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tv   Bloomberg Daybreak Europe  Bloomberg  February 28, 2022 1:00am-2:00am EST

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dani: this is "bloomberg daybreak: europe." these are the stories that set your agenda. >> i will say frankly like always, i don't believe much in the result of this meeting, but let me try so that no citizen of ukraine has any doubt left that i as president took every chance to stop the war. dani: the ruble plunges as
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officials plan to meet at the border. stocks slump and oil surges the most since 2020 as western nations target swift and bank of russia assets with new sanctions. plus, bp moved to dump shares in an oil giant, while norway removes russian assets from the world's biggest sovereign wealth fund. happy wednesday. the tail risk has become the base case with russia amplifying , intensifying its invasion of ukraine and the west moving to isolate russia. the fear, the risk is now this is a market whose plumbing is about to freeze and the market turmoil seizing up. the ruble example phis the danger. at one point overnight, you had banks quoting as much as a 50% on the ruble. it continues to trade at significant levels against the dollar.
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at credit suisse, they say the risk is a central banks need to stand at the ready with daily swap lines. they write that exclusions from swift lead to missed payments and giant overdrafts similar to what we saw in march 2020. a banks and ability to make payments due to their exclusion from swift is the same as lehman's inability to make payments due to bank's unwillingness to send payments on heads -- on its half. in other words, this is lehman's all over again. let's get a check on the markets. it is turmoil, the fear of freezing do swift, that the financial plumbing will not work. i showed you the ruble. here are wheat prices, jumping more than 5%. brent crude above $100. euro stocks down. the euro down more than 1%, its biggest fall since march 2020.
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let's look at your u.s. assets, u.s. stocks falling as well. a little more insulation but the did the bonds, the safe haven play. the front end of the curve getting the most bids, 10 year yields down six basis points. the dollar spot, the bloomberg dollar spot is playing the haven traded through, up 6/10 of 1%. now to the story today, the weekend with more escalation in ukraine. that's get more from our reporters. we have correspondence in germany, geneva and dubai. first we begin in russia. the u.s. has significantly ratcheted up sanctions against russia over the weekend. what sort of impacts are we seeing from russia on the ground at this moment?
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looks like we might have -- go ahead. >> hello. there is a sense of panic. ordinary russians have been trying to withdraw money from atm machines. as you mentioned, the ruble is expected to collapse even more. the market opens in about an hour and it could be even worse. the biggest measure that was taken was the decision to freeze the euro and dollar reserves of the russian central bank. you could describe it as putin's war chest, the money built up over years, to withstand a situation like this. clearly russia at the moment,
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the markets will be in freefall today. dani: on the ground in ukraine, can you describe what the current situation is? it is clearly fast-moving, but what do we know so far? >> as you mentioned, there are talks due to take place between ukn and russian officials on the border with belarus. at the same time, the military campaign, the russian invasion is ongoing, a bombardment taking place in the capitol kyiv, and a second city with fighting taking place over control of that city. there is no let up in the fighting at the moment. dani: thank you. our reporter in russia. let's move over to chad thomas. in germany, we seldom significantly boost defense spending. this feels like a significant about-face from the german government and how it approaches defense spending.
