starts now. >> the countdown is on in europe. this is "bloomberg markets: european close," with guy johnson and alix steel. ♪ guy: 30 minutes to the close, this is what the price action looks like in europe. stoxx 600 i .66%. energy stocks leading. not much reaction here in the u.k. to the political shenanigans taking place in westminster. we are expecting news from sue gray at some point that may determine the future of boris johnson. does not look like it is going to come today. brent crude the real reason why european stocks are surging today, now north of $90, $90.11, up by 2.2%. kailey: three hours to go until

we get that federal reserve decision, and equities are higher. we were up as much as 2% or more in the case of the nasdaq 100 at one point about an hour ago. right now we are down to about 1.7 6% gains. yes, it is a strong rebound. the question is, will it last after two days of incredible volatility in the equity market? lifting the tech sector today is the result we got out of microsoft, growth in its cloud business lifting that stock about 4%. we are waiting and watching to hear from jay powell and the rest of his team later on. right now, the 10 year yield right around 1.78%. you were talking about the gains for brent we are seeing today. that is true for wti, up about 2.25%, trading on an $87 handle, the highest going all the way back to 2014. guy: let's talk about what we are seeing in the markets and whether or not what we will see will end up influencing what happens with central banks.

we have already seen the bank of canada decided not to raise rates today, so here is our question of the day. is the speed of the stock market selloff, which i appreciate we are not seeing today, going to be a problem for the fed? joining us is steven englander, global head of g10 fx research at standard chartered. let's talk about what the fed is going to factor in in terms of its decision-making process. do you think the gyrations we are seeing in risk assets will see any role in that thinking process? steven: no, short answer. what is going to play a role be gyrations that would occur up to the march meeting, when the first hike is likely to come. i think it is way too early for them to signal that the turbulence we have seen the last few days is going to be a factor for what they do on the much longer term horizon. kailey: so what do you expect

them to signal today? how far do you think powell will go? steven: i don't think he's going to go quite as far as the hawks in the market. i think he's going to say they will be as hawkish as they have to be in order to get inflation down, but as of right now, they don't expect that they have to be alter hawkish. think there is still going to be a tendency for lower inflation this year, and that a combination of moderate rate hikes and moderate balance sheets will do the trick. right now i think the market is positioned for a more hawkish set of commentary from the fed, so today it might come across as being somewhat dovish. guy: how should we sing about the relationship between rate hikes and balance sheet runoff? you postulate that maybe the fed could deliver runoff earlier, and therefore deliver less when

it comes to rate hikes. how do we do the maths and comparing those to options? how do we think about balance sheet runoff in comparison with fed rate hikes? steven: the math is really hard, and in some ways i think the bet would be they would judge on a real-time basis exactly whether they are getting the right combination that they want. but i would say that the amazing consensus between somewhat hawkish and somewhat dovish, the hawks are involved in what could be considered backdoor deficits from the balance sheets. the doves kind of think if we treat the balance sheet, maybe we don't have to hike what is aggressively. so i think there may be more emphasis on the balance sheets

shrinkage. how much is very hard to tell, and there is a big difference between it may have an impact on the short-term, but we know that there's $1 trillion to $1.5 trillion of fed balance sheet that's being given back to the fed every day, so i would not overestimate the impact there. kailey: what would that short-term impact look like if we were to start to see that telegraphed at today's meeting? steven: i think it is hawkish probably on the first announcement because they will not say anything about rates. if it turns out that they see a trade-off, and if powell says there might be a trade-off between the balance sheet and the pace of fed funds hiking, i think it will quickly turn out to be dovish. i think the market would be very comfortable with that. guy: what impact does the balance sheet runoff have on

inflation, and how quickly does balance sheet runoff impact inflation in the economy vis-a-vis rate hikes? steven: those are hard questions, partly because we are dealing with the supply shock, so being hawkish isn't going to fix the supply shock and get inflation down particularly quickly, and being dovish isn't going to. i think over time, everyone on the fed, including the hawks, kind of hope that inflation comes down on its own, but we are past the big income surge, and now real disposable income is below the 2011-2019 trend for the first time in a long time, and they hope that supply comes back online, but i think they are kind of counting on that. larry summers implied recently that if you want to get to do

