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tv   Bloomberg Surveillance  Bloomberg  March 22, 2022 7:00am-8:01am EDT

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>> i am still a big believer about the physical global economy continues to mow the lawn. >> it really does come down to consumers. real consumption is still very strong. >> you're looking at possibilities of oil prices over $150 this summer. >> how far is the fed going to raise rates? >> there is kind of another inflationary shock that may require more hikes from those central banks. >> this is "bloomberg surveillance." jonathan: some big calls for a big move in may of this federal reserve. from new york city this morning, good morning morning, good morning. this is "bloomberg surveillance." alongside lisa abramowicz and kailey leinz. the price action once again and the bond market. lisa: shocking to see where we
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were last year and now we are looking up toward perhaps a 2.4% 10 year yield and looking at a 2.2% if you round up to year yield. how much are we bringing forward fed hikes and how much can the fed respond? jonathan: lisa, what do you make of the bunching up in the yield curve? to zan tends down to 18 basis points. lisa: if the fed can get back to normal inflation and is a better -- i bet we are going to get inflation and a couple of years, not eminently. how much will that get traced as we see the fed take action? it sounded like jay powell yesterday was not only -- citigroup just said not only willing to go 50 basis points, but likely. jonathan: back to back, perhaps, as well. that is what goldman was looking for. back to back 50 basis point hikes. mohamed el-erian coming out swinging on bloomberg opinion this morning. kaylee, the fed being pushed
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into a developing economy can dashcam. kailey: what we are realistically talking about with goldman sachs is 100 basis points higher on the federal funds rate over the course of just two meetings. this is akin to moves you see in emerging markets like brazil. really drastic action to get inflation under control. question is if we see aggressive action at the beginning does that change how high the terminal rate will go? the answer for goldman, is yes. you are still looking at 3.25% at the end of the tightening cycle. jonathan: it is difficult when you have upside risk to inflation and downside risk to growth. for some people i question around the credibility of the policy of the last 12 months. lisa: that is what mohamed el-erian was pointing to. you -- losing their credibility and responding in a strong way to regain it.
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i wonder how that shifts their strategy and how much they clearly do not know how this is going to develop -- none of us do -- and how they try to maintain their credibility. is it having a hard or fast going forward? 50 basis point hikes as well as shrinking the balance sheet? jonathan: what happened to frontloading the rate hikes? what happened to that in the meeting last week? lisa: it seemed like they were shocked by the ukraine crisis and were trying to wait to get a sense of how much the risk would be skewed to higher commodity prices versus a slowdown of growth. those are opposite risks, and they have come out realizing inflation as their pre-minute concerned, so they're going to be more aggressive. but that is delayed by this frontloading a lot of people were expecting. jonathan: yields climbing this morning. 216 on twos. futures up .3% on the s&p. 10 year yields higher by five basis points.
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crude lower by 1%. euro-dollar, just about holding on to $110. -- to 1.10. lisa, so much still to come. lisa: that really speaks again to that divergence in policy with the japanese holding rates where they are in their negative rate policy, even as the federal reserve moves. if you want to get more clarity on the federal reserve, a slew of speakers will be speaking. james bullard will be joining bloomberg surveillance. how much does he edify this eight-break height expectation? through february of next year? how much does he see they need to get even more aggressive? have heard him take a hawkish tone, as well as other fed speakers throughout the day. new york fed president jon williams, i'm watching that one. san francisco fed president mary daly.