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chad: this is a real seachange in germany. the chancellor yesterday in a special session of parliament, announcing germany will create a 100 billion euro fund to modernize the military. that fund will be spent this year. they also said they will boost defense spending in the coming years, boost it to more than 2% of gdp in the coming years. that is something that as a nato member they actually have been required to do but they have not been meeting those spending targets. they have been at about 1.5 gdp. this is a big seachange in germany. germany saying they need to take action now to modernize their military in the wake of this invasion of ukraine. dani: what other measures are germany planning to help ukraine? chad: germany said over the
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weekend they will send military equipment to ukraine both via third countries, and also some equipment directly themselves. this is also a big shift in german policy. germany has historically not sent military equipment into a conflict zone. this is because of germany's history in the 20th so streak -- 20th century, being the aggressor of world wars. the foreign minister said it was time for germany to step up and no one can be neutral in this conflict. dani: chad, thank you for the update. over the weekend, the eu and allies also upped sanctions on russia. >> russian banks will be excluded from the swift system. we will also ban the transactions of russia's central bank and freeze all of its assets to prevent it from
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financing putin's war. >> there are a range of steps we have as options. >> president putin's decision to pursue his aggression against ukraine is a terrible strategic mistake. which russia will pay a severe price for years to come. dani: for more, let's get to maria tadeo in geneva. watch us -- walk us through what the eu said exactly. maria: where to start? this is a mega package the european union put together over 48 hours and it tackles everything. from the military, we know they will provide facility for 150 million euros for lethal weapons, another 50 million for fuel. that on top of measures i individual countries, who know there is a heavy economic part of the package. we talked about cutting off russia from swift. there will be a certain number
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of inks -- banks specifically. the stellar measure is the central bank. yesterday, a diplomat said 50% of russia's central banks will be frozen, restricted. that is now going to be sanctioned. the other part is having to do with disinformation. russia today will be taken off the air in the european union, they are shutting down their airspace, and that includes flights owned and registered by russians. oligarchs are not going to be able to fly around the continent. and humanitarian aid, we are expecting an influx of refugees trying to flee ukraine. it has already been five days of heavy fighting in the country. the question is how could this come about so quickly? 48 hours for the european union, usually slow with decisions. one person told me it was the strength of president zelensky.
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another official told me at this point they have made a decision to resist and we have to help them. dani: there's been a lot of commentary that putin was surprised by the swift action of europe. another meeting today in geneva under the cloud of the invasion. what are we expecting? maria: look, for starters, we will see -- we are expecting on paper that sergei lavrov, the russian minister will be here and participate in the assembly. this is the first time we will see russia on the international sphere. until now, it has been short videos that are very choreographed by the kremlin. we have seen vladimir putin but only for a short time. this is the first reaction by the russians in the international sphere. remember also the pressure on figures from russia but also its main international names.
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we have seen businessmen and oligarchs affected from this. the question is what do they do from this point? do they continue to support vladimir putin openly and say the invasion was justified? the only thing i would .2 that shows how russia has been pushed into a quarter -- the only thing i would point two is showing russia has been which into a quarter is let 'er rip putin has said nato has been very aggressive toward russia. he said he might have to call in nuclear deterrence. that caught a lot of people by surprise, who said a threat like that is just crazy. dani: thank you, a great update. let's get to paul wallace in dubai, tracking the corporate impact. we learned that bp will remove a 20% stake. how much of a discount will they be taking and who can they sell to at this point? paul: those are big questions.
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we think based on what they said and what they have told us, that they could be taking a hit as as much as .5 billion dollars, including a write-down on the value on that stake in that russian company, and also what will be revealed when the first quarter results come out in may. this was a surprise. as of last week, it was not expected that bp would do this. it is one of the biggest single investments in russia from companies anywhere and it goes to show how far western powers, how far they will go to punish vladimir putin's government for the invasion of ukraine last week. on the question of who would buy it, that is an extremely tough one to answer. on the face of it, there is no one obvious. russian assets right now will be seen as toxic by just about
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anyone, especially in the west. but even beyond that, it is difficult to see anyone buying the stake. dani: to that point, we were just showing a graphic of the other western companies that have exposure to russia. another company announcing it would be exiting. is this what we can be expecting, these western energy companies en masse trying to unload assets? paul: this week we could see other western companies following bp's lead. in the oil sector, you have chevron, exxon and shell, all with pretty significant investments in russia. none of them as significant as bp's, but nonetheless, it's got to be the case they will be looking at how to deal with these assets, and maybe now they have seen what bp has done and they will go the same route and
