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00:00> > WE HAVE HAD TWO YEARS OF HELICOPTER MONEY AND WE ARE PAYING THE PRICE WITH HIGHER INFLATION. > > AT SOME POINT THE ANXIETY AROUND THE FED WILL LEAD TO A GREATER SCARE OF RECESSION. > > IT COULD GET WORSE IF THE FED MOVES AS FAST AS IT IS TELEGRAPHING. > > A VERY PESSIMISTIC SENTIMENT ENVIRONMENT DOES PROVIDE SUPPORT FOR THE MARKET HERE. > > THE QUESTION YOU SHOULD ASK YOURSELF, WHERE CAN I FIND SAFETY IN THE WORLD? > > THIS IS BLOOMBERG SURVEILLANCE WITH, JONATHAN FERRO, AND LISA ABRAMOWICZ. JON: LIVE FROM NEW YORK CITY FOR OUR AUDIENCE WORLDWIDE, GOOD MORNING, GOOD MORNING. THIS IS BLOOMBERG SURVEILLANCE LIVE ON TV AND RADIO ALONGSIDE TOM KEENE AND LISA ABRAMOWICZ. I'M JONATHAN FERRO. FUTURES UP ON THE S & P, WITH FACEBOOK KNOCKING IT OUT OF THE PARK. WE CAN TALK ABOUT THAT LATER. WHAT A MOVE IN THAT. TOM: IT'S AN EXTRA NERI MOMENT. STAY WITH US FOR THE MORNING AS WE GIVE THE BEST COVERAGE WE CAN ON THIS INTERNATIONAL DEBACLE. I WILL BE LINKING IN MATT LEVINE OF BLOOMBERG'S PHENOMENAL EFFORT ON BILL HWANG WITH THE JAPANESE MINISTRY OF FINANCE. WANG WAS AND IS TRYING TO CORNER A MARKET. HE TRIED TO CORNER 10 SELECTED STOCKS AND MOVE THEM UP AND UP IN A LEVERAGED WAY AND WE TALKED ABOUT THIS BEFORE THE SHOW, JAPAN'S GOVERNMENT IS TRYING TO CORNER THE JGB MARKET BY EYEING IN MORE PAPER, KEEPING CONTROL OF THE YIELD. WHAT IS THE DIFFERENCE? JON: THE DOJ PROBABLY -- DOJ PROBABLY. THE ACTION OF THE BOJ IS IN CONFLICT WITH THE JAPANESE FINANCE MINISTRY. ON THE SAME DAY MINISTER, OFFICIAL FROM THE MINISTRY OF FINANCE AND JAPAN, IS EXTERNALLY CONCERNED ON THE MOVE AND FX. THE BANK OF JAPAN IS OFFERING TO BUY UNLIMITED AMOUNT OF GOVERNMENT BONDS AT 0.25%. TO PROTECT THE CEILING. THOSE TWO THINGS ARE IN TOTAL CONFLICT THIS MORNING. TOM: AND WHAT IS SO IMPORTANT IS THE RELATIVE CRISIS. IT IS NOT 2002. OUR TEAM AND JAPAN HAVE A FABULOUS READ THIS MORNING ON THIS, THE EFFECT ON JAPAN AND CORONA, THE MINISTRY OF FINANCE, A LONG TIME AGO, DEALT WITH A 135 YEN. HE IS USED TO THAT EXCEPT IT IS NOT 2002, IT IS A WHOLE DIFFERENT SET OF CARDS THIS MORNING. JON: YOU CAN'T HAVE IT BOTH WAYS. LISA: THAT SEEMS TO BE WITH THE MARKET IS SAYING AND WE WILL GO WITH THE FACT YOU WILL NOT SUPPORT THE VALUE OF YOUR CURRENCY. IT IS ALSO ESCALATING ON ITSELF AS A LOT OF INVESTORS DO NOT VIEW THE YEN ANYMORE AS A HAVEN BAT. THIS IS A GAME CHANGER. IT USED TO BE THE HAVEN TRADE AND NOW IT SEEMS TO BE ONLY THE DOLLAR, THE REASON YOU SEE STRENGTH. JON: IT IS STERLING TOO AND THE EURO. EURO-DOLLAR AT A 104 HANDLE. LISA: JUST SHOCKING AND REALLY CAUSING A CONFLICT OVER GAS AND OIL EMBARGOES POTENTIALLY ON RUSSIA. DIVERGENCE, SHOCKER, SOME PEOPLE WILL NOT WANT TO WITHDRAW THEIR GOOGLE PAYMENTS FROM RUSSIA IN ORDER -- RUBLE PAYMENTS FROM RUSSIA TO GET GAS AND OIL AND THAT IS LEADING TO A LOT OF CONCERN. JON: I THINK WE SHOULD LEAVE THE JONATHAN FERRO BANNER UP OVER LISA ABRAMOWICZ'S FACE. TOM: IT'S GOOD. JON: I THINK WE SHOULD CUT THEIR. ONCE UPON A TIME, TWO VASES MERGED. TOM: WE ARE BLAMING EVERYTHING ON DAVID TODAY. JON: UP 1.6% ON THE S & P 500 AND THE NASDAQ UP MORE THAN TWO FULL PERCENTAGE POINTS. FACEBOOK KNOCKING IT OUT OF THE PARK. THE STOCK WAS SO BADLY BEATEN UP COMING INTO EARNINGS AND THAT IS HELPING THE NASDAQ IT A LITTLE LIFT. YIELDS COMING A BASIS POINT 281 POINT 67. WE HAVE TALKED ABOUT THE MOVE ON CRUDE, 120 222. LISA: I CANNOT GET A READ ON CRUDE BECAUSE THEY'RE SO MUCH UNCERTAINTY AND WE ARE HELPED UP BY THE RELEASE OF THE STRATEGIC PETROLEUM RESERVE. WHEN I'M WATCHING IS A SLEW OF ECONOMIC DATA COMING OUT IN ABOUT 2.5 HOURS, 8:30 A.M. GETTING FIRST QUARTER GDP INCLUDING CORE PCE, LEADING TO THE HIGHEST LEVELS GOING BACK TO THE EARLY 1980'S AS WELL AS INITIAL JOBLESS CLAIMS. IT IS EXPECTED TO COME IN LIGHT. THE ANALYSTS EXPECT A 1% GDP ON THE FIRST QUARTER AND RBC EXPECTING A CONTRACTION. A LOT OF PEOPLE SAY IT IS A HEAD FAKE BECAUSE OF TRADE DISCREPANCIES. WE WILL BE WATCHING THAT TO GET A SENSE OF HOW MUCH WEAKNESS OR STRENGTH THERE IS. TODAY PRESIDENT BIDEN IS SPEAKING AT 10:45 A.M., TALKING ABOUT WHAT THE U.S. PLANS TO DO TO HELP UKRAINE. WE ALSO HAVE THE U.S. SECRETARY GENERAL MEETING WITH THE PRESIDENT OF UKRAINE AND IS COMING AS WE SAW FACEBOOK AND GERMANY -- IN GERMANY -- FACEBOOK AND GERMANY SAYING THEY WILL PROVIDE HEAVY ASSISTANCE. IT SEEMS THE GLOVES ARE COMING OFF. HE TALKED LAST NIGHT ABOUT META, FACEBOOK BLOWING CERTAIN ASPECTS OF THE EARNINGS REPORT OUT OF THE WATER. HOWEVER, A LOW BAR FOR THEM TO SORT OF STEP OVER. I'M INTERESTED IN SEEING AMAZON, AWS, AS WELL AS APPLE. WHAT DOES APPLE SAY ABOUT THE SHUTDOWN IN CHINA AND HOW MUCH WILL THAT IMPACT AND POSSIBLY INTERRUPT SOME OF THE SUPPLIES? JON: LOOKING FORWARD TO THOSE EARNINGS AFTER THE CLOSE. THE TEAM WILL LEAD YOU THROUGH THE AND TWITTER, BEFORE THE OPENING BELL LITTLE LATER THIS MORNING. NO EARNINGS CALL GIVEN THE IMPENDING TRANSACTION BETWEEN TWITTER AND OF COURSE ELON MUSK. THERE IS A MASSIVE MOVE IN THE FX MARKET. THE DOLLAR INDEX, 103, PRETTY CLOSE TO 104 TODAY. JOINING US IS THE PART OF HAD AN MICROSTRATEGY AT STRATEGIC, CHRISTOPHER VERRONE. WHAT IS GOING ON IN THIS FX MARKET? CHRIS: IT IS FUNNY, ABOUT A YEAR AGO I WROTE SOMETHING THAT SAID WE ARE ABOUT TO ENTER THE GOLDEN ERA OF MACRO INVESTING AGAIN AND I DID NOT KNOW HOW PRECIOUS THAT WOULD BE. WHAT WE SEE IN THE MACRO RIGHT NOW WE HAVE NOT SEEN IN 30 TO 40 YEARS. WHAT IS PLAYING OUT IN ENTERING NOW IS SO REMINISCENT OF WHAT HAPPENED AS YOU KNOW IN SEPTEMBER 1992 WITH THE BANK OF ENGLAND AND THE POUND. THE BIG FANTASY THAT THEY CAN KEEP A LID ON 10 YEAR JGB, THE 25 BASIS POINTS, THE CURRENCY MARKET IS LAUGHING AT THAT. WITH GERMAN YIELDS NEAR 1% AND U.S. YIELDS NEED 3%, THE LIKELIHOOD THIS CAP ON JGB AT 25 HOLDS IS A FANTASY OF THIS POINT. THE OUTLET FOR THIS IS THE CURRENCY MARKET. THIS IS THE CURRENCY MARKET COMING FOR THE BANK OF JAPAN. TOM: IS THERE A GEORGE SOROS OUT THERE? I DON'T WANT TO PUT YOU IN HOT WATER BUT CAN YOU IDENTIFY 2022'S GEORGE SOROS? CHRIS: I CANNOT. I'M SURE THERE'S A NUMBER OF MACRO GUYS OUT THERE WHO ARE FOLLOWING THIS TRYING TO HAVE BEEN ON THIS EARLY AND ARE PRESSING THIS, BUT I THINK THE BIGGER PICTURE IS WHAT RELATIONSHIP HAS BEEN SEVERED OVER THE LAST SIX MONTHS? FOR THE LAST NUMBER OF YEARS, EVERY TIME YEN WEAKENED, JAPANESE STOCKS WENT OUT. THAT HAS NOT HAPPENED HERE. THE MARKET SAYS THIS WEAKNESS IN JAPANESE YEN IS NOT BULLISH FOR THE EQUITIES AS IT HAS BEEN IN THE PAST. THAT'S A VERY IMPORT AND SANCTION. TOM: I'M LOOKING AT TANGENTIAL IS LIKE 1992 WITH JOHN MAJOR AND STERLING, AND I'M LOOKING FOR STING DOLLAR BACK TO 1996 AND THIS IS A SECONDARY MARKET AND THAT NUMBER MEANS NOTHING. 10 YEN, SEEING DOLLAR, BUT WE ARE STRONG SING DOLLAR BACK TO 1996. THOSE ARE THE KNOCK ON EFFECTS. WHAT TECHNICALLY DO YOU LOOK AT TO SHOW YOU WHERE YEN IS GOING? CHRIS: FIRST IN TERMS OF KNOCK ON EFFECTS, I THINK THERE IS ONE PLACE WE NEED TO LOOK ABOVE ALL OTHERS, WHAT IS HAPPENING IN OFFSHORE CHINESE ONE IS ALSO PRETTY REMARKABLE. YOU TAKE FROM LET'S CALL IT 640 TO 660 IN THE LAST WEEK OR SO. I DO NOT THINK GIVEN THE WEAKNESS WE HAVE SEEN IN EURO, THE WEAKNESS IN STERLING, THE WEAKNESS WE HAVE SEEN IN YEN THAT THE CHINESE CAN SIT BACK WITH THE STRONGEST CURRENCY IN THE WORLD. MOVE THERE, LITTLE REMINISCENT OF SUMMER 2015 AND 2016 WHEN YOU SAW A PRETTY MAJOR DEVALUATION. IN TERMS OF YEN TARGETS, 130 WAS OUR TARGET. WE ARE THERE. I THINK I NEED TO REASSESS AND SAY LONGER-TERM, IS THIS HEADED TO 150 OR 160? I THINK THE BIGGEST TAKE AWAY FOR INVESTORS -- FIGURE TAKEAWAY FOR INVESTORS, THERE ARE FEW PEOPLE IN THIS BUSINESS THAT MANAGE MONEY WITH YEN NORTH OF 130. THIS IS A DIFFERENT MACRO REGIME. LISA: YOU SAY YOU MIGHT HAVE TO REASSESS, WHAT WOULD MAKE YOU DO THAT? WHAT CAPITULATION WOULD YOU HAVE TO SEE IN MARKETS FROM A TECHNICAL TREND? CHRIS: I THINK IN THE SHORT TERM, YOU HAVE CAPITULATIONS. IF YOU LOOK AT ANY SAVER -- ANY SURVEY WORK, PEOPLE ARE EXPRESSING IRISH VIEWS ON SENTIMENT UNLIKE THE FIRST PERCENTILE OF ALL OBSERVATIONS HISTORICALLY. SO SOME PAWS ON THIS 130, 135 WOULD NOT BE A SURPRISE. THE LONGER-TERM CHART YOU POINT TO 150, ULTIMATELY THAT IS WHERE THIS IS GOING. JON: THIS IS A PROBLEM FOR JAPAN. WHY IS IT A PROBLEM FOR ANYONE ELSE? CHRIS: NUMBER ONE, THE IDEA WEAKER YEN AS WE TALKED ABOUT WILL BE BULLISH FOR JAPANESE STOCKS INDEFINITELY IS PUT TO THE TEST YEAR. I AM REMINDED OF WHEN POUND BROKE IN 1992 AND ENDED WITH ENGLAND RECESSION. I DO NOT WANT TO FORGET THAT IN TERMS OF THE JAPANESE EXAMPLE GOING FORWARD. I THINK MOST IMPORTANTLY, AS WE TALKED ABOUT THE CHINESE JUAN, I DON'T THINK THEY CAN SIT BACK AND MAINTAIN IT WHERE IT HAS BEEN CHAINING -- TRADING. I THINK YOU WILL SEE PERSISTENT WEAKNESS AND THIS IS A NEW MACRO REGIME. THE RISK PREMIUM HAS TO GO UP EVERYWHERE WHEN YOU SEE THESE TYPES OF MOVES. JON: GREAT TO CATCH UP. CHRISTOPHER VERRONE OF STRATEGIC -- STRATEGIC'S. EXPLOSIVE THEM ANYWAYS. TOM: THIS IS WHY IT IS HARD TO GIVE A TARGET. HE MENTIONED 130 TO 150 WITH 99% LISTENING AND WATCHING IS UNIMAGINABLE. I WILL TAKE THE POINT OF 1992 AND OTHERS AND NOT JUST STERLING. I WOULD LOOK AT EMERGING MARKETS. THE KNOCK ON EFFECTS HERE ARE NOT JUST ABOUT DXY. THIS IS IMPORTANT. I CAN DO THIS ON THE BLOOMBERG. TX WHY GO, 50% ZERO, 14% YEN, 12% BRITISH POUND. THAT IS THE DXY BUT THERE IS A WHOLE ANOTHER WORLD OUT THERE, LIKE I MENTIONED SEEING-DOLLAR, WHICH HAS KNOCK ON EFFECTS ON THIS AND YOU GET INTO A COMPLEXITY OR ALMOST COORDINATION WHERE YOU DO NOT KNOW WHAT WILL BREAK. JON: THE MINISTRY OF FINANCE OF BANK OF JAPAN THIS MORNING, BEING COMPATIBLE. LISA: AS WEBSITE, A WEAKER YEN IS NOT HELPING THE ECONOMY. THE IMPORTANCE OF THIS GOES SO FAR BEHIND THE JAPANESE ECONOMY BECAUSE ALSO WE ARE TALKING ABOUT ONE OF THE BIGGEST BUYERS OF U.S. TREASURY AND A POSSIBLE INABILITY TO PLAY IN THE GLOBAL MARKETS WITH A LOT OF THESE INVESTORS IN THE PAST. JON: WE NEED TO TALK ABOUT MATTER, UP 17% IN THE EQUITY MARKET, EQUITY FUTURES UP TWO PERCENTAGE POINTS, A MESSAGE -- MESSAGE REPORT COMING UP WITH APPLE. THIS IS "BLOOMBERG SURVEILLANCE." ♪ JON: KEEPING YOU UP-TO-DATE -- > > KEEPING YOU UP-TO-DATE WITH NEWS FROM AROUND THE WORLD, BLOOMBERG AND -- BLOOMBERG LEARNED ON CHAIRING INTELLIGENCE WITH UKRAINE, INTENDED TO HELP UKRAINE DEFEND AND POTENTIALLY RETAKE TERRITORY IN THE EAST AND SOUTH WHERE RUSSIA HAS RENEWED AN OFFENSIVE. TOP REPUBLICANS IN THE HOUSE AND SENATE INTELLIGENCE COMMITTEE HAVE URGED THE RESTRICTIONS TO BE LIFTED. THE BANK OF JAPAN HAS SPARKED A SHARP SLIDE IN THE END BY DOUBLING DOWN ON BOND PURCHASES. THE CENTRAL BANK SAID IT WOULD BUY AN UNLIMITED AMOUNT OF BONDS AT FIXED RATES EVERY BUSINESS DAY. THAT PROMPTED THE YEN TO HIT A TWO DECADE LOW AGAINST THE DOLLAR. CITIES ACROSS CHINA ARE ROLLING OUT SWIFT MEASURES FROM MASS TESTING DRIVES TO LOCKDOWNS FOR JUST A MERE HANDFUL OF CORONAVIRUS CASES. THEY ARE TRYING TO KEEP FLAREUPS PER DAY AND ENJOY -- AND AVOID THE HARDSHIPS BY SHANGHAI. RESPONSES REFLECT THE LOCAL GOVERNMENTS FACE AND WRESTLING WITH THE HIGHLY INFECTIOUS OMICRON STRAIN. IN NEW YORK, THE BILLIONAIRE BEHIND THE COLLAPSE OF ARCO CAPITAL, BILL HWANG, HAS BEEN RELEASED ON $100 MILLION BOND. HE ENDED HIS FORMER CFO HAVE BEEN CHARGED WITH FRAUD. FEDERAL PROSECUTORS OUTLINED THAT THEY CALL A VAST CRIMINAL SCHEME TO MISLEAD BANKS AND MANIPULATE MARKETS, AND BOTH HAVE PLEADED NOT GUILTY. SHARES OF FACEBOOK PARENT META PLATFORMS ARE SOARING. FACEBOOK'S MAIN SOCIAL NETWORK ADDED MORE USERS THAN PROJECTED IN THE FIRST QUARTER AND THAT POTENTIALLY COULD STAVE OFF CONCERNS THE COMPANY IS LOSING MOMENTUM AS A NEW GENERATION FLUX TO YOUNGER SITES LIKE TIKTOK. 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 AM LISA MATTEO. THIS IS BLOOMBERG. ♪ > > U.S. YIELDS PUSHED HIGHER IN THE DOLLAR-YEN COULD PUSH HIGHER , BUT IF WE MOVE INTO THE END OF THE YEAR, PEOPLE BEGIN TO THINK THE U.S. ECONOMY CAN SLOW AS YIELDS ARE LOWER. IN A WAY, THAT COULD TAKE THE BANK OF JAPAN OFF OF THE HOOK IF YOU LIKE. JON: JANE FULLY, THE HEAD OF FX STRATEGY, WHAT A MOVE IN THE JAPANESE CURRENCY. GOOD MORNING. EQUITY FUTURES UP 1.4% ON THE S & P 500. ON THE NASDAQ, THE STORY OF FACEBOOK SENDING THE NASDAQ 100 HIGHER, MUCH HIGHER, BY ALMOST TWO PERCENTAGE POINTS. HERE ARE THE MOVES IN THE FX MARKET, EURO-DOLLAR 1.05. 