percent and guarantee that you get to 2% over the next year, you are probably going to need a higher on them meant right than they are willing to tolerate, and i don't think they are willing to slow the economy that aggressively unless it is absolutely necessary. kailey: i am sure that is part of the reason why you think the fed will only hike twice this year, which is an out of consensus view. when we think about the market obligations of the fed hiking, however many times they do it, you say not all hiking cycles result in a stronger dollar. is this going to be one of those cycles that doesn't? steven: it could well be because of something kind of external, largely external to the hiking, which is that for a long time, u.s. equities were vulnerable to the rest of the world. what we sign 1994 when u.s. equities seemed flat, what we saw with them underperforming,

what we saw from 2017 into 2018 was them underperforming, the higher u.s. interest rates was not about to get the dollar going up. the dollar fell. so i think that the question of capital inflow really matters, and the u.s. equity outperformance has been a big factor, but kind of in the background. guy: how should we said about the other side of the pairs and think about that? europe faces a number of challenges at the moment. we still kind of don't know what is going to happen with ukraine, what is going to happen with gas prices. we don't have the same sort of growth trajectory in europe as we have in the united states. ultimately, we've got political tensions to factoring as well. when you think about it from the other side of the fence and you think about some of the major pairs, how much of a factor are all of the things i have just laid out going to be as part of

how you think of the dollar? steven: we think the main winners are going to be commodity currencies and em, and that is kind of the way it is playing out of the last couple of months. be dxy has been weaker largely as a function of euro weakness and yen weakness. but i think in europe in particular, it is not going to go anywhere until you see some sign that the ecb is admitting or recognizing that inflation may not -- as fast. given that rates have been negative for so long, a lot of investors don't touch negative interest rates. if there's any sign those rates are going to shift into positive territory, there is a colossal european asset short that can be built. we had a forecast of 1.21 for

the end of the year based on expectations improving that the ecb is going to start normalizing at the end of this or next year. kailey: steven englander of standard chartered, appreciate your insight today. steve was just talking about commodities and currencies. we do need to check on the russian ruble, weaker against the dollar now by about 1.7%, trading right around $80, which is its weakest level against the greenback going back to november 2020, as we see escalating tensions on the russia-ukraine issue. it is not just you political turmoil we are paying attention to. also domestic turmoil in politics in europe. italy is having trouble electing a president, and british prime minister boris johnson is again refusing to quit over allegations of group breaking parties. we will have the details on those stories next. this is bloomberg. ♪ ♪

kailey: italian lawmakers have not been able to elect a president for the third day in a row. most of the voting has been leaving their ballots blank. francine lacqua is in rome to help us sort all of this out. how long are we going to have to keep you out there on the terrace in rome? francine: i know, it is a very tough assignment. i hope they find a president very soon. it could take a couple more days. we could see a consensus candidate emerge tomorrow. today, we knew they would vote blank because there's parallel negotiations. it is a little bit like the market place. you have many parties, like

other countries in europe. you have about 12 parties that actually matter, and they are all trying to haggle. they say if we have draghi as president, who is prime minister? it is very secretive, i am sure very interesting, conversations going down in the corridors of power behind me. we are trying to get access to senators to say which way they are thinking. it is very difficult to know. mario draghi is still the front mining -- the frontrunner just about, but the problem is you have stability on the presidential front for seven years, but what happens to the actual government with the prime minister? can they find a candidate to replace him, or do they have to go to early election? guy: if it is not draghi, what does draghi do? there's a kind of worst scenario here for the markets that draghi does not get it, and is

therefore probably going to leave as prime minister as well. francine: this is the worst scenario for the markets because you don't have that stabilizing hand. mario draghi, very straight talking, very intent on putting through reforms to make sure they get access to eu funds. this is a probably if you speak to a lot of centers who say maybe there's a 15% chance that this would happen, but the thinking is that actually, if they put someone else in the presidential role, the prime minister remains mario draghi and tries to continue pushing through his reforms. but with every month that passes , because we won't see elections possibly until 2023, he will have a much harder time getting these political factions to follow what he wants to do. for the moment it is pretty plain sailing. it is not an easy job, but they have been doing what he wanted. as soon as you start talking about elections, it is up to the political parties to say i don't want this because this is why

you should elect me, so herd ing the cats is going to be difficult for mario draghi as prime minister or the next one. guy: vtb buns -- btp bunds widening out a bit. bloomberg's francine lacqua in rome. here in the u.k., prime minster boris johnson has again refused to step down over the controversy involving parties at downing street during lockdown. lawmakers are now waiting for to reports from two investigations into the matter. one being conducted by civil service, the other being conducted by the metropolitan police. joining us now is bloomberg's david merritt. i came into work this morning, there was speculation that the sue gray report might be released today. what do we know on timing? david: we all woke up this morning thinking we might