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effectively write off those assets. dani: thank you, paul wallace in dubai. and thanks to our reporters in moscow, geneva and berlin. coming up, we continue to bring you live coverage around ukraine and we will dig into the market reaction with our guest. this is bloomberg. ♪
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>> -- thursday, to me that indicates the market will be quite risk off as we open to try and understand the intricacies about the system. >> these are not permanent measures, i believe, and that is what these sanctions are trying to achieve. >> in that regard, we are
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overweight the dollar. dani: guests on the u.s. and eu agreeing to cut off russia from the swift payment system. joining us is martin malone. great to have you. seeing a dramatic reaction in the markets, the ruble falling by some 20%, european stocks 3%, the euro down nearly 1%. as you look at the market this morning, i want your first observations on the first few hours of trading. what signs of stress are you seeing? martin: i guess we are currently in a financial crisis situation. the european union made significant changes over the weekend, as did germany, they essentially throughout the rulebook. the european union used three words -- unprecedented, historic, and "a defining
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moment." that's why any views about what markets will do, we have to be very careful. but the flight to quality is the bottom line. that means liquidity and where u.s. treasuries can trade be the most critical issue for all investors this week. dani: martin, credit suisse called this a lehman's moment, a liquidity crisis like march 2020. tings are moving so quickly you have this -- things are moving so quickly that you have this fear that things will break, especially money markets. do you see signs of that? martin: i would agree with him and i think he is spot on. for instance, the sanctions that have an unannounced go to issues we have never seen before. for instance, banning a global central bank, particularly a g20 central bank like the central
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bank of russia, from accessing its 615 -- from accessing its $650 billion of foreign change reserves, all of the banks have banned russia from liquidating the assets in their country. this basically will have very much unintended consequences, and that will deliver more flight to quality issues. the 1.5% to year yield we have today, we could easily see 1.2% or 1% before the week is out. dani: right now we are looking at a chart of funding stress on the u.s. dollar, oas swaps, the gap widening. you are looking at a huge flight to bonds, previously going into this year the playbook had been a tightening of central banks from europe to the u.s. you have your thesis going into this year before this crisis, before the war in ukraine. have you completely ripped up
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the book? martin: in a quick answer, the word is yes. simply because the shifts the g7 countries, the eu, have taken. we have to be cognizant, when you have a no-fly zone in europe, a complete freezing of all of russia's financial assets, and private sector assets, these are sort of 1998 style, 2008 style, or march 2020 style factors. it is sort of a crisis management 101 book that has to be taken out this week. dani: we will ask you to dive more into that look and how that plays out in a moment. that is martin malone, sticking with us. let's get a snapshot of the martin -- of the markets in turmoil. the ruble plunging 20%, after last week's turmoil. there was a bounce on friday, it
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increased and tougher sections out of europe, including the swift payment phasing out in russian banks. the euro also dropping 9/10 of a percent, the low of the morning. euro down 9/10 of a percent. the commodity space moving significantly. you are looking at wheat prices jumping 5%. brent crude up above $100 per barrel. yes, there are not sanctions on oil, but do the blocking of payments effectively freeze the commodity sector in russia? also looking at the pain in stocks, european stocks taking the brunt of the beating. we don't expect russian equities to open for a few hours this morning. i tried to look at the moak's website, it is frozen, not a great indicator, but we expect fx markets to open around 10:00 a.m. local time. you are looking at tech
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underperforming, falling 2.2%. it is a flight into bonds and safety. to year yields up by nearly 10 basis and the dollar stronger by 6/10 of 1%. we will stick with this topic in the fallout in terms of ukraine and markets. this is bloomberg. ♪ ♪
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dani: welcome back to "bloomberg daybreak: europe," i am dani burger in london. markets continue to selloff, the ruble continues to crash as we monitor the fallout from the invasion in ukraine. breaking lines on the u.k., the u.k. intention to take further restrictions, to have restrictive economic measures. they will target the central bank of russia and prohibit any u.k. person to deal with the russian central bank. they say they are taking these measures in concert with the u.s. and eu.
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again, targeting the central bank of russia. there is a question how much of the reserves, about 600 billion dollars of reserves in the russian central bank, they can use at this point. they are also prohibiting any citizen from transaction with the russian central bank. let's get back to our guest, martin vallone. -- martin malone. as much as an economist and observer, you are a historian of this market as well. is there any historical corollary you look back to at this moment to help give you guidance as to how to act as this unfolds? martin: i think most people would recognize the financial crisis of the lehman moment in 2008, and similarly the asian, russian and ltm crisis of 1998. and maybe the 1998 crisis is the best to use today.