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cleveland president loretta mester. how much do they talk about this flattening to tends curve? how much do they talk about the five 30's curve? the gap between 30 year and five year yields shrinking to the narrowest between 2000 and seven? we know what happened in 2008. much of a looking at a longer-term slowdown, secular stagnation? how much are they trying to get away from that as they try to be aggressive now? today is day one of the bloombergtv quality summit. the ceos of macy's, visa, and new york life all joining. how did they view the idea of esg in light of a shock? in light of something that actually changes the landscape on both an ethical standpoint, as well as a commodities standpoint? how number can some of these categories be as people increasingly allocated these categories? jonathan: germany's foreign minister is speaking at a tesla factory opening near berlin, and
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this headline gets your attention. want to be independent from russian crude. whether they choose to make a major move this week, though, that is a different question. kailey: the question is, yes, they are seeking energy independence from russia. how quickly can i get there? that is the pivotal point when the european union is considering an embargo on russian fossil fuels you have to make a transition somehow. that takes time. jonathan: you need everybody to agree on that for it to happen. to get everybody to agree on that this week is going to be incredibly difficult given that hungry came out yesterday and said, redline, no thank you. lisa: very difficult is a difficult -- is a very diplomatic saying -- way of saying not going to happen. frankly, the legwork that has to go into creating supplies is vast. how quickly can get that online? jonathan: team coverage starts with john mack you and maria tadeo. maria, this headline from germany, foreign minister, we
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want to be independent from russian oil. they choose to do this week remains to be seen. maria: it really remains to be seen, and there is two big dates to watch out for. thursday is a big diplomatic push between united states and the european delegations meeting here in brussels. then a friday morning session in which european leaders will debate around energy. the big question continues to be, are we going to see anything that looks like a full u.s. embargo on russian energy imports? when i speak to my sources, they say this debate is very much back on the table. a week ago the germans tried to push it aside, it is back at the table. the because the eastern europeans -- poland, estonia, the one yet -- they want this to be a flashpoint in this debate coming up at the end of the week. when i speak to the same sources and i put this question clearly -- are we going to see it
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happening by the end of the week -- the answer i get is, no. there is no unanimity. in the european union you need the 27 member states to agree to a massive resolution like that. then you have the hungarian president who is running for reelection in two weeks who has a complicated relationship with european union, but also with russia and vladimir putin, saying this is a redline, i will veto this. lisa: in the meantime we heard from francisco blanche of bank of america that this entire conflict will lead the united states to be dominant in five national -- liquefied natural gas. joe: we know they have been calling around here for more than weeks looking for alternate sources of energy. there was an important meeting that happened yesterday that we have confirmed that took place at the white house with the ceos of 16 companies, including oil and gas companies.
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the big integrated companies like exxon, conoco, along with some refiners, and some companies representing the renewable energy space as the president tried to give them a heads up on the number of needs coming. a readout from the white house says they discussed the need to work together to address vladimir putin's disruptions to global markets and supply chains, especially for energy and agricultural commodities. this is clearly an administration aware of disruptions that could be on the way. jonathan: joe, i know this is going to be a big story for you later on i'm looking for to that. sound on coming up later on bloomberg radio. do not miss that. our special thanks to maria tadeo, as always. i'm going to catch up with mohamed in a few hours. the burn in this quote in bloomberg opinion, "judging from price movements on monday, the federal reserve risks slipping into a no-one interaction that
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is more familiar to developing countries that lack policy, credibility." lisa: mohamed el-erian has been aggressive in terms of how far the fed had to go. a lot of people agreed with him. i guess what he is arguing is, perhaps it is going to be a challenge to get ahead of the curve. a lot of people agree, we have not seen that long in -- long and get unhinged. i wonder, if they don't go aggressively in the next couple of meetings, are you going to start to see a more aggressive move on the long end with treasury yields spiking? jonathan: let's talk about why they will be so aggressive. is it because people agree the economy can take it, or chairman powell will not be able to deliver what is needed? is it a bit of both? lisa: i think it is a bit of both. there is a feeling that at a certain point it will disrupt the markets enough to get their attention, but i don't really see how that could be the case, it's a dream the fact they have not been disrupted so far.
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the fed seems to think that inflation is the more pressing concern. jonathan: it is interesting to me that the second news conference chair powell has this -- has conducted where he said what needs to be said, and we have not responded to it. it is later in either the minutes -- back in the december meeting -- and we needed a course of fed speakers to say the same thing for us to start to listen to what might happen in may. lisa: perhaps the market is listening. perhaps stocks don't care. perhaps it will not matter to stock that euros are going so high. people were saying that if yields got to 2.5% on the 10 year that would be a game changer. we are not seeing it right now. jonathan: yields up again by five basis points on the 10 year. from new york. this is bloomberg. ♪
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ritika: keep you up-to-date with the first word, i'm ritika gupta. russia is refocusing its military campaign on the east in what may have become a narrower set of goals for vladimir putin on one of the primary targets, the port city of mary or paul. the bombardment has continued as the russian deadline for surrender expired. the intensity of the attacks is striking, given the slowing russian war effort elsewhere. president joe biden is warning the revit sector -- improve your defenses against cyberattacks. the president says the kremlin may be plotting cyberattacks to retaliate. the white house provided few details about the nature of that right. federal reserve chair jerome powell is using a more aggressive tone toward curbing inflation and he did just a few days ago. powell said the fed is prepared to raise interest rates by half a percentage point at its next meeting if needed. last week policymakers increased the benchmark by .25 points.