finally get this report. it has still not emerged, and a lot of confusion about exacting when this thing is going to appear. it does seem that it is complete, so we may well get it this evening. some reports that the speaker has said mr. johnson could come to parliament to make a statement about it, they will clear the agenda later today. so we may get our eyes on it tonight. if not, it is going to have to be tomorrow at this point. . kailey: is it the sue gray report that rebels within the tory party are likely to react to, or are they now going to wait for the results of the police investigation? david: i think we will have to wait and see what is in this report, but we are already getting clues as to how mr. johnson will handle it. he very forcefully batted away any suggestion that he might resign, and his allies rallying around the line they are taking, that you are getting this all out of proportion. he had a slice of cake with a colleague. look at the bigger picture, what is going on in the world. there are all of these security threats, conflict with russia looming.

why are we getting bogged down by these details, so trying to belittle it as a misdemeanor, if you like. but people who aid big sacrifices at the time don't see it that way, and i think the key is going to be how many of the constituencies of these mps, if the public and timmy with the level of anger they have had and make that known to their mps, whether or not that is going to be enough for them to turn on this prime minister and force him from office. but this is certainly not going to walk out of number 10 downing street without being forced. guy: politicians talk about events being what ultimately end up guiding them. there are a series of events taking place that could end up influencing boris johnson's trajectory here. it is ultimately his strategy at the moment to play for time and hope that something else, as he was almost adjusting today, comes onto the horizon? david: that is certainly his strategy. he was batting back every

question from the leader of the opposition, trying to trap him to admit he had lied to parliament throughout this process, and he's going to be betting that the longer time goes on, the public are going to get bored with this issue. we are emerging from the pandemic here in britain. all of the restrictions were finally rolled back in england today. the people back in the office, back at work. the economy picking up again. is going to be betting if he can just stall for time a little bit longer, people's attention span is going to move on, and he's going to get away with this and be able to kind of point to the future. it is a big gamble because the level of anger in the party and the country is very high, but mr. johnson has got out of big scrapes before. he's not a normal politician. kailey: thank you so much to bloomberg's david merritt. coming up, one of europe's big discount airlines is counting on a big summer to help offset the misery of the past two years. we will hear from the ceo of wizz air next. this is bloomberg. ♪

♪ guy: airline stocks higher in europe today. wizz air looking at european operations for planes and staff in terms of its plans to boost capacity here in the u.k. growing optimism certainly in the industry that test free travel, but is starting to come back in the u.k., increasingly

on the continent as well, will have a significant impact on demand by summer. bloomberg spoke with wizz air's ceo and cofounder. >> more importantly, when you look at the next few months, we will be in a market that omicron and the whole covid crisis might have been behind us by that time. so we are very upbeat and optimistic, and we look at the future and what the next few months can bring to the market. we are growing capacity, looking at operating kits percent higher earnings capacity in summer 2022 compared to 2019. we have 40% more employees than eight months ago. so we are clearly investing into markets, and to people, to make sure that we are coming out of

the covid crisis, and we see that going into spring and summer, we see a lot better market to get into. >> we have seen that the u.k. government has changed its regulations for vaccinated travelers, reducing the need for testing. how much are you seeing that across european markets, across the market that you operate in? how quickly our testing requirements being dropped? >> i think the u.k. example is very interesting because broadly , -- [indiscernible] governments are relaxing the operating environment in this context. we immediately saw the reaction of the market. we are seeing a lot more bookings coming. we are reviewing our plans for whether or not this would be upping our pacitti, and we are

looking more as a result of the u.k.. continental europe is likely a few weeks behind the u.k., but i would be expecting a similar event once that curve is measured in europe, so governments will take away some of the restrictions, some of the testing requirements. obviously testing exposes the consumer. it is very important that the market becomes free for people, especially if people are responsible and fully vaccinated. kailey: that was the wizz air ceo, which became the first major european character to return to pre-covid capacity in august, but it has warned that the winter months would require price cuts to increase sales. via sleepy winter months, especially december and early january, were tougher airlines not just in europe, but the u.s. as well, but it seems to be the consensus on both sides of the atlantic was that was relatively short-lived in terms of the

