the first time, i started crying. i could hear everything. call 1-800-miracle and schedule your free hearing evaluation today. tom: bloomberg surveillance,

jonathan ferro

and all that, but it's something much more. we'll have more coverage on russia here coming up. our team is working tirelessly. you'll see that through the morning and into the afternoon as well. but right now, i think we need to move with movers. and we start by saying, tom was wrong. so that's a good way to start it. well, i mean, just to give a sense of what else is going on outside of the drama, spurred inside of russia, there is going to be a stress test result coming out on wednesday. the fed is still very focused on the u.s financial system. west bancorp very much in the news this morning. this looks like a big pop, 7.3%

gain. tom will roll his eyes at may. the shares are $7.76 off, a peak of $51.20 in january 2021. but this comes after they sold a $3.5 billion asset backed loan portfolio to arie's management as they try to bolster liquidity with some of the outflows they've been seeing. we'll get a review of that coming up on wednesday. no surprises in the friday report that we get every week, but am very closely watching this because, tom, you asked the question, is the banking crisis over? yes, maybe. who knows? we're still watching and think that that's what people have to say. well, let's see on we've got a chart on that here in a bit. what else do you have? alphabet dropping? about 2.3% are tesla first dropping 2.3% after being downgraded to neutral from buy at goldman sachs. this comes after the shares have just skyrocketed so far. this year. but an increasing number of analysts are coming out and saying, we don't know yet what the implications are for both the electric vehicle charging network as well as the competitive edge that they have

in alphabet falling after downgraded the company to neutral questions. romanization around artificial intelligence. and that's going to continue. it'll be the first thing to see the news flow into the summer on tesla. i have no idea what to think. i think nobody well, think there is something legitimate under it. now. valuation lines are really the focus. and again, the main question heading into the second half of this year has been can the biggest rally on record for the first six months of a year in tech stocks persist despite the increasingly hawkish rhetoric of central banks. google what do you have? google is falling 1.4% because they were downgraded because of monetization risks for artificial intelligence. okay. they were downgraded as well. sorry i missed that this morning. i was wrong on the banks. bring up this chart on radio. it's real simple. a lot of us, including me, believe there was actually a rebound in the banks. at least it's like a dead cat bounce pack was i? no idea. they just haven't come back, have they? they have not come back.

the peak was 52, $51.20 in january 21st. there is an issue right now with the bears. do they double down or do they get perhaps a little bit more optimistic like carl weinberg did earlier this morning? morgan stanley's mike wilson among those staying bearish, saying equities are facing a wall of worry which could fuel a sharp sell off. quote, the headwinds significantly outweigh the tailwinds and we believe risks for a major correction have rarely been higher. our target for the s&p 500 is 3900 for four of 2023. even though, as people have been saying, the underlying economy looks good for now. tom yeah, but there's 3900. but there's a lot of other people below. mike wilson mike's getting all the print, but there's some serious bears out there who, you know, they're being challenged right now to be polite about it. yeah, like greg waddle over at bnp paribas. yeah, absolutely. 43, 83 on rex right now, someone watching this is amy silverman had a derivative strategy. rbc capital markets. my head spinning. amy it's like the fifth cross

moment. it's out worse than courtesy. and the rest of it over the weekend. how did you study the bull bear debate? yeah, obviously, you know, incorporated into the weekend was just a geopolitical news and will tell you coming into this weekend volatility tom had just been pummeled. you know one thing we were talking about is just when you look at apple, which is 20% of the contribution to return to the s&p this year, 20%, it's at a two, five and ten year low. from an options perspective. so, you know, the birkin of the market is on sale. and then on top of that, now you get this geopolitical instability. what does that mean? it's tough. but i just have to say that when you introduce this level of uncertainty, it's hard not to see, you know, option price levels as quite compelling when you see a lack of volatility of 14.43. we had a 12 print at one point, just as a general amateur statement. how do bulls hedge?

are you able to constructively and effectively hedge your success right now? yeah, so that's an interesting question because of the following observation. the one thing that's been happening in options right now is volatility and spot price have actually been positive correlated. that's that's not normal. so usually, you know, your vix goes up when your s&p goes down and vice versa. we've been having vix and s&p go up at the same time. one of the reasons for this is because of those bulls. tom, because folks are still reaching for that right tail. they're doing it through options. and that's a function of why you're seeing both volatility and spot price rise in some instances. amy, how are you tracking the potential terrorists being exploited or expresd following this weekend's events? are you starting to see shifts in how people are putting on tail risk hedges oh yeah. so i think we're going to get

more details on that kind of later to daily. so just because it happened over the weekend. but i'll tell you, you know, i've been in boston speaking with clients. and this past week before the news hit, it was just kind of this overall statement of, look, volatility is low, but think we still need to sell it because low volatility does not necessarily mean cheap volatility. and then over the weekend, you introduce a pretty big left tail risk that think, you know, possibly could be a compelling reason for folks to own it. so you might see that left tail start to get good again. we've been talking all morning about one of the biggest questions heading into the second half of the year is whether this tech trade can continue or whether it's going to get retraced substantially based on positioning. what's your read on that? so positioning right now and you know, i'll just say, granted, given the political news, this might change. but going into this past weekend, it was still remarkably bullish. so folks were still on that tech train. they were still in that momentum train. and you see that in that skew inversion that coal demand over