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that is a sort of financial implosion of a large country like russia. it is basically being imposed on them by g7, eu, u.k., u.s. actions basically announced over the weekend. that changes the entire rulebook of how we are going to trade these markets, and we are in crisis management mode from first thing this morning. dani: how do you manage it if you have russian exposure? if you are an investor and you have russian bond holdings right now, how do you get rid of that? martin: unfortunately, you won't be able to. to transact those positions. it clearly depends on what investor type you are. what we've already seen from an example, they will park their holdings in a special unit, and those bond or equity positions will be worked off over a period
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of time. that could be this week or it could take months. dani: martin, i want to go back to the breaking headlines, the u.k. prohibiting any u.k. person from dealing with the central bank. also saying they are targeting the central bank of russia. if you look at the distribution of what they hold, about 5% of their assets related to the u.k., does this push the of russia closer to china? about 30 seconds. martin: yes. china, japan and other countries have seen significant investment by the russian central bank, away from the g7 countries over the last 10 years, since crimea. they may or may not be able to liquidate those, but the u.k. decision this morning is just running what the ecb and fed decisions meant over the weekend. dani: again, the question about how much of the currency reserves can the central bank of russia actually access. martin, thank you for joining
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us. that is martin malone. coming up, we will be speaking with a leading expert in russia's energy fund. that is next. this is bloomberg. ♪
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dani: this is "bloomberg daybreak: europe," i am dani burger and these are the stories that set your agenda. >> i will say frankly, like always, i don't believe that much in the result of this meeting, but let me try so that not a single citizen in ukraine has any doubt that i as president used every chance to stop the war, even a small one. dani: the ruble plunges as
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russian and ukrainian officials prepare to meet at the belarus border after prudent put nuclear weapons on high alert. russia targeted with new sanctions. plus, bp dumps stock in a russian company. it is concerns of a market that has gone into turmoil. this funding stress not only playing through with russia, but with swift and the russia central bank, does this sees the plumbing of the a title -- the entire market? this is the ruble. you looking at a jump of 34%. from that level, just three business days ago. this morning, a drop of 20%. i say jump -- it is the dollar jumping, versus the ruble, which
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is in freefall this morning. that's get straight to the markets, the ruble down about 22%. in the euro, stress also playing through when markets open. currently down about 9/10 of 1%. still on track for its biggest loss since march 2020. our last guest saying march 2020, a lehman's moment, he is seeing echoes of that today. the concern is the freezing of assets, does it freeze the entire financial system? we to futures higher, -- wheat futures higher, ukraine the breadbasket of europe. european stocks down 3.4%. russian equities not set to open for a few hours and we will keep you updated. s&p 500 futures also feeling the pain. how much contagion is that? the front end of the curve, martin malone pointing out that the fed might rip up the playbook and not hike this year.
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dollar your haven, up more than half a percent. get more on international reaction to the war in ukraine. maria tadeo is an geneva. -- in geneva. walk us through what has been announced by the eu thus far. maria: this is a huge package that has been agreed by the european union in 48 hours alongside the u.k. and u.s. the european package, the agreement to combat and help ukraine defend itself, includes a huge military facilitation capability. it would include 150 million euros for lethal weapons, 50 million to buy fuel for ukraine. the focus this morning, we've been doing this 30 minutes on the show, the economic aspect and sanctions from the package. we know a number of russian banks will be cut off from the swift. there was huge pressure for the
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europeans to agree to this and they have done it. we are waiting for a final list of institutions that will be hit. we have the measures taken at the russian central bank. yesterday, the 12 european diplomats said 50% of russia's central bank assets will be frozen. the reason is that operations are restricted under the package, so 50% of russia's reserves are in g7 jurisdictions. this will be a huge move. we are waiting to see the real-time market reaction this morning. dani: we just learned the u.k. is joining in as well targeting the russia central bank. you are in geneva and you and central rights -- human rights council meeting today under a cloud of invasion. what are we expecting to happen? maria: yeah, absolutely. you have seen the response from the international community, they are horrified at the brutality of the attack from russia into ukraine.