1.04 EARLIER. DOLLAR YEN THROUGH 130 IN THE FIRST TIME. TOM: HUGE DEAL. WE WILL FOCUS ON JAPANESE YEN AND THE AFFECTS GLOBALLY BUT SO MANY OTHER STORIES OUT THERE. APPLE AND AMAZON LATER TODAY. RIGHT NOW ON THE WAR, JACK FITZPATRICK IS IN WASHINGTON AND MARIA TADEO IN BRUSSELS. THIS IS WITH GREAT RESPECT TO ALL OF THOSE AT RISK, WHO IS WINNING THIS WAR RIGHT NOW? > > THAT'S A DIFFICULT QUESTION TO ANSWER. THE RUSSIANS SAY WE WILL WIN THE WAR AND THIS IS NOT OVER, IT IS TOO EARLY TO MAKE A FINAL ASSESSMENT ON THIS END. TOM, THE NEXT 10 DAYS WILL BE INCREDIBLY CRUCIAL. WE KNOW THAT FOR THE RUSSIANS, VICTORY DAY, I KNOW WE TALK ABOUT THIS ALL THE TIME BUT IT'S INCREDIBLY IMPORTANT, MAY 9, VLADIMIR PUTIN HAS PRESSURE TO GO ON THE RECORD AND SHOW THERE IS A VICTORY IN UKRAINE. HE WILL NOT STOP UNTIL THAT DATE. IT IS SO IMPORTANT FOR THE RUSSIANS. IT IS A SOVIET CELEBRATION AND A CONTEXT IN WHICH THE COUNTRY SAYS IT IS DEFYING UKRAINE. WHEN YOU LOOK AT UKRAINE, THEY TELL YOU WE ARE ALREADY WINNING AND SINCE RUSSIA HAS NOT BEEN ABLE TO TAKE ANY MAJOR CITY. MAR YOU BOWL IS STILL STANDING - - MARIUPOL IS STILL STANDING. THE BATTLE FOR DUNBAS IS CRUCIAL. AS LONG AS THEY HAVE WEAPONS, THEY WILL NOT SURRENDER. TOM: HOW TO THE WEAPONS GET TO THE UKRAINE ARMY? MARIA: THEY'RE GOING THROUGH POLLING, THROUGH THE CZECH REPUBLIC, AND THROUGH A LOT OF NEIGHBORS THAT WILL NOT SATE OPENLY BECAUSE THEY WORRY ABOUT BEING TARGETED BY THE RUSSIAN ARMY. WE HAVE SEEN THAT BEFORE, WARMINGS FROM THE KREMLIN'S SAYING IF YOU SUPPLY WEAPONS YOU HAVE BECOME BELLIGERENT IN THIS WAR, STAY OUT. YESTERDAY, ANOTHER WARNING BY VLADIMIR PUTIN SO IT IS COMING FROM THIS EASTERN EUROPEAN COUNTRIES. WE KNOW POLAND IS A MAJOR DISTRIBUTION HUB BUT NOT THE OWN ONE. HAVING SAID THAT, THERE ARE SECRETS ON HOW THEY GET IN BUT THEY ARE STILL THERE. IF NOT THEIR WEAPONS IT IS WEAPONS PROVIDED BY ALLIES. LISA: MARIA BRINGS UP A GOOD POINT, THE REDLINES VIEWED AS ESCALATION IN TERMS OF WHICH WEAPONS ARE BEING SUPPLIED TO UKRAINE HAVE GOTTEN KICKED OUT AGAIN AND AGAIN. WHAT IS THE NEW REDLINE WE WILL HEAR FROM PRESIDENT BIDEN WHEN HE GIVES HIS SPEECH LATER THIS MORNING? > > I DON'T KNOW WE WILL HEAR REDLINES ABOUT LIMITS ON THE U.S. INVOLVEMENT BUT WE ARE GOING TO HEAR MORE DETAILS ON WHAT WE ARE SENDING AND WHAT HE IS ASKING FROM CONGRESS. IN TERMS OF WHAT WE EXACTLY SEND, I HAVE HEARD SKEPTICISM FROM LAWMAKERS ON FIGHTER JETS. OBVIOUS A THAT WAS A REQUEST THE LENSKI MADE A WHILE BACK THE DEMOCRATS IN PARTICULAR THOUGHT THE FOCUS SHOULD BE ON SMALLER ARMS, AND THEY FEEL THE JAVELINS AND STINGERS AND SWITCHBLADE DRONES SEEM TO BE WORKING WELL. BUT THIS IS GOING TO BE A BROADER SPEECH FROM BIDEN ON LONGER-TERM AID. THERE WILL BE THE MILITARY COMPONENT, ECONOMIC COMPONENT, IT SOUNDS TO BE FAIRLY WIDE-RANGING, THE REQUESTS THEY MAKE FROM CONGRESS. ANTONY BLINKEN TOLD CONGRESS YESTERDAY HE EXPECTS THIS GETS INTO THE GLOBAL FOOD EIGHT ISSUE, MAY BE STAGED POSSIBILITY OF GETTING U.S. DIPLOMATS BACK EVENTUALLY REOPENING AN EMBASSY IN KEY. THIS WILL BE A FOCUS ON THE MILITARY, ECONOMIC, AND DIPLOMATIC COMPONENTS OF ALL OF THIS. LISA: BEFORE LET YOU GO, MARIA, I WANT YOUR TAKE ON WHAT THE LATEST IS WITH RESPECT ON OIL AND GAS, EMBARGOES ON RUSSIA GIVEN THE FACT POLAND WAS AMONG THOSE IN BULGARIA THAT GOT THEIR OIL SHUT OFF BY RUSSIA. HAS THERE BEEN ANY COHESION WITH THE ALLIES IN THE EU ABOUT HOW TO PROCEED FROM HERE? MARIA: I THINK THERE ARE TWO THINGS, WE WILL NOT SEE ANYTHING UNTIL MID-MAY. POLAND AND BULGARIA HAVE SPECIFIC CASES. IT IS A WARNING SHOT BY THE RUSSIANS ON WHAT THEY COULD POTENTIALLY DO BUT I DO NOT SEE -- THINK WE WILL SEE THE SAME WITH ITALY OR GERMANY UNTIL MID-MAY. THAT IS IN THE NEW RULE PAYMENTS ARE DUE AND IN TERMS OF POSSIBLE EMBARGO AS WELL, BIDEN IS WEAK -- CN OF THE WEEK THERE WILL BE A LIGHT EMBARGO ON RUSSIAN OIL BUT THE QUESTION, AND THIS IS VERY MUCH THE ISSUE, IS THE GAS. THIS IS NOT AN OIL STORY, THE GAS STORY. FOR THE TIME BEING AND THERE'S A LOT OF CONFUSION IN TERMS OF WILL THAT FLOW, SHOULD THE EUROPEAN UNION CUT IT OFF BEFORE THEY GET CUT OFF AND HOW DO YOU FAVOR THIS? THE HEAD OF THE EUROPEAN COMMISSION SAYS IF YOU PAY RUBLES, THAT IS IN BREACH OF SANCTIONS AND YOU COULD BE IN A BIG PROBLEM TODAY. FOR A LOT OF EUROPEAN COMPANIES, THEY DO NOT KNOW HOW TO NAVIGATE THIS. LAWYERS WILL BE WORKING OVERTIME ON THIS BECAUSE THIS IS A SERIOUS QUESTION AND THEY DO NOT HAVE THE ANSWER TODAY. JON: MARIA TADEO IN BRUSSELS AND JACK FITZPATRICK IN WASHINGTON, D.C. I DON'T GET WHAT IS GOING ON HERE OR WHAT WILL HAPPEN. I HAVE NO IDEA ABOUT THAT EITHER. TOM: WE DON'T KNOW. THERE ARE TOO MANY VARIANCES. I LOOK AT THE WAR AND I SAY THIS WITH MUCH RESPECT, WE ARE DOWN TO BASIC WAR COVERAGE OF WHO IS WINNING. I LOOK AT THE ZEITGEIST THIS MORNING AND I DO NOT THINK WE KNOW. JON: MANY FOCUSED ON THE ENERGY STORY. WHO IS NEXT? I THINK THAT IS THE QUESTION. WHAT DID POLAND AND BULGARIA DO OTHERS DID NOT DO? WHY WERE THEY CUT OFF AND WHY WERE NOT OTHERS? I THINK WE NEED MORE DETAIL ON THAT. LISA: AND HOW MUCH IS THIS BECAUSE THEY ARE SMALLER BUYERS AND CAN BE PUSHED AROUND MORE THAN THE LIKES OF GERMANY? ALSO GERMANY COMING OUT YESTERDAY SAYING THEY ARE OK WITH OR AT LEAST ACCORDING TO REPORTING BY BLOOMBERG, A PHASED IN REMOVAL OF OIL IMPORTS FROM RUSSIA, AND I WONDER WHO IS THIS GOING TO BITE FIRST? IF THEY TELL RUSSIA WE WILL NOT BUY OIL FROM YOU, THAT BASICALLY REMOVES INCENTIVE FROM RUSSIA TO KEEP SUPPLYING OIL. JON: RUSSIA JUST GETS TO REWRAP CRUDE, GETTING THE TIME TO REROUTE CRUDE -- GETS TO REROUTE CRUDE, GETTING THE TIME TO FIGURE OUT HOW TO REROUTE CRUDE. WHAT DOES THAT ACHIEVE? LISA: EVEN WITH BULGARIA AND POLAND, THEY SAY THEY GET OIL AND GAS FROM THEIR NEIGHBORS. WHERE DID THAT COME FROM? ALL OF THESE THINGS ARE TECHNICALITIES AND YOU ARE ALSO HEARING COMPANIES ARE LINING UP PAYMENTS IN RUBLES TO KEEP GOING WITH SOME OF THE SUPPLIES FROM RUSSIA. JON: THE EUROPEANS ARE NOW, PARTICULARLY GERMANS, IT IS UTTERLY EMBARRASSING FROM WHAT IS HAPPENING ON THE GROUND AND EMBARRASSING BECAUSE THEY CONTINUE TO FIND IT. TOM: THE FUNDING IS THERE, AND I THINK THE GRANULARITY AS YOU AND I HAVE TALKED ABOUT IS REALLY IMPORTANT ON FUNDING. I WILL BE HONEST, I AM WATCHING ITALY. I THINK THERE A STORY HERE. I WONDER HOW DRAGHI WILL REACT TO WHAT WE SEE ON RUBLES IN ITALY. JON: FUTURES UP ON THE S & P 500, A BOUNCE BACK ON THE NASDAQ, UP 2%. FACEBOOK OR AS LISA WOULD CALL IT, META--- > > I WAS WRONG, IT IS A BIG STORY. JON: GOOD MORNING ON TV AND RADIO, THIS IS BLOOMBERG SURVEILLANCE AND HERE'S YOUR PRICE ACTION. FUTURES ARE POSITIVE ON THE S & P 500 BY 1.4%. ON THE NASDAQ 100, UP BY ALMOST TWOFOLD -- TO FULL PERCENTAGE POINTS. THE TEAM AT BLOOMBERG SUGGESTING A THIRD OF THAT MOVE IS FROM ONE SINGLE NAME. LET'S GET TO THAT NAME NOW. IT IS FACEBOOK. FACEBOOK USER GROWTH, GROWTH, YES IT IS BACK, A LITTLE BIT ANYWAY. THE STOCK IS A BALL A LOT MORE BECAUSE IT WAS DOWN A WHOLE LOT OF THE YEAR SO FAR. UP 17% IN TWO YESTERDAY, DOWN BY MORE THAN 40%. AMAZON AND APPLE STILL TO COME, THOSE TWO NAMES, 20% OF THE NASDAQ 100. THEY REPORT AFTER THE CLOSE. LET'S FINISH ON THIS, AN EMBARRASSING MOMENT FOR THE JAPANESE POLICYMAKER, MAKE SENSE OF THIS FOR ME. ON THE SAME TO THE BANK OF JAPAN IS COMING OUT AND PLEDGING, DOUBLING DOWN AND PLEDGING TO COME IN AND BIND UNLIMITED AMOUNT OF JAPANESE GOVERNMENT BONDS, THE CAP ON THE 10 YEAR YIELD AT 0.2 5%, THE MINISTRY OF FINANCE, ACCORDING TO A SOURCE SPEAKING TO US, THEY ARE EXTREMELY CONCERNED ABOUT THE MOVE IN THE FX MARKET. THE N UP 1.4 PERCENT. THE ACTION TO THE BOJ AND CONCERN FOR THE MINISTRY OF FINANCE IN JAPAN RIGHT NOW IN TOTAL CONFLICT WITH EACH OTHER. TOM: THIS IS INTERESTING. NOT THAT I'M AN EXPERT ON THE CULTURE OF THIS BUT I WOULD SUGGEST YOUR ADMINISTRATIVE FINANCE AND CHOSEN FEW END UP AT THE LOVELY BANK OF JAPAN IS SORT OF THE PASSAGE YOU HAVE THERE WITH A VERY RIGID ACADEMIC HIERARCHY. I HAVE FELT THE TENSION WHEN I HAVE BEEN IN TOKYO BETWEEN THE TWO INSTITUTIONS. I AM SORRY BUT MY RADAR IS ON MINISTRY OF FINANCE RATHER THAN BANK OF JAPAN. JON: YOU CANNOT HAVE IT BOTH WAYS. WE HAVE ACTION IN THE BOJ AND WORK IN THE MINISTRY OF FINANCE. WHAT CAN THEY DO TO OFFSET WHAT THE BOJ IS DOING IN UNLIMITED AMOUNTS? TOM: THEY NEED TO PREPARE FOR THE UNEXPECTED. AND WE ARE THERE, THE UNEXPECTED. WHAT DO WE DO IF CHRISTOPHER ONCE THE YEN? JON: WE HAVE A PROBLEM. BONDS, TREASURIES, ARE THEY GOING TO MANAGE TO KEEP THE JAPANESE GOVERNMENT BOND A 0.25 PERCENT WITH ALL THAT'S GOING ON AND ALSO MANAGED TO CAP THE MOVE IN DOLLAR-YEN? I WOULD SUGGEST GOOD LUCK. TOM: GOOD LUCK IS MAYBE THE BRITISH WAY OF PUTTING IT, UNLIKE YEAH RIGHT. WHAT WE WILL DO NOW IS BLOOMBERG SURVEILLANCE AND WELCOME YOU ALL TO RADIO TELEVISION TO A CLINIC NOW WITH WINSTON, GLOBAL HEAD OF CURRENCY STRATEGY AT BROWN BROTHERS CHAIRMAN AND BARELY DESCRIBES HIS PERSPECTIVE ON THE HISTORY OF FOREIGN EXCHANGE IN -- AND SPECIFICALLY HIS PACIFIC RIM FROM JAPAN DOWN TO HIS FIRM. DOCTOR, THANK YOU FOR JOINING US. I THINK WE NEED TO EDUCATE ALL, INCLUDING MYSELF, ON THE ANCIENT JAPANESE TRAJECTORY OF NEEDING TO WEEK THE YEN. THE YEN STARTS OUT AT 19.49 AFTER WORLD WAR II, SET AT 360, THEN GOES ON TO 200, STRONGER YEN, STRONGER YEN, TWO YEARS LATER WE SCREWED UP, 120 AND THEN THE SHOCK WHICH YOU AND I LIVED IN 1995 OF TO USE A PHRASE FROM BOSTON, STRONG AND OF 80. WHERE ARE WE AT NOW AT 130 WITHIN THE ANCIENT JAPANESE CONTINUUM TO THE HATE AND DISLIKE OF THE STRONG YEN? DR. THIN: FIRST OFF, THANK YOU FOR HAVING ME. IT'S ALWAYS A PLEASURE. I THINK THERE ARE TWO THINGS WE ARE TWO THINGS WE'RE LOOKING AT RIGHT NOW, THE OLD ADAGE YOU CAN NEVER HAVE TOO MUCH OF A GOOD THING. THE JAPANESE POLICYMAKERS HAVE BEEN LOOKING FOR A WEEK YEN AND HIGHER INFLATION FOR YEARS IF NOT DECADES AND THEY ARE FINALLY GETTING IT BUT AT A PACE THAT IS QUITE COMFORTABLE. I WANT TO CIRCLE BACK TO WHAT JONATHAN MENTIONED ABOUT HOW TO SQUARE THE CIRCLE AND THEY CANNOT. EFFEXOR MUNDELL, WHO I HAD THE PLEASURE OF HAVING A CLASS IN GRAD SCHOOL, WAY BACK IN THE 1960'S, TALKED ABOUT A POSSIBLE TRINITY. YOU CANNOT HAVE FREE CAPITAL CONTROLS, RUN INDEPENDENT POLICY, AND ALSO INFLUENCE EXCHANGE-RATE. YOU CANNOT HAVE ALL THREE. JAPAN HAS FREE CAPITAL FLOWS AND THEY ARE KEEPING MONETARY POLICY ULTRA-LOOSE. AS MR. MUNDELL WOULD SAY, PROFESSOR MUNDELL WOULD SAY, IT IS IMPOSSIBLE TO CONTROL YEN. IT WILL FIND ITS OWN LEVEL. THE DOUBLING DOWN ON YIELD CURVE CONTROL IS A STARK CONTRAST. EARLIER TODAY, THE RITZ BANK DELIVERED A SURPRISE HIKE. WHEN THE RITZ BANK IS MORE HAWKISH THAN YOU, THAT IS SAYING SOMETHING. [LAUGHTER] JON: WHEN WERE IN A SITUATION LIKE THIS ONE, I THINK WE RECOGNIZE SOMETHING HAS TO GIVE. I WON'T USE THE WORDS SOMETHING HAS TO BREAK BUT SOMETHING HAS TO GIVE. HOW DO YOU GET A READ ON WHAT GIVES? IS IT IN THE GOVERNMENT BOND MARKET OR IN FOREIGN EXCHANGE? DR. THIN: I WOULD SAY IT'S TOO EARLY TO DETERMINE. IT IS NOT JUST A JAPANESE PHENOMENON OBVIOUSLY. THIS CONTROL COULD BE SUSTAINED IF GLOBAL BOND YIELDS HAD REMAINED AS LOW LEVELS -- AT LOW LEVELS AND HERE WE ARE, THE U.S. 10 IS GETTING CLOSE TO 3%. IT IS MAKING IT MORE CHALLENGING. TO ME, THE BANK OF JAPAN DELIVERED AN ULTRA DOVISH HOLD. IF YOU LOOK AT THE FORECAST, THEY ARE SAYING NO TIGHTENING THROUGH FISCAL YEAR 2024. I THOUGHT -- THINK THEY KEPT THEIR CORE INFLATION AROUND ONE POINT 4% FOR FISCAL YEAR 2023 AND 2024. THAT IS QUITE A STATEMENT. AT SOME POINT THEY WILL HAVE TO TURN AROUND AND I THINK MY FEELING RIGHT NOW IS THIS POLICY WILL BE KEPT GOING THROUGH THE END OF THE TERM WHICH ENDS EARLY NEXT YEAR AND WILL ALLOW THE SUCCESSOR TO WRESTLE WITH THIS. THAT IS A YEAR OUT, I KNOW IT SOUNDS LIKE A MATERNITY, BUT EVENTUALLY WE WILL HAVE YIELD CONTROL. I DO NOT THINK IT WILL HAPPEN SOON BUT IT IS UNNATURAL. HAVING A 10 YEAR IS UNNATURAL. I THINK THAT IS WHERE IT WILL GO BUT WE ARE NOWHERE NEAR CLOSE TO THE PAIN THRESHOLD. LISA: HOW MUCH DOES THIS DISRUPT THE IDEA OF THE YEN AS A HAVEN TRADE? HOW MUCH DOES THIS REDIRECT FLOWS SIBLEY INTO THE DOLLAR AS THE ONLY HAVEN LEFT? DR. THIN: THAT'S A GOOD POINT. THAT'S REALLY WHAT THE PUZZLE IS RIGHT NOW. OVER THIS LAST WEEK OR TWO OF RISK OFF ACTIVITY, THE YEN WEAKENED. CERTAINLY SOMETHING TO LOOK OUT FOR, WE DID HAVE SOME LOWER DOLLAR-YEN IN RESPONSE TO RISK OFF BUT IT IS VERY MINUSCULE, MAYBE ONE TO TWO YEN. I THINK THIS MONETARY POLICY IS THE DRIVING FORCE. YES WE HAVE A LITTLE RISK OFF, MAYBE A COUPLE OF ONE OR 2%, BUT TO ME, THERE'S AN UNDERLYING STORY OF MONETARY POLICY. THE YEN WILL GO HOLLER -- GO HIGHER. I HAVE HEARD 150 BUT I TAKE ONE STEP AT A TIME AND GET TO THE 2000 TOO HIGH OF 135 AND SEE WHERE THINGS STAND. LISA: CHRISTOPHER WAS JUST ON SAYING THE KNOCK ON EFFECTS TO CHINA, THE YUAN OVERNIGHT WILL BE A BIG CONCERN TO THE CHINESE AUTHORITIES. DO WE EXPECT FURTHER INTERVENTION THERE IN ORDER TO STAVE OFF SOME OF THE DRAMATIC PACE OF MOVES IF NOT THE DIRECTION? DR. THIN: CHINA IS OBVIOUSLY VERY INTERESTING, DESPITE INTRODUCING MORE MARKETS, THEIR HEAVY-HANDED IN MARKETS ACROSS CHINA. I WOULD POINT OUT TO MONETARY POLICY THERE IS A STORY THERE. PEOPLE'S BANK OF CHINA, MORE DOVISH INNOCENCE THERE LOOSENING POLICY. JAPAN IS MAINTAINING LOOSE POLICY BUT WE SEE PEOPLE SAYING CHINA CUFFED RESERVE REQUIREMENTS AND THEY TAKE INTEREST RATES WERE LOWER. THAT IS MORE WEAKNESS MORE THAN THE KNOCK ON EFFECTS. THAT MONETARY POLICY UNDER BOC'S IS EVEN STRONGER. THEY CAN CONTROL THE PACE OF ITS A BIT MORE THAN JAPAN CAN OBVIOUSLY AND THEY HAVE A