tv Bloomberg Daybreak Europe Bloomberg March 30, 2022 1:00am-2:00am EDT
hackers steal $600 billion in one of the biggest. crypto heists ever. . that recessionary signal briefly flashing with the two and 10 curve invert a. it is back this morning. but the debate rages on how strong a recessionary signal this is. pimco says it may not be the most reliable one. jeffrey gundlach says. i will leave this to the pros because there are lots of sides you can take. one thing i will point out is clear divergence is, dislocations, in this market, as we fear a recession. stocks are holding up, specifically if you look at the volatility markets, we have a chart for this. you are looking at a move index of bond volatility which continues to go even higher. the blue is the vix. the vix has been in decline. bank of america warns this is a
bear market trap. that in the past when we have seen this level of dislocation which is near record, we have seen the s&p 500 fall 7% over the next seven weeks. the recommendation, sell the rally. futures dipping, so let's get your check on markets. we are looking at yields coming in by five basis points after yesterday's heavy selling that sent the yield curve into inversion. the s&p 500 futures are negative as well after we had the s&p gained more than 1% yesterday, nearly making up for all of its losses year to date. nearly the second day of gains for the yen, you are looking at a dollar about 0.8% versus the yen. finally, crude, brent higher by
0.9%. let's get to our top stories and reporters from around the world. enda curran is in hong kong covering the bond market recession risk. in warsaw, the latest on ukraine-russia talks and juliette saly is covering all the markets. the bond market flashed a key recession signal. that comes as pressure on the fed to hike rates mounts as inflation runs superhot. bill dudley says a recession is inevitable given powell's hesitancy to act. for more we are joined by our chief issue correspondent enda curran. what are the broader implications from here? >> the takeaway is that this inversion usually predates recession. it is a warning signal that we are moving from an inflation
scared to a growth scare. this is all not just about tightening, but central bank tightening all around the world. several emerging economies are tightening monetary policy to offset inflation. now that is only going to lead to slower growth and economic spillover from the russian invasion of ukraine. central banks are on a tricky path trying to navigate raising interest rates. for those who say the signal is not what it has been in the past, among them pimco, saying just because it is signaling recession does not mean one is likely. dani: now, also bill dudley wrote an opinion piece yesterday that caught quite a splash.
harsh warning of a fed policy error. what was his argument? >> he disagrees with fed chair jerome powell take on -- the fed was right to let inflation get a head of steam and he disagrees with powell's view that the fed has in the past tightened to dramatically and succeeded in a soft landing of the economy in previous cycles. the u.s. is headed to a recession. this is what is driving policy debate. there is a view that people are saying central banks are behind the curve on inflation. now they are going to jack up rates at the wrong time and will end up choking the recovery. mr. dudley making this point that the fed has made a policy error. dani: thank you. that is enda curran, our chief asia economics correspondent. now to ukraine where president
volodymyr zelenskyy says talks have given positive signs, but he is warning that russia cannot be trusted. . >> we can say the signals we hear are positive, but these signals cannot silence the explosions of russian shells. of course we are seeing the risks. we are not seeing grounds to trust the words of the country that continues fighting to destroy us. dani: what are the reactions to russia's announcement of this drastic pullback around kyiv? >> indeed. the situation is that we have seen how markets have reacted. they have reacted very positively. the reaction from officials was much more skeptical as we heard from president zelenskyy, but also from officials in the u.s. and also an advisor to zelenskyy
said we are perplexed by how markets are reacting. what president biden said -- i should not be reading too much into what has been achieved. also, mr. blinken, secretary blinken set actually there is one thing with russia says and what russia does now. what russia has said is that they will reduce military presence around kyiv. what that seems to mean more or less to military experts is that actually russia has already been pulling out some of the forces and moving them east. it is more like putting cloth on the fact they did not make much progress -- gloss on the fact they did not make much progress. the front moves to the east. obviously the situation from the talks is that what has not been
achieved, the minimum that ukraine was talking about, is some kind of cease-fire. that did not happen. also we did not have any agreement on corridors and humanitarian corridors from cities such as mariupol. still there is progress. obviously there are talks about potentially moving basically discussing meeting with zelenskyy and putin down the line, but that has to be agreed still. there is a lot of talk about that. dani: to bring you a breaking headline, ubs is pledging to repurchase -- rather it is announcing a new buyback program. it will purchase up to $6 billion of its registered shares. recall it did recently last month in february say that it
was planning on a buyback program of $5 billion. this is larger then what they previously announced. $6 billion a registered shares as they claw their way out of a pandemic environment, boosting buybacks. previously ubs boosted targets as well. let's turn to asia and markets. the boj continuing to buy debt to keep yields down. a little bit of surprise here to the extent that the boj is using this bond buying program, but it seems to work keeping yields down. >> they seem to be winning this fight in this extraordinary intervention we have seen from the bank of japan. big move down in the yield on the 30, by 10 points in the few minutes or so.
