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00:00JONATHAN: LIVE FROM NEW YORK CITY, GOOD MORNING. FOLLOWING THE BIGGEST TWO DAY POP ON THE S & P FROM EQUITIES SOFTER. 30 MINUTES AWAY. THE COUNTDOWN TO THE OPEN STARTS RIGHT NOW. > > EVERYTHING YOU NEED TO GET SET FOR THE START OF U.S. TRADING. THIS IS "BLOOMBERG: THE OPEN" WITH JONATHAN FERRO. JONATHAN: LIVE FROM NEW YORK CITY, WE BEGIN WITH THE BIG ISSUE. WE HAVE LEFT OFF. > > WE FINALLY GOT THE FIRST FED RATE OF THE CYCLE. > > ALL OF THE FORECASTS WERE NOT PARTICULARLY ENCOURAGING. > > UNREALISTICALLY HAWKISH. > > THE NUMBERS DO NOT ADD UP. > > I CANNOT AT THE NUMBERS UP AND MAKE ANY SENSE OF THEM. > > I DO NOT THINK THEY BELIEVE IT. > > IT IS TRUE WE NEED TO GET RID OF INFLATION. > > AS TIME GOES BY AND WE SEE THE CONSEQUENCES OF A FEW HIKES FROM THE GROWTH ASPECT WILL BECOME MORE REAL. > > IT IS FANCIFUL TO THINK WE DO NOT SEE AN INCREASE IN THE UNEMPLOYMENT RATE. > > TALK IS CHEAP. > > INFLATION IS NOT EMBEDDED, EXPECTATIONS ARE NOT EMBEDDED. > > THIS IS ALL FANTASYLAND. JONATHAN: JOINING US IS VICTORIA FERNANDEZ, MATT HORNBACH, JEAN TO NEWT SO -- GENE TENO -- 50 OR YOU, IS THIS ALL VENTAS -- VICTORIA, IS THIS ALL FANTASYLAND? VICTORIA: WE HAVE THE DOT PLOT SHOW SEVEN RATE HIKES. YOU LOOK AND SAY 2.8% BY THE END OF THE YEAR? THAT DOES NOT SEEM RIGHT. THE MARKET, THE REACTION WE SAW TELUS PEOPLE WERE QUITE CAN USE. YOU HAVE A TWO YEARS SKYROCKETING, YOU HAVE TRANSPORTS MOVE HIGHER. YOU HAD FLOWS INTO STAPLES. IT IS ALL OF THESE MIXED MESSAGES. EVEN THOUGH I THINK THE RALLY IN THE MARKET YESTERDAY WAS PROBABLY BECAUSE WE GOT PAST THIS FIRST RATE HIKE, WE GOT PAST ONE UNCERTAINTY OF WHAT THE DOT PLOT IS GOING TO LOOK LIKE. I THINK THERE IS CONFUSION. I DO NOT SEE THIS PLAYING OUT THE WAIT IT WAS LAID OUT YESTERDAY. THE FED WILL HAVE TO END UP BEING MORE DOVISH THAN WHAT WAS PLANNED FOR YESTERDAY. JONATHAN: STANDARD CHARTERED AGREES. THEY SAY WE ARE LESS CONVINCED ON THE UNDERLYING DEMAND IN THE LABOR MARKET AND REMAIN SKEPTICAL THEY FOLLOW THROUGH WITH THEIR PROGRAM. GENE, CONSENSUS FALLS QUICKLY. WE'VE HEARD FROM DIANE SWONK WHO SAID IT WAS FANCIFUL. YOU AGREE? GENE: I DO NOT. I THINK THAT THERE WAS A HEADLINE TO THE FED MEETING YESTERDAY IT SHOULD SAVE MISSION ACCOMPLISHED. JAY POWELL WAS STARING INTO THE FACE OF THE BIGGEST DISINFLATIONARY FORCE WE HAVE SEEN SINCE THE GREAT FINANCIAL CRISIS AND PERHAPS EVER. SITTING HERE TWO YEARS LATER WITH A V-SHAPED RECOVERY, THE UNEMPLOYMENT RATE BELOW 4%, IT WAS THE EASIEST THING FOR THEM TO STEP UP AND SAID THEY WANT TO HIKE RATES 25 BASIS POINTS. I THINK THE MARKET RESPONSE WAS QUITE REASONABLE. IF YOU LOOK AT THE LONG END YIELD BEING STABLE, SHORT-TERM INTEREST RATES RISING, RISK ASSETS DOING WELL, THAT IS MISSION ACCOMPLISHED. JONATHAN: THAT IS NOT THE BIT THEY THINK IT IS FANTASYLAND. IT IS GETTING INTO 2.8% YEAR END 2023 AT DOING THAT WITH UNEMPLOYMENT STAYING AT 3.5% AND THROWING BALANCE SHEET REDUCTION AS WELL. YOU THINK THAT IS ACHIEVABLE? GENE: NO, BUT I DO NOT THINK THOSE ARE USEFUL IN TERMS OF OUR INVESTMENT DECISION-MAKING. THE FED IS NOT IN THE POSITION TO PREDICT THE HIGHER UNEMPLOYMENT RATE. THERE IS NOT A FRAMEWORK FOR THEM TO DO THAT. AT THIS POINT THEY'VE ACCOMPLISHED THE LABOR MARKET OBJECTIVE FOR NOW AND THEY WILL REACT TO THE IMPORTED RATE RATHER THAN BEING ABLE TO INFLUENCE IT? JONATHAN: MATT HORNBACH, WHAT WAS YOUR TAKE? MATT: I THINK MISSION ACCOMPLISHED. I DO NOT THINK WHAT THE FED IS SUGGESTING THEY MAY DO LATER THIS YEAR IS FANTASYLAND. WHAT IS FANTASYLAND IS PEOPLE THINK INFLATION IS GOING TO COME ALL THE WAY BACK DOWN TO HER -- BACK DOWN TO EARTH BECAUSE OF MARGINAL IMPROVEMENTS IN SUPPLY CHAIN. INFLATION IS NOT ABOUT SUPPLY, IT IS ALSO ABOUT DEMAND. ONE OF THE THINGS THAT STRUCK ME AS FANCIFUL IN THE FED FORECAST WAS THE GROWTH FORECAST FOR THIS YEAR. THEY HAVE GROWTH COMING IN BELOW 3%. MORGAN STANLEY ECONOMISTS ARE WAY ABOVE THAT STOP WE THINK THE ECONOMY WILL BE QUITE STRONG THIS YEAR. IF THAT ENDS UP BEING THE CASE, EVEN WITH MARGINAL IMPROVEMENT IN SUPPLY CHAINS, WHICH HAS NOW BEEN THROWN INTO QUESTION GIVEN THE CONFLICT IN UKRAINE, I WOULD SAY THERE PROBABLY IS UPSIDE RISK TO INFLATION. BY THE WAY THAT IS THE FED'S PERSPECTIVE. IF WE GET THE GROWTH WE ARE EXPECTING AT MORGAN STANLEY AND THE FED GETS THE INFLATION THEY ARE EXPECTING, THEY WILL ALMOST CERTAINLY HIKE RATES IN EVERY MEETING THIS YEAR