the put demand in apple, in the media, etcetera, was mentioned. you know, you have hedges and apple costing kind of decade lows. and really the question think is with this breadth of the market, if tech goes to market, by definition and goes and so that's what think people are going to have to start putting into their thought process going forward. what do you recommending then? what are you saying is the more likely outcome based on positioning, based on the bullishness? does that make the trade more fragile or does that give it legs because of the money still flowing in? yeah, you know, i think, look, when you start to introduce geopolitical risks like what we're seeing, the one thing is the market tends to be very bad at pricing out these risks from a left tail and a right tail perspective. so overall, if you're going to put tail hedges on some sort of index proxy, like an apple, for instance, those are quite inexpensive because what happens is if it becomes more unstable, you get a correlated move down. that's what we've seen historically. and that's why, you know, you

want to just own anything that could be a proxy for the overall market. amy lawrence mcdonald made a splash, i think it was ten days ago with a lengthy, lengthy essay off the first order mass of index funds, etfs, all the other 401. stuff we do. and then the amy wu silverman space of overlaid derivative instruments on top of this ginormous amount of money. do we have opacity or clarity on the notional value of the derivative set of derivative instruments off of our gazillion dollar retirement base? yeah. so? so this has been a very hot topic, tom, among derivatives practitioners because so when you speak to that, the way i'll tell you it happens practically is there's now a lot of money going into funds where, you know, the fund is essentially long stocks, but there is a derivative overlay strategy that's maybe selling calls,

collecting premium on top of it. and so what has happened because of that, tom, is there has been this dampening of volatility overall because there's so much notional going into funds that's selling volatility into an environment that already has narrow breadth and the question is, you know, this is what derivatives practitioners are asking. what happens when this breaks? what happens when there's big correlated move either to the downside or to the upside? in this case, it's actually a correlated move to the upside that could break this, because remember, it's mostly overwriting. that's where the notional is. and i do think that's that's why we fixate so much on the breadth of tech, because if i keeps going, if that train keeps going, that's where have the question. but it does seem like, you know right now that maybe some of the froth is slowly starting to leave the market, at least from price action this past week. amy, thank you. what a clinic. amy silverman rbc capital markets. at least this is a huge, huge deal. i just can't say enough about it

at 87. okay. it happened in like two days later. we're all like, oh, portfolio insurance or, you know, 98 or the flash crash at whatever. and is greenspan articulated beautifully once we have to have derivative instruments there a constructive value to a financial system but they feed on themselves and where are we now in the cumulative snowball rolling down the hill of notion, top line derivative value? my answer is we don't know. amy thought was a little more articulate about it. we don't know. and there's also this issue of people who are trying to get signals from the derivative exposure. you talk about vix, that's a key example. vix artificially suppressed because of how people are expressing some of their views in markets, renting it, not buying it. i mean, we'll just we'll just have to see. and you know, i think it's the

problem is it's very complex. the fact is it's complex and people's eyes glaze over when they read about this stuff or or listen to it. but the fact is, it has to be addressed also on the leverage bet and what the leverage is out there. the underlying, you know, are we going to get out to 20 to 1 idiocy, which usually gets us in trouble? well, this that's the reason why i think a lot of people are watching the stress tests that come out on wednesday by the federal reserve to understand the leverage being baked into the system that has been made more resilient. if you're just joining the program, you could take a look at the s&p lower by about a 10th of a percent, a bit of a safety trade. ten year yields are lower by about five basis points, 368 right now. i am curious, especially given some of the uncertainty, how some of the biggest banks, tom's or tom, are readjusting, given that they're expecting deal flow to drop off and there's a changing of the guard in a number of banks? well, it's a change in the guard, the number of banks. but to your point on readjustment, we have yet to mention this. that's how much we're focused on

what's going on in russia. and lisa, it's simple, right sizing at jpmorgan, right sizing at goldman sachs, right sizing at citi. there's a trend here into the summer wrapped around the world of sonali basak around investment banking that you're going to see deals fall off, trading volumes expected trading revenues, expecting to fall quite significantly, just on a year over year comparison basis because last year was so great. then this captures it and the comfort for mr. solomon is i did a panel at

davos with montag. he is a throwback. he is a guy from another generation. he is going to give a traditional message as a member of the board. lisa: that's the question. he is going to say his piece of mind. he returns to his goldman sachs. red and green on the screen. stay with us. this is bloomberg. ♪

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on the continent, russia will play into this. we see clear signs of demand slowdown. that is something that needs to be reacted to. tom: good morning. bloomberg surveillance. jeffrey getting this started. lisa and i are scouring the news sources on an original monday. i would say the only idea we can coalesce around here, away from speculation is many sources saying the former head of wagner's, i'm wrong on that. maybe he is still head of warner. -- wagner's. lisa: the news over the weekend was the right man of vladimir putin, the head of the wegner group, he had marched on mark -- moscow.