HEAVY HAND, BUT MAKE NO MISTAKE, DOLLAR YOU ON IS GOING HIGHER -- DOLLAR YUAN IS GOING HIGHER. TOM: I WILL PHRASE THIS CAREFULLY TO WHAT YOU SAID TWO TO THREE QUESTIONS AGO, WHAT WE'RE GOING TO HEAR IS BAD PEOPLE LIKE THAT GEORGE SOROS ON BLACK WEDNESDAY 1992 "ARE MANIPULATING YEN, ARE MANIPULATING DOLLAR, ARE MANIPULATING THE CURRENCY MARKET." RESPOND TO THAT. DOES THE MARKET TELL THESE POWERS AND INSTITUTIONS WHAT TO DO? DR. THIN: NO. THAT IS A TERRIBLE TROLL, THESE CONSPIRACY THEORIES. THE MARKET IS THE MARKET. WE HAVE HEDGE FUNDS, REAL MONEY, SPECULATION. OF COURSE ALL CORPORATIONS WE HAVE ALL SORTS OF PLAYERS IN THE FOREIGN EXCHANGE MARKET. I WOULD POSIT RIGHT NOW UPWARDS OF $3.5 TRILLION PER DAY OF FX CLOSE DAILY AND THAT IS GETTING MUCH HARDER TO MANIPULATE THE MARKET. IT IS EASY BACK IN THE MARKETS WHEN WE HAVE CAPITAL FLOWS NOT AS LARGE. IT IS ALWAYS EASY TO SEE THIS A LOT IN EMERGING MARKETS BUT YOU ALWAYS BLAME THE FOREIGN SPECULATORS. IT IS A TERRIBLE SENTIMENT THAT I WISH WOULD GO THE WAY OF THE WILD WEST. IT IS NOT THE WAY THE FX MARKET IS RIGHT NOW. JON: GREAT TO CATCH UP. IF THERE IS MANIPULATION GOING ON RIGHT NOW, JAPAN IS DRIVEN BY THE CENTRAL BANK, BOTTOM LINE. AT THE END OF LAST YEAR, THE BOJ OWNED MORE THAN 40% OF THE JGB MARKET. WHO IS THE MANIPULATOR HERE? IF YOU HAVE A CENTRAL BANK THAT COMES ON SAYS FIXED-PRICE, I AM FIXING THE MARKET, THERE IS A CEILING IN THE JAPANESE GOVERNMENT BOND MARKET AND A ZERO -- ON THE TENURE, WHOSE MANIPULATING THE MARKET? TOM: THIS IS IMPORTANT. JOHN USES THE CORRECT WORD, FIXING. THE BOWTIE INSTITUTIONAL RESPONSE IS A SILLY WORD, CONTROL, WHICH ROBERT MUNDELL WON THE NOBEL PRIZE FOR IN HIS WORK WITH WINSTON AT COLUMBIA. THE REALITY IS THEY ARE DOING A CONTROL EXPERIMENT AND RULE 102 OF FX IS THEY ALWAYS FAIL AT SOME STRESS POINT. WE ARE THERE NOW. JON: THE S & P CAN HOLD THE LINE. TOM: EXACTLY. JON: THE BOJ CAN HOLD THE LINE. ULTIMATELY, SOROS CAME UP WITH -- STRUCK AND MILLER CAME UP WITH A TRADE SAYING PUT IT ON ITS SIDE. THIS IS NOT ABOUT THEM FIXING THE MARKET. YOU HAVE THE CENTRAL BANK THAT TRIES TO FIX THE TRADE AND SOMEONE IN THE MARKET SAYING GUESS WHAT, I WILL BE BRAVE ENOUGH TO PUT ON A BET AND SAY I DON'T THINK THEY CAN. TOM: I THINK AN EVENING BROADCAST SEEM TO VEIL AND FROM TOKYO WORKS. I THINK IT IS WARRANTED. THE IMPERIAL HOTEL, THE BAR THAT IS THE ORIGINAL FRANK LLOYD WRIGHT, I SEE A REMOTE THERE. JON: WE MIGHT NOT GET OUT OF THE COUNTRY. FUTURES UP 1.4% ON THE S & P. ON THE NASDAQ UP 2%. FROM NEW YORK FOR OUR AUDIENCE WORLDWIDE WITH TOM KEENE, LISA ABRAMOWICZ, AND JONATHAN FERRO, THIS IS BLOOMBERG. ♪ > > KEEPING YOU UP TODAY WITH NEWS FROM AROUND THE WORLD WITH THE FIRST WORD, I LISA MATTEO. PRESIDENT BIDEN PLANS TO DELIVER REMARKS FOR UKRAINE COMING AS HIS ADMINISTRATION LOOKS AT THEN CONGRESS PROPOSAL FOR WEAPONS AND HUMANITARIAN AID FOR UKRAINE THAT WOULD LAST THROUGH SEPTEMBER. A PROPOSAL WOULD INCLUDE FUNDS TO HELP REMOVE LANDMINES AND COMBAT FOOD INSECURITY. PRESIDENT URSULA VON DER LEYEN IS WARNING COMPANIES NOT TO BEND TO RUSSIA'S DEMAND TO PAY FOR GAS IN RUBLES. THEY HAVE TURNED OFF THE TAPS TO POLAND AND BULGARIA AND A DRAMATIC ESCALATION THEM A GOOD IF RUBLES WERE NOT USED FOR PAYMENT. ATTENTION TURNS TO HELP BIG CONSUMERS GERMANY AND ITALY RESPOND. A NEW STUDY SAYS THE U.K. SHOULD FOCUS ON COOPERATION WITH THE U.S. TO BOLSTER ITS FINANCE INDUSTRY FOLLOWING BREXIT. ACCORDING TO TWO THINK TANKS, WRITTEN SHOULD BE MOVING ON FROM ATTEMPTS TO PUSH FOR ACCESS FOR EU MARKETS. THE STUDY SAYS CLOSER TIES WITH THE U.S. COULD HELP U.K. GROW ITS CAPITAL MARKET BUSINESS BY 40%. THE WORLD'S BIGGEST COMMODITY TRADER IS HEADING FOR ANOTHER YEAR OF BUMPER PROFITS. THEY SAY BASED ON FIRST-ORDER PERFORMANCE, TRADING PROFITS WILL BE COMFORTABLY ABOVE THE TOP END OF ITS GUIDANCE RATE. GLENCORE IS CASHING IN ON SOARING PRICES FOR RAW MATERIALS AND MARKET VOLATILITY. TRADERS AT BARCLAYS DELIVERED A SURPRISE JUMP IN REVENUE DURING A VOLATILE FIRST QUARTER THAT HELPED OFFSET A QUIETER -- FOR BRITISH BANK DEALMAKERS AND A CHARGE FOR OVERSELLING U.S. SECURITY. BARCLAYS REVENUE FROM FIXED INCOME. EAST -- FIXED INCOME CURRENCIES SWORD ALREADY 7%. GLOBAL NEWS, 24 HOURS A DAY, POWERED BY 2700 JOURNALISTS AND ANALYSTS IN MORE THAN 120 COUNTRIES. I'M LISA MATTEO AND THIS IS BLOOMBERG. > > IT WILL BE IMPOSSIBLE TO PREVENT A REOCCURRENCE OF A SINGLE TASTE OF COVID AND ANY CITIES IN CHINA. IF THIS POLICY CONTINUES, THIS WILL WREAK HAVOC ON THE PEOPLE, THE RESIDENCE OF CHINA IN THESE CITIES. JON: GARY LUCK, THE FORMER U.S. AMBASSADOR TO CHINA. NEW YORK CITY -- FROM NEW YORK CITY, GOOD MORNING. THE NASDAQ 100 UP BY 1.95% OFF THE BACK OF EARNINGS FROM FACEBOOK AFTER THE CLOSE YESTERDAY. AFTER THE CLOSE TODAY, WE HEAR FROM AMAZON AND APPLE. WE HEARD FROM CATERPILLAR MOMENTS AGO. THE -- THESE HEADLINES ARE PROBABLY WHAT YOU WANT TO HEAR. THEY SEE MARGIN IMPROVEMENT -- EXPECT MARGIN IMPROVEMENT IN THE SECNAV OF 2022 VERSUS THE FIRST HALF OF 2022. TOM: SPX UP 1.3% AND NASDAQ WITH THE FACEBOOK LEAP UP 1.9%. I THINK IT IS FASCINATING. I DO NOT HAVE ANY STRONG OPINION HERE ON THE DURABILITY OF EARNINGS. THE FACT IS I'M A SELECTED SECTORS ARE COMING IN AND I WOULD BE RIVETED AT 4:15 FOR AMAZON AND APPLE. EARNINGS ARE COLLIDING WITH A TON OF DOUBT FOR THE SECOND HALF OF THIS YEAR. ON HOW I ROOTS WILL GO. TOM: THE EPSILON AND BACKSIDE OF THE EQUATION, IT IS ABOUT THE WAR IN UKRAINE AND MAYBE ABOUT DOMESTIC ISSUES HERE. MAYBE IT IS ABOUT THE END AND WEAKER YEN. AT THE END OF THE DAY, IT'S CONTINUES THE PANDEMIC. LEAN FORWARD RIGHT NOW ON RADIO AND TELEVISION, PROFESSOR OF EPIDEMIOLOGY AT JOHNS HOPKINS BLOOMBERG SCHOOL OF PUBLIC HEALTH AND HE IS TRULY AN AUTHORITY ON INTERNATIONAL RAMIFICATIONS OF THIS HORRIFIC PANDEMIC. DOCTOR, I WANT TO CUT TO THE CHASE IN THE ZEITGEIST IS DELTA THAN OMICRON. OMICRON IS SLIPPING AWAY. THERE ARE TWO IDENTIFIABLE VARIANTS AND I BELIEVE IN SOUTH AFRICA WHERE YOU JUST WERE THERE IS EVEN A THIRD VARIANT. I'M CAN -- I'M CONFUSED. HOW VIRILE AND, HOW IMPORTANT ARE THESE NEW DARE I SAY THREE VARIANTS? > > THESE ARE ALSO VARIANTS OF OMICRON. REALLY THERE IS NOTHING CIRCULATING ANYTHING ANYMORE WORLDWIDE EXCEPT OMICRON AND SUBVARIANTS. THESE APPEAR TO BE RECUMBENT VIRUSES WITHIN THE OMICRON LINEAGE. WHAT WE HAVE SEEN AND THE MOST RECENT SCIENCE IS OMICRON IS BETTER AT EVADING THE BINDING SITE OF THE VIRUS TO OUR TISSUES. THAT WAS JUST OUT FROM MY HOPKINS COLLEAGUES LAST -- IN THE LAST DAY OR TWO. THAT IS WHY WE SEE BREAKTHROUGH INFRACTIONS -- INFRACTIONS -- BREAKTHROUGH INFECTIONS. THAT IS A MAJOR CONCERN. THE GOOD NEWS IS IF YOU ARE VACCINATED AND BOOSTED, THE GREAT MAJORITY OF PEOPLE HAVE MILD DISEASE OR A SYMPTOM AT A DISEASE. YESTERDAY, DESPITE MORE THAN 52,000 NEW INFECTIONS, WE KNOW THAT IS ANY UNDERCOUNT, WE HAD FEWER THAN 360 DEATHS IN THE UNITED STATES. DEATHS ARE DOWN. TOM: DEATHS ARE DOWN. DO YOU SEE A TREND WHERE WE HAVE THESE INFECTIONS AND THIS IS OPPOSITE OF WHAT WE SEE IN CHINA, WE HAVE THESE INFECTIONS, WE ARE WITHIN OUR PUBLIC LIVES, DEATH SICKO DOWN TOWARD A NORMAL FLU-LIKE LEVEL OF 130 TO 150 A DAY. IS THAT THE FINAL OUTCOME? > > THAT CERTAINLY IS THE OUTCOME AHEAD AS LONG AS OMICRON IS WHAT IS CIRCULATING. WE CANNOT SAY IF THERE WILL BE ANOTHER VARIANT ON ANOTHER LINEAGE OR IF WE HAVE A WORSENING VARIANT WITH OMICRON. IT IS TOO SOON TO KNOW THAT. BUT WHAT IS CIRCULATING NOW, THAT IS THE TREND WE ARE ON. THAT IS WHY THE DOCTOR EARLIER THIS WEEK SAID WE ARE OUT OF THE PANDEMIC PHASE. CHINA IS NOT. THOSE MAINTAINING ZERO COVID POLICIES ARE IN A DIFFERENT POSITION. THE CDC JUST PUT OUT THE U.S. POPULATION, NOW 60% OF AMERICANS, HAVE HAD COVID INFECTION AND EVIDENCE OF COVID INFECTION AND 75% OF OUR CHILDREN. SO THAT IS QUITE DRAMATIC AND TWO THIRDS OF US ARE FULLY VACCINATED AND BOOSTED. THEY SITUATION AND COUNTRIES THAT WENT WITH ZERO COVID IS OF COURSE THEY ARE TRYING TO STOP ANYBODY FROM GETTING A SINGLE INFECTION. YOU CANNOT DO THAT WITH THE OMICRON -- WITH OMICRON. THAT IS EVEN MORE TRUE OF THE SUBVARIANT. LISA: WHAT IS THE NEW PHARMACEUTICAL FRONT YOU ARE WATCHING THAT COULD BE WHERE PEOPLE PUT ALL OF THEIR MONEY NEXT IN ORDER TO DEAL WITH AN AND I MAKE VIRUS THAT HAS A COMPARABLE PROFILE? > > THE ANTIVIRALS CONTINUE TO BE PROMISING AND CERTAINLY THE PAXLOVID, THE CURRENT ANTIVIRAL, HAS THE GREAT ADVANTAGE THAT IT IS WORKING JUST AS WELL AGAINST ANY OF THE VARIANCE BECAUSE IT ATTACKS THE VIRAL ASPECT THAT VIRUSES HAVE TO HAVE TWO REPLICATE. IT IS ALSO TRUE THAT WE NOW NEED TO NEUTRALIZE ANYBODY'S. OMICRON HAS BEEN ABLE TO EVADE MANY OF THE NEUTRALIZING ANYBODY'S AT WORK AGAINST THE OLDER VARIANT, THE ORIGINAL VARIANT. THERE IS A LOT OF WORK ON THAT FRONT BUT WE SHOULD REMEMBER THAT ALL THIS WORK HAS BEEN DONE IN PARTNERSHIP WITH THE NIH AND WITH THE PUBLIC SECTOR, AMERICA'S GREAT SCIENTIFIC UNIVERSITIES. THAT FUNDING FOR THE COVID VACCINE PREVENTION NETWORK AND COVID ANTIVIRAL NETWORK EXPIRES IN NOVEMBER. CONGRESS HAS NOT ACTED ON REAUTHORIZING IT. THAT HAS TO HAPPEN. WE CANNOT HAVE NOW ANY ABRUPT END OF THE RESEARCH EFFORT ON COVID. THAT WOULD BE SO UNWISE. JON: FOR PEOPLE STILL GETTING COVID AND MANY ARE, HOW EASY IS IT TO GET PAXLOVID? IF YOU WHAT THE ANTIVIRAL PILLS, HOW EASY IS IT TO GET THEM? DR. THIN: IT HAS BEEN -- > > IT HAS BEEN FRUSTRATING FOR PEOPLE AND I THINK MUCH EASIER -- IT SHOULD BE MUCH EASIER THAN IT IS. YOU REALLY NEED TO START TAKING WHAT WE HAVE IN THE FIRST THREE TO FIVE DAYS. AS SOON AS YOU GET SYMPTOMS, YOU NEED TO START. IT IS STILL DIFFICULT FOR PEOPLE TO FIND THEM, TO GET A PRESCRIPTION, PROVIDERS ARE NOT NECESSARILY SO COMFORTABLE WITH THEM. IF YOU LOSE THOSE COUPLE FIRST DAYS, AT THIS HE GOES DOWN DRAMATICALLY. THE ONLY THING WE DO NOT KNOW IS IF ANTIVIRALS OR VACCINES REALLY ARE HAVING AN IMPACT ON LONG COVID. LONG COVID OF COURSE IS EMERGING AS EXTREMELY IMPORTANT, UNFORTUNATELY QUITE COMMON, LOCATION, MAY BE UP TO 30% OF PEOPLE, INCLUDING PEOPLE WHO HAVE HAD RELATIVELY MILD CASES OF COVID CAN STILL HAVE LONG COVID. IT CAN BE DEBILITATING AND IT IS IMPORTANT. THAT IS ALSO A RESEARCH AREA THAT WE NEED TO BE INVESTING IN. BOTH FOR COMPANIES IN THE PUBLIC SECTOR RESEARCH EFFORT. THERE ARE COHORTS UNDERWAY, PEOPLE ARE TRYING TO TREAT THESE PATIENTS AND HELP THEM, BUT IT IS A FRUSTRATING SYNDROME AND IT CAN HAVE COMPLICATIONS IN THE BRAIN AND COGNITIONS, THINKING, MEMORY, AREAS WE ALL WANT TO PRESERVE. JON: WONDERFUL TO CATCH UP WITH YOU. IT IS GOOD TO HEAR FROM YOU. DR. CHRIS BEYRER SCHOOL OF PUBLIC HEALTH. -- OF THE JOHN HOPKINS SCHOOL OF HEALTH. DECENT NUMBERS FROM DOWN TO UNITED AND AMERICAN TOO. LISA: BASICALLY PEOPLE ARE SAYING WE WILL KEEP TRAVELING AND PERHAPS NOT WEAR MASKS. THE IDEA PEOPLE WANT TO MOVE ON REGARDLESS OF THE RISKS, I WONDER WITH SOUTHWEST FOR EXAMPLE REPORTING EARNINGS COMING OUT SLIGHTLY WORSE THAN EXPECTED OF THE LOSERS AND WINNERS IN THIS. JON: TWITTER COMING UP SHORTLY AS WELL. TWITTER COMING UP SHORTLY WITHOUT AN EARNINGS CALL LATER. AND A BIG SPREAD BETWEEN WHERE THE STOCKS ARE TRADING AND THE PRICE OF ELON MUSK. TOM: WE HAVE NOT DONE ENOUGH ON TWITTER. JON: WE CAN DO TWITTER JUST FOR YOU. > > WE'VE HAD TWO YEARS OF HELICOPTER MONEY, BUT NOW WE ARE PAYING THE PRICE WITH HIGHER INFLATION. > > AT SOME POINT THE ANXIETY AROUND THE FED WILL LEAD TO A GREATER SCARE OF RECESSION. > > IT COULD GET WORSE IF THE FED IS MOVES SHIFT THE FED MOVES AS FAST -- WORSE IF THE FED MOVES AS FAST. > > THE QUESTION YOU SHOULD ASK YOURSELF IS WHERE CAN I FIND SAFETY IN THE WORLD. > > THIS IS "BLOOMBERG SURVEILLANCE" WITH TOM KEENE, JONATHAN FERRO, AND LISA ABRAMOWICZ. JONATHAN: A TON OF TECH EARNINGS COMING RIGHT UP. FROM NEW YORK CITY, FOR OUR AUDIENCE WORLDWIDE, GOOD MORNING. THIS IS "BLOOMBERG SURVEILLANCE" ON TV AND RADIO. ALONGSIDE TOM KEENE AND LISA ABRAMOWICZ, I'M JONATHAN FERRO. FUTURES POSITIVE BY 1.4% ON THE S & P. AFTER THE CLOSE, AMAZON AND APPLE. TOM: WE HAVE BEEN DISTRACTED THIS MORNING WITH A LOT OF MACRO BABBLE. CHRIS VERRONE WITH WEEKEND -- WITH WEAK YEN OUT TO 150. I WAS WRONG ON FACEBOOK. THEY DELIVERED IN SPADES. I LOVED WHAT DAN IVES OF WEDBUSH SAID. THEY GET A POP THIS MORNING OFF THE USER GROWTH AND STABILITY. JONATHAN: LOST ALMOST 50% SO FAR COMING INTO THE EARNINGS STORY, SO CERTAINLY A POP UP OF PRETTY DEPRESSED EXPECTATIONS. SPEAKING OF GROWTH, MCDONALD'S JUST OUT, SALES FOR THE FIRST QUARTER PLUS 11.8%. TOM: THE KEY NOW, IF YOU LOOK AT PARAGRAPH 42, IT WILL MENTION A LITTLE BIT OF ROAD TRIP THERE BY MCDONALD'S, SALES AND ALL OF THAT. IT COMES BACK DOWN TO IF THEY CAN RAISE PRICES. IT COMES DOWN TO A NUMBER TO VALUE MEAL AT MCDONALD'S, NOT THAT I WOULD KNOW ANYTHING ABOUT NUMBER TWO VALUE MEAL. JONATHAN: I DON'T BELIEVE YOU ACTUALLY DO, BUT CARRY ON. TOM: I GO TO LUNCH ON 3RD AVENUE AT THE MCDONALD'S, WHICH I DO FOUR TIMES A WEEK ON THE AMEX. GUESS WHAT, CAN THEY RAISE PRICES? JONATHAN: PRICES ARE RISING VERY QUICKLY IN AMERICA. THE