AND PEOPLE WILL HAVE TO CHANGE THEIR TUNE ON WHAT FANTASIES THEY ARE DEALING WITH. JONATHAN: MICHAEL MCKEE, IT SOUNDS LIKE WE HAVE A RANGE OF OPINIONS. YOU HEARD WHAT PEOPLE SAID TO US YESTERDAY. MATT HORNBACH AND GENE TANNUZZO TAKING THE OTHER SIDE OF THIS. CHARIMAN POWELL'S WORDS, WE FEEL THE ECONOMY IS STRONG AND WELL-POSITIONED TO WITHSTAND TIGHTER MONETARY POLICY. MICHAEL: WE WERE WATCHING THE FED CHAIRMAN AND WE WILL BE WATCHING THE ECONOMY AND SEE HOW THE FORECAST TURNS OUT. I WANT TO START BY TAKING YOU BACK HOME TO ENGLAND WHERE THE BANK OF ENGLAND TODAY RAISED INTEREST RATES FOR THE THIRD TIME IN A ROW. THEY ARE WALKING THE WALK THE FED IS TALKING, BUT TAKE A LOOK AT THE TOP LINE. THAT IS INFLATION EXPECTATIONS. THEY ARE RAISING RATES AND EXPECTATIONS ARE STILL GOING UP. GOVERNOR ANDREW BAILEY IS SEEING WHAT JAY POWELL DOES NOT WANT TO SEE, WHICH MAY BE SOMETHING BEHIND THEIR FORECAST. TAKE A LOOK AT WHAT THEY ARE TALKING ABOUT. WE HAVE GONE OVER THE NUMBERS PRETTY WELL. UNEMPLOYMENT IS NOT GOING TO RISE, GDP IS NOT GOING TO FALL BELOW POTENTIAL. I'M NOT GOING TO FIT IS THE LAND. I AM COLORS -- I'M NOT CALLING IT FANTASYLAND. I AM GOING TO ALICE AND WONDERLAND. THE FED FUNDS RATE WILL GO ABOVE NEUTRAL AND ALL THIS IS GOING TO HAPPEN? IT MAY BE PERFORMANCE. THE FED DOES NOT KNOW WHAT WILL HAPPEN BECAUSE OF THE WAR AND COVID. THEY WILL OVERPROMISE TO KEEP THE MARKETS FROM GETTING OVER CONCERNED AND KEEP INFLATION EXPECTATIONS ANCHORED AND THEY WILL SEE DOWN THE ROAD IF THEY NEED TO DO SIX OR SEVEN. YOU LOOK AT THE DOT PLOT AND SEE HOW IT HAS MOVED OVER THE LAST 24 HOURS TO THE RIGHT AND HIGHER. THE LIGHT GREEN LINE IS WHERE THE MARKET THINKS RATES ARE GOING TO BE. THE FED HAS POSITIONED ITSELF EVEN MORE HAWKISH THAN THE MARKET. WHAT YOU LOOK AT ON THE WHITE DOTS, THE BIG SPREAD IN 2023 AND 2024 SHOWS THE FED IS NOT UNITED ON WHAT NEEDS TO BE DONE. THERE IS A LONG WAY BETWEEN HERE AND GETTING EVERYTHING WE SAW IN THEIR FORECAST. THE FED MAY NOT GO THAT FAR BUT THEY WANT TO CONTROL THE NARRATIVE. JONATHAN: LET'S TALK ABOUT HOW TO PUSH THIS THROUGH THE BOND MARKET. VICTORIA, 2, 10, THE SPREAD 23 BASIS POINTS. ARE WE FACING CURVE IN VERSION THROUGH THE NEXT COUPLE OF MONTHS? VICTORIA: WE HAVE A LITTLE BIT ALREADY. EVEN YESTERDAY DURING THE PRESS CONFERENCE YOU COULD SEE SOME OF THOSE INVERSIONS HAPPENING. YOU PARTS OF THE CURVE INVERT? I THINK THEY DO. YOU HAVE YOUR DURATION CALL ON YOUR FIXED INCOME PORTFOLIO, BUT WHERE ON THE YIELD CURVE DO YOU WANT TO BE? THAT IS PART OF OUR INVESTMENT PROCESS. CLIENTS KEEP ASKING US ABOUT THAT. WHAT HAPPENS OF THE YIELD CURVE INVERTS? AT OUR MEETING WE SAID LET'S LOOK THREE MONTHS. THAT IS WHERE WE THINK YOU GET SOME OF THE TECHNICAL MOVEMENT WHEN IT COMES TO RECESSIONS FOLLOWING INVERSION. YOU LOOK A WEEK AND A HALF AGO, THAT WAS AROUND 1.40, 1.45. THIS MORNING IT IS 1.70. YOU HAVE STEEPENING IN THE THREE-MONTH TO 10 YEAR PART OF THE CURVE. YOU GET EVERYTHING ELSE FLATTENING. THERE IS CONFUSION. WE NEED TO GIVE IT A LITTLE OF TIME TO FLATTEN OUT BUT WE ARE EXTENDING DURATION RIGHT NOW. WE HAVE BEEN SHORT FOR A LONG TIME BECAUSE YOU THINK THE 230, 240 RANGE WILL BE THE PEAK REGARDLESS OF THE NEWS THAT CAME OUT YESTERDAY. 230, 240 ON THE 10 YEAR BEFORE WE SEE YIELDS COMING BACK DOWN. JONATHAN: MATT HORNBACH, YOUR REACTION? MATT: WE ARE IN THE FLATTER CURVE CAMP. THIS CURVE WILL END UP INVERTING MORE THAN WE HAVE SEEN IN MY CAREER, AND I WOULD ARGUE FOR A COUPLE OF DECADES BEFORE I JOINED THE BUSINESS. I THINK WE WILL END UP SEEING A MUCH FLATTER YIELD CURVE. IT IS NOT GOING TO, BY WAY OF CONUNDRUM. THIS IS NOT THE 2004 TO 2006 EXPERIENCE WHEN WE HAD A TREMENDOUS AMOUNT OF CAPITAL INFLOW INTO THE U.S.. THIS IS A COMBINATION OF OVERSEAS DEMAND. YOU HAVE TREMENDOUS CENTRAL BANK BALANCE SHEET STOCK WEIGHING ON THE LONG END OF THE CURVE AND SOLVENCY RATIOS THAT KEEP GOING UP. YOU WILL HAVE ITS MENACE AMOUNT OF DEMAND FOR THE BACK END OF THE CURVE AND END UP FLATTENING THE CURVE QUITE A BIT. JONATHAN: FINAL THOUGHTS? GENE: VICTORIA SAID IT VERY WELL. THERE'S A LOT OF POSITIVE SLOPE STILL IN THE CURVE WHEN YOU THINK ABOUT THE FED FUNDS RATE AT 40 BASIS POINTS IN THE 30 YEAR AT 240 BASIS POINTS. IT IS ONLY BEEN ABOUT 10 YEARS THE FED HAS BEEN GIVING US THE SUMMARY OF ECONOMIC PROJECTIONS OR THE DOTS. ALL OF A SUDDEN THE FIRST TWO YEARS HAVE A LOT MORE CLARITY WE START TO LOOK AT THINGS LIKE TWO AND 10 