he came to some agreement may be to go to larusso not be charged. understand all of the uncertainty and what this means, how important it may be amid our questions. we are lucky to have with us someone who has extensive experience in the army and as a teacher at the u.s. air force academy. a board member for academy security and seven with a storied history throughout the years. >>, and lisa, thanks very much. what i would tell you, we've seen something incredibly significant. it's an opportunity for the ukrainians from a military and

psychological warfare perspective. particularly if wagner's is out of ukraine. that could tip the fight in ukraine's favor. there is so much uncertainty regarding what is happening out there. mr. vladimir putin is still in power. his priority is staying in power. he sees a chang in his armor. now he wants to avoid a spark that weakens public opinion against him. that has gone into this notion of what happened over the weekend. there are lots of rumors running around. there is one that prigozhin captured a nuclear storage facility, which would end his

coup. moscow may have not been his final destination. the storage facility might have been. if that happened, which is a rumor. when he got where he was going, he ended the operations. lisa: what would be some of your key questions at a time when people are talking about this likely does benefit ukraine. what are you curious to know? is this positive in terms of vending the conflict? >> excellent questions. he answers are what i would be looking at. where is he? what were his objectives? is he operating out of de la rue's now?

here is a possibility that the so-called revolt was a ruse to open up a northern front into ukraine. one needs to understand that deception is an element of russian operations. there is a lot of speculation and few facts. that is what we need to do, here are the facts or verify some of them. we will be better prepared to understand what is going on. tom: it's an honor to have you with us. it goes back to colorado springs. many people have linked you to the heritage of airplanes in america. david is associated with drones and all of the development we've had in drones. to these events in russia and belarus, do they allow for a

better use of airspace by ukraine with aircraft or drones? >> that's a wonderful question. i appreciate it. lesson number one coming out of what's happened with this conflict, the value of air superiority. neither side has it right now. it's essentially the ability to operate freely in airspace at any time in any location. without that, you seen this conflict evolve into a world war i style slugfest. that's a huge lesson. i don't want to take a lot of time. one has to ask why they performed so poorly. it's understandable on the part of ukrainians. they are such a small air force.

tom: what is important here is the offense given this opportunity. to signal that ukraine wants a better dominance in the black sea. is this now the opportunity to use drones to free up that geography? >> once again, we don't think a drone is not a drone. that's why we prefer the term remotely piloted aircraft. there are small ones in large ones. some have the capacity to carry other systems that impose desired effects. a good example is if you look at

systems like the m2 nine, that is incredibly in cable. there are policy issues on part of the government. tom: thank you for this brief. people go who is the guy, this is the guy who did drones. it is just that simple. lisa: you asked a good question about the airspace, this has been one big question. why russia hasn't used their air dominance over ukraine.

he did a good job about the questions and the ramifications. this will make it and give them an advantage in the near-term. tom: i wonder if some of this is over the stasis out of russia. i am going to success four or five hours off the total chaos of saturday. i think you see it in the tape. these are little tweaks. i've got red and green on the screen. the vix is not as angst the as it was. lisa: everybody was getting into vacation mode. we are heading into the holiday season. a lot of people were hoping for a quiet weekend. everyone had to pay attention to find out. this is the issue right now. we look at whether people care

about this. we can go back to our assumptions and our plans for the upcoming season. tom: we have to work it out through the morning. there are three ways to look at the ruble. there is a ruble basket. there is dollar ruble. there is euro ruble. we are really back to 15 months weakness after shocking rush off the beginning of the war in ukraine. please stay with us, up next is collin martin. this is bloomberg. it morning. ♪

it's an amazing thing when you show generosity of spirit to someone. and you want people to be saved and to have a better life, then you don't stop. the idea that we have saved five million people's lives, it's overwhelming. it's everything.

>> in with the fed and these other central banks tightening policy aggressively, it starts to bite and it is starting to bite. >> fundamentally, the economy is very strong. >> we are only now getting to take policy. >> not clear in the end of the tightening cycle can be. >> this is bloomberg

surveillance with tom keene jonathan ferro and lisa abramowicz. lisa: russia is the big tail risk once again. good morning, this is bloomberg surveillance on bloomberg radio and television. jonathan ferro is on vacation this week. we are looking at a time when once again people are not talking about inflation or central banks, they are saying what's going on in russia and how significantly could this change the course of events? tom: i thought tina for note -- fordham was great earlier. it's a general statement this morning but there seemed to be radio silence from all the geographies. it's been very quiet over there as far as the news flow. lisa: what we heard over the weekend was the wegner military

group that had been working through the rush -- with the russian military in ukraine and a number of different conflict, the leader marched on moscow in defiance against vladimir putin, the president of russia. we are looking right now at this idea that people are looking at some sort of tail risk because they think things look pretty strong right now and still are worried. tom: mr. pruden made an address. -- mr. putin made an address in the speaking to the youth and industrial engineers of the future. he didn't mention anything about the coup. there is some form of recent sighting of mr. putin.