FEDERAL RESERVE HAS TO HIKE INTEREST RATES. THE ECB MIGHT JOIN THE PARTY. THE BANK OF JAPAN HAS NO INTEREST WHATSOEVER OF DOING THE SAME THING. THE BOJ DOUBLED DOWN THIS MORNING ON COMING INTO THIS MARKET AND CAPPING A 10 YEAR JUMP IN JAPANESE GOVERNMENT BONDS ADD 0.25 PERCENT. THE MINISTRY OF FINANCE SAID THEY ARE UNCOMFORTABLE WITH WHAT IS GOING ON IN THE FX MARKET. THEY SAID THEY ARE DEEPLY CONCERNED ABOUT THE MOVES IN FOREIGN EXCHANGE. CAN YOU SQUARE THOSE TWO THINGS? TOM: I AM GOING TO SAY THIS AGAIN, THIS IS ACTUALLY SOME REALLY COMPLEX STUFF. WE KILLED OURSELVES THIS MORNING TRYING TO GIVE YOU BEST IN CLASS SIMPLICITY ON THIS COMPLEXITY. ALL YOU NEED TO FOCUS ON IS A THEORETICAL EXPERIMENT WRAPPED AROUND THE WORD CONTROL. THEY HAVE A CONTROL YIELD CURVE, AND THE ANSWER IS IT ALWAYS FAILS AT SOME POINT. IS THAT FAILURE NOW, OR IS IT NEXT YEAR? LISA: YOU ACTUALLY SET IT UP PERFECTLY TALKING ABOUT PRICES AND THE RELATIONSHIP TO WHAT THE BANK OF JAPAN IS GOING TO DO BECAUSE THIS IS NOT A POSITIVE FOR A NATION THAT, IN THE PAST, HE WOULD HER HE PERHAPS WOULD BE MORE STRENGTH IN EXPORTS. NOW THEY HAVE TO DEAL WITH IMPORTING INFLATION AKIN TO WHAT THEY HAVE NOT SEEN BEFORE. THIS HAS BEEN MORE THAN A 10% DEPRECIATION VERSUS THE DOLLAR IN SEVEN WEEKS. JONATHAN: SO FAR IT IS ACTION VERSUS WORDS. IN THAT ENVIRONMENT, ACTION OFTEN WINS OUT, AND IT IS THE ACTION OF THE BOJ WAITING OUT AT THE MOMENT. LISA: THEY ARE GOING TO TRY TO CONTROL THIS YIELD CURVE. AT WHAT POINT DO THEY ON THE MARKET? AT WHAT POINT DO THEY HAVE TO CAPITULATE TO THE CONCERNS OF THE FOREIGN MINISTRY? JONATHAN: WELL SAID. IT IS NO LONGER A MARKET. HAS NOT BEEN FOR A LONG TIME, HAS IT? FUTURES UP 1.5% ON THE S & P. HELPED OUT BY THE EARNINGS STORY FROM FACEBOOK. THEN IT IS ONTO AMAZON, IT IS ON TO APPLE. YIELDS COMING IN A COUPLE OF BASIS POINTS. CRUDE A LITTLE BIT LOWER, $101.43, DOWN 0.6%. LISA: WE GET A DATA DUMP OUT OF THE UNITED STATES AT 8:30 A.M. U.S. FIRST CORE GDP AND PCE, THE CLASSIC INFLATION GAUGE LOOKED AT BY THE FED, LIKELY RISING FURTHER HERE. I AM TRYING TO UNDERSTAND WHAT POTENTIAL WEAKNESS COULD MEAN GOING FORWARD. WE HAD TOM PORCELLI OF RBC OVERNIGHT SAYING IT COULD BE A NEGATIVE PRINT, AND EVEN THOUGH EVERYONE IS EXPECTING THIS AND IT IS TRADE RELATED AND PEOPLE WILL LOOK PAST IT, IT IS STILL A MARKET TALKING ABOUT WEAKNESS IN THE ECONOMY IN THE UNITED STATES. PRESIDENT BIDEN WILL SPEAK ABOUT THE SITUATION IN UKRAINE, POTENTIALLY U.S. AID TO UKRAINE. WE WILL ALSO HEAR FROM YOU IN SECRETARY-GENERAL ANTONIO GUTERRES, MEETING WITH VOLODYMYR ZELENSKYY TODAY. EARNINGS DO CONTINUE. WE ARE AWAITING AT ANY MOMENT TWITTER. WE ARE OF COURSE GOING TO SEE APPLE AND AMAZON. META, I AM FASCINATED BY HOW MUCH THE POP IS. I THINK DAN IVES PUT IT REALLY WELL. PERHAPS THIS IS A GAME OF EXPECTATIONS CONSIDERING HOW BEATEN UP THOSE SHARES WERE. THE NASDAQ DOWN STILL WINDY PERCENT SO FAR THIS YEAR. -- DOWN 20% STILL SO FAR THIS YEAR. JONATHAN: THOSE EARNINGS DO ANY MOMENT NOW. JOINING US NOW IS SOMEONE WHO LIKES EMERGING MARKETS, WHO LIKES U.S. STOCKS. WEI LI, GLOBAL CHIEF INVESTMENT STRATEGIST AT BLACK ROCK. WHY DO YOU STILL LIKE THE EQUITY STORY? WEI: IF USING ABOUT THE BROADER MACRO ENVIRONMENT, INDEED WE HAVE MORE CHALLENGES NOW. THINKING ABOUT POLICY CERTAINTY, THINKING ABOUT PROPERTY RATE HIKES. PUTTING ASIDE THE YEAR TO DATE DEVELOP MEANT, REAL RATES, WE ARE STILL TALKING ABOUT REALLY LOW LEVELS VERSUS HISTORICAL AVERAGES, AND ALSO THE BROADER GROWTH IN OUR VIEW, THE SPILLOVER FROM THE WAR IN UKRAINE WILL IMPACT EUROPEAN ECONOMIES A LOT MORE THAN U.S. ECONOMIES, SO OUR ESTIMATES OF THE SPILLOVER OF GROWTH IMPACTING THE U.S. ECONOMY FOR THIS YEAR IS OUT TO 0.5% GDP GROWTH, WHICH IS A LOT SMALLER THAN WHAT WE ARE EXPERT IN FOR EUROPEAN ECONOMIES. THAT BEING THE CASE, WE PREFER U.S. MARKETS OVER EUROPEAN MARKETS. WE DO LIKE EMERGING MARKETS BEST , BUT EMERGING MARKET WE PREFER TO PLAY IT TO LOCAL EM EQUITIES. TOM: YOU GO RIGHT TO WHERE I WANT TO GO, WHICH IS LOCAL PAPER. I WANT YOU TO GIVE ME THE SPILLOVER ON THIS NEW STRONG DOLLAR. BLACK ROCK HAS TO BE RIVETED TO THE ETHICS DYNAMICS OF YIELD DYNAMICS IN PRICE. HOW DO YOU ADJUST TO STRONG DOLLAR IN THIS CRISIS WITH THE YEN? WEI: INDEED, WHAT WE HAVE SEEN SO FAR DOLLAR-YEN, WE ARE TALKING ABOUT TWO STANDARD DEVIATIONS AWAY FROM THE CABIN OFFICE BREAKEVEN ESTIMATE, AND CREDIBLE CURRENCY VOLATILITY. THAT VERY MUCH SPEAKS TO POLICY DIVERGENCE. SO ON THE ONE HAND YOU HAVE CENTRAL BANKS LIKE THE PBOC AND BOJ ARE GET ON THE OTHER HAND YOU HAVE CENTRAL BANKS LIKE THE FED AND ECB LOOKING TO GET CLOSER TO NEUTRAL AS QUICKLY AS POSSIBLE. SPECIFICALLY IN THE CASE OF JAPAN, NOT ONLY DO WE HAVE A MONETARY SIDE OF THINGS STILL REMAINING VERY ACCOMMODATIVE, ON THE FISCAL SIDE OF THINGS THEY ARE COMING THROUGH AS WELL. THEY RECENTLY JUST ANNOUNCED $48 BILLION OF FISCAL AID TO EASE THE INFLATION PAIN. SO VERY DIFFERENT FROM WHAT WE ARE SEEING IN JAPAN, STILL SEEING THE SUPPORT COMING FROM THE MONETARY SIDE AS WELL IS THE FISCAL SIDE OF THINGS. THE JAPANESE YEN SHOULD BE A SUPPORT FOR JAPANESE EQUITIES, GIVEN A NEGATIVE CORRELATION BETWEEN THE TWO, BUT THAT CORRELATION WAS BROKEN DOWN A LITTLE BIT IN RECENT YEARS BECAUSE A LOT OF THE JAPANESE CORPORATE'S ARE OVERSEAS. BUT WE LIKE THE CURRENCY HEDGED BASIS AT THIS POINT. LISA: JUST TAKING A STEP BACK, IS THE ONLY HAVENS OCCURRED -- THE ONLY HAVEN CURRENCY LEFT THE DOLLAR? WEI: THAT IS A GREAT QUESTION. SO FAR IF YOU LOOK WITHIN CURRENCIES, THE DOLLAR HAS BEEN TO KEEP. THAT IS WHERE PEOPLE HIDE WHEN THINGS GO WRONG. BUT ONE HAS TO ALSO QUESTION AT SOME POINT THE BENEFIT OF GOVERNMENT BONDS AS I DIVERSIFIER. WE HAVE TO DISCUSS AT WHICH POINT, I'D WHICH LEVELS GOVERN BONDS AND BE GOOD AGAIN AS DIVERSIFIERS. SO FAR THEY HAVE NOT BEEN GOOD. THEY HAVE DONE THE OPPOSITE OF WHAT WE EXPECTED. BUT THERE IS A LEVEL AT WHICH POINT GOVERNMENT BONDS WILL BE ATTRACTIVE, AND THEIR DIVERSIFICATION BENEFITS WOULD ALSO COME BACK IN PLACE. THAT IS SOMETHING ELSE WE ARE PAYING VERY CLOSE ATTENTION TO. JONATHAN: YOU SAID SOME THING REALLY INTERESTING THEN. YOU LIKE JAPANESE EQUITIES STILL ON A CURRENCY HEDGE BASIS. WHY WOULD YOU HEDGE THE CURRENCY , AND HOW EXPENSIVE IS IT TO DO THAT RIGHT NOW, GIVEN THE MOVES WE ARE SEEING? WEI: THAT IS A GREAT QUESTION. WE TURNED POSITIVE ON JAPANESE EQUITIES EARLIER IN THE YEAR, AND WE WANTED TO KIND OF HEDGE OUT THE CURRENCY SIDE OF THINGS BECAUSE THE LIGHTING CORRELATION BETWEEN EQUITIES AND CURRENCY, AND ALSO BECAUSE THE EXPECTATION OF A CURRENCY TO WEAKEN GIVEN POLICY DIVERGENCE, 130 IF WE ARE TALKING ABOUT FRESH ENTRY INTO JAPANESE MARKETS, WE PROBABLY WOULD NOT BE TOO ENCOURAGED BECAUSE THIS REPRESENTS TWO STANDARD DEVIATION MOVE, AND COST IS RISING. JONATHAN: THANK YOU. SOME BIG QUESTIONS RIGHT NOW WORLDWIDE IN FOREIGN EXCHANGE. IF YOU TAKE THAT FOREIGN EXPOSURE, DO YOU WANT TO HEDGE THAT ARE NOT? GIVEN THE MOVE WE HAVE SEEN IN JAPAN, IF YOU ARE A U.S.-BASED INVESTOR, PRETTY TIDY MOVE. LISA: BUT HOW MUCH ARE YOU PAYING FOR THAT HEDGE? THAT HAS BEEN ONE OF THE BIG ISSUES FOR PEOPLE WHO WANT TO BUY DEBT CURRENTLY BASED IN JAPAN WITH U.S. DENOMINATIONS. JONATHAN: CAN YOU IMAGINE HOW EXPENSIVE IT MUST BE TO HEDGE SOME OF THIS STUFF NOW? LISA: THAT IS THE REASON WHY SOME OF THESE YIELDS IN THE U.S. ARE NOT MAKING SENSE TO JAPANESE INVESTORS. TOM: YOU MOVE OUT OF BANK OF JAPAN TO THE MCDONALD'S AT TOKYO STATION. IT IS EXPENSIVE. JONATHAN: HAVE YOU JUST DONE SOME RESEARCH? TOM: I HAVE DONE THAT RESEARCH MYSELF. JONATHAN: THAT I BELIEVE, IF THERE WAS A DRINK OR SOMETHING INVOLVED AS WELL. TOM: WHAT THERE REALLY IS IS THE GREATEST BOOKSTORE IN THE WORLD ON THE WAY TO MCDONALD'S IN TOKYO. IT IS THE GREATEST BOOKSTORE IN THE WORLD. JONATHAN: THAT MOVE IN FOREIGN EXCHANGE HAS GOT TO HURT. YOUR 10 YEAR YIELD, 2.81 47%. EQUITY FUTURES POSITIVE. THIS IS BLOOMBERG. > > KEEPING YOU UP TO DATE WITH NEWS FROM AROUND THE WORLD, WITH THE FIRST WORD, I'M LISA MATEO. THE BANK OF JAPAN DOUBLING DOWN ON BOND PURCHASES. CENTRAL BANK SAID IT WOULD BUY AN UNLIMITED AMOUNT OF BONDS AT FIXED RATES EVERY BUSINESS DAY. THAT PUNTED THE YEN TO HIT A TWO DECADE LOW AGAINST THE DOLLAR. BLOOMBERG HAS LEARNED U.S. HAS LIFTED SOME RESTRICTIONS ON SHARING INTELLIGENCE WITH UKRAINE. THE EXPANDED SHARING IS INTENDED TO HELP UKRAINE DEFEND ITS TERRITORY IN THE EAST AND SOUTH, WHERE RUSSIA HAS RENEWED AND OFFENSIVE. SOME HAVE URGED RESTRICTIONS TO BE LIFTED. MODERNA HAS ASKED U.S. REGULATORS FOR EMERGENCY USE AUTHORIZATION FOR ITS COVID VACCINE FOR KIDS AGES SIX MONTHS TO UNDER SIX YEARS. A SUCCESSFUL TRIAL SHOWED TWO DOSES GENERATE HIGH LEVELS OF ANTIBODIES TO THE VIRUS. THERE IS CURRENTLY NO VACCINE APPROVED FOR THOSE UNDER FIVE. CITIES ACROSS CHINA ARE ROLLING OUT SWIFT MEASURES FROM MASS TESTING DRIVES TO LOCKDOWNS FOR A MERE HANDFUL OF CORONAVIRUS CASES. THEY ARE TRYING TO KEEP FLAREUPS AT BAY AND AVOID THE HARDSHIPS ENDURED BY SHANGHAI. THE RESPONSES REFLECT THE GROWING STAKES LOCAL GOVERNMENTS FACE AND WRESTLING WITH THE HIGHLY INFECTIOUS OMICRON STRAIN. 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 LISA MATEO. THIS IS BLOOMBERG. > > WHAT IS PLAYING OUT IN YEN RIGHT NOW IS SO REMINISCENT OF WHAT HAPPENED IN SEPTEMBER 1992 THIS BANK OF ENGLAND AND THE POUND. THE BANK OF JAPAN'S FANTASY THAT THEY CAN KEEP A LID ON 10 YEAR JGB'S AT 25 BASIS POINTS, THE CURRENCY MARKET IS LAUGHING AT THAT. JONATHAN: CHRIS VERRONE WAS LAUGHING AT THAT, TOO. GOOD MORNING. FUTURES LOOK LIKE THIS ON THE S & P, ON THE NASDAQ, TOO, UP BY MORE THAN 2% ON THE S & P 500. THIS FROM THE EQUITY TEAM AT JP MORGAN. "ENERGY REMAINS OUR HIGHEST CONVICTION OVERWEIGHT SECTOR WITH EARNINGS GROWTH AND MULTIPLE RERATING -- MULTIPLE RERATINGS STILL." TOM: IT IS FASCINATING. THIS IS A RECAPITULATION OF THEIR OUTSTANDING 100 PAGE OPUS OF ABOUT A WEEK AND A HALF AGO. CHRISTYAN MALEK WRITING IT UP. WHAT TO ME IS FASCINATING IS A COMPLETELY RESET WITH AN $80 BENCHMARK WAS EVERYTHING GEARED HIGHER, AND THEY SAY THE ENERGY SECTOR, AND THEY WALK THROUGH FOUR OR FIVE OR SIX METRICS. JONATHAN: ON THE YEAR THIS YEAR, THAT SECTOR ON THE S & P 500 UP 35%. QUITE A MOVE, AND CORRECTED LOWER MORE RECENTLY, BUT QUITE A MOVE STILL. TOM: LONDON, JP MORGAN ON BOARD WITH A MOVE HIGHER. THAT GOES TO THE MAY BE THE IMMEDIATE POLITICS OF THE EUROPEAN FRONT ON THIS WERE IN UKRAINE. MARIA TADEO JOINS FROM BRUSSELS. JACK FITZPATRICK IN WASHINGTON AS WELL. LET ME GO DOMESTIC ON YOU RIGHT NOW. IF WASHINGTON WAS TO READ THE 100 PAGE JP MORGAN REPORT -- FULL DISCLOSURE, NO ONE WILL -- BUT IF THEY WERE, HOW DO REPUBLICANS AND DEMOCRATS SET TO GUESSTIMATE $120 OIL? JACK: WHEN IT COMES TO OIL PRICES, THAT HAS DOMINATED DISCUSSIONS IN WASHINGTON LATELY. IT HAS BEEN VERY PARTISAN. OBVIOUSLY REPUBLICANS ARE PUSHING FOR MUCH MORE DOMESTIC PRODUCTION. THE CRITIQUE OF THAT FROM DEMOCRATS IS THAT THAT WOULD TAKE A MUCH LONGER TIME. THERE IS SORT OF AN UNDERSTANDING THAT EVERYTHING IN UKRAINE IS HAVING A NEGATIVE EFFECT ON THIS AND THERE ARE LIMITS TO WHAT THE U.S. CAN DO. THERE'S A CONVERSATION ABOUT WHAT THEY CAN DO ON GAS PRICES, BUT GIVEN HIGH DEFICITS AND EXACTLY HOW THAT WORKS, THERE IS NOT AN OBVIOUS SOLUTION OR EVEN SHORT-TERM ACTION BEING DISCUSSED RIGHT NOW. TOM: I'VE GOT AAA UNLEADED, $3.41 A GALLON. IT IS MUCH HIGHER WHERE LISA ABRAMOWICZ FILLS UP. BUT BEFORE LISA GOES TO MARIA, IF WE BREAK THROUGH TO A NEW PRICE PER GALLON HI, WHICH CLEARLY ON THE CHART IS DOABLE, HOW DOES YOUR WORLD REACT? JACK: THEY TRY TO COME UP WITH SOMETHING, ESPECIALLY ON THE DEMOCRATIC SIDE, AS WE HEAD TOWARDS NOVEMBER, TOWARD THE MIDTERMS. THERE'S A BIT OF A SENSE OF DESPERATION THAT MAKES THINGS VERY DIFFICULT FOR DEMOCRATS. THERE ARE CONVERSATIONS ABOUT DO YOU COME UP WITH SOME SORT OF REBATE PLAN TO TRY TO CUT PRICES. IT IS A VERY DIFFICULT ISSUE THAT HAS ALREADY SETTLED INTO THE YEARS LONG, LONG TERM PARTISAN DEBATE OVER ENERGY PRODUCTION AND THINGS THAT ARE NOT NECESSARILY RELEVANT TO TODAY'S GAS PRICES IN THE SHORT TERM. SO IT IS REALLY KIND OF AN ISSUE THAT HAS ALREADY MORPHED INTO CAMPAIGN RHETORIC PROBABLY MORE THAN ACTUAL ACTIONS THAT THE GOVERNMENT WOULD TAKE AT THIS POINT IN THE SHORT TERM. LISA: IN THE EUROPEAN UNION IT IS A BIT MORE EMINENT, AND I AM SO CONFUSED OVER PAYMENT IN RUBLES, WHAT THE NEW POLICY IS, HOW THE EU IS GOING TO MOVE FORWARD IN TERMS OF DEMANDS THE KREMLIN IS MAKING AND THE FACT THAT THEY SAY THAT VIOLATES SANCTIONS. MARIA: YOU ARE NOT THE ONLY ONE. IF YOU ARE A MAJOR EUROPEAN COMPANY TODAY, YOU DON'T KNOW WHAT TO DO, AND YOU LOOK AT THIS AS A RED LIGHT ACROSS THE BOARD/AND FOR YOU BECAUSE OF COURSE, THAT MEANS YOU COULD POTENTIALLY BREACH EUROPEAN SANCTIONS AND EVERYTHING THAT COMES WITH IT. TODAY WE HAD A EUROPEAN OFFICIAL ONCE AGAIN WHO WAS SPEAKING TO US JUST A FEW MINUTES AGO WHO SAID WE REITERATE, EUROPEAN COMPANIES SHOULD ONLY SET UP A EURO DENOMINATED COMPANY OR ACCOUNT WITH