IT DOES NOT GIVE US THE RELIABLE SIGNAL IT GAVE US BEFORE. AS WE GO FORWARD THE FED INDICATED A CONSIDERATE PATH OF HIKES. IT IS HARD TO SEE THE CURVE NOT FLATTENING. JONATHAN: ABOUT 20 UNITS AWAY FROM THE OPENING BELL, LET'S GET YOU SOME MOVERS WITH ABBY. ABIGAIL: AFTER THE BEST TWO DAYS FOR THE S & P SINCE 2020, WE ARE TAKING A BREAK. LEADING THE WAY IS APPLE, COMING IN AFTER A 7% TWO DAY REBOUND RALLY. THAT IS FOR THE NASDAQ 100, THAT IS THE BEST SINCE NOVEMBER 2020. THE TRAVEL TRADE UNWINDING WITH OIL BACK ABOVE $100 PER BARREL. UNITED AIRLINES DOWN 2.5% IN THE BANKS WITH YIELDS IN JUST SLIGHTLY, WEIGHING ON THE BANKS. DOWN 6.1%. THE I WAVE -- THE EYEWEAR RETAILER IS PLUNGING ON A NET REVENUE MISS. THERE IS ONE SECTOR HIGHER. THAT IS ENERGY. JONATHAN: THE BIG MOVE IN CRUDE AGAIN TODAY. RUSSIA DENYING REPORTS OF MAJOR PROGRESS IN PEACE TALKS. > > RUSSIANS, FOR ALL OF THE TALK ABOUT A DIPLOMATIC PATH FORWARD, WE HAVE NOT SEEN THEM ACT ON THAT. THAT IS NEXT. THIS IS BLOOMBERG. > > RUSSIANS, FOR ALL THE TALK ABOUT WANTING TO FIND A DIPLOMATIC PATH FORWARD, WE HAVE NOT SEEN THEM ACT. WHAT WE ARE SEEING IS A FULL ON COMMITMENT MILITARY OPERATIONS. THE FIGHTING CONTINUES, THE DEATH AND DESTRUCTION CONTINUES. JONATHAN: MIXED MESSAGING EMERGING BETWEEN TALKS BETWEEN RUSSIA AND RAIN. THE FINANCIAL TIMES WRITING UKRAINE AND RUSSIA HAVE MADE SIGNIFICANT PROGRESS ON A PEACE PLAN INCLUDING A CEASE FIRE. THE KREMLIN DENIED THE REPORT, SAYING ON THE WHOLE THAT IS WRONG. WHEN THERE IS PROGRESS WE WILL TELL YOU. TEAM COVERAGE STARTS NOW. IN RECORD TURN IN D.C. -- ANNMARIE HORDERN IN D.C., MARIA TADEO IN BRUSSELS. CAN YOU TELL ME WHERE WE ARE IN THESE TALKS? MARIA: HE DID SAY THE WORDS COMING OUT OF THE RUSSIAN FEDERATION DO NOT MATCH THE ACTIONS ON THE GROUND FROM THE RUSSIAN FEDERATION. WE SEE A HUGE MILITARY DEPLOYMENT IN UKRAINE. WE SEE CITIES THAT GET BOMBED AND SHELLED EVERY DAY. YESTERDAY THERE WAS A BIG OPERATION IN THE CITY OF MAI RUPOL. THIS IS A MAJOR FIGHTING GROUND FOR THE RUSSIANS AND THAT CONTINUES. HE MADE IT CLEAR THAT UKRAINIANS WANT TO SEE A CEASE FIRE BEFORE THE REAL TALKS BEGIN AND THAT CEASE FIRE IS NOWHERE TO BE SEEN. RUSSIA CONTINUES TO ENGAGE NOT JUST MEN ON THE GROUND, BUT REMEMBER THE REAL DAMAGE IS BEING DONE FROM THE SKY. IT IS AIRCRAFT AND FIGHTER JETS THAT BOMBED UKRAINIANS. A LOT OF THIS, YOU TALK ABOUT NEUTRALITY AND SO ON. ON THE GROUND OF THIS IS STILL A WAR THAT IS GOING ON FOR 22 DAYS. JONATHAN: IMPORTANT TALKS TOMORROW THAT DO NOT INVOLVE RUSSIA OR UKRAINE. IT IS THE PRESIDENT OF THE UNITED STATES WITH XI JINPING OF CHINA. HOW IMPORTANT IS THAT? ANNMARIE: IT IS INCREDIBLY IMPORTANT GIVEN THE FACT THE UNITED STATES IS TRYING TO GET CHINA ON BOARD TO INFLUENCE PRESIDENT PUTIN. THIS COMES AFTER A NUMBER OF REPORTS THAT RUSSIA IS SEEKING HELP FROM BEIJING ON THE MILITARY FRONT BUT ALSO THE SANCTIONS FRONT. THEY WANT TO DO TRADE AND BUSINESS WITH CHINA. IT ALSO COMES AFTER HIGH-LEVEL TALKS BETWEEN JAKE SULLIVAN AND HIS CHINESE COUNTERPART IN ROME. NOW YOU HAVE LEADER TO LEADER. THEY HAVE NOT SPOKEN SINCE NOVEMBER. THIS IS AN INCREDIBLY IMPORTANT CALL FOR THE PRESIDENT TO TRY TO ATTEMPT TO GET CHINA ON THE SIDE WITH THE UNITED STATES. CHINA IS NOT THERE, DIPLOMATIC, ON THE SURFACE LEVEL, BUT ALSO THE UNDERTONES. ARE THEY GOING TO COME TO RUSSIA'S RESCUE? JONATHAN: ANNMARIE HORDERN AND RHEA TODAY BEEN BRUSSELS. CRUDE UP. ON WTI, -- AND MARIA TADEO IN BRUSSELS. MORGAN STANLEY WITH THEIR FORECAST OF $120 FOR CRUDE. THEY SAY TO SAY THAT OIL PRICES HAVE BEEN VOLATILE RECENTLY WOULD BE AN UNDERSTATEMENT. IT WILL LIKELY BECOME PROGRESSIVELY MORE DIFFICULT FOR RUSSIA TO MAINTAIN ITS EXPORTS IN THE COMING MONTHS. VICTORIA FERNANDEZ, HAVE WE FULLY REALIZED THE RISKS ASSOCIATED WITH THE STORY AND WHAT WOULD YOU LOOK FOR TO GIVE YOU CONFIDENCE THAT IS THE CONCLUSION? VICTORIA: WE WERE UNDERWEIGHT ENERGY LAST YEAR, WHICH FROM A MARKET PERSPECTIVE DID NOT WORK OUT WELL FOR US. WE WERE ADDING SOME IN THE BEGINNING OF THE YEAR. WE STARTED THE TREND BECAUSE THERE'S SO MUCH UNCERTAINTY GOING ON. IS IT FULLY PRICED IN? PROBABLY NOT. THE QUESTION IS YOU HAVE TANKERS ON THEIR WAY HERE WITH RUSSIAN OIL. WE CLOSE THE PORTS? WHAT HAPPENS TO THE COMPANIES THAT HAVE PAID FOR THAT AND THE TANKERS SIT OUT IN THE OCEAN. YOU HAVE RUSSIAN OIL THAT WILL BE PRICED SO CHEAPLY. DO COMPANIES CONTINUE TO TURN A BLIND EYE TO THAT BECAUSE OF POLITICAL