China Terror Crackdown a `Tough Balance': Consonery

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March 3 (Bloomberg) -- Eurasia Group's Nick Consonery discusses the terrorist knife attack in China with Trish Regan and Matt Miller on Bloomberg Television's "Street Smart." (Source: Bloomberg)

That just had a tremendous compounding over the years.

Tremendous compounding over the years.

Doing that when you are a company with a market value of 280 billion dollars is really hard.

We appreciate it.

We will be on the markets again in 30 minutes.

"street smart" is up next.

Hello, everyone.

I am trish regan.

Tension in ukraine mounts.

Stock sinking on worries that there may be a larger military conflict.

We have more on that story and in just a moment.

You're watching the most important hour of the session.

Matt miller and i are scouring the markets for your last trade of the day and your foes -- first trade of tomorrow.

Ready big concerns over the ukraine mounting.

We are also at an all-time, never witnessed before, historical high, so a selloff from the greatest level the s&p has ever seen -- that softens the blow a little bit.

Maybe a little bit.

Let's move on.

These are the stocks you are watching as we head into the lows.

Julie hyman, watching for us.

With the your crane and the tensions there, there is one stock i wanted to look at -- with ukraine and the tensions there, there is one stock i wanted to look at.

Yandex.

It is being affected by what is going on over there, shares plunging 13%. let's talk about ford.

Sales down more than six percent.

A lot of automakers beating analyst estimates.

Ford, one of the exceptions.

Down more than one percent.

And finally, this tobacco company, up the most in the s&p, after a report that reynolds company was looking for possible acquisitions.

Could happen for lorillard.

A analysts say they do not see a deal happening right now, if at all.

Thank you, julie hyman.

Now to the crisis, the standoff over the ukraine intensified over the weekend.

Russian forces mounting in the crimean peninsula.

The u.s. secretary of state john kerry says that putin will suffer record cautions for what he calls an incredible act of aggression.

He is going to lose all the glow that came out of the olympics.

His $60 billion extravaganza.

He is not going to have a sochi g-8. he may not remain in the g-8 if this continues.

He made find himself with asset freezes on russian business.

American business may pull back.

There may be of further tumble of the ruble.

There is a huge price to pay.

A lot of threats.

Kerry traveled to kiev to meet with european ministers.

The world is trying to determine what is mr.

Putin's next move.

Our guest -- we have the advanced study director and richard falkenrath also joining us.

Also another guest on the phone.

We will start with you.

Are these threats or will they go anywhere?

No, i think they are very real.

As secretary of state kerry mentioned, the ruble fell.

The stock price in russia fell more than 10%. ok, you say that it has an effect.

I come back with, why is putin not backing down?

Because putin has made an economic and military calculation -- a political and military calculation.

He does not think we will follow through on our threats?

I think he thinks on a certain level we will not follow through.

Especially on a military level.

But i do not think he has calculated to what level economic sanctions can influence developments on the ground in russia.

Do we have influence, given what happened in syria, do we run the risk of he is calling our buff and we -- our bluff and we are stuck?

Yes, we do.

I think secretary kerry from rhetoric is way out in front of what the international community is prepared to do.

No one likes that vladimir putin has done this.

Being able to coerce him into a completely different policy is completely different matter.

Right now you have stacked up everything the international community is repaired to do and i do not believe anyone thinks it is enough to have vladimir putin change his mind.

We are all look at it -- looking at this from the outside in, but if you look at it from a russian's respective, vladimir putin just tell these fantastic olympics and he is flexing his muscles and taking what they shortly think, a lot of them, is rightfully his.

No?

there is no country that is more important to the kremlin than ukraine from a policy perspective.

Putin has calculated that ukraine, crimea, eastern ukraine is really his for the taking.

At the end of the day if the g8 countries do not show up in sochi in may or june rather, then he probably is not going to lose too much sleep.

Yes, russian stocks did plummet today.

We did see a little weakness in the ruble, but the ruble has been weak for a good long while, i would point out, along with other emerging markets.

In the meanwhile, we see an oil spike, which is good for the russians.

This is important to them.

Ryan, i was rereading an essay from yuliya 10 mission go --yuliya temoshenko.