impact, and it is looking like brighter skies ahead, especially because guy johnson has two and a half years of vacations he needs to take, so you are probably going to be buying a lot of plane tickets. guy: we are already starting to do that. it will be interesting. it is certainly busy. other people are trying to get away. a lot of people did not get away at christmas. now they are trying to get away at the end of february. there's a lot of pent-up demand. a lot of people have a lot of credit built up with the airlines that they will look to take advantage of. but i think the real question is actually less around the short-haul, more about what is going to happen with long haul. are people going to be going on long-haul holiday? will we see that sick can we pick up? air -- significantly pickup? airlines trading higher. the close is next. this is bloomberg. ♪

guy: the sea of green across the continent led by energy. the london market is outperforming relative to its peer group on the continent. today in underperformer. the dax is up 2.2%, the cac 40 up 2.1%. lvmh later on this week. the story is the action we have seen over the last few days. europe has not been immune to that. we are still down over the last five days by 2.8%. while we track higher we have not unwound volatility of earlier on this week. in terms of what we are looking at today, let's break it down. let's try to get an idea of what is happening. brent crude over $90 a barrel is having an impact on the energy sector, up over 4% today.

big names like total and bp adding to the upside. we are also seeing some of the airlines climbing back. today the u.k. is reducing its restrictions in terms of reentry into the u.k.. the expectation is others will follow on the continent. travel will become easier. basic resources are doing relatively well. you are noticing the grocery sector underperforming. health care as well. that is maybe one of the reasons london is underperforming. i mentioned what was going on with wiz. iag up strongly. this is the owner of british airways tracking strongly today on the easing of those restrictions come up 7.43%. then you get onto seb, manufacturer of cooking appliances. a strong name in terms of the

portfolio. i saw one analyst comment earlier that maybe this is a crisis proof stock. i wonder what the consumer will be doing. seb trading up strongly by 6.4%. total, the sector is performing strongly, up over 4%. total of 4%. kailey: a great look at that trio of upside movers. there been a lot in europe. only 68 stock in the stoxx 600 are lower. let's get more on the market moves. richie aberdeen joins us. did you find an entry point? ben: i think we found an entry point some time ago and it has been a tough start to the year. we'd like to see continued volatility as the market digests the shift we are seeing the

short end of the interest rate curve in the united states. guy: what is your expectation? ben: i think we are likely to see volatility continue. i do not think we will see rotation that we have seen over the last three or four weeks but we will see investors work out the direction of interest rates. i think even if we get the short end rates, markets, equities of all different types can live without and perform quite well over the medium to long-term. kailey: you said this rotation has been extreme. is this one that is going to stick? ben: i think it comes back down to fundamentals. you have to look at the performance of banks, oils, these are companies backed by improving earnings performance. the environment for banks looks pretty good from a capital market perspective.

things like the oil sector, energy prices are very high. you are seeing upon the mental support to that. it is not always necessarily been the case. i think there is more legs to the value side of the market. on the other cited that the earnings potential for the growth side of the market also looks good. we may see a more balanced performance from here. guy: what are the risks for the european growth story? we have ukraine, we are thinking of energy prices going higher. we do not know what the ecb will do. many are talking about the idea we could see a ship there. where are the risks in europe? ben: is perhaps about an accelerated reduction of financial support for the economy. will we see a tightening of monetary policy? i think it is more about the growth. that is the area where europe has been the achilles heel. china has been week, emerging

markets have been week. if we see that that is likely the area. kailey: is china the biggest risk factor because of its covid zero policy? ben: i think china is a big driver for european equities and european corporate. significant weakness be relatively unhelpful for europe compared to the united states. that is definitely a risk. i'm not sure if the zero covid policy is the thing. i suspect we will see that these over time -- see that ease over time. i would say emerging markets are risk to the european story but china is doing ok and corporate's are not doing too badly. guy: i we think about russia in the context of what you just said? a bunch of italian ceos from largely industrial companies had a conference call with vladimir putin. russia is important to a lot of european industrialists.

you think about names like volkswagen. if there is a problem, how will that be reflected in european stocks? if energy prices go up, how quickly will that be reflected? ben: is a question of sentiment. ukraine is as much about what might happen in terms of nerves around eastern europe. it is getting close where a amount of logistics important for european production. that will be of concern. energy will be a mixed bag. initially we will see oil prices go up but we will likely see demand fall as demand spreads. people are little bit complacent on ukraine. there is a consensus nothing will probably happens, but i do not think we have seen what it is vladimir putin wants to achieve and we will find that out over the next couple of weeks. kailey: when we talk about the implications of more conflict in ukraine, a lot of the conflict

has been focused on the inflationary impact. i wonder how that could bleed through into your world when you think about margin pressure? ben: companies are having to work hard to maintain margins. they're having to be active on pricing and were harder their costs and push past -- push back on their suppliers. an inflationary environment is much better than a deflationary one. if you're in a position where your fortune enough to build up your prices of fast then your input costs are coming in, that is a pretty good place to be in. last year we saw a real expansion in the european margins and the prospect this year to not look too bad. it can be positive for a lot of companies as well. guy: we talked to steven englander earlier on and he was talking about his year end target for euro-dollar being 1.21. we are at 1.12 right now.