ISSUES? I DO NOT KNOW HOW THIS IS GOING TO WORK OUT. THERE IS TREMENDOUS VOLATILITY. WE SPOKE A COUPLE OF WEEKS AGO AND WE THOUGHT OIL COULD GET $100 AND IT GOT $130. NOW WE ARE BACK AT $100. THAT IS A LOT OF MOVEMENT. WE KNEW THERE WOULD BE VOLATILITY. I DO NOT THINK WE KNEW IT WOULD BE QUITE THIS MUCH. I WOULD BE CAUTIOUS UNTIL WE SEE THINGS PLAY OUT MORE. THE MEETING WITH CHINA PLAYS INTO THIS. HOW MUCH IS CHINA GOING TO STEP IN AND HELP WITH RUSSIAN OIL AND TAKING SOME OF THAT VOLUME? I DO NOT HAVE AN ANSWER. OUR SUGGESTION WOULD BE BE CAUTIOUS. JONATHAN: CANNOT COME TO YOU ON THAT QUESTION? YOU REMEMBER COMING OUT OF THE PANDEMIC, AT SOME POINT IN AWKWARD TRANSITION EVOLVED. THE MARKET STARTS TO LIVE IN A BETTER FUTURE, HOPING FOR ONE EVEN WITH THE DEVASTATION THAT CONTINUES IN FRONT OF OUR FACES. HOW DO YOU IDENTIFY WHEN THE MARKET IS STARTING TO MOVE PAST A TRAGEDY LIKE THIS ONE? MATT: IS A WONDERFUL QUESTION. I DO NOT KNOW IF THERE IS ONE ANSWER. TIME TENDS TO HEAL ALL WOUNDS, BUT IT DEPENDS ON HOW BIG THE WOUND IS. WHAT WE ARE LOOKING FOR IS SIGNS THAT THE INCREASE IN PRICES FOR ENERGY, ULTIMATELY THAT ENDS UP AFFECTING CONSUMERS, TO WHAT EXTENT ARE THE INCOMES CONSUMERS ARE BRINGING IN THROUGH NEW JOBS OR GENERAL USES IN WAGES, HOW DO THEY DEAL WITH THAT? ARE THOSE INCREASES IN WAGES ENOUGH TO OFFSET HIGHER PRICES AT THE PUMP? THESE ARE IMPORTANT THINGS AND THERE IS UNCERTAINTY, WHICH IS WHY YOU SEE A LOT OF DISAGREEMENT OR AT LEAST UNCERTAINTY IN THE FED PROJECTIONS FOR POLICY THIS YEAR. JONATHAN: GENE TANNUZZO, THE LACK OF VISIBILITY FOR POLICY, IS THAT A CONVERSATION WHERE YOU SIT? GENE: ABSOLUTELY. TIGHTENING IS HAPPENING RIGHT NOW BESIDES JUST THE FED FUNDS RATE. WE KNOW THE SHORT-TERM INTEREST RATE HAS RISEN BUT LOST THIS DEBATE ABOUT WHETHER THE FED SHOULD HIKE 25 OR 50 BASIS POINTS IS THE FACT WE WILL ALSO SEE THE BALANCE SHEET START TO RUN OFF AT THE NEXT MEETING. WE ARE ALSO SEEING FINANCIAL CONDITIONS TIGHTENING AND WE ARE ALSO SEEING THE BUSY -- THE BIGGEST FISCAL DRAG WE HAVE EVER HAD IN THIS COUNTRY POSTWAR. THE DRAGS ON GROWTH ARE REAL. WHEN YOU TALK ABOUT THE SHOCKS, WHETHER FROM RUSSIA OR UKRAINE OR WHAT COULD COME IF THINGS GOT BUMPY WITH CHINA, THOSE ARE REAL AND THINGS THE FED WILL HAVE TO DEAL WITH, PERHAPS IN THE SECOND HALF OF THE YEAR. JONATHAN: YOU SAID SOMETHING SO IMPORTANT ABOUT THE SUMMARY OF ECONOMIC PROJECTIONS. NOT ONLY DID WE USED TO GET BY WITHOUT THAT, WE DID NOT HAVE A NEWS CONFERENCE, WE DID NOT HAVE A STATEMENT. WHEN THAT WAS INTRODUCED IT WAS INTRODUCED TO HELP REINFORCE FORWARD GUIDANCE, AS IF TO SAY WHERE WE THINK RATES WILL BE FOR THE NEXT FEW YEARS, THEY ARE GOING NOWHERE. PRICED THAT IN. ONCE WE STARTED TO EMBARK ON TIGHTENING CYCLES WE TAKE THE DOT PLOT, FRONT LOAD THE RATE HIKE, THE FED WILL BACK AWAY BEFORE THEY CAN DO ANY OF THAT. YOU THINK THIS TIME IS SOMEWHAT DIFFERENT? GENE: WE AFTER NUMBER HOW THE FED AFFECTS FINANCIAL CONDITIONS. -- WE HAVE TO REMEMBER HOW THE FED AFFECTS FINANCIAL CONDITIONS. FORWARD GUIDANCE IS A POWERFUL TOOL. THE DOTS ARE IMPORTANT COMMUNICATION TOOL FOR THEIR FORWARD GUIDANCE. THE DOTS ARE MUCH MORE EFFECTIVE AS AN EASING TOOL THAN THEY ARE IS A TIGHTENING TOOL. AS WE'RE TRYING TO PRICE IN ADDITIONAL HIKES, IT IS JUST A SUMMARY OF THE CURRENT STATE MORE THAN IT IS AN ACCURATE PROJECTION OF WHERE YIELDS MUST GO IN THE FUTURE. WE REALIZE INFLATION IS HIGH IN THE EMPLOYMENT RATE IS LOW. THOSE DOTS YOU SEE ON THE SCREEN ON THE PROJECTION YOU HAVE TO HAVE GIVEN THE STATE OF THE ECONOMY AS IT SITS TODAY. JONATHAN: GENE TANNUZZO, VICTORIA FERNANDEZ, MATT HORNBACH STICKING WITH US. LATER, JP MORGAN, BANK OF AMERICA. JP MORGAN DOWN .5%. BANK OF AMERICA OFF .4%. THE OPENING BELL JUST AROUND THE CORNER. JONATHAN: FIVE MINUTES AWAY FROM THE OPENING BELL. DOWN .4% ON THE S & P 500. FASCINATING MOVES IN THE BOND MARKET. 