RUSSIA, MAKE THE PAYMENT, AND DECLARE THAT PAYMENT COMPLETE AND FULFILLED. THAT IS WHERE IT SHOULD STOP. NOTHING ELSE. IF YOU GO BEYOND THAT, YOU ARE IN BREACH OF SANCTIONS. A BALL IS BACK TO MOSCOW'S COURT. IT WILL DEPEND ON HOW THE RUSSIANS ACCEPT THIS. WHAT I WOULD SAY IS THERE ARE TWO THINGS GOING FORWARD. ONE IS THIS IS A SERIOUS TEST FOR THE UNITY OF THE EUROPEAN UNION. WE KNOW THERE'S A NUMBER OF COUNTRIES WHO HALL ALSO SAID WE WOULD RATHER PAY RUBLES AND GET THE GAS. SECONDLY, IT BRINGS OF A MORE IMPORTANT QUESTION, WHICH IS ARE WE GOING TO SEE AN EMBARGO FROM THE EUROPEAN UNION TO FRONT RUN THE RUSSIANS BEFORE THEY CUT IT OFF AND MOVE THAT LEVERAGE AWAY FROM VLADIMIR PUTIN? THAT IS A BIG QUESTION. IF YOU ARE A EUROPEAN COMPANY TODAY, IT IS A VERY DIFFICULT DAY TO NAVIGATE. LISA: ARE YOU SURPRISED THAT THERE IS NOT BEEN MORE RESPONSE TO WHAT IS GOING ON? MARIA: IN SOME WAYS, BUT THE IDEA THAT WE HAVE SEEN POLAND AND BULGARIA CUT OFF FROM THE MARKET ON WEDNESDAY, THIS WAS A WARNING SHOT AND RUSSIA IS NOT READY TO TACKLE ITALY AND GERMANY. THAT IS A KEY DIPLOMATIC RELATIONSHIP FOR THE RUSSIANS. THEY ARE NOT READY TO GO FOR THOSE TWO COUNTRIES JUST YET. BUT THE KEY DATE TO KEEP IN MIND WILL BE MID-MAY, WHEN THE NEW PAYMENTS IN RUBLES WILL BE DUE FOR THE TWO OF THEM. JONATHAN: WONDERFUL WORK THERE. JACK FITZPATRICK DOWNING WASHINGTON, D.C. AS WELL. WE'VE GOT TO T -- WE GOT A TON TO TALK ABOUT IN THIS MARKET. TOM: STANDARD CHARTERED WITH A HUGE FOCUS ON THE KNOCK ON EFFECTS OF THE EM. BEN EMMONS JUST PUBLISHED A BLISTERING NOTE GOING BACK TO FLEMING AND MUNDELL, AND HE SAYS FLAT OUT, THIS IS, TO BORROW A PHRASE FROM THE GIANTS OF THE EARLY 1960'S, "AN IMPOSSIBLE TRINITY" FOR BOJ. JONATHAN: LET'S TALK ABOUT THAT RIGHT NOW. THEY WANT TO GET BACK TO 2% INFLATION. THEY WANT TO CAP YIELDS AT 0.25% ON THE 10 YEAR, BUT THEY DON'T WANT THE CURRENCY DEPRECIATION THAT COMES WITH IT. SOMETHING HAS GOT TO GIVE. LISA: ESPECIALLY BECAUSE THEY ARE SEEING SOME INFLATION, BUT NOT THE RIGHT KIND OF INFLATION, SO THEY WANT TO HOLD RATES LOW ENOUGH TO ENGAGE WITH A GROWTH PICTURE AT A TIME WHEN GLOBAL INFLATION THAT THEY ARE GOING TO IMPORT IS ONLY GOING TO IMPEDE THAT. THIS IS A VERY DIFFICULT SITUATION. AT A CERTAIN POINT YOU SEE THAT TENSION BUBBLE OUT BETWEEN THE AGENCIES. JONATHAN: PER HAD A BIT OF PHRASING -- PERHAPS A BIT OF PHRASING CAME FROM LUKE KAWA, THE KURODA DILEMMA -- THE " KURODA TRILEMMA." TOM: MY POINT IS WE ARE HERE NOW , COMING UP WITH A CONCEPT, MOVING FROM TRINITY TO TRILEMMA. JONATHAN: THIS IS A 1.7% MOVE ON DOLLAR-YEN, PUSHING 131 NOW, 130 POINT 62. YOU GOT THE BANK OF JAPAN DOUBLING DOWN AND THE MINISTRY OF FINANCE SUGGESTING THEY ARE NOT HAPPY ABOUT THE CURRENCY MOVES. JONATHAN: LIVE FROM NEW YORK CITY THIS MORNING, GOOD MORNING. RIGHT NOW, FUTURES POSITIVE 1.5%. THE NASDAQ HELPED OUT BY THE FACEBOOK STORY, UP BY MORE THAN 2%. INTO THE BOND MARKET, LESS THAN A WEEK AWAY FROM THE FEDERAL RESERVE, YOUR TWO-YEAR YIELD COMING IN JUST A LITTLE BIT, DOWN TO TWO BASIS POINTS. DOWN ABOUT A BASIS POINT OR SO ON THE 10 YEAR. THE MADE EVENT IS THIS ONE RIGHT HERE IN JAPAN. THE JAPANESE 10 YEAR YIELD, CAN YOU ACHIEVE THAT WITHOUT A WEAK CURRENCY? A WEAKER JAPANESE YEN. IN JUST ONE DAY, THE BOJ COMES OUT, DOUBLES DOWN AND SAYS WE ARE GOING TO CAP THIS CEILING ON THE JAPANESE 10 YEAR, 0.25%. WE ARE COMMITTED TO IT. A FEW HOURS LATER, AND INITIAL -- UNOFFICIAL AT THE MR. FINANCE SAYS WE ARE DEEPLY CONCERNED BY WHAT IS HAPPENING. TOM: YOU GET WAS IN THE TRIANGLE, AND WE DO IT NOW WITH STEVE ENGLANDER. FIRST ISAAC WAS GOT KRITI GUPTA ON TECH. JONATHAN: WE ARE WAITING FOR SOME TWITTER EARNINGS AS WELL. TOM: I THOUGHT THEY WERE OUT. LISA: I CANNOT TELL YOU. JONATHAN: YOU WERE TALKING -- TOM: YOU WERE TALKING TO ELONG ON THE BREAK -- TO ELON ON THE BREAK. JONATHAN: HERE ARE YOUR SINGLE NAMES. WE CAN GET THEM WITH CRITICAL TO. KRITI: TALKING ABOUT THOSE TECH MOVES, YOU REALLY SEE THAT IN THE MASSIVE USER GROWTH NUMBER COMING BACK. IT'S A LOT BUT GROWTH IS IN INSTAGRAM. REALLY POWERING THE STOCKS THIS MORNING. QUALCOMM IS THE OTHER ONE. THIS IS THE BIGGEST IPHONE CHIP SUPPLIER ACROSS THE WORLD, HUGE WHEN IT COMES TO FORECASTING WHAT APPLE IS GOING TO SAY AFTER THE BELL TODAY. THEY CAME OUT WITH EARNINGS THAT NOT ONLY BEAT, IT WAS A ROBUST STRONG OUTLOOK. THE DEMAND PICTURE IS DOING BETTER, SO SHARES UP 6.7% THIS MORNING. APPLE REALLY TAKING THE LEAD FROM QUALCOMM. APPLE AFTER THE BELL TALKING ABOUT CONSUMER DEMAND AND THE SUPPLY CHAIN. LET'S TALK ABOUT AMAZON, NOT JUST CONSUMER DEMAND HERE IN THE STATES, BUT REALLY THERE GLOBAL E-COMMERCE BUSINESS. IF THERE IS PAIN IN THE E-COMMERCE BUSINESS, DOES AMAZON WEB SERVICES OFFSET THAT? SPEAKING OF GLOBAL DEMAND, CATERPILLAR UNDER PRESSURE, DOWN 1.9 PERCENT, JUST SHY OF 2%. THIS IS A COMPANY TO MIX CONSTRUCTION EQUIPMENT. LASTLY, LET'S TALK ABOUT DONALD. EVERYTHING TO DO WITH THE CURRENCY PITCHER. YOU WERE TALKING ABOUT A STRONGER DOLLAR, WEAKER EURO, WEAKER POUND. I THING ABOUT 68% MCDONALD'S REVENUE COMES FROM ABROAD, SO THEY HAVE TO CONVERT IT BACK TO DOLLARS. NEVERTHELESS, THEY CAME OUT WITH EARNINGS SO THAT SALES ARE FAST AND FURIOUS. TOM: WE WERE TALKING CURRENCY, TALKING THE NUMBER TWO VALUE MEAL AS WELL BEING VERY IMPORTANT. SERIOUSLY, THIS AFTERNOON WE WILL ALL BE RIVETED TO APPLE AND AMAZON. WE SPOKE WITH WRISTER FOR VERONA -- WITH CHRIS VERRONE. NOW FOR A MEAL UNIVERSITY AND STANDARD CHARTERED BANK, STEPHEN LENDER -- STEVE ENGLANDER WITH GLOBAL WALL STREET THIS MORNING. YOU AND I STUDIED AT M.I.T., WE WILL GO TO YOU RIGHT NOW. HOW IS THIS TRILEMMA DIFFERENT FROM WHAT WAS CODIFIED? STEVE: WE KNOW THE BOJ IS UNLIKELY TO BE ABLE TO KEEP ALL OF THEM, AND THE INTERVENTION THEY HAVE TO DO ON THE BOND BUYING FRONT RIGHT NOW IS THE DEGREE OF FREEDOM THEY ARE USING. THE BOJ MAY BE ROLLING DICE WITH THE UNIVERSE, BUT WHAT THEY MAY BE HOPING IS THAT THEY CAN GET THE YEN WEEK QUICK ENOUGH, INFLATION UP FAST ENOUGH, INCLUDING WAGES, NOT JUST CONSUMER PRICES DRIVEN BY ENERGY IMPORTS, AND THEN RELEASE THE YCC CONSTRAINTS THAT THEY HAVE SO THEY COULD FINALLY HAVE DOMESTIC CORE INFLATION IN LINE WITH THEIR INFLATION OBJECTIVES. TOM: YOU INTRODUCE A LOT OF COMPLEXITY. LET'S GO TO THE OUTCOME WE KNOW IS COMING. IS YIELD CURVE CONTROL SUMS AND THAT WILL FAIL OUTRIGHT, OR DO YOU BELIEVE THEY CAN AMEND IT IN SOME FASHION TO REVEAL DOLLAR STRENGTH IN YEN COLLAPSE? STEVEN: ONE, YIELD CURVE CONTROL WORKS IN A VERY LIMITED SET OF CIRCUMSTANCES. YOU CAN'T USE YIELD CURVE CONTROL TO MAKE IT ONE. WHAT IT CAN DO IS, IF YOU ARE SETTING IS CORRECT, IT CAN GUIDE EXPECTATIONS UNTIL THE MARKET YOU ARE NOT HAVING FLUCTUATIONS AROUND IT. THE ONE THING I WOULD SAY, IF YOU TAKE A LOOK AT HOW THE CHINESE CURRENCY IS TRADING AGAINST THE YEN, IT IS AT ITS HIGHEST LEVEL IN 10 YEARS. WHEN YOU LOOK AT THE END AGAINST OTHER ASIAN CURRENCY, IT IS VERY HIGH. I EXPECT THE BOJ IS GETTING PHONE CALLS FROM ITS PEERS IN ASIA ASKING WHAT IS GOING ON. LISA: HOW HIGH WOULD YIELDS BE IN JAPAN IF YIELD CURVE CONTROLS WENT THE WAY OF THE TRASHCAN? STEVEN: THEY ARE LIKE 35 BASIS POINTS HIGHER. NORMALLY THEY ARE FLAT. MY GUESS IS UNLESS THEY RELEASE IT ENTIRELY, YIELDS WOULD JUST GO UP TO A NEW LIMIT. IF THEY RAISED IT TO 50, WE WOULD PROBABLY SEE JUJUBE YIELDS GO TO 50 AND SWAP SPREADS GO EVEN HIGHER, ANTICIPATING THERE WOULD BE A COMPLETE RELEASE AT SOME POINT. LISA: THE REASON I ASK IS WHEN YOU TALK ABOUT SOMETHING BREAKING, IT SEEMS LIKE THERE'S A FEAR OF SOMETHING BREAKING ON THE OTHER SIDE. WHICH IS THE WORST FEAR RIGHT NOW, SOMETHING BREAKING IF THE BANK OF JAPAN WERE TO RELEASE YIELD CURVE CONTROL OR THE FEAR OF SOMETHING BREAKING IF THE JAPANESE CONTINUES TO DEPRECIATE? STEVEN: ON THE JAPANESE SIDE, THEY STILL HAVE FISCAL ISSUES, AND THE MINISTRY OF FINANCE HAS BEEN BLESSED BY HAVING VERY LOW INTEREST RATES FOR A VERY LONG TIME. THE BOJ BUYING A LOT OF JGB DEBT MAKES IT EASY. WERE THEY TO BACK OFF AND WERE YIELDS TO GO UP, THE MARKET WOULD START TAKING A CLOSER LOOK AT JAPANESE FISCAL SUSTAINABILITY, I THINK THAT THE LEVEL OF THE YEN AGAINST ITS COMPETITORS IN THE REST OF ASIA, IS NOT JUST A SMALL BREAK. IT IS UP BY 10% TO 15% OVER THE LAST TWO MONTHS. I THINK THAT WILL BE A CAUSE OF CONCERN, EVEN IF NOT NOW BECAUSE RIGHT NOW I DON'T THINK JAPANESE PRODUCTION CAN RAMP UP BECAUSE THE YEN IS CHEAPER. BUT ONCE WE GET PAST THE COVID ISSUES, IT WILL BE MATERIAL WHETHER THE YEN IS AS WEAK AS IT IS NOW BECAUSE THEY WILL BOTH EXPLOIT THE COMPETITIVE ADVANTAGE AGAINST THEIR NEIGHBORS. JONATHAN: THE COMMENT FROM THE MINISTRY OF FINANCE GOT US THINKING ABOUT INTERVENTION. WHEN YOU GO BACK TO THE EARTHQUAKE IN 2011 AND WE HAD THE JOINT INTERVENTION FROM THE G7, THAT WAS BECAUSE THE CURRENCY WAS TOO STRONG. RIGHT NOW IT IS TOO WEAK. IT ALSO SAID THE BIG DIFFERENCE WAS IT JUST FEELS LIKE THEY ARE ALONE ON THIS ONE, THAT IF THEY TRIED TO INTERVENE, THEY ARE DOING IT SO LOW. HOW BIG A DIFFERENCE IS THAT? STEVEN: LITERALLY THE EARTHQUAKE WAS AN ACT OF GOD. THIS IS A BOX THAT HAVE KIND OF PUT THEMSELVES INTO. I THINK THE ODDS OF INTERVENTION, COORDINATED INTERVENTION, WOULD GO UP A LOT IF THEY RELAXED PRICES, BUT IT COULD BE VIEWED AS THROWING MONEY AWAY. JONATHAN: STEVE, FANTASTIC ZOO CATCH UP WITH YOU ON A MORNING LIKE THIS ONE. DK, THEY ARE FLYING SOLO. THIS IS A PROBLEM OF THEIR OWN CREATION IN A WORLD WHERE INTEREST RATES ARE RISING AND THEY REFUSED TO LET BOND YIELDS COME FOR THE RIDE. TOM: THERE'S A LITTLE BOOK YOU PUT IN YOUR HANDS, WRITTEN BY A GUY NAMED STANLEY FISHER, I BELIEVE STILL AT BLACK ROCK. WHEN HE WAS ON THE WATCH AT THE IMF, IT WAS A DEBRIS OF UNEXPECTED CONSEQUENCES OF THE EARLY 1990'S OUT TO THE FINANCIAL CRISIS OF 1990 EIGHT. I WOULD RESPECTFULLY SUGGEST THIS IS NO DIFFERENT. WHAT STEVE ENGLANDER IS EXPERT ON IS THE KNOCK ON EFFECTS OF THIS. THIS IS JAPAN ALONE UNTIL THEY ARE NOT. WHAT LEVEL IS THAT? CLEARLY IT IS NOT 130, BUT I AM STUNNED THAT IN EMMONS FRAMES THAT 135, 140. JONATHAN: IF THE PROBLEM WAS IN THE BOND MARKET, MAYBE THEY WOULD BE LESS ALONE. AT THE MOMENT THIS JUST FEELS VERY LONELY FOR JAPAN. JAPAN AND WHAT JAPAN MEANS FOR THE GLOBAL ECONOMY IS NOT WHAT IT MEANT 20 YEARS AGO. LISA: SO IF THEY ARE GOING THIS ALONE, THEY ARE GOING TO GET PUNISHED UNIQUELY. THE FLIPSIDE OF THIS STORY IS THE DOLLAR. I WANT TO POINT OUT THE DOLLAR IS AT SESSION HIGHS IF YOU LOOK AT THE DXY INDEX. THE IDEA THAT WE ARE LOOKING AT THE HIGHEST DOLLAR VALUE, THE STRONGEST GOING BACK TO 2002, WHAT DOES THIS MEAN FOR ON SHORING SOME OF THE SUPPLY CHAINS, FOR DOMESTIC PRODUCTION GIVEN THAT THIS MAKES US NOT NECESSARILY HAVE THE SAME COMPETITIVE LANDSCAPE? TOM: I DID THIS ON THE BREAK WHILE I WAS LOOKING AT MY MCDONALD'S ORDER FOR THIS MORNING. I DID A VERY WEAK, CLUMSY INTERPOLATION OF POUND STERLING BACK TO THE MAJOR LOWS OF 1992. IT IS SQUISHY, BUT IT IS AN 8% KIND OF MOVE ON STERLING, AND THAT GETS YOU BACK UNDER 1.20. JONATHAN: YOU KNOW WHAT I DID IN THE BREAK? HAD A LOOK TO MAKE SURE THE NUMBER TWO VALUE MEAL WAS A CHEESEBURGER. JUST A FACT-CHECK. IT IS A QUARTER POUNDER WITH CHEESE. TOM: BUT I AMEND IT TO TWO CHEESEBURGERS. JONATHAN: I STILL DON'T BELIEVE THAT YOU GO TO MCDONALD'S. TOM: THE TRICK IS YOU ORDER WITHOUT CATCH UP SO THAT YOU GET FRESH COOKED BURGERS. JONATHAN: THAT'S GOOD NEWS. I WILL TRY THAT ONE IN LIKE 10 YEARS. TOM: YOU AND ME, LONDON. THE LIVERPOOL STATION. JONATHAN: ONCE AND ONLY ONCE WITH YOU. WE ARE NEVER GOING BACK. THIS IS BLOOMBERG. LISA M: KEEPING YOU UP-TO-DATE WITH NEWS FROM AROUND THE WORLD, WITH THE FIRST WORD, I'M LISA MATEO. PRESIDENT BIDEN PLANS TO DELIVER REMARKS TODAY ON SUPPORT FOR UKRAINE AS THE END LOOKS TO SEND CONGRESS A PROPOSAL FOR WEAPONS AND HUMANITARIAN AID FOR UKRAINE THAT WOULD LAST THROUGH SEPTEMBER. THE PROPOSAL WOULD INCLUDE FUNDS TO HELP REMOVE LANDMINES AND COMBAT FOOD INSECURITY. EUROPEAN COMMISSION PRESIDENT URSULA VON DER LEYEN IS WARNING COMPANIES NOT TO BEND TO RUSSIA'S DEMANDS TO PAY FOR GAS IN RUBLES. THEY HAVE TURNED OFF THE TAPS TO POLAND AND BULGARIA IN A DRAMATIC ESCALATION. THAT MADE GOOD ON A THREAT IF RUBLES WERE NOT USED FOR PAYMENT. NOW ATTENTION TURNED TO HOW BIG CONSUMERS GERMANY AND ITALY RESPOND. A NEW STUDY SAYS U.K. SHOULD FOCUS ON CLOSER COOPERATION WITH THE U.S. TO BOLSTER ITS FINANCE INDUSTRY FOLLOWING BREXIT. ACCORDING TO TWO THINK TANKS, ATLANTIC COUNCIL AND NEW FINANCIAL, BRITAIN SHOULD MOVE ON FROM ATTEMPTS TO PUSH FOR ACCESS TO EU MARKETS. THE STUDY SAYS CLOSER TIES WITH THE U.S. COULD HELP THE U.K. GROW ITS CAPITAL MARKETS BUSINESS BY 40%. SIMPSON REPORTED A SURGE IN FIRST-QUARTER PROFIT ON STRONG SALES OF MEMORY CHIPS AND PREMIUM SMARTPHONES, BUT THE SOUTH KOREAN COMPANY WARNED THERE ARE RISKS AHEAD FROM INFLATION AND GEOPOLITICAL UNCERTAINTY. SAMSUNG IS CONSIDERED A BELLWETHER FOR THE TECH INDUSTRY SINCE IT IS THE LARGEST PRODUCER OF MEMORY CHIPS FOR COMPANIES LIKE APPLE. IT IS ALSO THE LARGEST SMARTPHONE MAKER. 