She basically predicted this.

She says you have a guy in charge and what he wants to do more than anything else in the world is restore russia's dominance as a major international player.

Ryan, what about this idea that could and could dominate from russia to china, a part of what we see today?

I think it is essential in terms of understanding putin's motivation.

He is trying to create a eurasian space, and ukraine as part of that eurasian space.

The eu association agreement would have pushed it in a different direction.

What is stopping him here?

Richard, what could possibly stop them?

If these threats are not enough?

Do not forget the president.

Do not forget, the president has said on a number of occasions, this will be costly.

Typical of secretary kerry and obama.

Kerry is way out in front of the president.

There is no cavalry coming to the rescue and crimea right now.

Go ahead.

William?

The question right now -- i think crimea, the facts on the ground dictate where things are going.

The issue is whether russia militarily will strike out against the eastern part of ukraine, and that is what the statements are trying to determine or at least identify some sort of cost.

Whether it deters boudin or not, we do not know yet.

But the statements are being directed for that future action in terms of what happens and crimea.

Ryan, you are on the ground and crimea.

Is there a sense it could go further than crimea?

Those couldn't have ambitions that would involve him taking over the rest of ukraine --does putin have ambitions that would involve him taking over the rest of ukraine?

It deems to heat up.

Russia has ordered two of their ships surrendered by 2 p.m. your time in new york -- and surely they well.

What you think?

It would be fully sure the ukraine to take on russia's military.

Russia has nearly one million troops.

Will they lay down their arms?

I don't know what they will, but it seems like they probably will.

The russian military says there is all this talk of the ultimatum.

They have not actually given these orders.

But there is no one here in ukraine that underestimate how this could develop at this point.

I don't think people were anticipating this.

It came as a surprise.

It came as a surprise saturday.

Richard, you may have something to add to this.

We are continually surprised by just how outrageous putin can be.

People are saying, oh, my gosh, he is sending troops then.

There is this sense of -- wait a minute, he did what?

Except in russia, where they do not see it as quite that outrageous.

Right.

, ryan, hang on.

I want to get richard.

Everybody pointed to the crimea, eastern ukraine as one of the dangerous areas.

Where is yeltsin, then president of the russian federation, was willing to let it go.

Give up some of the black sea fleet.

This flashpoint we have known about.

Putin is willing to use force.

In this case, he is being reactive, not proactive.

He did not ask for this.

Yanokovich is the one who fell from powder -- from power.

He is the one who got tossed out, in putin's mind at least forcing his hand.

Thank you very much for that.

We will have more on ukraine coming up.

Our team had a lot to say about this in this morning's meeting.

Take a listen.

We are leading with ukraine obviously -- [indiscernible] we have the sunday shows back and forth.

Russia has engaged in military active aggression against another country.

Do you expect -- you expect kerry to say what he is saying.

It is almost by script.

But obviously russia is going to do, take what is theirs.

Whoa, wait a moment.

It does not look bad to people in russia, right?

[indiscernible] if they wanted to exact some kind of punishment, you would not go out there, but you would selectively target the elite.

Those are the people that putin answers the most two.

Then you can effect change.

? secretary of state john kerry is not happy about putin --putin's actions and the ukraine in the markets are not too happy about it either.

It was the worst selloff in russia's benchmark equity indexed in a decade.

European markets also falling overall the global uncertainty we are discussing here today.

For more, we will get wall street's take.

We have our guest from greylock capital as well as a president and founder.

Good to have you guys here.

Let me ask you for what is -- for your take on what is going on.

I know you have a ukrainian guy in your office.

You have been talking to people on the ground there.

You have made investments.

I'm not sure if you are still live there.

What you think of the situation as it is developing?

It is really tricky.

The u.s. and the u.k. have a big issue.

In 1994 when the ukraine gave up its weapons, the u.s. and the u.k. signed a diplomatic paper saying they would protect the borders.

There are huge implications with iran.

That has all gone in the trash.

The u.s. and the u.k. have not decided because they are on the hook for this.

From the market side, we did take the position on bonds, calling it the hero trade -- it sure was if you sold on that day.

You bought ukrainian debt?