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regulators are trying to figure out why a boeing 737 suddenly fell from the sky. the crash is believed to have killed all 132 people on board. air crash experts are baffled by the plane's nose dive from 29,000 feet. china grounded its fleet of those planes. alibaba has ramped up its share buyback to $25 billion. china's e-commerce giant is reacting to a $470 billion loss of value during beijing's internet crackdown. the government has pledged to support the economy and finish the clampdown as soon as possible. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i'm ritika gupta. this is bloomberg. ♪
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>> the expectation was that we would see inflation peeking in the first quarter, then may be leveling out and see a lot of progress and the second half. that story has already fallen apart. i colleagues and i may well reach the conclusion that we will need to move more quickly, and if so, we will do so. jonathan: their story has already fallen apart. that was chairman powell at the federal reserve. more fed speak, including president williams of new york. look out for that. good morning to you.
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up .3% on the s&p. yields higher again by five basis points. the curve, lisa, flatter. lisa: frankly, inverted in several maturities. the question i have is, when did it start to pretend in session for markets? it does not seem to be portending recession if you trust equities. jonathan: joining us now is joanne feeney, folio manager at advisors capital management. i want to start we here with you joanne and go to the price action of yesterday. yields up, banks down. why? joanne: good morning, jonathan, and team. clearly the market is adjusting their expectations based on a flatter yield curve. but people have to remember that a lot of business for banks
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comes from checking accounts, on which they pay no interest. it would be better with a steeple yield curve, then the second thing is the concern over the growing risk of recession. which could impact the amount of loans that they make. lower loan volumes would tend to reduce earnings. i think young's have a positive outlook, given what the fed is saying. it still looks like we are going to have growing production, growing loans. we are still in a reopening recovery, even if it is slower than we expected because of the russia war in ukraine. lisa: bonds are up, pricing in a bit of recession risk. are we seeing the same sort of pricing in in equity markets if you look below the surface? joanne: i think what we are seeing reflects the change in interest rate expectations that began last november when the fed signaled it was going to start raising rates. saul these multiples come down dramatically and we saw this big reallocation from large
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institutional money managers away from tech toward more cyclical stocks, things that are more stable as well. i think that reallocation, i think we are seeing action that suggests reallocation might be over. if investors want to get exposure to growth given a slowing aggregate of economy, i think they're going to those strong secular growth companies, whether it is the server market, data centers, etc. i think that is what we have seen in the equity markets. a big reallocation, plus the expectation that growth overall is going to slow down. lisa: join, do you lean into that or do you think equities are not being -- are not listening to the message being sent by bonds? joanne: it is always the case that the bond market is going to look more closely at recession. where else are investors going to go? equities is really the only game in town in terms of building some sorts of appreciation.
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if you are a long-term investor, as our clients are, i think you can ride out this volatility. but let's make no mistake, it is going to be volatile for a while. the equity market, i think, still holds now, lots of opportunity for investors with a long-term view to get exposure to secular growth, even if the economy slows down. even in an in session there is a way to build in defense. there are a lot of ways to build insurance into per folios in this kind of environment. kailey: what you are saying echoes what john authers wrote today, that essentially higher yields in theory can threaten equities, especially those that command higher multiples, and at the end of the day a more aggressive fed is going to be worse for bonds that it is for stocks. is that the thesis you subscribe to? joanne: i think that is a fair statement. we have to put interest rates into perspective. interest rates of 3% as still incredibly low, historically.