lisa: we don't understand whether this was a coup or an issue of simply expressing displeasure. the fact that markets were focused on it and there's little reaction in terms of direction to the trade highlights the uncertainty and the stasis at a time of great reset heading into a very different second half of the year. tom: here is the data check. the tape is better over the last three hours. there is an improved tape over the last few hours with futures negative three. the yields are not as grim as they were. oil is up $.61. lisa: it's a bull market for oil. we are also seeing natural gas in europe arising off some of

the higher gains as people calibrate what this means. the fact that treasuries rallied is fascinating, the fact that you saw a haven play for treasuries even though people were saying that potentially the outcomes could be inflationary and that raises the question as bonds as a diversifying and's -- instrument. did you take a signal that once again we have seen bonds reclaim their role as a stabilizing factor in a counter hedge to risk? >> we think so, yields came down a little bit but they've given some of the retreat back. we think when there are concerns like this and there are risks like that, you see the bid for treasuries kick up and yields come down a little bit. oil hasn't done too much.

yes, the offer that diversification benefit and we continue to suggest that all investors consider bonds of these levels. lisa: if it wasn't for the russian conflict, we would be talk about the fact that the head of the ecb and the federal reserve and the bank of japan and bank of england are meeting unmet wednesday to discuss their increasing fight inflation. our people understating or overstating how far the central banks are looking to go in now high rates go but how long they are willing to hold them? >> i would say it's understated internationally and domestically. we are not expecting a ton more rate hikes from the fed but it seems like one is likely. whether they hike once or twice more, we're focusing on the length of time and that's a tight financial condition and it comes into play. it doesn't give households or corporations any kind of bailout

down the road to take advantage of rates. the longer they hold, the more they can reach their goal. we think the markets are probably underestimating that. rate cuts have been significantly pushed back. it's a basic idea of the wall of money out there. there was a wall of money out there and that wall of money is 99% schwab. is there literally a shortage of bonds? >> i don't think so. there is a lot of money out there and we talk about savings and what's there and what's not and a lot of that probably is gone but we are still looking at futures and we have to see wages come down a little bit to see that spending come down to a level. tom: on a retirement basis, are you optimistic there will be issuance by corporations?

will there be issuance of we can buy the coupon? will there be a shortage of bonds? >> i don't think so, if you look at corporate's, the amount outstanding in the free world, we are looking at 6 trillion plus. i wouldn't expect corporations en masse to suddenly start shrinking the amount they have. i think they will be cautious but you look at the big picture in terms of corporate issuance and whether it's high yield market and you get closer to trend -- $10 trillion, we don't expect that to shrink. lisa: you do expect companies to continue to maintain their leverage profiles. when will higher rates bite? they will have to refinance at some point. >> hopefully soon, we think it will way on these corporations for a while insofar, it hasn't

impacted the way the markets are perceiving the risk. we seen spreads across the ratings of spectrum come down when we saw a little bit of an uptick last week and we expected to be more pronounced in the junk market. if you are asking when they will hit the bottom line, it's hitting the autumn line right now. tish is sitting the above -- it is heading the bottom line right now. lisa: high-yield bonds have continue to rally and this is a conundrum. if you look around, you see things pretty good as employment being pretty full. how do you sell off in advance of a crisis or some sort of tightening in credit conditions that will inevitably happen at some point when these companies roll over their debts. >> we've seen a false start to pick up. defaults are closer to 3% on moody's.

expectations are for them to rise. as far as the length of time rates are so high, the corporations might be sitting on the sidelines now and not looking to refinance debt and be given that opportunity. i yield bonds have performed well this year. we continue to talk about how cautious we are and spreads remain close to or percent or 4.5%. we've seen 20 indicators that say they should move higher. we tell our clients you don't need to get out totally. we are cautious but if you hold for a long time, you can ride out the price declines. you can break even or make money over 12 months. we talk about 12 months because you want to earn the annual income payments. tom: are you expecting new issuance by corporations?

will there be a solid issuance stream in taxable bonds? >> for ig we can seek solid issuance. they have stronger profiles. i think we will see a weaker high-yield market. investors will be a little bit more cautious i think issuers themselves will look at those numbers and decide this might not make sense right now. tom: thank you for joining us. i think this is a huge deal for cfo's, maybe they do a little less equity and more bond exposure. . i don't mean companies like john deere but vanilla industrials, old-school stuff. lisa: and they will get good rates because people are so clamoring for their bonds. you might see lower spreads than people have seen in the past because the benchmark yield is so much higher.

it's the other companies i wonder about and the riskier companies. do they start going increasingly to private markets and becoming richer and deeper as people see opportunities. these are the questions that people are gaining out right now. they are calling for an increasing boiling of the frog. tom: where does that phrase come from? boiling of the fraud? lisa: it's slowly turning up the temperature more and more until the frog is no longer with us. tom: can we do boiling of a lobster? lisa: basically it's a slow grind is what people are talking about. at some point, there was a story about why this economy has been interest rate sensitive as people thought it would be. tom: there was treatment this weekend on that. lisa: this is part of the reason for his companies don't have to buy. tom: there is also a pandemic

study. it's part of this pandemic study that we will have full coverage from central with a huge focus on wednesday. lisa: that will be the big confab between central bank heads. tom: everyone will be there and we will bring you central coverage as they readjust and recalibrate this summer from portugal. futures are negative three in the s&p 500 is down fractionally, 0.1%. lisa: as we recalibrate into the second half of the year, i think the big focus will be on the banking sector especially given that they kick off earnings about july 14 when jp morgan has its earnings. it begins the whole cycle and this will be curious at a time when trading revenues are coming down and dealmaking revenues are coming down and lending is very much in the -- in the forefront with the potential of credit restraints. tom: we want to talk to people

who know what they are doing. the expert on the cloud and ibm, here is the initial take on the acquisition today of ibm of apti o? a $5 billion transaction, a smart move. more software revenue but what i find interesting is ibm is one of the few large tech companies that can actually get a deal done as regulators scrutinize any move by the bigger firms. to me it's really interesting. they are like jp morgan, they are almost boxed out. lisa: they don't have a monopoly in the hot technology so there -- so they are in a lot of positions? tom: i think they are behind so yes, they met get to make an acquisition as well. oil is $69.53.