We bought ukraine debt.

With the events that transpired over the weekend with yanokovich leaving and the russians coming in certainly through things into turmoil.

The yields must be going way up?

They have not fallen as much as they did a week and a half ago.

Shocking.

Think about it.

If there is a transition -- the west is going to have to step up with this now.

There is no way you can cut it loose.

You cannot sell to the u.s. and beathe eu.

There was a 40% evaluation and contraction.

It makes sense.

How can you not get involved?

Are we going to let putin get away with yet another -- there is iraq and afghanistan.

This is a real place to get involved, right?

I think the question is, who wants to yield themselves to the ukraine?

The ukraine is a bankrupt country.

Neither the eu or the u.s. -- or russia certainly was to take on those liabilities.

He has an importance warm water port there.

We are not talking about national security.

You are saying why would anybody want to be -- why would anyone want to pony up the money necessary to sustain the ukraine?

For russia, the opportunity is too short the ruble, whether russia goes in and fights, or if russia goes in and occupies parts of the recurring -- parts of the ukraine, the ruble is going to fall.

This is ruble negative.

I did take your point.

I think this goes beyond economical -- economic.

It is political.

Let's ask cons about it.

It's interesting.

What ever you see russia doing, they are not negotiating from a place of strength.

It is weakness.

Playing this hard, i would agree.

You are looking at a bullish situation from russia regardless.

It is very negative for the broader markets.

It is very anti-growth.

Very stagflation airing -- stagflationary.

You have the price of fuel going up.

Very expensive dollars.

It really has implications, not so much for in the ukraine and russia, but i think the implications are wider for the treasury, the dollar, japan, things of that nature.

That is where one should cast their ride.

Definitely interesting to take a look at it from a market perspective as a well -- as well from the geopolitical respective.

We have a lot of world news today.

33 people killed in china over the weekend.

We will have lots more on the situation in china when we come back.

? welcome back to "street smart ." i am alix steel thomas with breaking news on the microsoft management shakeup.

These rumors are confirmed.

Here is what we can tell you.

Mark penn is named the executive vice president strategy chief.

We have some exits here.

Tony bates will be leaving.

He was passed over for the ceo job.

He was the ceo of skype.

He will be departing the company along with tammy weller, who was the vc in charge of marketing.

Weller will be replaced way the new marketing chief.

Again, trying to make these management changes to take microsoft in the right direction.

Thank you for that.

Meanwhile turning to all of this international news.

The world watching the ukraine violence.

33 people died after a terror attack in a train station.

As comes amid growing social unrest.

China for a president is cracking down on what he calls "violent terror activities." nic joins us from our washington bureau.

What is the thinking here?

The president, the prime minister coming out and saying this is terrorism.

What does this mean?

Is this a -- is this religious terrorism?

They -- the fact that they got arrested, they are a minority group.

This is predominantly in one province, but -- this is predominantly in the xinjiang, but it is disseminated up rust the country.

Are you saying the people were behind this?

No, not the people.

There is some indication that people involved with the attack were involved with that particular minority group.

It probably will be the case that that is the end result of this.

There is concern when it comes to china about exactly how forthcoming, shall we say, the chinese really are.

Can we anticipate that we are actually going to get a transparent investigation, or will this be like the gdp numbers?

Or will this be a putinesque crackdown on terrorism?

There has been a continuing effort from the government to tighten down on policies in xinjiang province.

The reality is this is a tough balance for them.

This is a tragedy where the government needs to respond in some way.

On the other hand, there is the concern as the responded in genders more of this activity.

Let me ask you about the broader issue, which is a concern in china as time goes on.

You have a male population, given for so many years they have the one child rule and a lot of people would try and have a son.

Given that there is a population imbalance, do you run the risk that china as we move forward is going to become an increasingly aggressive place?

I think we are talking about two very different stories here.

This egg or picture is the terrorist like activity -- the bigger picture is the terrorist like activity is a foreign-policy issue.

It is pretty unlikely to be driven by the demographics -- we will leave it there.

Nick, thank you very much.

Ok, matt went shopping last month.

Consumer spending is out.

?

This text has been automatically generated. It may not be 100% accurate.

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