tv Bloomberg Markets Bloomberg February 25, 2022 1:30pm-2:00pm EST
saying kyiv stopped responding after rejecting moscow's offer of a meeting in belarus. russian officials say ukraine wanted to meet in the polish capital of warsaw. that back and forth comes as russian forces move toward capital. president volodymyr zelensky says they continued to -- >> this morning we are defending our state by ourselves as we did yesterday. the most powerful forces are watching at a distance. we are hearing in our skies and seeing on land that sanctions are not enough. mark: the prospect of talks between russia and ukraine was in question as the kremlin said
kyiv stopped responding after rejecting moscow's offer of a meeting in, belarus. xi jinping told putin that moscow should negotiate with ukraine. at least two of china's largest state-owned banks are restricting financing for purchases of russian commodities. the move underscore the limits of beijing's pledge to maintain economic ties with one of its top strategic partners in the face of sanctions by the u.s. and its allies. president biden has made his decision on who will replace stephen breyer on the u.s. supreme court, choosing federal appeals court ketanji brown jackson. if chosen, she would be the first black woman to serve on the high court. president biden and jackson are set to speak from the white house this afternoon. global news 24 hours a day, on-air, and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. i'm mark crumpton. this is bloomberg. ♪
>> welcome to bloomberg markets. matt: here are the top stories we are following from around the world. u.s. stocks near session highs. investors pull back on bets the fed will aggressively hike interest rates next month. and one company that is fueling the retail pressure after a disappointing outlook brings it to the worst day in 13 years. with the war in ukraine in its second day, russian forces continue their push toward the capital of kyiv. putin now demanding surrender even before he is willing to negotiate. we will speak to the former u.s. ambassador to nato. greg: let's check in on the markets.
we have become accustomed to volatility but the moves in the past two sessions have been nothing less of astonishing. but we actually finished in positive territory yesterday. tsx up 1.5%. the s&p up 2%. the nasdaq up 1.2%. upward pressure on yields as well. the idea that the fed may not be as aggressive because of geopolitical risk even though it has to face inflation. assets more closely correlated to what is happening with russia's incursion into ukraine. nasa pullback in gas. we are talking about ramping up oil and gas.
the sanctions that we saw not hitting russia's energy space. let's bring in the senior investment strategist at edward jones. it feels like the markets are trying to reassess the risk and where they want to be positioned. mona: it has been fascinating to watch. what we are seeing is a reversal of the last few days of that like to safety, safe haven assets like the dollar, even gold reversing lower today. those assets that have been pressure through the crisis, oil, natural gas, also commodities like wheat and other parts of the commodity space driven by russia and ukraine. today, investors flocking to more risk across traditional assets like equities across the space. matt: how much does this have to
do with changing expectations or the fed? mona: to some extent, generally, the fed pat has not been altered too much. we are still getting inflationary pressures that are ramping up higher. added pressure on oil and energy commodities. that probability of a 50 basis point rate hike in march has really come off the table. that probability have been as high as 95%. we are now seeing it closer to 15%. markets are saying this geopolitical risk has taken off the table the shock and awe campaign by the fed. they will probably move at a steady pace, march through september, as we assess this path of inflation. greg: is it troubling how dependent we have become on what
the fed will do next, how aggressive they will be? i would feel more comfortable if stocks were trading off the fundamentals of the names. mona: fairpoint. we are yet to embark on one rate hike and we have already seen such market indigestion since the beginning of the year. the s&p is still down 10% year to date because of the uncertainty by fed rate hikes but also the inflationary path. when we look at the broader picture, fundamentals, we still see an economy that is relatively healthy driven by a pretty strong consumer. personal consumption up 2.1%. a healthy consumer still boosted by that stimulus over the last two years. healthy corporate balance sheet profiles, healthy corporate earnings, 8% this year. with that backdrop, we are not
heading into what we would call a recession or downturn that would invoke bear market type reactions. some of what we are seeing may be an acknowledgment that the fundamentals remain healthy despite a fed that will start raising rates in march, but maybe not derail the overall economic expansion. matt: of course geopolitical tensions have been front and center in the markets. what should we be bracing for? mona: the russia-ukraine crisis remains front and center for investors. we will be watching the path of sanctions. they have not yet hit energy and oil markets, have not hit that swift financial system either. we will see if that path continues. hopefully we move more toward a path of diplomacy, talks. we are hopeful that is the path that we see going forward. of course, as we shift to the next couple of weeks, we will be
looking for that fed meeting in march. prior to that, we get a jobs report and then cpi on march 10, which will be telling, as well. matt: thank you so much, mona. u.s. consumer sentiment improves, still remaining at a decade low. foot locker is having its worst day in 13 years. it is our stock of the hour. this is bloomberg. ♪
matt: this is bloomberg markets. i'm matt miller. today, we received a mixed picture on the consumer front. consumer spending advanced by more than expected but sentiment held at a decade low which leads us to days -- today's stock of the hour, footlocker. shares fall in the most on record after the company gave a disappointing outlook. joining us now is catherine morgan. what is going on? >> thanks for having me. the company surprise wall street with the news that nike is cutting back on business. they gave a bad outlook for the year coming well below expectations for same-store sales and earnings. nike has been a huge part of the business for many years, accounting for as much as 75% of their business in just a couple years ago.