10'S LAST THURSDAY 1.9096. TWO ABOVE WHERE 10'S WERE LAST WEEK. 1.9344. THE SPREAD BETWEEN THE 221 BASIS POINTS. TIGHTER AND TIGHTER. WE HAVE GONE FROM 70 AT THE START OF THE YEAR ALL THE WAY IN TO THE LOW 20'S AND A LITTLE LOOK AT 18 EARLIER. THERE THE MORNING CALLS. JP MORGAN UPGRADING RALPH LAUREN TO OVERWEIGHT, SEEING THE REGIONAL REVENUE MIX OFFERING RELATIVE BRAND INSULATION. WEDBUSH RAISING ITS TARGET ON WILLIAMS-SONOMA THAT IN THE COMPANY REPORTED FOURTH QUARTER RESULTS THAT HANDILY BEAT ON THE BOTTOM LINE. RBC UPGRADING UNION PACIFIC, SEEING THE PERFORMANCE GAP NARROWING ON NEAR AND MEDIUM-TERM FACTORS. JONATHAN: THE BIGGEST TWO DATE POP ON THE S & P BACK TO APRIL 2020. WE PULL BACK A LITTLE BIT. -.5%. ON THE NASDAQ A SIMILAR MOVE. ON THE RUSSELL DOWN .5%. RUSSIA POSES BACK AGAINST THE IDEA WE HAVE HAD A BREAKTHROUGH IN TALKS. THEY SAY THE REPORT IS WRONG. WHAT A MOVE WE HAVE SEEN. THE TWO YEAR YIELD MUCH HIGHER THAN WHERE WAS AT THE START OF THE YEAR. LAST TIME THE FED MET 1.15 AT THE CLOSE. YESTERDAY CLOSE TO 2% ON THE TWO YEAR. THE TENURE YEAR -- THE 10 YEAR DOWN TO 2.15. EURO-DOLLAR 1.1062, UP .1%. LOOK AT CRUDE GO, UP MORE THAN 7% TO $101.83. 25 SECONDS IN, HERE IS ABBY. ABIGAIL: WE ARE LOOKING AT A CONSOLIDATION OF THE BIG TWO DAY RALLY BEING LED BY SOME OF THE TECH NAMES, INCLUDING AMAZON. THE POINT CONSTITUTION TO THE INDEXES IS WHAT COUNTS, DOWN .6%. TESLA DOWN .9% AMID NEWS THEY HAVE HALTED A BOND SALE BACKED BY AUTO LEASES WITH ALL THE MARKET TURMOIL. AMAZON HAS CLOSED TODAY $.5 BILLION. -- TODAY AT $8.5 BILLION. OCCIDENTAL PETROLEUM UP 5.1%. ENERGY ONE OF TWO SECTORS HIGHER, THE REST IS LOWER. JONATHAN: THE BIG WINNERS OF THE SESSION, THE BIG WINNERS OF THE YEAR. THE BIG BANKS REVERSING GAINS. FOR MORE I WANT TO BRING YOU KAILEY LEINZ. KAILEY: THE BANKS ARE DECLINING IN HAVE BEEN DECLINING FOR A LARGE PART OF THE YEAR. THE KBW BANK INDEX WAS DOWN 5% BUT IT DID REVERSE A GOOD DEAL OF THE LOSSES YESTERDAY POST THAT DECISION, UP 3.6%, CUTTING THE LOSSES DOWN TO 1.5% ON THE YEAR. IT WAS UP 4.5% ON THE DAY YESTERDAY CASH JP MORGAN WAS UP 4.5% ON THE DAY YESTERDAY. -- JP MORGAN WAS UP 4.5% ON THE DAY YESTERDAY. NOT ONLY DID THE FED RAISED RATES YESTERDAY. IT SIGNALED MORE HIKES TOOK ON, SIX MORE. ULTIMATELY GETTING TO 2.8% BY THE END OF 2023 IF YOU BELIEVE THE DOT PLOT. THAT SHOULD BENEFIT THE BANKS WHEN IT COMES TO NET INTEREST INCOME WHICH IS THE PRIMARY REVENUE SOURCE. 58% OF REVENUE FOR CITIGROUP. OBVIOUSLY IS IMPORTANT FOR INVESTMENT BANKING. MORGAN STANLEY AND GOLDMAN SACHS. HIGHER RATES SHOULD HELP OUT THE FUNDAMENTALS FOR THESE COMPANIES. AT WHAT POINT DO HIGHER BORROWING COSTS FOR DEMAND FOR LOANS AND START TO TURN THINGS IN THE OTHER DIRECTION? JONATHAN: THAT IS THE U.S. AND EUROPE. THEY HAVE OTHER PROBLEMS. THAT BEGINS WITH RUSSIA. THIS WAS THE LINE, RUSSIA UKRAINE LOAN EXPOSURE TOTALED 1.5 BILLION EUROS. LATER VISIO SIGNALING THE 2022 -- LATER THE CEO OF SIGNALING THE 2022 PROFIT GOAL IS AT RISK, GOING ON TO SAY THEY HAVE NO PLANS TO POSTPONE THE 2022 SHARE BUYBACK. THAT STOCK SOFTER ON THE SESSION SO FAR. LET'S GO BACK TO THE FINANCIALS IN AMERICA. LARRY ADAM SAID THIS. ONE OF THE CATALYST IS INTEREST RATES MOVING HIGHER IN THAT WILL HELP LIFT THE EXPECTATIONS OF WHAT THE SECTOR CAN PRODUCE FROM AN EARNINGS EFFECTIVE. VICTORIA, THERE ARE TWO THINGS THAT PLAY. I THINK THE 10 YEAR SETS THE TONE FOR HOW INVESTORS ALLOCATE TOWARDS THE FINANCIALS. WHEN YOU'RE TALKING ABOUT PROFITABILITY, ISN'T IT SOMEWHERE ELSE? VICTORIA: YOU HAVE TO LOOK AT THE SHAPE OF THE YIELD CURVE. AS THAT GETS FLATTER WE LOOK AT THE DIFFERENCE BETWEEN THE SHORT END IN THE LONG END AND THAT COMES INTO PLAY A LOT MORE FOR BANKS THAN THE TENURE RATE BY ITSELF. SAYING YOU KNOW FINANCIALS ARE ONE OF OUR SECTORS -- OUR FAVORITE SECTORS THIS YEAR. LAST WEEK IN EARLY THIS WEEK WE WERE ADDING TO THE NAMES, ADDING TO BANK OF AMERICA, ADDING TO VISA AND MASTERCARD. I THINK WE SEE IMPROVEMENT THROUGHOUT THE YEAR. YESTERDAY WAS A STRONG DAY WITH WHAT WE SAW OUT OF THE FOMC MEETING. EVEN GOING FORWARD, I KNOW KAILEY LEINZ TALKED ABOUT HIM GROWTH IT WILL THAT DAMPENED WITH CONSUMER SENTIMENT GOING DOWN? WE DO NOT THINK SO. WE LOOK AT HOUSEHOLD BALANCE SHEETS WITH REVOLVING DEBT THERE'S PLENTY OF ROOM FOR THE CONSUMER TO GO IN AND DO LOANS AND INCREASE THEIR DEBT AS WELL. WE HAVE STRONG BALANCE SHEETS FOR THESE BANKS. YOU LOOK AT BANK OF AMERICA, THERE IS A 2% DIVIDEND YIELD. I THINK THEY ARE SITTING AT A DECENT POSITION. THIS IS U.S. BANKS, NOT EUROPEAN BANKS. YOU LOOK AT WHERE THEY SIT IN REGARD TO THE RUSSIA ISSUE. BANK OF AMERICA IS PRETTY GOOD. WE KNOW CITIGROUP HAD EXPOSURE. YOU ALSO HAVE A LOOK AT COUNTERPARTY RISKS IN REGARD TO COMMODITY FUTURES. BANK OF AMERICA SITS WELL THERE. MORGAN STANLEY HAS MORE ISSUES. FOR THE SECTOR WE ARE CONFIDENT GOING FORWARD. JONATHAN: YOU LIKE THE BANKS AND THE REASON YOU LIKE THE BANKS IS THE REASON PEOPLE DO NOT LIKE BIG TECH. DAN IVES SAID IN A NUTSHELL WE