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 LISA MATEO. THIS IS BLOOMBERG. > > OUR GUIDANCE HERE IS VERY CLEAR. TO PAY IN RUBLES, IF THIS IS NOT FORESEEN IN THE CONTRACT, TO PAY IN RUBLES IS A BREACH OF OUR SANCTIONS. WE HAVE AROUND 97% OF CONTRACT THAT ASKED LUCIDLY STIPULATE PAYMENTS IN EUROS OR DOLLARS. JONATHAN: URSULA VON DER LEYEN, THE EUROPEAN COMMISSION PRESIDENT. HERE'S THE PRICE ACTION, POSITIVE 1.5% ON THE S & P, UP BY 2.12%. META, FACEBOOK, THE EARNINGS FOR THEM HELPING THEM OUT. NO EARNINGS CALL LATER EITHER. I GUESS FOR A LOT OF PEOPLE, THE RELEVANCE OF THESE EARNINGS HAVE DIMINISHED SOMEWHAT OVER THE LAST COUPLE OF WEEKS. INTERESTING TO SEE WHERE THIS IS TRADING. THE GAP IS GETTING A LITTLE WIDER, NOT NARROWER, OVER THE LAST FEW DAYS. TOM: THERE'S A LOT OF THINGS GOING ON HERE. LET'S TAKE TWO SECONDS ON THE 10 YEAR YIELD. I GET IT, IT IS RANGE BOUND, BUT IT IS ALSO RESILIENT TO A HIGHER YIELD. JONATHAN: WE'VE GOT TO WAIT FOR CHAIRMAN POWELL NEXT WEDNESDAY. . TOM: I THINK IT IS OFF THE RADAR. JONATHAN: THE TWO-YEAR YIELD IS ABOUT 20 BASIS POINTS OFF THE HIGHS OF THE LAST COUPLE OF WEEKS. TOM: 30 SECONDS, FARM JOURNAL. CORN, WHEAT, HIGHER. LISA: IT IS THE HIGHEST LEVELS I BELIEVE GOING BACK A DECADE OR MORE. FOOD INFLATION IS GOING TO BE A REAL ISSUE . TOM: RIGHT NOW, DANIEL TANNEBAUM WITH US, A REAL DISCUSSION, AT OLIVER WYMAN. LET'S DO SANCTIONS 101. ARE THEY WORKING? DANIEL: WORKING WITH RESPECT TO DRIVING PUT IN AND THE RUSSIAN GOVERNMENT OUT OF UKRAINE? PRETTY CLEARLY NOT. THEY HAVE NOT PUSHED BACK THE RUSSIAN FORCES, BUT THESE SANCTIONS WERE ALWAYS GOING TO TAKE SOME TIME TO FORCE ANY SORT OF IMPACT TO THE RUSSIAN ECONOMY. SANCTIONS WERE NOT GOING TO WORK IN ISOLATION IN CONJUNCTION WITH MILITARY AID, WITH THE EFFORTS OF THE UKRAINIAN ARMY ON THE GROUND. SANCTIONS IN ISOLATION WERE NEVER GOING TO BE THE SOLUTION. TOM: I WANT TO GO TO YOUR WHEELHOUSE, SPEAKING AS A COMPLETE AMATEUR. THE RUSSIAN BOAT GOES INTO A HARBOR AND WE CAN'T STOP THE RUSSIAN BOAT, BUT IN YOUR WORLD, WE CAN STOP THE INSURANCE AND LEGAL MECHANISMS THAT ALLOWS THAT BOAT TO MOVE. DO WE NEED TO GO AFTER, AND PLEASE STAY WITH ME ON THIS, THE LLOYD'S OF LONDON LIKE TROOPS THAT AFFECT LOGISTICS? DANIEL: RUSSIAN VESSELS CAN'T MAKE HER GET THAT WAS ANNOUNCED LAST WEEK I PRESIDENT BIDEN. VERY FEW RUSSIAN FLAG VESSELS MAKE PORT CALLS IN THE U.S., BUT THEY ARE OWNED BY A VARIETY OF OTHER MECHANISMS. THEY WILL NOT MOVE CARGO. THEY WILL NOT MOVE GOODS INTO AND OUT OF RUSSIA. TOM: SO MAERSK IS COOPERATING. DANIEL: A NUMBER OF SHIPPING COOPERATING -- A NUMBER OF SHOULD BIG COMPANIES ARE COOPERATING. LISA: IF YOU HAD THE THANKLESS JOB OF ADVISING IT GERMAN OIL COMPANY RIGHT NOW, WHAT WOULD YOU TELL THEM IN TERMS OF THE FINANCING MECHANISM TO PAY FOR OIL FROM RUSSIA? DANIEL: THIS IS GETTING COMPLICATED. YOU HAVE URSULA VON DER LEYEN WHO IS CLEARLY SAYING THAT PAYMENT IN RUBLES IS IN VIOLATION OF SANCTIONS. THERE IS SOME CONFUSION IN TERMS OF WHERE IN THE REGULATIONS THAT IS MADE EXPLICIT. YOU GUYS REPORTED YESTERDAY A NUMBER OF EU COUNTRIES HAVE OPENED UP HER BULL ACCOUNTS IN RUSSIA TO MAKE PAYMENT, AND YOU ALSO HAVE THE THREAT OF EU SANCTIONS ON RUSSIAN ENERGY. WE ARE ALL WATCHING RODNEY DANGERFIELD TEE OFF, WAITING FOR SOME SORT OF SANCTIONS PACKAGE TO ROLL OUT ALL WHILE RUSSIA IS CLOSING OFF THE SPIGOT FOR A NUMBER OF COUNTRIES. TOM: I CAN'T BELIEVE "CADDY SHACK" DIDN'T WIN THE OSCAR. I'VE NEVER GOTTEN OVER IT. LISA: I THINK A LOT OF PEOPLE ARE IN THE SAME BOAT. BUT PLEASE CARRY ON AND TRY TO MOVE ON FROM THAT. JONATHAN: WATCHING YOU TRY TO HANDLE THAT IS BRILLIANT. [LAUGHTER] LISA: HONESTLY, I AM LOOKING AT WHAT IS GOING ON, AND A HEADLINE ON THE BLOOMBERG SAYING COMPANIES MUST NOT OPEN RUBLE ACCOUNTS. THIS IS BECOMING AN ISSUE THAT NEEDS TO BE UNIFIED IN A SPLINTERED EU. DO YOU EXPECT A COHESIVE RESPONSE IN THE NEXT COUPLE OF WEEKS? DANIEL: I THINK IT IS VERY CLEAR IN MY DISCUSSION WITH FOLKS IN THE EUROPEAN UNION THAT WE ARE COMING UP WITH SOME SORT OF COHESIVE PACKAGE. RUSSIA COULD BEGIN TURNING OFF MORE COUNTRIES BEFORE THE EU BEGINS TO ANNOUNCE ITS ACTUAL ENERGY PACKAGE AT THIS RATE. JONATHAN: THEY COULD REROUTE THE CRUDE AS WELL, GIVEN THE TIME THEY'VE GOT. YOU FIND THAT BIZARRE? HAVE THEY GOT TO ACCEPT SOME ECONOMIC PAIN? IF YOU START PACING -- START PHASING IN A RUSSIAN CRUDE BAN. DANIEL: YOU CAN BUY CRUDE FROM THE SAUDIS. YOU CAN SOURCE CRUDE ELSEWHERE. LNG IS THE BIGGER ISSUE FROM AN ENERGY STANDPOINT. JONATHAN: SUPERSMART, AS ALWAYS. IT IS GOOD TO SEE YOU. DANIEL 10 ABOUT -- DANIEL TANNEBAUM IN THE STUDIO. IT IS HARD TO CONTROL TK WHEN YOU ARE THIS FAR AWAY. [LAUGHTER] LISA: TOM, WHAT WERE YOU THINKING WITH "CADDY SHACK?" TOM: WHAT WAS I THINKING, BESIDE EVERY MOMENT IS CHISELED IN? I MEAN, "BE THE BALL." THERE ARE SOME PARTS THERE THAT RESONATE BACK TO THE BEGINNINGS OF CINEMA. DANIEL: SO I'VE GOT SOMETHING THERE. TOM: AND LOOK WHAT IT DID FOR KENNY LOGGINS. DAN HAD NO IDEA HE WAS GOING THERE. JONATHAN: I STILL HAVE NOT WATCHED THE MOVIE. TOM: ARE YOU SERIOUS? THAT IS UN-AMERICAN. LISA: I HAVEN'T SEEN IT EITHER, I'M GOING TO BE HONEST. TOM: OH NO. LISA ABRAMOWICZ, FERRO HAS AN EXCUSE. LISA: I'M LOOKING AT R YIELDS RIGHT NOW. THEY ARE FASCINATING. PEOPLE ARE WORRIED ABOUT WHAT THEY ARE NOT SEEING IT, WHICH IS THE CONSUMER. I THINK IT WILL BE FASCINATING TO SEE THAT CONSUMERS ARE STILL PICKING UP THE PRICE INCREASES YOU ARE SEEING ACROSS THE BOARD. I FIND THAT AMAZING SO PEOPLE ARE WORRIED ABOUT SOMETHING THAT HAS NOT HAPPENED YET AND THEY ARE STARTING TO PRICE IT IN. JONATHAN: THEY ALWAYS ARE, AREN'T THEY? THE EARNINGS HAVE BEEN DECENT. YOU MENTIONED THE EMPLOYMENT COST INDEX. THAT IS COMING UP TOMORROW. A LOT OF ECONOMISTS FOCUSED ON THAT GOING INTO THE FED. I THINK IT WAS CHAIRMAN POWELL, WHEN ASKED, SAID IT WAS BECAUSE THE ECI WAS REALLY STRONG THAT ONE MONTH. TOM: MIKE MCKEE TOLD ME TO FOLLOW THAT ONE. IT IS THE ONE THAT MATTERS, AND THERE IS SOME NUANCE YOU CAN DO WITH IT, BUT INCLUDES WAGES AND BENEFITS. I WOULD SAY ALTHOUGH WE HAVE SEEN REAL ESTATE IN NEW YORK, NO ONE CARES ABOUT THE ECI. JONATHAN: IT IS ALL ABOUT THE ECI AND NOTHING TO DO WITH THE RENOMINATION GERMAN POWELL WAS GETTING AT ALL. > > WAS HAD TWO YEARS OF HELICOPTER MONEY, BUT NOW WE ARE PAYING THE PRICE WITH HIGHER INFLATION. > > AT SOME POINT THE ANXIETY AROUND THE FED WILL LEAD TO A GREATER SCARE OF RECESSION. > > IT COULD BE WORSE IF THE FED MOVES AS FAST AS IT IS TELEGRAPHING. > > THE QUESTION YOU SHOULD ASK YOURSELF IS WHERE CAN I FIND SAFETY IN THE WORLD. > > THIS IS "BLOOMBERG SURVEILLANCE" WITH TOM KEENE, JONATHAN FERRO, AND LISA ABRAMOWICZ. TOM: GOOD MORNING, EVERYONE. AN HISTORIC DAY FOR "BLOOMBERG SURVEILLANCE." WE HAVE MICROECONOMICS, WE HAVE AMAZON AND APPLE THIS AFTERNOON. ALL THAT IS GOING ON IN EUROPE. WE HAVE STOCK-BASED COMPENSATION AT TWITTER. IT GREW 60% YEAR-OVER-YEAR. SOMEHOW I THINK THAT MAY END. TOM: WE GOT SOME -- JONATHAN: WE GOT SOME EARNINGS. THEY WILL NOT BE PROVIDING ANY FORWARD GUIDANCE. ALL PREVIOUSLY PROVIDED GOALS AND THEIR OUTLOOK AS WELL. AFTER THE CLOSE WE WILL NOT HAVE AN EARNINGS CALL THIS MORNING. YESTERDAY THAT STOCK CLOSED AT $48, AND THE OFFER IS $54.20. TOM: THAT GOES TO THE COMPLEXITIES OF THIS PUBLIC TO PRIVATE TRANSACTION. OPERATING MARGIN COMPARED TO A PLUS 5% OPERATING MARGIN, I'M NOT QUITE SURE WHAT THAT MEANS. THE BOTTOM LINE HERE IS CAN WE SAY -- HOW IS MR. MUSK GOING TO LOOK AT THIS? JONATHAN: I COULD NOT CARE LESS ABOUT THIS EARNINGS REPORT THIS MONEY. WE JUST HAD GERMAN CPI COME IN AT 7.8%. THE WORLD HAS GOT BIGGER PROBLEMS THAN THIS EARNINGS REPORT. TOM: I HAVE BEEN SCREAMING ABOUT THIS ALL MORNING WITH THE NEWS FLOW. WE WILL GET TO THE MOMENT WITH ALISHA LEVINE. IN THIS SET OF NEWS, WHAT MATTERS TO YOU? ? LISA: THE GERMAN INFLATION RATE COMING IN HIGHER-THAN-EXPECTED, THE ECB'S HANDS ARE VERY TIED. OVER IN THE U.S., I HAVE BEEN STRUCK BY THE EARNINGS THAT HAVE COME OUT. THOSE HIGHER COSTS BEING PASSED ALONG TO THE CONSUMERS WITH NO PROBLEM. IN EUROPE IT MIGHT BE A SLIGHTLY DIFFERENT SITUATION IN DRIVEN BY OIL AND GAS. TOM: I'M LOOKING AT THE SET OF ISSUES IN LONDON, AND WHAT I SEE IS A LONG CURVE DOWN AND A WEAKENING OF POUND STERLING. MY RIGHT TO SAY POUND STERLING IS DISASSOCIATED FROM EUROPE? JONATHAN: THERE'S A SIMILAR STORY GOING ON BUT WHEN THE BANK OF ENGLAND AND THE ECB. THE BANK OF ENGLAND MIGHT BE HIKING INTO ECONOMIC WITH US. THE ECB, IF IT DOES HIKE, WILL BE HIKING INTO ECONOMIC WEAKNESS. I THINK IT WAS THE SILLIEST GKIONAKIS -- I THINK IT WAS VESELY US CANNOT GUESS -- I THINK IT WAS THE SILLY OH'S -- IT WAS VASILIOS GKIONAKIS WHO SAID IT. I DON'T HAVE A CLUE WHAT THE ECB IS GOING TO DO LATER ON THIS SUMMER, WITH GROWTH DECELERATING , INFLATION PRESSURE STILL BUILDING. WHAT ON EARTH DO THEY DO WITH INTEREST RATES? TOM: SO IMPORTANT WITH THAT, IT IS DIFFERENT THAN IT WAS ON MONDAY. IS TODAY THURSDAY? IT IS THURSDAY RIGHT NOW, AND THE ECB HAS LESS OF A CLUE NOW THAN THEY DID 72 ARE 96 HOURS AGO. JONATHAN: DOLLAR-YEN NORTH OF 130. THE BANK OF JAPAN, WHAT WAS AMAZING ABOUT THE BOJ TODAY WAS WHAT HAPPENED AFTER THE BOJ DID WHAT IT DID. THE BOJ HAS COME OUT AND SAID WE ARE DOUBLING DOWN AND SAID I WANT TO CAP INTEREST RATES. WE WILL COME IN EVERY SINGLE BUSINESS DAY AND BY AN UNLIMITED AMOUNT OF BONDS TO MAKE THAT HAPPEN. AND IF IS THE MINISTRY OF FINANCE SAYS WE DON'T LIKE WHAT IS HAPPENING IN THE FOREIGN EXCHANGE MARKET. WE ARE DEEPLY CONCERNED ABOUT THE WEAKNESS. YOU CAN'T HAVE BOTH. SOMETHING HAS GOT TO GIVE HERE. SO IT IS EITHER THE CURRENCY OR YIELD CURVE CONTROL. TOM: AGAIN WITH THE SET OF INTERVIEWS WE'VE HAD, THANK, PARTICULARLY STEVE INLANDER -- STEVE INLAND -- STEVE ENGLANDER OF STANDARD CHARTERED. I'M LOOKING AT BRENT CRUDE, $104 $.71. THEY SCREAM HIGHER OIL. JONATHAN: FUTURES UP BY 1.8%, 1.9% HIGHER, RETURNING TO GROWTH AND DEEPLY DEPRESSED EXPECTATIONS RELATIVE TO WHERE THE STOCK WAS TRADING. ON TO LATER, WE GOT EARNINGS FROM AMAZON AND APPLE AFTER THE CLOSE. TOM: AS JON MENTIONS, THE EUROPEAN CENTRAL BANK FROM IRELAND, PHILIP LANE THE ACADEMIC WILL BE WITH US, CHIEF ECONOMIST FOR THE ECB. THAT WILL BE A TIMELY CONVERSATION. ALWAYS TIMELY, ALISHA LEVINE AT B AND Y LEVINE -- ALECIA LEVINE -- ALICIA LEVINE AT BNY MELLON. EXPLAIN TO AN AUDIENCE WITH A DOMESTIC PORTFOLIO BY DOLLAR-YEN CRISIS MATTERS. ALICIA: GOOD MORNING, AND IT IS GREAT TO SEE YOU EVEN THOUGH THE WORLD SEEMS TO BE GIVING US ISSUES EVERY TIME WE WAKE UP. OUR CENTRAL BANK IS MUCH TIGHTER AND MUCH MORE WILLING TO HIKE RATES THAN ANYWHERE ELSE IN THE WORLD BECAUSE OUR ECONOMY IS STRONGER THAN ANY OTHER ECONOMY IN THE WORLD, AND WHAT THAT MEANS IS A MUCH STRONGER DOLLAR FOR THE U.S.. IT IS GREAT IF YOU'RE TRAVELING, NOT GREAT IF YOU ARE A MULTINATIONAL COMPANY THAT HAS BUSINESS OVERSEAS BECAUSE YOUR BUSINESS IS SOURCED IN EUROS AND THOSE HAVE TO BE CONVERTED BACK TO DOLLARS AT A MUCH MORE EXPENSIVE DOLLAR. SO YOU'VE GOT PRESSURE ON EARNINGS FROM OVERSEAS COMPANIES , AND IN GENERAL IT IS NOT GREAT TO SEE THESE CURRENCIES OF OUR MAJOR TRADING PARTNERS SO WEEK BECAUSE IT SUGGESTS THERE IS REAL STRENGTH IN THE SYSTEM HERE BECAUSE OF THE DIFFERENTIAL IN CENTRAL BANKS. JONATHAN: THE TRADE USED TO BE GO LONG EQUITIES. THAT IS NOT THE TRADE ANYMORE FOR JAPAN, IS IT? ALICIA: IT IS NOT. I THINK WE SHOULD ALL BE THINKING ABOUT JAPAN IS A LITTLE BIT OF A TAIL RISK HERE. IF YOU HAVE A MARKET, SOMETHING HAS TO GIVE HERE. OF COURSE, JAPAN DOES BY OUR TREASURIES. IF YOU HAVE TO HITCH THE DEFT -- IF YOU HAVE TO HEDGE THE CURRENCY, EVEN THE DIFFERENCE RATE IF -- THE INTEREST RATE DIFFERENTIAL MIGHT NOT BE ATTRACTIVE FOR BUYERS. I THINK IT IS SOMETHING THAT CENTRAL BANKS HAVE TO START TO PAY ATTENTION TO. THE BIG FEAR ON THE FED HIKING CYCLE, IS SOMETHING GOING TO BREAK? I DO WONDER WHETHER THIS IS THE FIRST SIGN OF WHERE THE STRESS COULD BE COMING FROM. LISA: WHEN YOU TAKE A LOOK AT THE U.S. EARNINGS THAT HAVE BEEN PRETTY SOLID ALL AROUND AND WE START TALKING ABOUT A STRONGER DOLLAR, AT WHAT POINT IS THAT NOT SIMPLY AN EXCUSE FOR MANAGEMENT? ALICIA: USUALLY AFFECTS, WHEN IT IS A SWING OF 3% OR 4%, KIND OF GOES AWAY. IT IS A LOUSY QUALITY EARNINGS MISS WHEN THE DOLLAR IS STRONG, AND INVESTORS DO TEND TO DISMISS IT. IT STARTS TO BE A PROBLEM IF OVERSEAS CONSUMERS CANNOT BUY YOUR GOODS. I SUSPECT WITH THE INFLATION NUMBERS WE ARE SEEING, WHAT IS EXTRAORDINARY ABOUT EARNINGS SEASON IS THAT REVENUES ARE COMING IN PRETTY STRONG. WHAT IS NOT COMING IN STRONG'S FORWARD GUIDANCE. FOR THE MOST PART OVERALL, COMPANIES ARE RELUCTANT TO REALLY PUSH GUIDANCE FORWARD BECAUSE THERE IS A SENSE THAT THERE COULD BE SOME DEMAND DISRUPTION BECAUSE OF HIGHER INFLATION GLOBALLY, PARTICULARLY HERE, AND AN UNWILLINGNESS TO REALLY GET AHEAD OF IT, AND THE COSTS. LISA: BASICALLY, WE ARE GOING TO GET AN EVEN WEAKER TYPE OF DEMAND FOR U.S. PROX BECAUSE OF THE STRONG DOLLAR? ALICIA: I WOULD SAY OVERALL, SENTIMENT