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still relatively cheap. corporations tend to borrow longer-term, so they are looking more at the 10 year. does seem to be anchored by fed credibility. clearly the market doesn't fit -- does it expect inflation to come down. also we have so much demand for the 10 year globally because it is the safe harbor. because pension funds have to be there. central banks are going to be there. that helps to anchor the long-term costs for corporations, which doesn't suggest more investments, more expansion. job openings are still at record highs. i think we're going to see expansion on the production side even while we see constraints on sumer spending. jonathan: join feeding, always great to catch up with you. we kicked off the conversation -- joanne feeney, always great to catch up with you. domestic growth is about to slow , his view. the fed seems destined to
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tighten into a domestic slowdown , again, his quote. the modest improvement in low demand, he thinks, will likely fizzle, and he thinks the trade has grown too popular. they are everyone's go to value stocks. lisa: there are two sides to this, which is the reason you have a market here, but you can add to the potential risks to capital market activity is slowing down. you are seeing companies struggle a little more to raise money. on the flipside banks aren't so much from the income on deposits that they are finally getting, the fact that two year yields are above 2%. that they can actually get yield. that income story gives people a buffer to filter into this argument that there is no alternative. jonathan: that is what doug says. where else are investors going to go? he says two-year notes. lisa: at what point does the treasury yield enticing enough investors not only from the united states, but also globally, even the divergences we are seeing between the u.s.
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and europe and the u.s. and japan? ritika: a percent jonathan: -- jonathan: 2% in an 8% inflation world? that is still pretty tough. lisa: you have to imagine the economy is strong enough to withstand any kind of rate hiking cycle, and that is the bet right now. fueling this there is no alternative debate over stocks. and, frankly, the bet a lot of people are making. they are saying they will continue to make money, as we saw from nike, as we saw from a lot of companies that reported earnings even as bonds struggle. jonathan: without a doubt what you said is what divides the bulls and bears right now. whether the economy can handle this cycle or not. even if they have to go more aggressive, even if they have to frontload 50 basis points, 50 basis points. kailey: that is what the market heard from jay powell on wednesday. policies that as a reason why they can be aggressive when it comes to policy. may be that is what the market
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misread last week and got a little bit more clarity on yesterday. jonathan: perhaps the economy will be ok, lisa. lisa: yeah, and we have seen for so many years that the economy has not been out ok and the market has been, so do we get the reverse? jonathan: futures up .3%. this is bloomberg. ♪
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♪ jonathan: two hours away from the opening bell in new york city. good morning to you. on the s&p, up 0.3%. on the nasdaq, up 0.2 percent. since 2:30 on wednesday, the s&p up almost 5%, just looking right through what may or may not happen with the fed funds rate over the next year or so. this is the story in the bond market now. things starting to get really bunched up. you will notice the five-year above the 10 year at 2.3637%. you will notice the two-year is getting closer and closer to the 10 year. some pockets of inversion here and there as well. this equity market still doing
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ok in the face of it. we will pick up on that in just a moment. elsewhere, if you're looking at the yield curve come you can look at five 30's, twos-tens. you can see the trend of the year so far. are we pricing a slowdown? i will tell you what we are not pricing in the bond market, anything that looks like a soft landing in this treasury curve. lisa: that seems to be the consensus increasingly among bond traders. i don't know that stock traders have gotten the message. i wonder how many people agree with jay powell that a curve inversion this time around is different than in prior cycles simply because the fed is hiking into a more robust economy rather than an incredibly light cycle. jonathan: goldman sachs says let's go. jan hatzius says a 50 basis point move in may and potentially another one in the meeting after that. let's get you some single names. we can do that this morning was kailey leinz. kailey: one company we are
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continuing to focus on is nike. beat revenue estimates across the board, including china, where sales were down by less than expected. the story here is one of it working for supply chain issues. the company still saying demand is outstripping supply, even with a 15% build in inventories. that stock up about 6% before the bell. boeing fell yesterday after that boeing 737 800 ng jet crashed in china. investigators still trying to figure out the why behind that. shares are rebounding just slightly, about 0.2%. going to point in -- i want to point to okta as well, authorization software. there was actually an incident in january. there is no ongoing kind of malicious activity.
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still, that stock is down about 7.5% before the bell. a quick check on alibaba and how the action is in the u.s. alibaba announcing a boosted buyback program of $25 billion, the second time in the last year it has hiked that program. maybe a sign of optimism about the easing of the regulatory crackdown from beijing. alibaba adrs 8%. and baidu each moving higher to the tune of 4% or 5%. jonathan: when the chairman speaks at a news conference for the federal reserve, he's got to reflect some form of consensus. when he speaks in a forum like he did yesterday, he is speaking for himself. ian lyngen joins us now come of u.s. rates strategy at bmo capital markets. what did we hear when we heard the man speaking for himself? ian: i think the primary take away was that he's actually very open to the idea of a 50 basis point rate hike.