BELIEVE THE TECH SECTOR IS AS OVERSOLD AS WE HAVE SEEN IN THE LAST FIVE YEARS AND WE WOULD STRONGLY BE BUYING CLOUD SOFTWARE, CYBERSECURITY CHIPS, AND TECH NAMES LED BY FAANG WITH APPLE AND MICROSOFT ARE CLEAR FAVORITE LARGE CAPS. THERE IS ONE VIEW THE FED CANNOT GET MUCH MORE HAWKISH THAN THIS. 2.8% NEXT YEAR. BALANCE SHEET REDUCTION. FOR THAT REASON, GIVEN WHAT IS HAPPENED WITH TECH ALREADY, BUY. WHAT DO YOU SAY? VICTORIA: I DO NOT DISAGREE AT ALL WITH THE STATEMENT. WE HAVE BEEN ADDING TO APPLE AND MICROSOFT BECAUSE WE AGREE THAT SECTOR HAS BEEN OVERSOLD. YOU DO NOT WANT TO HAVE ZERO GROWTH EXPOSURE, ZERO TECH EXPOSURE IN YOUR PORTFOLIO. YOU LOOK AT THE NAMES THAT HAVE COME DOWN. 15%, 20%, 25% YEAR TO DATE. YOU GO IN AND YOU HAVE THAT OPPORTUNITY. DAN MENTIONED APPLE AND MICROSOFT AND I SAID THERE WERE NAMES WE HAD BOUGHT OVER THE LAST COUPLE OF WEEKS. YOU USE IT AS AN OPPORTUNITY FOR THOSE REASONS. JONATHAN: ALLOW ME TO PLAY DEVILS ADVOCATE. WE HAVE YIELD CURVE THAT WILL INVERT. CONSUMER CONFIDENCE CHANGING FROM A FED THAT WILL REDUCE THE BALANCE SHEET LATE, MORE QUICKLY THAN LAST TIME AROUND. HIGHER THAN LAST TIME AROUND. WHY DO I WANT TO OWN RISK ASSETS IN THAT WORLD? GENE: WE HAVE TO REMEMBER THE GROWTH HEADWINDS ARE THERE. I DO NOT THINK WE HAVE A FREE PASS DAD RISK ACROSS THE BOARD AND PORTFOLIOS. WE HAVE HAD A SIGNIFICANT REPRICING. THE EXAMPLE I WOULD USE IS U.S. INVESTMENT GRADE CREDIT. WE HAVE HAD SPREADS WIDENED MATERIALLY AT A TIME WHEN YIELDS HAVE RISEN AS WELL. YOU HAD INVESTMENT GRADE LONG DURATION DOWN 15% IN THE LAST SIX MONTHS. WE THINK THIS IS A BUYING OPPORTUNITY WHEN THE FED IS GIVING US SOME COMFORT A LONG RUN. IS IN THE REALM OF WHERE THE 30 YEAR TREASURY YIELD IS AT THIS POINT IN TIME. CREDIT SPREADS ARE WIDER AND THESE ARE THE COMPANIES WITH THE STRENGTH OF BALANCE SHEET THAT THE FULLNESS OF TIME WILL DO WELL THROUGH THE CYCLE AS OPPOSED TO THE HIGH YIELD COMPANIES. JONATHAN: ANY PARTICULAR ENERGY GROUPS WITHIN IG YOU WOULD PREFER? GENE: DIFF DORIA BROUGHT UP THE BANKS -- VICTORIA FRONT OF THE BANKS AND THE FIXED INCOME LAND THEY ARE MORE ATTRACTIVE THAN THEY HAVE BEEN IN A LONG TIME. A LOT OF THAT IS BECAUSE OF THE SUPPLY AND THE TECHNICAL PICTURE. THAT HAS PUSHED THE SECTOR WIDER FOR REASONS TEMPORARY IN NATURE. JONATHAN: MATT HORNBACH, YOU WROTE ABOUT THE HEDGING PROPERTIES OF THE LONG BOND. CAN YOU TALK TO US ABOUT WHY THAT MIGHT BE THE PLACE TO BE? MATT: ONE OF THE THINGS WE HAVE BEEN FOLLOWING NOW IS THE INCREASE IN FUNDING RATIOS FOR THE U.S. CORPORATE DEFINED BENEFIT PENSION PLAN COMMUNITY. ONE OF THE THINGS GENE ALLUDED TO WAS WITH THE INCREASE IN LONG-TERM INTEREST RATES, THE WIDENING AND CREDIT SPREADS, THAT HAS BOOSTED THE DISCOUNT RATE FOR CORPORATE PENSION LIABILITIES. EVEN THOUGH THERE HAS BEEN WEAKNESS IN THE EQUITY MARKET SINCE THE START OF THE YEAR, YOU HAVE SEEN THE SOLVENCY RATIOS CONTINUE TO MARCH HIGHER FOR CORPORATE PENSION PLANS. ULTIMATELY THIS IS PUTTING THEM IN A GOOD POSITION TO DE-RISK THEIR PORTFOLIOS. THIS IS NOT SOMETHING THEY WILL DO AT ONE POINT IN TIME AND THEN NEVER DO AGAIN. THERE IS A GLIDE PATH THAT A LOT OF PENSION PLANS FOLLOW. AT THE END OF THE DAY AS LONG AS THAT FUNDED STATUS IMPROVES, YOU SHOULD CONTINUE TO SEE DEMAND COMING OUT OF THE EQUITY MARKET INTO LONG DATED FIXED INCOME FOR THAT PARTICULAR COMMUNITY OF INVESTORS. THAT IS IN ADDITION TO THE LARGE STOP OF SECURITIES -- THE LARGE STOCK OF SECURITIES THE FED HAS MOVED FROM THE MARKETPLACE. THAT IS ONE OF THE FEATURES OF A CORE FLAT AND HER. JONATHAN: HOW YOU THINK THE CURVE WILL RESPOND TO THE EVENTUAL BALANCE ROLLOFF WE ARE LOOKING FOR, THE QT IN THE COMING 18 MONTHS? MATT: THE CONSENSUS EXPECTATION FOR THAT PROCESS, WHICH IS A PASSIVE PROCESS, IS MORE OR LESS IN THE PRICE OF THE BOND MARKET ALREADY. THERE MAY BE SLIGHT DIFFERENCES IN PEOPLE'S OPINIONS OF THE SPECIFICS OF THE PROGRAM, WHERE WILL THE CAPS BE SET, HOW QUICKLY WILL THE FED GET TO THE CAPS? HOW QUICKLY WILL THEY START THE PROGRAM? GENE SUGGESTED MAY. THERE IS SOME DIFFERENCE IN VIEWS BUT EVERYONE KNOWS IT WILL GET GOING BY MIDYEAR. WHAT IS NOT IN THE PRICE IS IF THE FED DECIDES TO SELL SECURITIES AT SOME POINT LATER THIS YEAR. THAT WOULD NOT BE IN THE PRICE. YOU WOULD SEE THE YIELD CURVE RESPOND TO THAT. JONATHAN: MATT HORNBACH, GREAT WORK AS ALWAYS. DORIA HERNANDEZ -- DORIA FERNANDEZ, GENE TANNUZZO. THANK YOU. AARON CANNON WROTE ME A MESSAGE ON