IS CLEARLY OR NEGATIVE. WE HAVE THE HISTORIC BEAR SENTIMENT READINGS WE HAVE NOT SEEN IN 30 YEARS, SO IN SOME WAYS THAT UNIVERSAL NEGATIVITY IS SUPPORTING THE MARKET, AND SOME OF THE POSITIONING AND THESE LARGER CAP TECH STOCKS IS SO NEGATIVE THAT ANYTHING , THAT IS WHAT THE MARKET HAS GOING FOR IT RIGHT NOW. I DO THINK WE HAVE SOME SURPRISES GOING FORWARD ON THE DEMAND SIDE. IT WILL START ERODING AWAY THE BOTTOM 40% OF THE U.S. CONSUMER WHICH IS ONLY 20% OF U.S. CONSUMPTION, BUT STILL THAT WILL START TO MATTER, AND THESE PEOPLE NOW HAVE REAL DISPOSABLE INCOME, WHICH IS LESS THAN BEFORE THE PANDEMIC. JONATHAN: ALISHA LEVINE, GREAT TO CATCH UP. WE GET MORE EARNINGS AFTER THE CLOSE. AMAZON AND APPLE. THIS MONEY WE HAD MASTERCARD. THE WRONG KIND OF UPSIDE SURPRISE JUST CAME OUT OF GERMANY. INFLATION COMING THROUGH AT 7.8% . TOM: WE HAVE TO STAY AT A 7% INFLATION STATISTIC IN A REUNITED GERMANY, EMOTIONALLY DIFFERENT THAN ANYWHERE ELSE ON THE PLANET. THE BAGGAGE OF THIS IS PROFOUND. JONATHAN: CAN YOU IMAGINE WHERE RATES WOULD BE IF JEAN-CLAUDE TRICHET WAS STILL RUNNING THE ECB? TOM: THAT WAS A DECISION OF A LONG TIME AGO, BUT THE ANSWER IS BY ANY METRIC, IT IS SUCH A CLICHE, BUT IT WORKS HERE. MASSIVE UNCHARTED TERRITORY, AND THAT IS WHAT INSTITUTIONS ARE BATTLING WITH RIGHT NOW. JONATHAN: EUROPE IN UNCHARTED TERRITORY, STILL -50 BASIS POINTS, THE DEPOT RATE AT THE ECB. . LISA:LISA: THEY ARE STILL FIGHTING DISINFLATION WE SAW FOR SO MANY YEARS. TOM: IT IS A RIVETING SHOW TODAY. THE DIFFERENT THEMES WE HAVE. THANKS AL FROM NEW JERSEY FOR WATCHING. THRILLED TO SEE THAT. HE'S ALL OVER LISA AND SAYS, "CADDY SHACK," "ANIMAL HOUSE," "STRIPES," YOUR WE CAN VIEWING. JONATHAN: LISA IS SUPER EXCITED ABOUT THAT YOU ENLIST -- THAT VIEWING LIST. [LAUGHTER] TOM: COME ON. IT WAS TOO MUCH. LISA: I WILL BE FULL OF INSIGHT ON MONDAY. JONATHAN: FUTURES UP 1.3% ON THE S & P. THIS IS BLOOMBERG. LISA M: KEEPING YOU UP TO DATE WITH NEWS FROM AROUND THE WORLD, WITH THE FIRST WORD, I’'M LISA MATEO. IN GERMANY, LAWMAKERS URGING THE GOVERNMENT TO QUICKLY SUPPLY UKRAINE WITH HEAVY WEAPONS AND OTHER EQUIPMENT. A MOTION IN PARLIAMENT THURSDAY NIGHT ALSO CALLED FOR AN END TO IMPORTS ON RUSSIAN OIL. CHANCELLOR OFF SCHULZ HAS FACED INTENSE CRITICISM TO DO MORE TO HELP UKRAINE. THE BANK OF JAPAN HAS SPARKED A SHARP SLIDE IN THE END BY DOUBLING DOWN ON BOND PURCHASES. THE CENTRAL BANK SAID IT WOULD BUY AN UNLIMITED AMOUNT OF BONDS AT FIXED RATES EVERY BUSINESS DAY. THAT POUNDED THE INTO HIT A TWO DECADE LOW AGAINST THE DOLLAR. MODERNA HAS ASKED U.S. REGULATORS FOR EMERGENCY USE AUTHORIZATION FOR ITS COVID VACCINE FOR KIDS AGES SIX MONTHS TO UNDER SIX YEARS. IS EXCESS FOR TRIAL SHOWED TWO DOSES GENERATE HIGHER LEVELS OF ANTIBODIES TO THE VIRUS. THERE'S IS CURRENTLY NO VACCINE APPROVED FOR THOSE UNDER FIVE. MCDONALD'S POSTED COMPARABLE SALES WORLDWIDE THAT WERE BETTER THAN EXPECTED TASK ORDER, BUT SEEM QUARTER SALES IN THE U.S. MISSED ESTIMATES. STILL, GAINS MAY BE SLOWING AS CONSUMERS GRAPPLE WITH SOARING INFLATION. FACEBOOK'S MAIN SOCIAL NETWORKS ADDED MORE USERS THAN PROJECTED IN THE FIRST QUARTER, AND THAT COULD STAVE OFF CONCERNS THAT THE COMPANY IS LOSING MOMENTUM IS LOSING MOMENTUM AS A NEW GENERATION FLUX TO YOUNGER SITES LIKE TIKTOK. > > THE BOJ MAY BE ROLLING THE DICE WITH THE UNIVERSE, BUT WHAT THEY MAY BE HOPING IS THAT THEY CAN GET THE YEN WEAK QUICK ENOUGH, AND RELEASE THE CONSTRAINTS THEY HAVE SO THAT THEY CAN FINALLY TAME DOMESTIC CORE INFLATION IN LINE WITH THEIR INFLATION OBJECTIVES. JONATHAN: THAT HOPE MAY WELL NOT MATERIALIZED. DOLLAR-YEN, 130 POINT 86. ELSEWHERE, YIELDS HIGHER BY A COUPLE OF BASIS POINTS. COLLET THREE ON THE 10 YEAR. ON THE NASDAQ, UP BY 1.38%. A LITTLE LATER WE WILL GET NUMBERS FROM APPLE AND AMAZON. WHEN YOU LOOK AT THE AUTOMAKERS, FORD NUMBERS DECENT AS WELL. TOM: WE CONTINUE THAT CONVERSATION ON DETROIT AUTOS WITH JOHN LAWLER, CFO OF FORD MOTOR, WHO HAS TATTOOED ON HIS BRAIN THAT YOU NEED TO BE IN A FORD F1 50 PICKUP TRUCK TO GO DOWN TO DES MOINES, IOWA. CAN YOU SELL A NEW $90,000 FULLY LOADED ELECTRIC PICKUP TRUCK ON THE EAST AND WEST COASTS OF THIS NATION? JOHN: ABSOLUTELY. IN FACT, OUR EARLY RESERVATIONS OF ORDERS ARE HIGHLY SKEWED TOWARDS CALIFORNIA AND THE EAST COAST, SO ABSOLUTELY. ONE OTHER THING TO POINT OUT, WE DO HAVE HIGH-END PICKUP TRUCKS AND THE PRICE RANGE YOU TALK ABOUT, BUT WE ALSO HAVE THE STARTING SERIES AT AROUND $40,000. SO WE HAVE MADE THIS VEHICLE AFFORDABLE FOR OUR COMMERCIAL CUSTOMERS, AS WELL AS THOSE THAT WOULD WANT TO ENTER INTO IT AT AN ENTRY-LEVEL SERIES. TOM: WHAT IS THE TORQUE ISSUE? THIS IS A LITTLE BIT ENGINEERING, AWAY FROM THE FINANCIAL SIDE OF FORD MOTOR, BUT PEOPLE ARE SAYING THIS THING CAN'T PULL LIKE THE OTHER ELECTRIC VEHICLES. HELP US WITH THAT. IS THE TORQUE THERE? JOHN: YES, THIS TRUCK IS FULLY CAPABLE. IT IS BUILT FORD TOUGH. IT HAS ALL THE CAPABILITIES YOU NEED IN A PICKUP TRUCK. IT HAS THE HORSE POWER, THE PAYLOAD, AND THE TOWING. WE FEEL CONFIDENT THIS TRUCK WILL MEET OUR CUSTOMERS' NEEDS AND WILL REPRESENT FORD TOUGH. LISA: THE LOOK NOW IS BESET BY A LOT OF SUPPLY CHAIN ISSUES WHICH WERE DEFINITELY WEIGHING ON SOME OF THE SUPPLIES YOU ARE GETTING IN TERMS OF SOME OF YOUR AUTOMOBILES IN THE FIRST QUARTER. GOING FORWARD, YOU MAINTAIN YOUR GUIDANCE EVEN THOUGH YOU HAVE SEEN PRODUCTION FALL SHORT OF WHERE YOU WERE EXPECTING. HOW CAN THAT BE? JOHN: IF YOU LOOK AT THE FIRST QUARTER, WE HAD INCREDIBLE DEMAND FOR OUR PRODUCTS, ALL OF OUR NEW PRODUCTS. THE BRONCO, BRONCO SPORT, THE NEW MAVERICK, AND OUR ELECTRIC VEHICLES. THE INCREDIBLE F-150 LIGHTNING. SO WE SEE VERY STRONG DEMAND FOR OUR PRODUCTS. IN THE FIRST QUARTER WE WERE DISRUPTED BY MODULES THAT WERE CONSTRAINED DUE TO THE CHIP CRISIS. WE RESOLVED MANY OF THOSE. WE DO SEE THE AVAILABILITY OF CHIPS IMPROVING AS WE GO THROUGH THE SECOND HALF, AND WE ARE SEEING GREAT TRACTION ON OUR FORD PLUS PLAN, AND INCREASING AND VERY HIGH DEMAND. WE SEE OUR VOLUMES OF THIS YEAR VERSUS LAST YEAR 10% TO 15%, AND THAT GIVES US CONFIDENCE IN REAFFIRMING OUR GUIDANCE FOR THE YEAR. LISA: HOW MUCH DO YOU EXPECT TO RAISE PRICES ON YOUR AUTOMOBILES THIS YEAR, GIVEN THE FACT THAT DEMAND IS STILL ROBUST AND SUPPLIES ARE STILL CONSTRAINED? JOHN: WE HAVE TAKEN PRICING THIS YEAR, AND WE ARE IN AN INFLATIONARY ENVIRONMENT. YOU WILL PROBABLY SEE IF INFLATION OR PRESSURES CONTINUE, COMMODITY PRICES CONTINUE TO INCREASE. YOU WILL SEE AN ADDITIONAL PRICE INCREASE. BUT THE OTHER THING WE ARE DOING IS WE ARE ALSO FOCUSED ON COST. IN AN INFLATIONARY ENVIRONMENT, YOU HAVE TO MANAGE BOTH ENDS, SO WE ARE LASER FOCUSED ON INCREASING PRODUCTIVITY AND DRIVING EFFICIENCIES THROUGH EVERY LINE ITEM OF OUR INCOME STATEMENT. TOM: I DON'T WANT TO GET YOU IN TROUBLE WITH YOUR GENERAL COUNSEL, BUT I'VE GOT TO ASK YOU THIS QUESTION. FULL DISCLOSURE, I GREW UP IN A FORD FAMILY. YOU EITHER HAD A FORD OR AGM, MI5 -- OR A GM, AND MY FATHER HAD THE ORIGINAL BRONCO. I'VE HAD THE HONOR OF TALKING TO BILL FORD. THE FACT IS ELON MUSK THINKS HE HAS BUILT TESLA TOUGH. HOW DOES TESLA DEAL IF YOUR FORD PICKUP, WITH THE SILVERADO AND THE 40 OTHER SUVS OUT THERE THAT HAS A HISTORY OF TOUGH? JOHN: WE'VE GOT THE ICONIC BRAND. WE HAVE F-150, THE NUMBER ONE SELLING VEHICLE IN THE U.S. WE KNOW WHAT CUSTOMERS NEED. TOM: WHAT DO THE CUSTOMERS TELL YOU -- I DON'T MEAN TO INTERRUPT. THIS IS TOO IMPORTANT. WHAT DO THE CUSTOMERS TELL YOU THEY WANT AS A PURCHASE DIFFERENTIATOR RIGHT NOW OVER TESLA? JOHN: WHEN YOU LOOK AT OUR PRODUCT, WE CONTINUE TO MAKE SURE THAT IT HAS THE CAPABILITY. IT IS A TOOL. IT HAS ALL OF THE CAPABILITIES I TALKED ABOUT EARLIER. THEY WANT THAT, PLUS THEY WANT THE AMENITIES THAT THEY GET WITH AN ELECTRIC VEHICLE THAT WE PROVIDE. CHARGING, THAT IS A TOOL. THAT IS AN ENHANCEMENT FOR THEM. THEY ARE COMING TO US AND SAYING THEY WANT TO CAPABILITIES AND THEY WANT THE BENEFITS YOU GET FROM HAVING AN EV POWERTRAIN, SO CUSTOMERS WANT THAT BENEFIT OF CLEAN EMISSIONS AND EVERYTHING ELSE YOU GET WITH EEEV, ALONG WITH NO COMPROMISES TO WHAT YOU WOULD EXPECT FROM A FORD F1 50, AND WE ARE DELIVERING THAT. JONATHAN: GREAT TO CATCH UP. THANKS FOR BEING WITH US. JOHN LAWLER, THE FORD MOTOR CFO. THE PROBLEM RIGHT NOW IS NOT WITH DEMAND SO MUCH, IT IS WITH SUPPLYING THESE VEHICLES, GETTING THEM MADE. TOM: I THINK THIS IS AN IMPORTANT POINT. I HAVE BEEN REMISS IN NOT BRINGING THIS UP. I SAW SOME BLOOMBERG DATA THIS WEEK -- I THINK LIZ ANN SONDERS BROUGHT THIS TO ME -- THE NUMBER OF DAYS FROM SHANGHAI, PACIFIC RIM OVER TO AMERICA TO DELIVER THE STUFF FROM ASIA IS STILL THE SAME UGLY NUMBER IT WAS NOT THAT LONG AGO. THE SUPPLY ISSUE HAS NOT GONE AWAY. JONATHAN: CHINA THE WEAK SPOT. THE PANDEMIC RESTRICTIONS AND THE ACCESS TO CHIPS STILL A BIG FACTOR. LISA: BUT THEY CAN OFFSET THAT WITH PRICE INCREASES. TO ME, ONE OF THE MOST NOTABLE THINGS HE SAID WAS THAT THERE STILL IS INCREDIBLY STRONG DEMAND AND THEY WILL CONTINUE TO PROBABLY RAISE PRICES THROUGHOUT THE YEAR BECAUSE OF THIS. HOW MUCH CAN THEY DO THIS BEFORE YOU GET PUSHBACK, CONSIDERING THE FACT THAT THIS IS A SUPPLY SHORTAGE, IT IS FUNDAMENTAL, AND IT IS ACROSS-THE-BOARD, AND THE ISSUES IN CHINA ARE ONLY EXACERBATED? JONATHAN: DRUMROLL, GET READY FOR A HARD LANDING. THAT IS THE VIEW FOR DEUTSCHE BANK. WE WILL CATCH UP WITH MATT LUZ ZETTI OF DEUTSCHE BANK. FIRST QUARTER GDP AND INITIAL JOBLESS CLAIMS AND A READ OF PCE AND PERSONAL CONSUMPTION. MIKE MCKEE MCKEE OF BLOOMBERG JOINING US VERY SHORTLY. YIELDS HIGHER BY THREE OR FOUR BASIS POINTS. > > LIVE FROM NEW YORK CITY, HERE IS THE PRICE ACTION ON THE S & P, UP MORE THAN 1%, ON THE NASDAQ UP 1.7. DECENT NUMBERS FROM FACEBOOK. LATER ON THIS AFTERNOON WE WILL HEAR FROM AMAZON AND APPLE. ECONOMIC DATA CROSSING THE BLOOMBERG WHICH MEANS WE CATCH UP WITH MICHAEL MCKEE. MICHAEL: BLOOMBERG'S ECONOMICS CALL THE FIRST QUARTER A POTHOLE, A RATHER DEEP ONE. THE GDP AT -1.4%. THE FORECAST CONSENSUS WAS A 1% GAIN. WE GREW AT A 6.9% RATE IN THE FOURTH QUARTER. PERSONAL CONSUMPTION IS NOT BAD, 2.7%, BUT NOT AS HIGH AS ANTICIPATED, THE 3.5% THE ECONOMIST CONSENSUS CALLED FOR. 2.5% WAS THE FOURTH QUARTER. THE GDP PRICE INDEX STILL HITS WHAT MAY BE THE HIGHEST IN SOME TIME, 8%. THE FORECAST WAS FOR 7.2%. THE FED WILL NOT WATCH THAT AS MUCH. WE GET THE MONTHLY NUMBERS. FOR THE FIRST QUARTER INFLATION IS A REAL ISSUE. ONE OTHER NUMBER NOW AND THEN I WILL DIVE INTO THE GDP FIGURES. JOBLESS CLAIMS, 180,000, SPOT ON WITH FORECAST. DOWN FROM 184,000 THE PRIOR WEEK. TOM: I LOOK AT THESE DATA AND THEY WILL BE REVISED. WHAT IS THE PRESUMED PATH OF REVISION YOU WOULD SEE ON A HEADLINE NEGATIVE STATISTIC? MICHAEL: WHAT WE HAVE SEEN IN THE PAST IS SOMETHING THAT IS A FORMER FED OFFICIAL WHO SAID WHEN A NUMBER COMES IN AS A SURPRISE IT USUALLY GETS REVISED IN THE DIRECTION OF THE SURPRISE. TOM: A GREATER NEGATIVE STATISTIC? MICHAEL: WE COULD SEE A GREATER NEGATIVE STATISTIC AND THAT WILL BE A CONCERN FOR THE FED. THE REASON THE BLOOMBERG'S ECONOMIC PEOPLE CALL IT A POTHOLE IS CONSUMER SPENDING HELD UP. I AM TAKING A LOOK AT THE NONRESIDENTIAL FIXED INVESTMENT, WHICH IS BASICALLY BUSINESS SPENDING. THAT WAS UP 7.3% AFTER A 2.7% RISE. CONSUMERS WERE SPENDING. THE BIG ISSUE IS WHAT HAPPENED WITH EXPORTS AND INVENTORIES. TOM: THAT IS THE HEAT OF THE MATTER, THE BACK END OF THE GDP QUESTION, WITH ALL OF THE CURRENCY DYNAMICS, WHEN YOU OR MATT LUZZETTI LOOK AT THIS IS A MYSTERY ON IMPORT AND EXPORT DYNAMICS, RIGHT? MICHAEL: IS NOT A MYSTERY BECAUSE WE KNOW AT LEAST A ROUGH APPROXIMATION OF THE INVENTORY NUMBERS. THOSE WILL CHANGE A LITTLE BIT BUT THEY HAVE IMPROVED THE REPORTING TIME ON THAT. THE CHANGE IN INVENTORIES, 34 POINT $5 BILLION LOWER. THAT SUBTRACTS FROM GROWTH BECAUSE INVENTORIES BUILT SO MUCH IN THE FOURTH QUARTER. TOM: MIKE MCKEE WILL DIVE INTO THESE NUMBERS AND WE WILL DIVE INTO A CONVERSATION WITH THE MOST CONTROVERSIAL CALL IN MARKET ECONOMICS. JONATHAN: LET'S GET TO MATT LUZZETTI OF DEUTSCHE BANK. EQUITIES STILL OK. YIELDS FADE A BIT. THAT INTRODUCES THE FEDERAL RESERVE CONVERSATION. YOUR REACTION TO THESE GDP NUMBERS? MATTHEW: THANKS SO MUCH FOR HAVING ME. WHEN WE LOOK AT GDP NUMBERS, IT IS ALWAYS A BACKWARD LOOKING NUMBER. THE QUESTION IS WHAT DO WE DETERMINE ABOUT THE FUTURE OF THE ECONOMY? WE KNEW THERE WOULD BE A LOT OF VOLATILITY IN THE TRADE DATA. WE HAD A RECORD NEGATIVE BALANCE YESTERDAY. WE DO RETAIL SALES WAS REVISED DOWN. CONSUMER SPENDING GROWTH, SPENDING WAS QUITE STRONG. WHEN WE STRIP IT DOWN TO PRIVATE DEMAND GROWTH, IT WAS A STRONG NUMBER. NEARLY A 4% REDUCTION OF NET EXPORTS. AT LEAST OVER THE NEXT TWO QUARTERS IT TELLS YOU THIS ECONOMY IS GROWING STRONG IN THE LABOR MARKET DATA SUGGESTS THE LABOR MARKET REMAINS STRONG. JONATHAN: YOU ARE LOOKING FOR THAT HARD LANDING, THAT RECESSION. THE END OF 2023, A RECESSION IN THE UNITED STATES OF AMERICA. HOW IS THE FED GOING TO INTERNALIZE INCOMING ECONOMIC DATA AND CONTINUE TO RAISE INTEREST RATES GIVEN