i really thought we would see more euro. lisa: is this a tail risk that could potentially bolster the euro or detract from it? it depends which way it goes and we don't have enough information. tom: it's been quite information this morning. vladimir putin and russia is in the news and coming up next, ian bremmer so stay with us on bloomberg surveillance. ♪ i just could not hear. i was hesitant to get the hearing aids because of my short hair. but nobody even sees them. our nearly invisible hearing aids are just one reason we've been the brand leader for over 75 years. when i finally could hear for the first time, i started crying. i could hear everything. call 1-800-miracle and schedule

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was also the first time your profits left you speechless. at the counter or on the go, save 20% with the lowest transaction fees and keep more of what you make. start saving today at godaddy.com >> we've seen some very serious cracks emerge. you have pergosian publicly questioning this russian aggression, the notion that ukraine for nato presented a threat to russia. you have someone challenging

vladimir's leadership publicly and very openly. we see cracks emerging and where they go if anywhere, when they get there, it's hard to say and i don't want to speculate but i don't think we have seen the final act. tom: the secretary of state on abc this weekend. it seems distant ago, sunday morning, so much news has changed from sunday morning and signing in to relative silence this morning. some nuances but it's really minimal. lisa: what we are hearing is from a number of leaders with the latest being the nato secretary-general saying the mutiny by pergosian of the wegner group. it seems to have weakened its position at least visually from the outside. tom: we will speak to ian bremmer now, president of the eurasian group.

he's far more identifying the risks of the world. i'm not sure this was on the risk. >> it was, it was number one. rogue russia, you and i were there in january. tom: thank you and thank you for your guidance and leadership on that. i would go to one statistic now in the wall street journal, the federation of american scientists, russia has over 1600 deployed strategic weapons pointed at europe and other places as well. brief us on the nuclear risk we face this morning. >> this is the most powerful rogue regime on the world stage

today by a very long margin. vladimir putin, who is facing unprecedented pressure from a disastrous war on ukraine that he has been fighting ineffectively for the last nearly year and a half, now also faces on precedented challenge domestically to his own power over the last 48 hours. probably the worst 40 eight hours since he became president of russia. this is a man who controls the largest nuclear arsenal in the world. i don't think i need to spell out more clearly what an existential threat that poses to all of us. he is a war criminal and he's thought that way by the entire nato summit in all of the american allies. it's very hard to find a way back from that. when we talk about war

criminals, we talk about people like washir and qaddafi and those are people and milosevic and they end up dead or in prison but the only way to get from your today with prudent evolves in a norma's amount of danger. that's why the story with mr. pegsian this weekend was so interesting. tom: this is not political but the angst over dick cheney years ago and some of the angst of the military over president trump, do you have an understanding of the military command and control of their missiles versus the focused group in the kremlin? >> i think we have greater concern about the disposition, not just of russian snoops but also the biological capability and its criminal cyber gangs who are the strongest and most capable of any country in the

world. that has all been marginal through russian state power and if you say how dangerous is that today? i want to remind everybody that we're vladimir putin has been tested in an unprecedented fashion, none of this senior military advisors or government leaders or major oligarchs bleeds. none of them defected. none of them came out against putin and his regime as per goshen - pergosian and wagoner were marching over the weekend. i don't think we have a reason to believe there is a challenge to that today. it's absolutely uncertain. lisa: do you think russia is more or less risky with vladimir still at the helm of the

statehood given he is a known entity? >> it would have been more risky for pergosian but it's a clear case, he's a former convict, massively, emotionally unstable, known torturer, personally responsible for war crimes in ukraine and elsewhere. he is also emotionally dealing with being on the front lines and facing the assassination of several close officers around him just in the paths months. none of us can put ourselves in his emotional state so i think it would have been more unstable with pergosdian. the enemy of our enemy is their enemy. i don't think there is anyone in nato that was rooting for perghosian to take over in moscow this weekend. lisa: how do you read the involvement of xi jin ping's

diplomats who held discussions with russia over the weekend but didn't seem to get involved? >> that's right, the deputy foreign minister had a trip that had already been scheduled. they certainly didn't cancel it. china basically discuss this as an internal russian affair. it's close to what nato had to say. putin is facing the worst challenge of his career and his best friend on the global stage xi jin ping offered no military support or direct defense. you don't usually talk about kazakhstan but i will mention it. year-and-a-half ago before the russian invasion of ukraine, there was a coup in kazakhstan and fulton sent 2000 paratroopers dachshund vladimir putin sent 2000 paratroopers and over this weekend, he said this is a russian matter and i got nothing to say. fulton doesn't have real friends on the global stage.