footlocker saying they will have to diversify, find other brands. definitely negative news for investors right now. greg: how big of this is a threat not only to footlocker but probably across the retail industry? nike looking to direct to consumer, saying we don't need your storefront anymore. >> wall street does not see other retailers having quite as bad of a reaction to this move by nike as footlocker has done. others are not seeing this type a big decline in business, so this may be a unique footlocker thing right now. matt: catherine larkin talking about footlocker having its worst day in 13 years. after billions of dollars in losses tied to the collapse of
archegos, credit suisse is trying to help the justice department build a case related to block trading against rivals morgan stanley and goldman sachs. joining us now is sonali basak. what are they saying? >> with $5 billion in losses, they held the lion's share of those losses. this is because they were later to unwind these losses that came first at morgan stanley. sources have told bloomberg that credit suisse representatives last week held a presentation at the southern district of the u.s. attorney's office. when you are involved in an investigation, everyone tends to give over information. the information being given to authorities is a little bit above and beyond their routine cooperation you would see from
the banks. it makes sense in terms of credit suisse's attempt to recoup their losses. greg: how does this filter through the industry, what is the reaction? sonali: a big reaction. the question was how credit suisse would respond to what happened. not only did they suffer those losses, stocks took a massive hit, executives loss of jobs. when people look at this incident, they think about those specific trays themselves, what happened when it came to viacom, gsx, but also how the banks handled those instances. the bank at the time held emergency talks before the unraveling of a lot of these traits. other investigations going on at the same time. it was reported previously that banks are facing antitrust questions around what happened
here, questions about whether they should have held these emergency talks without a regulator present. a lot of regulation being discussed among the family office industry, concurrent probes among regulators. matt: we have learned about block trades recently, a lot of gray area. may be these banks floated the idea that there were big blocks of shares out there looking for buyers, and then everyone front ran that selling. sonali: what could have happened at the time, a lot of the buyers want answers to, were there any crossing of chinese walls, were clients alerted? there is no wrongdoing accused of yet, but this is an investigation that goes to the heart of not only arche goes but a key business on wall street,
these massive equity underwriting shops. greg: what do we expect the next development to be? sonali: slowly things will leak out. yesterday, morgan stanley disclosed in its 10k that it was taking questions from authorities on this matter, but that was the extent of the disclosure, a single paragraph. we know credit suisse is involved a little bit more. we will keep an eye out on what tangible things authorities start to find. we only have clues on the things they've been asking for. matt: i want to pivot to a different story you have been covering today, the possibility of russia being removed from swift. we know that swift allows companies and countries to operate in international currency exchanges to do business. the europeans, according to the biden administration, have
insisted that russia can continue to use swift so they can buy their oil and gas. any chance that changes? sonali: the next couple of days will be critical to watch. we know the german finance minister has asked the ecb and others across europe to figure out what the implications would be in terms of damage done to europe versus russia, in terms of cutting them off from swift. when we think about the extent of the trade between the eu and russia, it's about $190 billion, with germany being the biggest trading partner. that gives you a lot of the context on the worry. matt: $190 billion for a year, with germany paying the most. sonali: a lot of this is important russian energy. the idea of russian energy and swift are really tied together nicely.