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we have now seen that reflected in the market, as you pointed out earlier. some calls have been changed. people are looking at may, saying 50 basis point starts to mike a lot of sense. let's not forget we are also going to see the balance sheet runoff soon as may, if not in june as well. so we are seeing the fed doubling down on being extremely hawkish, and this is why the curve is flattening. it is going to flatten to the point of inversion, and the big conversation is are we headed into a recession or is this the fed actively crafting a soft landing? it is getting harder and harder to imagine we are going to have a truly soft landing at this pace of tightening. lisa: is the bond market reflecting that view that it will be very difficult to have a soft landing, and a hard landing is much more likely? ian: the short answer is yes, particularly if you look at
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euro-dollar's and inversion further out in the euro-dollar curve implies that the fed is going to hike to keep inflation expectations anchored, but eventually need to fine-tune policy rates to make sure that in the immediate slowdown it does not start to perpetuate and end up as a true recession. recall the fed was always cognizant that they were trading part of the recovery for price stability, and what we have seen over the last week or so has been an incredible credibility enhancing event for the fed in terms of being an inflation fighter. if anything, they have been very successful in communicating that message. lisa: this kind of goes against what mohamed el-erian was saying, that they are risking their could ability more. why is this boosting people's belief in the fed? ian:ian: i think there's two time frames to consider fed credibility. there's the short term. do they get it right?
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do they get it wrong? do we end up in recession or not? this might not be a credibility enhancing event in that context. but in a longer-term timeframe, the fed has tried extremely hard to prove that it can contain inflation. if we think about the increase in fed transparency, predictability, this is what they have done, and they have made it clear that they can. what powell is attempting to do at this moment is say we might need to go through neutral. we might need to get to 3%, 3.5% potentially in terms of policy rates, but we are going to keep in place and expectations anchored, and that is a material shift from what we have seen from the fed over the last several years. jonathan: i just wonder what kind of price reaction we are seeing in the market. i don't think breakevens are the be-all and end-all, but why are they still elevated if they have reclaimed credibility to fight inflation? ian: in the near term, the only
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thing driving breakevens higher is food and energy, and a lot of that has to do with the war in eastern europe, and a lot of that has to do with the uncertainties that we are going to see play out over the course of the next several months. five-year five-year forward breakevens, a bit more tame given everything that is going on. i think it will be very fascinating to see what i expect will be a divergence between headline inflation and core inflation that develops over the course of the next three or four months. that will put the fed in a very difficult situation in terms of 50 basis point rate hikes. 25 think will resonate with the market, but if it is all headline, and what you are seeing is consumers have their real spending capacity undermined, that is going to be a more persistent problem for the fed. kailey: to what extent do you think jerome powell is talking
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up this hawkish narrative, allowing the market to price reflective of that to give himself the flexibility if needed, but also give himself the leeway to not take it that far? ian: i think that is precisely what is occurring at the moment. you are seeing the fed put the classic trial balloons out there and say what if we did go 50, is that going to materially impact risk assets, are equities going to selloff as a result. one could argue that powell is asking the markets' permission to do 50. given the fact that conditions have not tighten significantly, credit seems to be doing fine overall, it seems as though investors are saying we are content with 50 in may, and that is an important feedback loop, and that is the feedback loop we have seen many fed chairs take over the years, and i'm not surprised to see powell doing it, and i think it make a lot of sense in this environment. jonathan: do you think be high
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in the two-year yield will be higher than the high in the 10 year yield this year? can i get a feel for my view? ian: i think the twos-tens yield curve is going to invert sometime between now and the may fomc meeting. i think the take away from that will be concerned about recessions, although the fed will do its best to reframe it as not a recessionary indicator, and i think, as you pointed out earlier in the show, what we are seeing is a convergence of all yields at effectively 2.25% to 2.50%. i think that is going to represent the peak for a lot of the key benchmarks in the treasury market. the five-year sector could cheapen even further. 30's i think are a real wildcard , and a bit more steeping rather than the steady flattening we
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have seen also represent. . one of the big unknowns. jonathan: thank you, ian lyngen of bmo capital markets. just to follow it and see how much the equity market has shaken it off over the last three or four days has been interesting to watch. lisa: i'm thinking about 2.25% to 250% -- to 2.50% being the range for almost all sectors as the fed he thinks still has the credibility and will raise rates accordingly to get to that level. just fascinating to see whether people actually come in and buy aggressively at this point. . jonathan: we are basically there, aren't we? lisa: i do also think about what he was saying, which is a credibility issue. to me, your question about the breakeven rates going forward seem to forecast a higher rate of inflation then what the fed's rate seems to be, as well as bond markets.