what are you plugging it in terms of valuations, and if we were to see us -- a significant appreciation of the euro, how would that change it? ben: the euro is negative overall for european equities given half of the revenues are coming from outside of europe. right now it reflects europe's economic performance. lackluster relative to everybody else. i think forecasting currency rates is not something i would profess to have a great deal of expertise. we expect there to be significant deviation around that? i do not think it will be the key thing for us. kailey: looking more specifically within europe, we were just talking with francine lacqua who is in rome for the presidential election in italy which is now past, we still do not know who the president will be, how would you factor that into italian equities? ben: italian equities are great

example of europe in a microcosm. at the end of the date there companies in italy that have been able to perform phenomenally well over the last decades despite political instability and low economic growth because they are down into attractive markets. it could be luxury goods come it could be hearing aids. we try to look through that and focus on the companies that are used to dealing with the political instability in that market. it is something to keep an eye on. it might create volatility. we are not particular concerned about the impact of italian politics on italian equities. guy: end of 2022, european stocks higher or lower from where we are now? ben: i think it will be a year like we saw last year. there'll be quarters where some type of companies are doing well, other types are falling. the earnings outlook is looking ok and i feel confident. it has been an interesting period. having been through a

performance a relative basis -- it is gluing those two things together. i think companies will deliver good returns this year. guy: great to see you here at bloomberg in the office in person. thank you very much. the rules are being eased. hopefully we'll be able to replicate this with many more people. ben ritchie, thank you very much indeed. these are the final numbers in europe. a very positive day. underperformance through the ftse 100, but outperforming relatively over the last few days. up 1.3%, but on the continent the dax up 2.2%. the cac 40 up 2.1%. lvmh is reporting tomorrow night. we look forward to that news. a meaningful event for the cac 40. carry on the coverage at the top of the hour. the table taking to the air on dab digital radio at 12:00 in new york.

if you cannot get dab digital radio you will find the podcast on spotify and apple. kailey: looking forward to the cable later but before we get to that we need to talk about geopolitics. russia threatening retaliation if the u.s. and its allies reject security plans over nato and ukraine. we will talk about what is next with european union's former ambassador to russia. this is bloomberg. ♪

ritika: this is european close. you're lucky you live shot of the principal room. coming up, the firm founder and ceo joining bloomberg technology at 5:00 p.m. eastern time. this is bloomberg. guy: president biden says he would consider personally sanctioning vladimir putin if the russian leader ordered an

invasion of ukraine. other penalties could include a crackdown on high-tech exports to russia. we spoke earlier in this program with u.s. commerce secretary gina raimondo. sec. raimondo: the president has been very clear that the united states is preparing a range of severe economic measures to impose on russia if it further invades ukraine. i will say it is not weaponizing semiconductors. the fact of the matter is semiconductors are a vital component of every piece of technology, including military equipment. vygaudas usackas is a form -- guy: vygaudas usackas is a former eu ambassador to russia. he joins us to talk about his perception of the situation. let's talk about what is happening. within the last hour the u.s. embassy in ukraine on its

website has started to urge all americans in ukraine to consider the harding now -- consider departing now. the u.s. ambassador has arrived at the russian foreign ministry in moscow. what is your read of the situation? how should we assess what we are seeing on the ground and what is developing now? vygaudas: under normal circumstances that would send a very powerful, worrisome message that imminent conventional war is about to start. from my professional reading, i redo that more as action to preserve united states to rally support from europeans with a view to preempt any potential aggressive actions from russia vis-a-vis ukraine. kailey: talking about that united support from europeans we

understand from bloomberg reporting that germany is looking for an energy exemption and any financial related sanctions. how hard is it going to be to coalesce around a sanctions package giving how much closely europe is tied to russia? vygaudas: that is exactly of vulnerability and a weakness which the kremlin has been successful to manipulate and wedge between different interest groups. energy is the biggest alliance sector for russia, especially vis-a-vis germany. the fact that nord stream 2 continues to be constructed and soon to be operational is indeed scandalous when it comes to the lack of consistency with european union policies, especially when it comes from berlin. guy: is not just germany. any perceived germany is the