greg: our thanks to sonali basa k. coming up, we will be talking to ivo daalder, former nato ambassador under president obama. and for what it is worth, blackrock is the top holder of russian dollar bonds, which lost almost half of their value this week. we will dig more into this issue, next. this is bloomberg. ♪ berg. ♪
self-defense, and its right to choose its own path. greg: this is bloomberg markets. i'm greg bonnell. the world has been watching these developments. that was the nato secretary-general calling on russia to end their invasion of ukraine. with us now is ivo daalder, former ambassador to nato. what is required now? ivo: what is required is a long-term strategy to ensure vladimir putin does not succeed in his ultimate aim which is not just to control the future of ukraine but he wants to revise in a fundamental way the cold war order that emerged after the fall of the berlin wall, collapse of the soviet union, the end of the warsaw pact. we now need to step up, a long-term strategy to contain him. then over time have the change
of internal to russia that we saw with the soviet union and bring this regime to an end. as long as by rebooting is in power he will have a danger in europe. it is something that we have to stand up to as strongly as we can. matt: the sanctions we have seen and acted i really just to make the west feel better about ourselves, some say. why wouldn't we sanction vladimir putin directly first? i know the u.s. is considering that but you would have thought that is the first thing they did. why do we continue to buy russian oil, gas, aluminum, concerning ourselves with prices at the pump, rather than people die in ukraine? ivo: as for the sanctions, i think the administration is right that we move lockstep it with our european friends. if we could have done the big
jump in one go, great. we are doing it in a rapid escalation. the sanctions the europeans agreed to today include freezing the assets of putin and lavrov abroad. you want to be able to have the ability to talk to the senior leadership in russia, if and when we can actually get to an end of this war. on the gas side, unfortunately, it is something the europeans have not been willing to do for a long time, reduce their dependence on russian gas. if you were to turn the tap off now in the middle of winter, countries like hungary, the baltic states, which depend 100% on russian energy imports, will be freezing. they will not have the electricity they want. the same is true for italy and germany. we need to find a way to reduce,
in fact, eliminate, our dependence on russian gas and oil. we are not there yet. matt: is this a discussion that you been having in nato? it didn't make a lot of sense when angela merkel was so committed to nord stream 2. the u.s. was trying to sell them more lng but they were not having it. mario draghi today said that they are thinking about turning back on coal plants and getting lng, when this is something they should have been doing years ago. ivo: absolutely. in the case of germany, it was after fukushima that they decided to get out of nuclear power. by now there are only three left running in germany. this is something that has been on the agenda for a good 15 years. it was there when i was at nato, came under the issue of energy security. the belief that we needed to find a way not to be reliant on russian gas. a lot of good things have happened.
one thing that was put into place, all of the gas pipelines can now flow both ways, so if ukraine or poland or the baltic states are cut off from russian gas, they can get other gas being fed from italy or germany or other places. the gas market is more interdependent than it was before. but clearly, lng, alternative sources of energy, and the energy transition writ large is something that i hope will finally be on the agenda in a way that we can actually get something done. matt: really appreciate your time. ivo daalder, former u.s. ambassador to nato. for greg purnell, i'm matt miller. . this is bloomberg. ♪
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nato secretary-general yum stoltenberg is urging russia to and it's been invasion of ukraine and has affirmed nato support for ukraine's democracy. he made the remarks in brussels. >> good afternoon and good morning to all of you and welcome to this meeting of nato leaders with our close partners, queensland, sweden, and the european union. russia has shattered peace on the european continent. what we have warned against four months -- mark: bolstering is defense with airpower and thousands of troops on the eastern flank in response to the russian invasion. vladimir putin is backing his nation's banks as russia works on its domestic response to sanctions rolled up by western governments over the invasion. russian state aid will initially focus on assisting