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the commodity story, if it is sticky, how much does it transform the inflation narrative over the longer-term, especially as we rejigger the entire world of commodities and where supply chains come from? jonathan: on this story, we will check up with jim bullard of the st. louis fed. he thinks a 50 basis point move. we will get more insight from him in about 50 minutes. futures up 0.3 percent on the s&p. yields higher by four basis points. crude not doing much for once. $112 on wti. this is bloomberg. ritika: keeping you up to date with news from around the world, with the first word, i'm ritika gupta. ukraine's president volodymyr zelenskyy says he is ready to discuss a deal with russia. he told ukrainian tv he would discuss a commitment from ukraine not to seek net to membership. in return -- seek nato member ship.
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in return, ukraine wants a cease-fire, a withdrawal of russian troops, and a guarantee of security. finance minister christian lindner called for money for reconstruction in a speech to parliament. the u.s. created the marshall plan after world war ii to pay for the postwar recovery of 16 nations, including germany. in canada, prime minister justin trudeau reportedly nearing a deal that would keep his party in power until 2025. according to multiple reports, trudeau is discussing an agreement with the left-leaning democratic party to reshape canada's political landscape. in texas, firefighters gained the upper hand over historic wildfires that have blackened tens of thousands of acres. it was 60% contained as of monday. residents of dallas had to seek
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shelter from tornadoes. alibaba has wrapped up its share buyback to $25 billion. the chinese tech giant is reacting to a loss of value during beijing's internet crackdown. the government has pledged to support the economy and finish that clampdown on the tech sector as soon as possible. that triggered a historic rally in chinese stocks. shares of nike are higher today. quarterly results beat expectations. that showed that the company is overcoming struggles in its supply chain and weakness in china. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm ritika gupta. this is bloomberg. ♪
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>> i'm not wedded to only moving 25 basis points. i'm not wedded to moving every
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other meeting. it could be nothing. it could be 25. it could be 50. it could be 75. it could be 1%. i'm really trying to start blue sky, not locked into anything. jonathan: out of everyone we've heard from at the federal reserve, i have to say, atlanta fed president raphael bostic was perhaps the most interesting. not getting locked into anything for 2022. lisa: he also talked about using the balance sheet more aggressively and perhaps taking the rate hiking cycle more intact. fascinating to see the diverging opinions. jonathan: jim bullard is ready to go. we will catch up with the st. louis fed president at 8:30 eastern time. futures up 0.2 5% on the s&p. all of the action has been the bond market over the last couple of days. up another four basis points on tens.
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lucky dear chart of the day now with bricks kriti gupta. kriti: we have to talk about one of the major stories this morning. a horrific story coming from china, the horrific plane crash that you saw. the boeing 737, not the 737 max, but the predecessor crashing in china. want to quickly look at the financial input occasions of boeing, and that brings me to my chart of the day. we look at the stock of boeing in the last five years, it has now halved in just three years. the bigger hit that you are seeing is coming from the pandemic, and what that means for travel in general, even after you've got the faa and the european aviation authority to underground the planes, china still has not done that. one of the big concerns from a financial perspective is does china give the green light to ease some of the pain it has been feeling.