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remember on monday and tuesday especially, when vladimir putin came out and give a message, he said this will be a keys keeping operation in eastern ukraine in one region. now russia is attacking ukraine on every front. operations happening from belarus. there will be a focus today on the russian delegation. sergei lavrov is due to be here. we are keeping an eye on the international response from russia. yesterday we heard from vladimir putin saying he did not like the unfriendly economic edgers and he did not like -- economic measures and he did not like the threats from nato countries. he said in response, i call on the nuclear deterrence and will explore options. that doesn't mean he will do it, and we have to be extremely careful when we talk about nuclear weapons. yesterday, an official told me look like a bluff, but it is hard to read what vladimir putin
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is intending. one told me it is dangerous to push him into a corner. there have to be talks between everyone to de-escalate the situation and that is what we are expecting between ukraine and russia. ukrainians saying this happening without preconditions from either side. dani: thank you for keeping us updated, that is maria tadeo in geneva. it's not just government taking action. companies also getting involved and bp moving to dump shares in a russian oil giant, and norway moving russian assets from its 1.3 trillion dollars sovereign wealth fund. joining us now is our energy and commodities editor in singapore. andrew, this 20% stake from bp, put into context for us how significant it is for bp to unload this? andrew: very significant. a 20% stake in the company.
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they have not said if they will sell or walk away, but they have set it is possible they will take a $25 billion write-down. obviously pretty massive. it will come as a pretty big shock, particularly even bp a few weeks ago was staunchly defending its presence in russia. it was one of the first oil majors into russia after the collapse of the soviet union. it has the biggest presence there. it seems to have come under a lot of political pressure from the u.k. government. the ceo was summoned to a meeting with the u.k. business secretary late last week. shares up about $.15 this year, but there will obviously be a big drop when it opens later this morning. dani: bp's exposure is obviously huge, but other western energy companies also have exposure, from ecuador -- wquinor to
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exxon. are we expecting other companies to follow suit? will everybody be trying to remove exposure to russia in the oil space? andrew: we have seen equinor saying it is x what -- it is exiting. as far as other oil majors, it is hard to answer with certainty, but after bp, total probably has the most, about 5% of its cash flows. shell has a holding in an lng project. chevron and exxon have a presence in lubricants. a bank used by exxon to pay staff was one of the ones sanctions. it is hard to say with any certainty, it will depend on what kind of pressure these companies come under from their
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respective governments. dani: andrew, thank you. that is our energy and commodities editor in singapore. now joining us is stanislav mitrakhovich, eight reading expert in -- an expert on russia. thank you for joining us. this is a quickly of offing situation. in your role, you study the influence of political factors on the energy industry and you have many clients in the energy space. as we look at the oil majors contemplating offloading russian assets, what is the dilemma and issue they are currently facing? take us through the thinking of one of these companies at the moment. stanislav: hello, thank you for having me today. you mentioned some of the companies that work in russia and are in a hard position now. i can name other companies.
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one from america, with a russian lng project. also, oil services in russia. it will be hard for them to sell just because maybe there will be no time or technical possibility to do that because of the restrictions from the russian side. maybe they can do it but with a huge discount. once again, everyone knows that sanctions are a double-sided weapon. dani: this morning, russia banning foreigners from selling securities. that is partially aimed at averting a fire sale. who can even buy at this point, who can these western companies sell to realistically? stanislav: as i told you, i think it will be a very big problem, there will be no technical possibility at all to sell.
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russian companies themselves can buy at a discount. theoretically, indian companies. russian efforts, the efforts of the central bank are frozen in the western world, it means there could be a reaction from the russian side. -- could be nationalized, for example. that is an option on the table. i personally hope there will be a de-escalation in the coming weeks. i don't know, months or years. for now, i'm not thinking the selling will be even possible. dani: we are certainly hoping for de-escalation. i wonder as we look at a freezing of payments and swift, sanctions have not directly completely targeted the russian oil and gas sector, but if we
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have a freezing of payments via swift, does this indirectly stop the flow of russian oil and gas? is that a present threat at this moment? stanislav: i think the most important threat for russia in the world economy is the trade environment. it is a little different from sanctions paid -- sanctions. will and gas are not the most important things paid -- oil and gas are not the most important things. if there is a trade embargo, it will be much more difficult. let's look at iran. iran continues to sell oil even with sanctions. but it was much harder to do it when there was a trade embargo. when that was a little bit moved away -- the obama administration lifted a bunch of sanctions.