a lot of people want to buy his oil for cheap and people want to do business with them but no one is prepared to take a domestic stand to help him. tom: given the shock of all this, we have no idea what will happen in the next 12 hours or 120 days, but is this a save face moment where turkey welcomes ukraine into nato? >> i think that was going to happen anyway but it probably happens more quickly now. i saw sultan bird from nato make indications in that direction the last 20 for hours. . this is an opportunity for the ukrainians who only have about 2.5 of the 11 divisions in position and fully outfitted and trained by the americans and the u.k. and have been fighting. they will certainly be more optimistic of being able to take more land. .

that has not gone well the past couple of weeks so that's an opportunity. the fact wagner group is being liquidated, there headquarters were rated over the weekend and their soldiers will have contracts for the ministry of defense and the ones involved directly in the fighting against moscow will not be fighting going forward.a lot of them are former criminals and are not trained, they are brutal in the field and they are more likely to engage in torture and other sorts of horrendous behavior. the fact that wagner is liquidated is good news for the world. for russia and ukraine but also mali and libya where they been operating. it's a very good thing the world's most powerful paramilitary organization will no longer be there. tom: thank you so much for your time this morning. ian bremmer of the eurasia group. i did not remember that.

he said it was the first risk this year. lisa: it's a big concern because the biggest nuclear collection out there. coming up, our next guest will talk about the some of the machinations after penitential political risks and uncertainty economically as the world's leading central bankers head over to portugal. ♪

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when you show generosity of spirit to someone. and you want people to be saved and to have a better life, then you don't stop. the idea that we have saved five million people's lives, it's overwhelming. it's everything.

tom: bloomberg surveillance, good morning worldwide to you. jonathan ferro, lisa abramowicz and tom keene and lisa getting ready for a 9:00 soirée with important guest on russia. in the 10:00 hour, bloomberg and alix steel and guy johnson will speak to general ben hodges retired of the u.s. army and we are looking forward to that conversation. the tape is better, that's what you need to know, off the shock of the international events of the weekend. i don't want to overdo it but sunday out of asia into our morning and it has improved. there is no other way to state

that. i've got fractional improvement on the screen but the nasdaq 100 is down. spx is zero essentially. that's very important. just as important is the two year yield improves a little bit but what has not improved his curve in version. i've got 103 basis points spread and that is really something. that's the source of study for our next guest. i got a huge response the last time this chief economist was on. we will revisit today and focus on some of the certitudes out there and the lack of patience over watching recession indicators. michael darda, thank you for joining us and we see the shocking curve in version, re-inverting through march.

you look at other spreads so why are we impatient on the signals of inversion? >> thanks for having me on. i think we are impatient simply because the yield curve is a long leading indicator with a lot of historical variation between inversion and subsequent recession. based on the 10 year one year treasury, that's where we focus. it occurs between seven months and 25 months post inversion with the average outcome 12-14 months. we are 11 months into inversion on that specific yield curve. it's just premature to say the statute of limitations is now up and we been inverted for too long and the economy has held up. we are slowing, there is no doubt about that, but the recession debate continues to go on. this always happens. you been on this for a couple of cycles now and when the yield

curve inverts, the macro data and risk markets tend to hold up for some time. it's different this time. it's a false signal some say. it's different this time phrases the most dangerous economic forecast. tom: as we look forward, do we just inflate? >> no doubt about it. you can already see that in the slowing trend for nominal gdp. in fact, on the income side, nominal gross domestic income is essentially flat or negative two quarters in a row gdi. that diversions a something to keep an eye on from a recessionary perspective. the last time we saw divergence between gdi and gdp was just before the 1990-91 and 07 and 09 recession. we can see the deceleration in the nominal aggregates and

inflation tends to follow. it's a lagging indicator so wages and rents tend to be tied to contracts. typically, the core inflation rates are coming down but they are still elevated and they will continue to come down on the back of slower nominal spending. that's really the key variable as to what the -- as to whether the fed has tightened or ease. it's decelerating sharply and there's more deceleration ahead. tom: this is critical, on nominal growth, adding real gdp and sums art of inflation statistic, are you suggesting we get to -5% nominal gdp? many people are not expecting that. >> we are already there. those tend to be a better barometer of where gdp will be revised to in the future.

we are limping along at barely 1% nominal for gdi. nominal gdp is still up in the fives. a 4% trend would be consistent with the inflation rate. i think we will get there and not fall below that in the near future. tom: this is what happens when you have someone from the university of wisconsin and they goal allgdi and gdp. he was the only one in his class that passed the test ongdi. let's translate this to the stock market. there is a cash flow and a lot of people are focused on earnings lessening and flattening. even if we get earnings flattening, can i get multiple expansion? >> you have been getting it this year. this run up in the equity market is largely driven by the multiples.