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it seems like the stock is not really seeing that in its future. jonathan: let's build on that delicate story with bloomberg's sid philip, who covers aerospace and defense of companies for us out of london. we are still building a picture of what happened here. what do we know so far? sidharth: we don't really know much so far. investigators are still trying to figure out why the 737 nosedived. we may get something from china when chinese officials are due to hold a briefing on the crash, so we might get some hints on what really went wrong there. lisa: what do we know in terms of independent investigators looking at the scene? is it just chinese authorities? does boeing want some of their own investigators to parse through the rubble? siddharth: boeing offered to help with the investigation, as did the ntsb and the engine makers, so i think at this point it is still pretty early, so
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there are negotiations happening at the moment. that will determine how the investigation will be supported. obviously the chinese authorities will lead the investigation, but as in the revia's cases, other investigators have helped. kailey: it is important to underscore this is not a 737 max, the 737 800 ng. can you talk to us about the safety record of this model of aircraft? siddharth: the 737 800 ng is the predecessor to the max, and it has a very high safety record. it has had about 11 fatal accidents in the 25 years it has been in service, and there's over 7000 of those planes in the sky at the moment. essentially, this is a very safe aircraft, among the top in terms of safety. at the same time, china eastern has grounded its entire fleet of 737 800's, and there are
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investigations as to what is going on here. kailey: our team at "bloomberg surv -- at bloomberg intelligence pointing out that they make more takeoffs and landings each day. can we deduce anything from the safety record of this aircraft and the likelihood that this was some kind of mechanical failure of the plane versus the error of another kind? siddharth: at the moment it is too early to speculate on what the causes could be. clearly, something went catastrophically wrong. they fly these every day, so this would be one of those rare occasions where something went wrong, and i thing investigators will be looking to piece together what really happened. jonathan: i know you are
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hesitant to jump to conclusions, and for good reason, so thank you for joining us today on that tragedy of the last 24 hours or so. one stock i want to look at in the premarket is nike, up by 5.8%. decent quarterly earnings. jeffries says it underscores the strength of the brand. demand continues to exceed supply. we thought we would work out of this story in the back half of last year, and here we are raging through 2022, and it is ongoing. lisa: i will tell you anecdotally, teenagers still love the air jordan's, and they collect them. jonathan: this is the young up, what's -- the young abramowicz . jonathan: how much do they cost these days? lisa: it is a lot of money. the resale market for them -- i do think that brand recognition, i'm going to get off of my soapbox here of personal angst, there is sort of a bigger point here, which is that they are able to sell their products
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direct to consumers because you are seeing so much brand recognition, and they are bypassing some of these platforms area i find this early interesting in how much this is actually fueling some of their sales and profits. jonathan: and direct to consumer, those numbers were great. kailey: that is an area where nike has consistently been focusing less so on the actual presence in physical stores and more on the direct to consumer part of the business. clearly, nike reaping the benefits of that. i keep coming back to the inventory story. a 15% build year on year and inventories, and yet you still don't have this apply to keep up with demand. it raises the question of when these actual bottlenecks or when the ability of that to come more into balance is actually going to come to the fore. that is something that, as we have had discussions for the last two hours on the monetary policy front, when we are looking at inflation to normalize by itself, maybe that is no longer an argument you can make. jonathan: does he avoid getting the creases in the sneakers? how does he achieve that?
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what is his strategy? lisa: he walks differently. he knows this sort of method of using some sort of towel and an iron. jonathan: to take the creases out? lisa: to take the creases out. you can use cleaning rags. i am looking at this and thinking, are you joking me? but they cost a lot of money and he wants to resell it and then buy another pair. he's found jordans for me and i say, no. jonathan: he wanted to buy crypto last summer. given the choice again, would you allow him to spend $202 and invest in the market or go to nike and by sneakers? lisa: you're going to make me have buyers remorse. jonathan: i am just trying to work out if his mother would like to backtrack on the nike thing and do what i suggested, which is let him invest. lisa: and fair enough, this is his backdoor way of trying to invest. he was really into some of these other crypto's that have done well. jonathan: just $250.
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lisa: ok, all right, all right. jonathan: just match him dollar for dollar in the market. [laughter] we can track young 'bramo's performance for the summer on this show. lisa: he would die. jonathan: then we can do a telephone interview it will be great. this is bloomberg. ♪ ♪
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>> i'm still a big believer that the physical level economy continues to further along. >> real consumption is still very strong. >> we are absolutely looking at the possibility of prices over $150 this summer. >> where is inflation going? how far is the fed going to raise rates? >> another inflationary shock might require more hikes as well from those central banks. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. jonathan: it is a fascinating moment in global mar


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