WHAT YOU ARE CALLING FOR? MATTHEW: THE NATURE OF OUR CALL IS ONE IN WHICH THERE IS SIGNIFICANT UNDERLYING DEMAND IN THE ECONOMY, CERTAINLY FROM THE LABOR MARKET AND WAGE PRESSURES AND PRICE PRESSURES THAT THE FED IS FORCED TO TAKE MORE AGGRESSIVELY THAN WHAT THE MARKET HAS ANTICIPATED. WE EXPECT 350 BASIS POINT MOVES. MORE IMPORTANTLY IT IS ABOUT WHERE DOES THE TERMINAL FED FUNDS RATE GET DURING THE CYCLE AND HOW HIGH DOES IT NEED TO GET TO BECOME RESTRICTIVE ENOUGH TO GET INFLATION PRESSURES DOWN? OUR VIEW IS AS A BASELINE THE FED NEEDS TO GET ABOVE 3.5%. WE'VE BEEN VIEW RISKS IS BEING SKEWED TO THE MORE AGGRESSIVE SIDE OF THAT. INFLATION REMAINS TO THE ARE. IF WE GET FURTHER SUPPLY-SIDE SHOPS IT IS POSSIBLE THE FED HAS TO BE MORE AGGRESSIVE. IF YOU LOOK AT HOW FAR -- WE DO NOT SEE A SOFT LANDING OF THE MOST LIKELY OUTCOME. LISA: CAN YOU GIVE US A GAME OUT OF WHERE INFLATION COULD BE AT THE END OF THIS YEAR THAT WILL IMPLY US STIFF YOUR NATURE TO THE PRICE INCREASES AND A MORE AGGRESSIVE APPROACH FROM THE FED? MATTHEW: WE ARE AT 4.5% FOR CORE PCE AT THE END OF THIS YEAR. THAT IS ABOUT 40% ABOVE WHERE THE FED WAS. WE GOT A SOMEWHAT SOFTER CORE PCE NUMBER. WE HAVE TO DIG INTO THE DETAILS AND SEE WHAT THE RATES LOOK LIKE. WE DO EXPECT WE ARE NEAR THE PEAK OR AT THE PEAK FOR CORE PCE AND IT IS A QUESTION OF WHERE DO WE GO FROM HERE, HOW QUICKLY DO YOU DISSIPATE? FOR ME IT IS ABOUT OUR BASELINE IN THE MIDDLE OF NEXT YEAR WILL BE CORE PCE AROUND 3.5% AND THE FED GETS THE REAL FUNDS RATE INTO POSITIVE TERRITORY. IF INFLATION DOES NOT DISSIPATE AS MUCH AS WE EXPECT, IF IT REMAINS 4.5% OR ABOVE, WHICH IS A REALISTIC RISK SCENARIO, THAN THE FED WILL HAVE TO BE THAT MUCH MORE AGGRESSIVE TO GET THE REAL FED FUNDS RATE INTO POSITIVE TERRITORY? LISA: HOW DO YOU FACTOR IN THE IDEA THAT WE COULD GET A RECESSION IN EUROPE, WE ARE SEEING THE YEN DEPRECIATES TO SUCH A DEGREE THAT IT GIVES THE U.S. LESS OF A COMPETITIVE EDGE. THE GDP RATE WAS DRAGGED DOWN BY TRADE. HOW MUCH IS THIS A HEADWIND FOR THE ECONOMY THAT MIGHT PROVIDE A REPRIEVE FOR THE FED? MATTHEW: IS A HEADWIND, BUT NOT AS MUCH DURING THIS CYCLE AS YOU WOULD A DISSIPATE. IT IS MORE ABOUT -- AS YOU WOULD ANTICIPATE. IS MOSTLY ABOUT SERVICES SPENDING. CONSUMER SERVICES SPENDING. IT IS ABOUT GETTING TO THE VIRUS TREND ON SERVICES SPENDING. THAT IS A PART OF THE ECONOMY THAT TENDS TO BE LESS SENSITIVE TO WHAT WE SEE FROM THE DOLLAR DATA FROM GLOBAL GROWTH DATA. EVEN THOUGH YOU ARE SEEING DOWNGRADES IN CHINA, CERTAINLY DOWNGRADE RISKS OR RECESSION RISKS IN EUROPE, I THINK THE U.S. ECONOMY SHOULD REMAIN RESILIENT TO THAT. AS LONG AS THE LABOR MARKET REMAINS RESILIENT, CONSUMER SPENDING CAN CHUG ALONG. TOM: IT IS UNFAIR TO YOU AND MICHAEL MCKEE WHEN A WALL OF DATA COMES OUT. I AM LOOKING AT DOMESTIC FINAL SALES OR WHAT IS CALLED REAL FINAL SALES. THEY PLUNGED IN THE PANDEMIC, THEY PLUNGED INTO THOUSAND EIGHT, BUT THEY HAVE ROLLED OVER AGAIN. IS THAT THE NEGATIVE STATISTIC A RECESSION OR IS THAT A KNOCK ON EFFECT FOR THE PANDEMIC? MATTHEW: I THINK WHAT I WOULD BE FOCUSED ON ARE THREE COMPONENTS. IT IS CONSUMER SPENDING, WHICH GREW 2.7%, IT IS GROWTH WHICH MICHAEL -- IT IS CAP EX, WHICH MICHAEL NOTED WAS QUITE STRONG -- THOSE ARE GIVING US CLEAR EVIDENCE OF WHAT THE UNDERLYING DEMAND IS IN THE U.S. ECONOMY AND THOSE EVER MADE RESILIENT. THOSE ARE THE AREAS WHERE WE CAN SEE WEAKENING. WE HAVE ALREADY SEEN WEAKENING IN THE HOUSING DATA. MORTGAGE RATES HAVE SPIKED AND AFFORDABILITY HAS COME DOWN. WE DO SEE GOOD MOMENTUM WITHIN THE CONSUMER AND CAP EX WHICH WILL KEEP THE ECONOMY RESILIENT IN THE NEAR TERM ENFORCES THE FED INTO A NEAR AGGRESSIVE STANCE. IT IS THAT WE EXPECT TO EVENTUALLY LEAD TO A RECESSION BY AROUND THE END OF NEXT YEAR, FULLY AWARE TIMING THAT EXACTLY IS VERY DIFFICULT. THE FUNDAMENTAL VIEW IS THAT IN ORDER TO GET INFLATION TO THE FED TARGET, THE FED WILL HAVE TO BE MORE AGGRESSIVE. JONATHAN: MATT LUZZETTI OF DEUTSCHE BANK. LOOKING AHEAD TO NEXT WEEK. THANK YOU FOR ALL OF YOUR WORK. THE OPTICS GOING INTO THE FED NEXT WEEK ARE DREADFUL. CONTRACTING GDP IN THE FIRST QUARTER, INFLATION NORTH OF 8%. WE HAVE TO GO DEEPER ON THE GDP FIGURE AND TALK ABOUT THAT CONTRACTION. IT IS A BLOOMING TRADE DEFICIT, IT IS SOFTER INVENTORY GROWTH. IF YOU WANT TO READ THE UNDERLYING STORY OF THE ECONOMY DOMESTICALLY, THE CONSUMER AND BUSINESS DEMAND PICTURE IS DECENT. TOM, YOU TALKED ABOUT REAL FINAL SALES. CITIGROUP HAD THIS TO SAY. "Q1 REAL GDP MAY DECLINE ON A QUARTERLY BASIS DUE TO DRAGGED FROM TRADED INVENTORIES, HOWEVER STRONG DOMESTIC DEMAND AND STRONG IMPORTS BEHIND THE WIDENING TRADE BALANCE IS CONSISTENT WITH AN OVERHEATING ECONOMY DELIVERING INFLATION ABOVE TARGET. THEY SHOULD LEAVE THE FED ON TRACK TO RAISE POLICY RATES RAPIDLY AT THE UPCOMING MEETING." TOM: MY AMATEUR TAKE IS ANDREW HALLMAN HORST IS CORRECT. I AM TAKING THE BACK END OF THE EQUATION THAT NET EXPORTS IS DISCRETE AND SEPARATE FROM THE DEBATE ON MAY 4. JONATHAN: EASY TO LAYER ON THE BLOOM ON THE BACK OF THIS NUMBER. THE EARNINGS OF Q1 DO NOT SPEAK TO A WEAK ECONOMY. LISA: CONSUMPTION, FIXED INCOME, DOMESTIC DEMAND ALL STRONG. I KEEP GOING BACK TO HOW LONG CAN THE U.S. ECONOMY REMAIN ISOLATED? IT WAS FASCINATING WHAT MATTHEW LUZZETTI WAS SAYING THAT LONG OR POSSIBLY LONGER THAN IN THE PAST. IF THAT IS THE CASE THAT THE FED HAS TO GO AND WE SEE MORE DOLLAR STRENGTH? JONATHAN: WE WILL TALK WITH MARK EASEL OF PIMCO JOINING US AT ABOUT 9:30. DO NOT MISS THAT CONVERSATION. FUTURES UP 1.35% ON THE S & P. ON THE NASDAQ UP 1.7%. FOR OUR AUDIENCE WORLDWIDE, THIS IS BLOOMBERG SURVEILLANCE. LISA: KEEPING YOU UP WITH NEWS FROM AROUND THE WORLD. PRESIDENT BIDEN PLANS TO DELIVER A MARKS ON SUPPORT FOR UKRAINE AS HIS ADMINISTRATION LOOKS TO SEND CONGRESS A PROPOSAL FOR HUMANITARIAN AID. THE PROPOSAL WOULD INCLUDE FUNDS TO HELP REMOVE LANDMINES AND COMBAT FOOD INSECURITY. EUROPEAN COMMISSION PRESIDENT IS WARNING COMPANIES NOT TO BEND TO RUSSIA'S DEMAND TO PAY FOR GAS IN RUBLES. A DRAMATIC ESCALATION -- THAT MADE GOOD ON A THREAT IF RUBLES WERE NOT USED FOR PAYMENT. NOW ATTENTION TURNS TO HELP BAKE CONSUMERS GERMANY AND -- TO HOW GERMANY AND ITALY RESPOND. IN ONE OF ITS LAST REPORTS BEFORE ELON MUSK TAKES THE COMPANY QUIET, TWITTER REPORTED REVENUES -- THE 16% GAIN IN SALES WAS THE WORST PACE OF GROWTH IN SIX QUARTERS. MEANWHILE TWITTER REPORTED A 60% INCREASE OF DAILY ACTIVE USERS TO 229 MILLION. CATERPILLAR IS WARNING DEMAND IN CHINA WILL BE WEAKER THAN EXPECTED. THE MINING AND CONSTRUCTED GIANTS SHOWED SALES SLUMPING EVEN AS REVENUE IN NORTH AMERICA IMPROVED. CATERPILLAR EXPECTS PRICE INCREASES TO MORE THAN OFFSET RISING MANUFACTURING COSTS FOR THE YEAR. SOUTHWEST AIRLINES IS JOINING ITS RIVALS IN PREDICTING REBOUND IN DOMESTIC TRAVEL WILL CARRY OVER INTO THE SUMMER. SOUTHWEST MAINTAINED A PLAN TO RESTORE 93% OF ITS PRE-PANDEMIC FLIGHT CAPACITY. IT IS FORECASTING REVENUE WILL BE AS 12% HIGHER THAN THREE YEARS AGO. GLOBAL NEWS 24 HOURS A DAY, ON AIR AND ON QUICKTAKE BY BLOOMBERG, POWERED BY MORE THAN 2700 JOURNALISTS AND ANALYSTS IN MORE THAN 120 COUNTRIES. I AM LISA MATTEO. THIS IS BLOOMBERG. > > THE CONFLICT IS DIPPING TOWARDS UKRAINE. THERE WILL BE SETBACKS ON BOTH SIDES. BUT UKRAINE NOW HAS MORE TAX THAN RUSSIA DOES IN THE FIELD -- MORE TANKS THAN RUSSIA DOES IN THE FIELD. THIS IS REMARKABLE. TOM: TINA FORDHAM, A BLISTERING INTERVIEW YESTERDAY ON WHAT IS NECESSARY TO ASSIST UKRAINE IN THE BATTLE WITH RUSSIA. LISA ABRAMOWICZ AND TOM KEENE, WE WELCOME YOU FROM OUR STUDIOS IN NEW YORK. JOINING US IS THE MAYOR -- NOT ONLY THE MAYOR OF THE BELEAGUERED CAPITAL OF UKRAINE BUT ALSO ACCLAIMED WITH HIS BROTHER, THE PAIR OF BOXING BROTHERS IN THE WORLD WITH MANY HEAVYWEIGHT CHAMPIONS. THIS IS NOT BOXING, THIS IS NOT A SPORT. THERE IS A MEANNESS YOU FOUGHT AGAINST IN ATHLETICS FOR YEAR. YOU STATE THE MEANNESS OF VLADIMIR PUTIN WILL GO AFTER THESE ICONIC SYMBOLS OF KYIV. WHEN YOU EXPECT VLADIMIR PUTIN TO GO AFTER THOSE ACCLAIMED CHURCHES AND OTHER SANCTUARIES? MAYOR KLITSCHKO: THANK YOU FOR YOUR QUESTION. YOU CAN COMPARE THE SITUATION IN UKRAINE WITH SPORTS. IN SPORTS YOU HAVE RULES. IF YOU BREAK THE RULES YOU WILL BE DISQUALIFIED. RIGHT NOW WE SEE THE WHOLE WORLD SEES NO RULES. THE ECONOMY OF OUR COUNTRY IS DESTROYED. YOU SPEAK FOR ALL POPULATION, NOT JUST THE WHOLE COUNTRY, AND ALSO A BIG DRAMA IN UKRAINE. YOU SPEAK DRAMA FOR EVERYONE FROM 40 MILLION PEOPLE WHO LIVE IN UKRAINE. A LOT OF REFUGEES TRY TO FIND A NEW HOME. PEOPLE DO NOT HAVE A JOB. THE ECONOMY DOES NOT WORK. RIGHT NOW THE EVERYDAY PEOPLE, I HAVE TOLD MANY TIMES, THIS IS WAR. THIS IS WAR. IT IS GENOCIDE OF THE UKRAINIAN POPULATION BECAUSE OUR CITY IS DESTROYED. OTHER CITIES WERE ACTUALLY DESTROYED. LISA: VITALI KLITSCHKO, THE MAYOR OF KYIV WITH US. WE ARE GLAD TO GET A SENSE OF WHAT IS GOING ON BUT ALSO HORRIFIED BY WHAT YOU TALK ABOUT. HOW MUCH WILL IT COST TO REBUILD THE KYIV OF OLD? MAYOR KLITSCHKO: WHAT WE HAVE RIGHT NOW IS A HUGE IMPACT FOR OUR ECONOMY. A BIG PART OF PEOPLE RELOCATE TO THE SAFE PART OF THE CITY. WE HAVE MORE THAN 200 BILLION -- 200 BUILDINGS DESTROYED. TO REBUILD THE BUILDINGS IS NOT SO BIG MONEY, IT IS ROUTE 100 MILLION U.S. DOLLARS. WE ARE LOSING MONEY IN THE BUDGET IN OUR CITY. WE GUESS AROUND 1.5 BILLION U.S. DOLLARS. ALSO I TOLD YOU ABOUT THE NUMBERS RIGHT NOW. WE DO NOT KNOW HOW LONG THE WAR AND HOW MUCH THIS WILL COST IN THE NEXT COUPLE OF WEEKS, MAYBE MONTHS, MAYBE YEARS. LISA: THIS IS A DELICATE QUESTION. WE HEAR ABOUT 40% OF THE BUSINESSES IN KYIV HAVE REOPENED. HOW MANY PEOPLE DO EXPECT, WHAT PROPORTION OF PEOPLE DO YOU EXPECT NOT TO RETURN BECAUSE OF THE WAR? MAYOR KLITSCHKO: PEOPLE ARE AFRAID AND RIGHT NOW PEOPLE ASKED ME TO MEASURE OUR HOMETOWN. WE CANNOT GUARANTEE THE SAFETY IN THE CAPITAL. JUST A WEEK AGO RUSSIANS LANDED IN BUILDINGS IN OUR HOMETOWN AND FIVE CIVILIANS ARE DEAD. A LOT INJURED. 200 CITIZENS OF OUR HOMETOWN ARE DEAD AND FOUR CHILDREN. TOM: ONE FINAL QUESTION IF WE COULD. WHAT WEAPONS DO YOU NEED RIGHT NOW FOR THE ALLIES AND FROM THE UNITED STATES? IF YOU ARE AFRAID OF FURTHER MISSILE ATTACKS ON SYMBOLIC UKRAINE, WHAT IS THE MATERIAL YOU NEED NOW? MAYOR KLITSCHKO: WE HAVE TO COVER THE AIR ABOVE OUR HEADS. WE NEED HEAVY WEAPONS. DEFENSIVE WEAPONS BECAUSE WE DEFEND OUR COUNTRY. I'M NOT AN OFFICER OF THE FORCES. THAT IS WHY CANNOT GIVE YOU NAMES. WE NEED THE WEAPONS BECAUSE WE GAVE A STRONG ARMY. THAT WAY IT WILL BE NOT ENOUGH AND WE WANT TO SAY THANK YOU TO THE UNITED STATES TO SUPPORT UKRAINE. IT IS VERY IMPORTANT. TOM: THANK YOU SO MUCH FOR JOINING BLOOMBERG. VITALI KLITSCHKO, THE MAYOR OF KYIV. I WANT TO LOOK BACK AT WHAT WE ARE SEEING IN THE MARKETS. WITH A MOVE ON FIVE BASIS POINTS ON THE 10 YEAR, THE 30 YEAR BOND IS MAKING ANOTHER RUN AT 3%. NEVERTHELESS, YIELDS ARE HIGHER. LISA: I WANT TO DOVETAIL THE CONVERSATION WE STARTED THE DAY WITH WITH RESPECT TO THE YIELDS AND THAT IS THE JAPANESE YEN. HOW MUCH DOES A WEAKENING IN THE YEN LEAD TO HIGHER U.S. YIELDS? THAT IS ONE MASSIVE SOURCE OF DEMAND. THAT BECOMES COMPLICATED WHEN IT IS EXPENSIVE TO HEDGE OUT THE CURRENCY VOLATILITY AND YOU GET A LOT OF BUYERS NOT SEEING THE RISK REWARD THERE. THIS IS SOMETHING YOU HAVE TO KEEP WATCHING AND WE SEE CURRENCY DISRUPTIONS UNLIKE ANYTHING WE HAVE SEEN IN DECADES. TOM: I WOULD MENTION WE WILL GET A RESPONSE FROM THE WHITE HOUSE ON A NEGATIVE GDP STATISTIC, BUT I AM MOST CERTAIN THE RESPONSE FROM THE FORMER PRESIDENT WOULD BE THE STRONG DOLLAR IS HURTING AMERICAN EXPORTS. WHETHER THAT IS RIGHT OR WRONG IS A DEBATE OF OUR GUESTS. THIS IS A TRUMP CURRENCY MARKET AND HE WOULD NOT BE HAPPY ABOUT THIS ADVANCE IN THE DOLLAR. LISA: WE WILL HEAR ABOUT WHAT THE FED HAS TO SAY. IF YOU PEEL BACK THE LAYER'S OF THIS GDP REPORT, IT WAS A NEGATIVE PRINT. UNDERNEATH WAS A LOT OF STRENGTH IN TERMS OF DOMESTIC DEMAND. IF YOU LOOK AT THE AIRLINES AND A LOT OF THE EARNINGS WE ARE SEEING WITH A LOT OF COMPANIES ABLE TO PASS ALONG PRICE INCREASES, YOU ASKED A REALLY IMPORTANT QUESTION. AT WHAT POINT DOES A STRONG DOLLAR START TO EAT AWAY AT SOME OF THAT MOMENTUM AND AT WHAT POINT DOES THAT EXACERBATE THE WEAKNESS PEOPLE ARE EXPECTING TO SEE? TOM: EATEN AWAY IS THE WAY TO LOOK AT THIS BECAUSE IT CAN BE VERY PERNICIOUS. WE SEE CORN IS ONE EXAMPLE IN AMERICA, OFF THE RADAR. $8.22. A SPRIGHTLY EQUITY MARKET. APPLE AND AMAZON WITH OUR COMPLETE COVERAGE THIS AFTERNOON. GOOD MORNING ON BLOOMBERG RADIO AND BLOOMBERG TELEVISION.

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'Bloomberg Surveillance Simulcast' Full Show 4/28/2022

Tom Keene, Jonathan Ferro and Lisa Abramowicz have the economy and the markets "under surveillance" as they cover the latest in finance, economics and investment, and talk with the leading voices shaping the conversation around world markets. This show is simulcast worldwide on Bloomberg Television and Radio. (Source: Bloomberg)

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