in my mind, i think that puts us in a bit of a dangerous place. at a 19x forward multiple on the s&p 500, with elevated recession risk still in front of us, i don't think that's a particularly good risk reward for most investors. if we look at what has driven the s&p 500 this year, it's obviously been the outperformance in growth starts so the infotech index is up at a 27 multiple. we haven't seen anything like that since late 2021 and that preceded a more than 30% collapse for the sector. because market interest rates are higher than they were at that time, the equity risk premium on the infotech sector is actually negative for the first time since june of 2007. that wasn't a particularly good time. tom: michael darden thank you so much for the guidance. michael darda with real caution

from someone who is usually optimistic. there is a lift to the tape all around, seeing a better stock market with futures a little positive. let's not make too much about as we wait for news for russia. there was a bombshell this morning on wall street. there was a wonderful panel years ago at davos from bank of america. we have a straight talking different person. did you see this coming that mr. montag would go back to this? sonali: he had worked at goldman sachs and worked at bank of america but when he left in 2021, it was after a string of news that questioned the culture. there was a few things going on.

he has a grand return to wall street. there is over a dozen people already on this board who are closely knit at a time when there are a lot of questions about the culture at goldman sachs. we are only a couple of weeks away from a story that was in the journal that it was at war with itself. tom montag whose work with david solomon and seen as a closer ally to him and he started to bring the bank back together and secure the idea here that david solomon could not do it alone. tom: the upset of goldman over the last three or four days, solomon was at bear stearns and then he and montag know each other. so solomon brought him back. in that process, he says i want the guy from bank of america to come back to goldman sachs. sonali: it's not should solomon who is chairman of the four but there is still an entire board. you think about the key players in one of those very key players

is the secretary to the board john rogers whose work at goldman sachs and the senses that you really can't lose his confidence. goldman sachs is not going to make big decisions here. there were huge pivots in strategy and there has been a lot of griping but this is year five for david solomon. tom: the article in 2021 was a huge article and tom montag as adina sarah -- is a dinosaur like me. montag talked about working for goldman. he was dead set against it so what will he bring to the board? sonali: he has confidence. the other way to look at this is this is a question of the next five years at goldman but not

the last five. while we talk about the consumer, it's a drop in the bucket. it had been at drop in the bucket for the revenue. they had been performing and beating on their core business model. they've expanded their leads and met -- and acquisitions and mergers and the trading desks abgenix for nearly well. tom: this is what i don't get. over the weekend, there was a lot of gossip which we don't do on this bank. all of it centers around how david has screwed it up. has he? sonali: i don't know if you been hanging out in the hamptons but there is a question of what -- of white goldman needs to be something else. why can't they do what it does best? when at investment banking and trading? tom: what is montag going to do on the board? i gate -- i get an idea of what

the former cfo does on the board but what does he do on the board? does sonali: sonali: he cheerlead? pretty much. one of the big questions as we heard this griping the came out of goldman for months now, a lot of leaking to the press. when to those problems become an actual business problem goldman sachs? there is a sense that there needs to be a bringing of people together to stop the complaining and stop the leaks so this doesn't become a bigger problem. tom: sonali works a six hour day and had zephyr beverages and -- and then goes out for beverages. was he pushed out of bank of america? sonali: when he stepped down, he was the only one. it was painted as a way tom: a generational thing. sonali: it did come in the wake

of that very explosive story to the point that not only bank of america but brian moynihan of bank of america had publicly defended tom montag seriously. these weren't just work from home issues. there were questions about whether women were allowed to be objectified in a culture. there were people afraid of losing their jobs. tom: red and green on the screen right now. a very constructive tone to the tape off of four or five hours ago on we're waiting for news from russia. maria tadeo is looking at that carefully. the standard & poor's 500, fractional, down 0.3%. we say good morning to all of you on bloomberg radio and television. over the weekend, if there hadn't been goldman sachs, if there hadn't been all of the international relations with russia, there would have been no other topic.

citigroup, goldman sachs layoffs. are they just getting out front of a difficult summer? sonali: the part that is so disheartening for many people is golden set out to cut many jobs and when they did that late last year and this year, there is a since they are going deep so they don't have to go deeper. to see these additional job cuts and to see citigroup and jp morgan make the cuts by the dozens, it's surgical. we are not talking about thousands of people but yes, this is happening in fits and starts. how far does it go? tom: what is the character of the managing directors? is it all the spec crew? sonali: there is a lot of that but you can say a lot of that has already happened. deals themselves have been muted and a lot of underwriting has been muted and ipos are only just starting to come back. people have hired so intensely in previous years. at what point does the market

come back that dramatically to have these people on staff? there is also a lot of movement in the positive direction. there is a lot of stars moving around to different firms. not all is bad out there. tom: thank you so much. we have an important story with mr. montag retired from bank of america. he's moving over to bank of america -- he's moving over to jp morgan. on radio and television, this is bloomberg surveillance. ♪.

>> when you start to introduce geopolitical risks like what we are seeing come of one thing is the market tends to be very bad at pricing of these risks. overall, if you're going to flip on index properties like apple, those are quite inexpensive because if it becomes more

unstable, you get a correlated move down which is what we've seen historically. tom: amy wu silverman was outstanding in the notional derivative value. this is an inside baseball item. if you were part of global wall street, go for our full conversation with her today. she was absolutely brilliant on the derivative build that lawrence mcdonald wrote about 10 days ago that was such news over a given weekend. we continue strong on the surprises of this 2023 market. gina martin adams put in a buy order for 100 shares of nvidia and now joins us. she is the chief equity strategist and you've never seen anything like this. i will cut to the chase -- for mere mortals that don't know nvidia, is it broadening outs?