weak link. today we saw a group of italian ceos from very large companies ignoring a warning from rome from mario draghi and going ahead with a conference call from vladimir putin. what kind of signal does that send? vygaudas: covering business investment news from bloomberg, you know investors and businesses, they make their own risk assessments and undertake their own -- russia is not china in terms of the largest market in the world, but russia is still an attractive market for many europeans. also american companies. businesses assess the risk to move forward, but that will be more volatile than before. kailey: russia is not china, but at the same time they are pushing similar boundaries from

in that china has an issue with taiwan and the south china sea. with russia it is ukraine. what are these western adversaries seeing that would indicate now is the right time to be pushing these boundaries? vygaudas: when it comes to russia in particular, what matters is we do not sound alarmist. we take the signals seriously and we try to respond in a hybrid way to deal with what the kremlin started in 2014. i do not believe a conventional war is at stake. i think it is more about negotiation tactics and a robust and provocative way, which will require the west to be united, but also sending reassurance message to the balkans by

stationing more troops and renewing commitments with nato and georgia over nato membership. maybe inviting suite it and more finland were actively considering nato membership. at the same time we have to be innovative and reached out beyond vladimir putin to the russian people that they would see open to a different russia, one with the rule of law and democracy and freedom. guy: do you trust the french president not to do a deal that is not in the interest of the baltic countries, central and eastern european countries? there is a fear i keep hearing being voiced that the french are going to try and go over everybody's head and do a deal, which does not satisfy deal with the fears many of these countries have vis-a-vis russia? vygaudas: my family history has

undergone soviet occupation and importation to save areas. trust but verify. i am sure emmanuel macron understands and takes responsibilities as one of the great european leaders pushing the strength of europe that if europe does not stand shoulder to shoulder to other europeans, the european union or france, europe will never play a role or be seriously considered. we need to have boots on the ground and defense spending. we need to invest in the defense industry to have a more equal role and being more reliable and stronger partners with united states. kailey: thank you so much for giving us your time and insight. that is vygaudas usackas, former eu ambassador to russia. we are waiting and watching for

the federal reserve signals. just about two hours to go. ahead of that we are looking at markets in the green. up about 2% on the nasdaq. buying of the dip after yesterday's losses. 1.78 on the 10 year. we are dancing around a 90 handle on brent crude. stay with us. this is bloomberg. ♪

kailey: investors are awaiting the fed decision in about two hours. michael mckee is thinking up the question he will ask jerome powell in his press conference. for we get there he will give us a rundown. michael: you say everybody is watching, jay powell, we turn our lonely eyes to you. no change in the target. that has been the market you for

weeks. they will say something about being close to or at maximum employment. they had to do that and get price stability. they have gone way over the price action. rate increase will be appropriate soon. some language like that in the statement. then they will talk about the tapering continuing as scheduled. they will not cut it off early and not say much about when they return to the balance sheet in terms of monetary policy. that still leaves people on wall street with a lot of questions about what is going to be happening this afternoon it will be put to this man. probably march, but how far and how fast big key questions. maybe later in the year. we are not looking up employment and prices right now. what are the things that are going to make the fed move? what to they want to see going forward. the other question is how do markets react?

the big question will not be the equity markets. we have been talking about that all week in terms of volatility. it will be the bond market spread to see if they are going to move. right now they are very compressed compared to what we have seen in the past. at this point it does not look like the markets are going to influence the fed. we'll see if the fed influences the markets. guy: the only question we are looking for is what you will be asking. michael mckee, thank you ray much indeed. great coverage coming up. really looking forward to that. great coverage between now and then. tomorrow will be a busy day. the earnings story continues as well. this is bloomberg. ♪

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joe: from bloomberg world headquarters in new york to our tv and radio audiences

worldwide, welcome to balance of power. i am joe mathieu in for david westin. just hearing reports at this hour that supreme court justice is set to retire. more on this as we learn more throughout the day. uncertainty is the word today from the russia-ukraine standoff to the situation with the federal reserve as we wait for word from policymakers front and center. we will tackle both of these stories as investors count to a rate decision in news conference from jay powell this afternoon. the fed expected to signal a march rate hike lived off. for more we are joined by tiffany wilding, pimco north america economist. i would like to hear what your expectations are today. we are hearing talk of a potential 50 basis point hike as soon as march. you expect jay powell will signal that and what will the reaction be? tiffany: thanks for having me