TWITTER, SAYING THE DILEMMA, ALLOCATE CAPITAL TOWARDS THE INFLATIONARY PICTURE OR ALLOCATE TOWARDS THE INCREASING LIKELIHOOD OF LOWER GROWTH AND HIGHER UNEMPLOYMENT. I SUSPECT THE LIKELY OUTCOME IS HIGHER VOLATILITY AND LOWER VALUATIONS FOR NOW. A RANGE OF OPINIONS. I AM LOOKING FORWARD TO CATCHING UP WITH AARON LATER STOP COMING UP, PRESIDENT BIDEN RAMPING UP MILITARY AID TO UKRAINE. > > I'M USING MY PRESIDENTIAL AUTHORITY TO ACTIVATE ADDITIONAL SECURITY SYSTEMS TO CONTINUE TO HELP UKRAINE FEND OFF RUSSIA'S ASSAULT. THAT IS NEXT. THIS IS BLOOMBERG. LATER TODAY, THE LAZARD ADVISORY CEO. THAT IS COMING UP AT 2:00 IN NEW YORK, 4:00 IN LONDON. THIS IS BLOOMBERG. PRES. BIDEN: NOW I AM ONCE AGAIN USING MY PRESIDENTIAL AUTHORITY TO ACTIVATE ADDITIONAL SECURITY SYSTEMS TO CONTINUE TO HELP UKRAINE FEND OFF RUSSIA'S ASSAULT. AN ADDITIONAL $800 MILLION IN ASSISTANCE. THAT BRINGS THE TOTAL OF NEW U.S. SECURITY SYSTEMS IN UKRAINE TO $1 BILLION. JONATHAN: PRESIDENT BIDEN EXPANDING THE ARSENAL FOR UKRAINE AS UKRAINE'S LEADER PLEADS FOR MORE MILITARY AID AND MORE SANCTIONS. THOSE SECTIONS ARE HITTING RUSSIA. THE COUNTDOWN KICKED OFF THIS WEEK. THE BOND PAYMENT IS STILL IN LIMBO. TWO INTEREST PAYMENTS. MARK DOWNING SAID THIS. EXPECT THE PAIN TO LAST. RUSSIA WILL BE IN THE ISOLATED WILDERNESS FOR A LONG TIME. A REGIME CHANGE IS PROBABLY A PREREQUISITE FOR REINVESTMENT, ALONG WITH LIFTING SANCTIONS. DAMIAN SASSOWER IS BACK WITH US. LET'S WORK OUT WHAT IS HAPPENING. HAVE THEY SENT THE MONEY TOWARDS THE INVESTORS AND THROUGH THE BANK? DAMIAN: MY UNDERSTANDING IS THE RUSSIAN FINANCE MINISTER DID SEND THE DOLLARS TO HIS CORRESPONDING BANK. WE HAVE HEARD NOTHING FROM CITIGROUP. WE DO NOT KNOW IF THEY HAVE TAKEN THAT MONEY AND THEY WILL ACTUALLY PAY THAT MONEY. WE KNOW CITIGROUP'S OFFICE HAD ISSUES IN THE PAST. REVLON, THEY MADE AN ERRONEOUS PAYMENT ONE YEAR AGO. THE REALITY IS WE DO NOT KNOW IF THERE ABLE TO MAKE THOSE PAYMENTS. WE DO NOT KNOW IF THEY RECEIVED THEM. LET'S SAY THEY HAVE RECEIVED THE MONEY AND THEY ARE GOING TO PAY THE CREDITORS. THEN WE LOOKED BACKWARDS AND FORWARDS. WE LOOK BACKWARDS TO MARCH 2. ASSUMING A 30 DAY GRACE PERIOD ON THAT, THAT TAKES US THROUGH TO APRIL 2 THAT MAY CONSTITUTE A FAULT. WE LOOK FORWARD TO APRIL 4 WINDOWS GO BILLION DOLLARS OF PRINCIPAL ARE DUE ON RUSSIAN BONDS. THE GAME GOES ON. IT IS A SHELL GAME. JONATHAN: WE DO NOT KNOW IF RUSSIA SENT THE MONEY. WE DO NOT HAVE CONFIRMATION OF THAT UNTIL THE BANK CAN SAFELY SAY WE TOOK THE FUNDS. IN THE CORRESPONDING BANK EXCEPT THE MONEY FROM DASHCAM THE CORRESPONDING -- CAN THE CORRESPONDING BANK EXCEPT THE MONEY FROM THE RUSSIAN SOVEREIGN? DAMIAN: I DO NOT KNOW STOP IF THE GOVERNMENT ALLOWS THEM TO RECEIVE IT YES THEY CAN. ACCORDING TO EVERYTHING WE ARE SEEING THEY ARE NOT ABLE TO TRANSACT WITH RUSSIAN BANKS. THE VERDICT IS STILL OUT. IF YOU LOOK AT SOME OF THE CORPORATES, THEY HAD TO RECEIVE DISPENSATION FROM THE RUSSIAN GOVERNMENT IN ORDER TO MOVE THOSE MONEYS TO THEIR CREDITORS. FAR BE IT FROM ME TO OPINE EITHER WAY, IT IS A MATTER OF WAIT AND SEE. WE DO NOT KNOW. JONATHAN: GUY GET ADDITIONAL CLARITY AS TO WHETHER THEY DID PAY THAT IN DOLLARS. YOU INDICATED THEY DID. DAMIAN: THE FINANCE MINISTER IS ABSOLUTELY SAYING THAT. THEY HAVE EVERY INTENTION OF MAKING THAT PAYMENT IN DOLLARS. THAT IS THE KEY POINT BECAUSE THE BONDS DO NOT HAVE THE FALLBACK OPTIONALITY WHEN THEY CAN PAY IN RUBLES. JONATHAN: HOW MANY DAYS ARE LEFT? DAMIAN: 29 AND COUNTING. JONATHAN: YOU THINK WE HAVE REALIZE THE CONSEQUENCES OF WHAT HAPPENS WHEN THAT GRACE PERIOD PASSES? DAMIAN: DEFAULT IS BAKED IN AT THIS POINT. IT IS THE REAL ECONOMIC IMPACT. OFFSHORE CREDITORS WILL GET INTO A COMPLEX RESTRUCTURING TO SEE WITH RECOVERY IS. BLUEBAY, MARK DOWNING ESTIMATED A 25% TO 40% RECOVERY WHEN ALL IS SAID AND DONE. HOW LONG DOES IT TAKE FOR THEM TO RECOVER THEIR INVESTMENT? THAT REMAINS TO BE SEEN. WE ARE IN LIMBO. JONATHAN: CAN YOU TELL ME HOW ISOLATED THE STORY IS WITHIN EM? HAS IT STARTED TO BLEED OUT? DAMIAN: WE ARE. RUSSIA HAS BEEN KICKED OUT OF ALL THESE BOND INDICES. THAT MEANS HE WILL TAKE THE FACE OF RUSSIAN INDICES GOING FORWARD. HIGH-YIELD EMERGING MARKETS LIKE EGYPTIAN LOCAL BONDS AND INDIAN LOCAL BONDS, ALL OF WHICH ARE BEING ADDED TO BOND INDICES, THEY SHOULD BENEFIT FROM THIS. ON THE FLIPSIDE, THOSE EM LOCAL DEBT MARKETS THAT ARE MOST HEAVILY WEIGHTED IT INDICES, CHINA, INDONESIA, THAILAND. HE WILL