>> in fits and starts as the best answer. what we gotten so far this year is anomalous. there were two other periods of time were resolve the top stocks outperform and 2020 was one of those times in the bull market. lisa very concentrated gains. they ultimately broadened as the economic recovery came to the fore later that year. it is possible we will continue to see broadening. many people are looking back at 2000 is the other incidents of concentration risk. in that case, we had the opposite scenario where the flying stars started to crash down to earth. many are fearful of that. we think we will see some broadening we saw that in early june. much of that broadening has been offset by some downdraft and some of these highflying stocks. for the rest of the year, we

will see that 2024 should look like a better economic year than this year and the result will be a broadening equity advance. tom: the curricula is real simple, study history. one of the great histories that was alluded to earlier is the opacity of the derivative structure. are you concerned about the derivative leverage or notional value overlaying our core equity holdings? are there excesses in 2023? >> as market cap accelerates, derivative exposure accelerates as well. in this climate where we have very little disability as to -- very little visibility is where the economy is going or where the earnings stream is going a lot of us deal with interest rate risk and people are not taking long cast positions. they are playing on the margins

and that is resulting in this derivative bubble if you will. . as the year progresses, we will find is the confidence starts to improve. that creates some general broadening of exposure, some greater confidence in the outlook which allows people to take longer-term positions rather than these short terms around the margins. if we end up with a very onerous response to higher interest rates and get a bigger crash than anticipated, we could be in trouble because those exposures have to unwind. i think generally, as long as the economic outlook goes as it is anticipated which is a modest recession followed by recover into 2024, the market structure should shift a little bit. investors should have a little bit more competent taking longer-term exposures. it just hasn't been there this year. tom: we are on the 3 trillion

watch for apple. they are up like 47% versus others to the moon. do you acquire marginal shares of tech? i know you don't to buy, hold, sell but what are your thoughts of if someone says i have to sell tech? have you respond to that? >> at this stage in a cycle, there is a lot of fundamental support the tech call. this is not specific to stocks and apple and microsoft are very large entities in the tech space. they tend to drive a lot of trends but what we are detecting in our sector scorecard which is a quantitatively driven model that allows us to find the best potential performance among sectors, this sector scorecard does promote tech and communication stocks as well as consumer discretionary stocks

and industrials. those segments are tour the top of the scorecards. the reason tech is toward the top is because there is an underlying earnings recovery in merchants. last year was one of the worst years ever for these stocks performance tech, communications, all of them underperformed in the biggest stocks in the index underperformed over 2022. some of 2023 is just a bounce back but also, we had tremendous earnings recession in this space. earnings fell up to 30% throughout 2022 and we are starting to see earnings recovery emerge. what we've got in stock prices is a reflection in large part from the 2022 experience now happening this year. also a reflection of the earnings call in reflection in margins. it's creating a degree of optimism. that's supported by fundamentals. tom: as i look at the

fundamentals, i link them to the gamble and the hope that nominal gdp will collapse. what is the revenue growth model relative to the boom revenue in selected areas of the pandemic back in 2019? >> this is a good point because revenue is a risk into the second half. we got this unique experience right now or most of the recovery in the earnings stream is likely to happen into the second half is because margins happen on the inflation downdraft. it's been key to creating some big margin stabilization. revenue growth does decelerate significantly. our model suggests that that results in about a 5% downdraft over the next 12 months.

there is already a 10% downdraft we have experienced. this is a persistence of a recession as opposed to suddenly we falling into recession. it's very consequential for stocks. stocks follow earnings, they don't follow the economy so even as the economy decelerates, if you have revenue decelerate, it's offset by using inflation in your earnings could be net positive i think that will emerge into 2024. that could be with the market has been trading on so far this year is the idea that the earnings distress that we've experienced over the last 12 months really comes to an end before the economy starts to turn over. tom: thank you so much. my head was spinning last week. you've got to be in the market.

you don't go to cash. let's summarize where we are. welcome all of you worldwide on bloomberg radio and bloomberg television. we've been trying to talk to individuals about the belief forward given hugely small news flow. there was speculation over the weekend but this morning, there's any number of themes and then silence. one theme out there is that the gentleman from wagner will face charges. there is also the idea of the uncertainties there were everyone is right now including mr. putin. maybe some of these answers will be given to us through the days. we've lined up a terrific number of guests and they will come in during the tonic like ours. the former general ben hodges

will join us and we will havealina. ian bremmer joined us and he just published his note and he has a concept here but i topics its original to him -- but i don't think it's original to him. that is the near abroad. when i have to study, this is interesting belarus to the north of ukraine clearly the near abroad for struggling vladimir putin. a major shout out from jonathan ferro and lisa abramowicz and myself to our team through the weekend to bring you the news. futures are negative two, this is bloomberg surveillance. ♪

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>> we are looking at stasis at this -- the world watches as we try to understand what is going on with russia. the countdown to be open starts now. -- the open starts now. >> this is bloomberg the open with jonathan ferro. lisa: we have come up markets on edge where traders preparing for the second half as finished -- geopolitical uncertainty emerges out of russia. we begin with the big issue, investors digesting their valley in russia. --