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[inaudible] dani: frequently when people talk of fortress russia, one of the things they discuss is a russia that starts to move toward china and china enabling them to continue trade, to help them prop up their fx reserves through you on -- yuan. can you walk us through that scenario, russia tapping help from the east to have healthy financial plumbing? stanislav: [inaudible] even if the most strategic -- accounts for it. when you cite russian officials talking about the central bank, they basically have information that is several months late. maybe after a few months, the reserves have changed in favor
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of yuan. that could be the case there was happening in previous months. as for trading with yuan, some companies started selling oil to china using yuan several use ago, so they -- several years ago, so they have been prepared. they tried to prepare to some extent. as prepayment systems, china is developing their own analog version of swift. there could be a kind of joining of that system with the russian system for transactions. so there will be possibilities to sell oil and gas to china even if there is an embargo from the west. and can the embargo keep going for a long period of time?
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maybe the situation could change in several months or a year. dani: really great to get your thoughts this morning. thank you for joining us. that was stanislav mitrakhovich, a leading expert at russia's energy security fund. one of the steps over the weekend was the move by western countries to cut off some russian banks from the international swift payment system, but we have been discussing. it is used for trillions of dollars of transactions around the world. for more details, we are joined by nicholas comfort, our european finance reporter. everything has been very fast-moving. it would be helpful if you just break down for us what exactly the moves have been in terms of these swift restrictions. nicholas: good morning. first of all, think of swift as the gmail of banks. it is not a payment system in the sense that money moves
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swift, but banks to swift to communicate with one another. when we say that the banks that were already sanctioned last week have now been booted off, we were saying earlier they cannot make payments via this system. from then on, it means they can -- to make these payments. if you are company trying to make payments, banks are probably overwhelmed. even if there are alternatives to the swift system, it will be very hard not just operationally to get money to move from europe to russia or the other way around. dani: when we look at some of the cut off from swift from
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russia banks, is there a possibility we see more self imposed sanctions from banks? so it goes beyond the face value of freezing out some institutions, as you say, the gmail of international payments. nicholas: that is a good point. the last time the u.s. imposed fines on banks for sanctions, it was very expensive, into the billions of dollars. the banks are still seeing that. they remember what it was like. they may say the russian business isn't worth the hassle to expose ourselves to this risk, and they might cut russia off and not business -- not do business with a series of clients. dani: thank you, that is nicholas comfort. i want to bring up russian lines
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-- breaking lines on the russia central bank, raising the rate to 20%. it had been at 9.5%. thank of russia saying external conditions have drastically changed, clearly tipping their hat at what is happening, and the bank of russia governor is set to speak at 4:00 p.m. moscow time. raising the key rate to 20%, saying the rate hike is necessary to make bank deposits attractive. a 20% hike. let's get to scott johnson from bloomberg economics. scott, lines coming fast and egg, a quickly moving situation. i want your initial thought. the key rate moving to 20%, had been 9.5%, they say this is necessary to make deposits attractive. your initial thought? scott: an extraordinary move. it shows you the significance of this event. that is a bigger hike than we saw in december 2014, one of the more recent analogues to look
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back too. it is an extraordinary action. dani: there's also the question of reserves at the central bank, what is and isn't accessible by them over this -- after this weekend. what is the read? scott: there are unknowns and important unknowns. there are potential workarounds with other countries. the broader question is not whether the central bank could run out of reserves in a situation like that, it is what is the confidence in the broader financial sector? that could be a bigger issue for them at this point. as we see this hike to 20%, it is obviously an attempt to restore confidence. dani: you mentioned some of the levers they have, the hike to 20% being one of them. what are the others? looking to other countries for fx does -- fx reserves? scott: a huge rush the cash. the ruble is plunging in
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offshore markets. when we look at their options at this point, some form of capital controls. we've seen restrictions on foreigners selling russian assets, so we could see more of that. it doesn't mean this continues as a run on the backs -- on the banks because there could be capital controls. dani: when you look at contagion risks, how are those likely to evolve? if you can look into your crystal ball, what are the wider implications from russia to the broader economy? scott: i think the main channels would be energy prices and a global risk off scenario. last week, even ahead of the latest sanctions, we were looking at three scenarios. one would be something a little like what markets priced and last week, where you see -- i think expectations were relatively brief crisis that will see energy prices stabilize. but i think we are looking more
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at the second scenario, more severe disruption. the potential for disruption to the energy market, we have already seen some signs of uncertainty oversupply, to a limited degree. in that scenario, we're looking at more inflationary pressure in europe and the u.s. that doesn't mean the economy is running off track them up but it raises the risk of a downturn in europe. for the u.s., a little more removed. we are looking at, still in the second scenario, a fed rate hike in march. more extreme scenario is more disruption to energy markets. dani: it is really a complicated proposition because so many of your inputs need to change. you have perhaps a move to change the energy sector as a whole, remove reliance, you have germany and all of europe potentially spending more on defense. how do those factors change the longer-term economic outlook for you and the team when it comes to europe?