SELL THE MOST LIQUID STUFF IN YOUR PORTFOLIO AND THAT IS GOVERNMENT BONDS AND HIGH GOVERNMENT BONDS AND SO FORTH. JONATHAN: WE HAVE A LOT OF WORK TO DO FOR THE NEXT 28 DAYS. YOU'LL WILL MAKE IT EASIER FOR ME. GOOD LUCK. DAMIAN SASSOWER. LET'S KEEP IT ON CHINA. ALLOWING SOME COMPANIES TO LEAD FACTORIES THE MIDDLE LOCKDOWN. WHEN IS A LOCKDOWN NOT A LOCKDOWN? CALL DONOVAN OF UBS SAYING THE PROBLEM IS PEOPLE HERE LOCKDOWN AND THINK OF WHAT HAPPENED IN 2020. THAT IS NOT WHAT IS HAPPENING NOW. LET'S GET BACK TO ABBY FOR MORE. ABIGAIL: ON MONDAY THE SKY WAS FALLING. HE ONE MILLION PEOPLE IN CHINA WERE LOCKED DOWN. THE IMPLICATION WAS IT WAS A 2020 STYLE LOCKDOWN. NOW IT SEEMS IT IS LOOSENING UP IN TERMS OF WHAT IS HAPPENING OVER THERE AS FAR AS WHAT IT MIGHT MEAN. A PIECE OF THIS IS THE FACT CONFIRMED CASES HAVE DROPPED FOR A SECOND STRAIGHT DAY. ON MONDAY THEY WERE UP FOUR FOR OVER A WEEK. ONE ECONOMIST EXPECTS THE FACTORY CLOSURES IN THE SOUTH AND THE NORTH TO BE JUST TWO WEEKS AS OPPOSED TO WHAT FELT LIKE IT COULD BE FOR A LONG TIME AND INFLUENCE THE ECONOMY. FOXCONN HAS RESUMED SOME OF THEIR PRODUCTION. I DO NOT KNOW IF THAT INCLUDES THE IPHONE, BUT IT MAY. IT SEEMS THERE IS SOME HOPE FOR THE CHINA ECONOMY ANNOUNCED -- AROUND THE NEW LOCKDOWN. THAT IS WHY WE HAVE THE HISTORIC RALLY FOR MANY CHINA INDEXES. THE CSI UP ITS .4%. THE HANG SENG UP NEARLY 7%. HANG SENG TECH UP 32%. TODAY TAKING A BREATHER. THAT MAKES SENSE. YESTERDAY THE GOLDEN DRAGON INDEX UP 33%. THE BEST DAY EVER. TODAY CONSOLIDATION. OIL AT $101 PER BARREL, ABOVE $101 PER BARREL, UP 6.3%. THAT REFLECTS SOME HOPE THE CHINA ECONOMY WILL NOT BE HIT QUITE SO HARD. JONATHAN: THIS ADR STORY AS WELL , WE'VE HAVE NOT SORTED OUT THAT ON IT ISSUE AS WELL. ABIGAIL: IT IS INCREDIBLE, THE VOLATILITY TO THE DOWNSIDE AND UPSIDE. THE KEY POINT IS THESE STOCKS DOWN 75% AT THE MONSTER RALLY THEY BARELY MADE UP THE LOSSES. A LOT OF FOLKS TELL ME IS LIKE CATCHING A FALLING KNIFE. I SPOKE TO BANK OF AMERICA AND THEY WERE SAYING PEOPLE ARE NOT REACHING OUT BECAUSE OF THAT RISK. IT DEPENDS ON THE FUNDAMENTALS PLUS THE IMPORTANT ISSUE OF WHERE CHINA FALLS ON THE UKRAINE-RUSSIA WAR. JONATHAN: THANK YOU. HEADLINE ROULETTE IS NEVER ENJOYABLE GAME WHEN IT COMES TO CHINESE POLICYMAKERS. CAN CHANGE THE OTHER WAY QUICKLY? THE HANG SENG UP MORE THAN 7%. THE CSI UP MORE THAN 2%. FOR YOUR SECTOR PRICE ACTION, HERE IS KRITI GUPTA. KRITI: DIVERGENCE IN THE MARKET. NOW FLAT. TECH WEIGHING THE MARKET DOWN. WHAT IS NOT WEIGHING THE MARKET DOWN IS ENERGY, UP 1.7%. IF YOU LOOK UNDERNEATH THE HOOD, IT IS THE FAVORITES. ENERGY COMPANIES THAT HAVE EXTRA EXPOSURE TO U.S. PRODUCTION. OCCIDENTAL GETTING AN EXTRA BIT. THE BEST PERFORMER AT THE MOMENT AFTER REPORTING WARREN BUFFETT IS NOW BUILDING HIS STAKE UP IN THE STOCK. 14.6% OF THE COMPANY IS SO MUCH HE OWNS. THIS IS IMPORTANT BECAUSE FINANCING FOR THE ANADARKO DEAL CAME FROM WARREN BUFFETT. IT FEELS LIKE OTHER INVESTORS ARE TAKING HIS LEAD AND BOOSTING THOSE ENERGY SHARES. JONATHAN: THANK YOU. KRITI GUPTA ON THE SECTOR PRICE ACTION. A MOVE ON BRENT. LET ME LEAVE YOU WITH THIS ONE FROM CITI. INVESTORS SHOULD HEED THE WARNING AND EXPECT THE FED TO CONTINUE TO RAISE RATES AND ENGAGE IN BOUND SHEET REDUCTION INTO A COMBINATION OF HIGHER REAL RATES AND LOWER RISK ASSETS ARE ACHIEVED. WE EXPECT OF 50 BASIS POINT HIKE INMATE IN THE ANNOUNCEMENT OF BALANCE SHEET REDUCTION AS WELL. , YOUR TRADING DIARY. JONATHAN: IN ABOUT FIVE MINUTES, GUY JOHNSON AND GINA MARTIN ADAMS PICKING UP IN THE PRICE ACTION. WE ARE UNCHANGED ON THE S & P. ON THE NASDAQ DOWN .1%. HERE'S THE TRADING DIARY. SECRETARY BLINKEN SPEAKING ON THE WAR IN UKRAINE AT 1:30. PRESIDENT BIDEN AND CHINA'S XI TALKING RUSSIA TOMORROW. THAT IS A REALLY IMPORTANT CONVERSATION. WE'LL HEAR FROM THE FED'S PARKING. -- BARKIN.

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'Bloomberg The Open' Full Show (03/17/2022)

Jonathan Ferro highlights the market-moving news you need to know heading into the opening bell on Wall Street. Stocks climbing with tech giants leading gains as investors assess the economy's ability to withstand the Fed's most aggressive tightening campaign in decades. Crossmark's Victoria Fernandez, Morgan Stanley's Matthew Hornbach and Columbia Threadneedle's Gene Tannuzzo discuss whether the Fed's economic goals are feasible. (Source: Bloomberg)

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