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scott: these are really longer-term questions. that is going to be a little more slow-moving. right now, events are moving very fast as we try to get a hold on what is happening. dani: scott, great to get your immediate reactions on this. our russia economist from bloomberg economics. some lines, reportedly some russian companies will have to sell 80% of fx reserves. this is from interfax. we have heard the bank of russia has raised their key rate to 20%. we were just talking with scott johnson about how drastic of a move this is. they are raising the key rate in hopes this will increase the attractiveness of deposits. also expecting the bank of russia governor to speak at 4:00 p.m. moscow time. these are controls the bank of russia is hoping to put in place to try to stem any contagion,
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any financial distress, as we see a run to cash in russia. hike of the key rate, 20% from 9.2%. there are concerns about russian companies selling fx reserves in an attempt to shore up reserves at the central bank. a quick look at markets. the russian ruble following this morning, plunging 20%. it is off the lows we've seen this morning, falling as much as 25% this morning. that means your ruble is trading at 1.05, versus the dollar. the euro-dollar also under stress today. there are a lot of questions about what this means for the european economy. it could mean more pain for the european economy, especially as gas prices rise. i want to point out, russia introducing mandatory fx rules
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for companies. again, the impact to the ruble, ruble continuing to weaken, down 20%. the yuan little change, there are questions about it being the currency of choice to shore up reserves. 1/10 of 1% of a rise of the yuan versus the dollar this morning. brent crude continuing to move higher, that is $103 this morning. let me reiterate some breaking lines we have been seeing, russia introducing mandatory fx revenue sales for companies, off the back of the interfax line. they have to sell 80% of fx revenues. the central bank trying to shore up reserves. here is a look at the stock market. stocks continue to fall drastically, especially in europe. we don't have russian stocks yet, but european stocks down. s&p futures down.
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it is a move into bonds. yields lower by nine basis points. let's get to the bloomberg first word news. juliette saly joins us in singapore. juliette saly is not here in singapore -- i will take you through. ukrainian officials have agreed to meet with russian counterparts at the border of belarus. this hours after president putin put his country's nuclear forces on higher alerts. belarus is reported to be preparing to send troops into ukraine to help its ally moscow. the eu has agreed to send 400 50 million euros of military aid to ukraine for lethal weapons. the foreign policy chief says the package may include fighter jets for the ukrainian air force. it is the first time the european union has supplied arms to a country at war. member states that don't want to contribute lethal weapons will be able to abstain or make a
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parallel contribution of nonlethal aid. chancellor olaf scholz has announced plans for a massive boost in german defense spending. the policy shift was triggered by the invasion of ukraine, and it will see germany in -- putting funds into the military. they will be in line with the nato target that berlin has consistently failed to me. 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. let's get to your check on markets. i should say, the istanbul markets declining 1.4 -- 1.8% on open. it is this contagion concern of the economy. the wider spill over we are monitoring, not just a contagion to the economy, the financial system with much of russian assets frozen. what does this mean to oil, to
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gas, how much further doesn't move? at least a three standard deviation move in brent crude and wti, easily trading over $100 per barrel. markets continue to act in turmoil. we will keep on top of it. this is bloomberg. ♪
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anna: good morning and welcome to "bloomberg markets: europe." mark cudmore joins us from singapore to take you through all of the market action at this hour. here are your top headlines. >> i will say frankly like always, i don't believe of the result of this meeting, but let us try so there is no doubt any left that i as

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