monday, yields were still staying above the boj limit. you have seen them drop amid this intervention is an the bond buying program. it has an impact on the yen. up for a second session, it has been up by as much as 1%. the greenback is holding close to those lows. the soft landing seems to be at that 120 level for the yen. we had kuroda meeting with key cheetah -- with kishida indicating that policy from the boj is not something that is reflected in the fx market. china's csi 300 having its best day in weeks.
a pullback on regulatory concerns and we have the aussie 10 year yield dropping to almost 10 basis points. quite a few sweeteners. dani: that is juliette saly giving us the latest on asia markets. at 10:00 am u.k. time we are going to have the latest data on euro area consumer confidence as well as unemployment figures. then we are going to have the crude oil inventory report. 1:00 pm is german cpi data and then we will have the latest u.s. gdp figures released at 1:30 p.m. at 3:00 p.m. in the u.k. boris johnson will appear before parliament's liaison committee where he is expected to be questioned on the war in ukraine. later week at richmond fed president thomas parkin speaking at the conference on investing
is almost impossible to avoid a recession. dani: that was bill dudley saying a recession is all but inevitable if the fed raises interest rates. the bond market is also flashing warnings of a recessionary signal. the u.s. two-year-10 year curve briefly inverted for the first time since 2019, not the only part of the curve to do so. further out parts also turned upside down. let's get into it with our guest . thank you for joining us this morning. i think we have you just perfectly, your shot is perfect. do not fret. thank you for joining the program. powell has waited too long and now it is impossible for him to navigate a soft landing. do you agree with the former new york fed president?
>> no, the u.s. will manage to have a soft landing. the fed admits they are behind the curve. they will tighten the monetary policy aggressively. we expect of 50 basis point hike. the question is, will the fed -- the fed will push the u.s. economy into recession as it tries to catch up. we think if we are looking at the other environment in the u.s., because of the very high level of debt, because of asset valuation, and because of the very specific sense, the very specific tightening cycle, now we are we tightening very late in the cycle. yes.
dani: i just want to go over one thing you said. part of the debate here is whether an inverted yield curve in itself can cause a recession. i wonder if that is true. especially if you think about what that does to bank profitability. >>'s it could take a long time, more than 20, 30 months. it is not an immediate signal that recession is coming next. and if you are looking at the curve, you see it is more the story of inflation, the story of the breaking of inflation explaining the inversion.
the real curve is not sending the same signals that we are seeing -- that we are near a recession. definitely looking at the sensitivity of the u.s. economy raising rates, it has increased. but we see that now in the u.s. economy, we have some -- because of all the support, monetary and fiscal support that has been provided during the covid crisis. balance sheets are in a good place. they have cash, maturity over the next two years is well manageable. especially in the united states. dani: we do see stocks continuing to rally. part of this argument, that corporate's are still healthy,
and bank of america saying be careful what this -- with this rally. 's is this a rally you would want to participate in or are you hesitant? >> we remain cautious. it is the time to be cautious and we continue to favor u.s. versus europe. in the u.s., inflation and the fed is tightening its monetary policy because inflation in the u.s. is the story of demand and a rise in costs. in the euro zone inflation is primarily driven by the price of energy. the ecb is tightening its monetary policy because of inflation, because of the increase in the price of energy.
i am much more confident with the near-term outlook of the u.s. economy than the one in the euro zone. i'm skeptical with the end of the qe that will come in q3. so the fact they have cash after the covid crisis with solid balance sheet, with -- and look also at the household balance sheet. household balance sheets are healthy. they have benefited from an increase in the price of financial assets. dani: let me play devils advocate when it comes to the american consumer. balance sheets might be
stronger, housing markets have gone up, but everything is more expensive. standard chartered pointing out the housing market is the most expensive since 2007. we have seen university of michigan surveys show as and more pessimistic consumers, the most since 2011. purchasing power is limited and therefore corporate stick to hit -- corporate's take a hit. >> the u.s. consumer will be impacted by the higher cost of life. the major difference you have between the u.s. and the euro zone is that in the u.s. you have a tight labor market. you have wages that are growing at the fastest pace. the euro zone is not so bad. you have a decline in the unemployment rate.
but the euro zone remains muted. you have a higher cost of living because of the spike in the price of energy. at the same time in the u.s., you have stronger labor markets. the fed wants to slow the demand , to tighten financial conditions, for demand to be better, to reduce pressure on price? will they succeed? that is the big question. dani: exactly, the multitrillion question. really appreciate you coming on the program. it's talking about the latest when it comes to inflation. now coming up, the global battle
an aussie dollar payment. it highlights the morrison government priorities as it tries to reverse an opinion poll slide with an election no later than may 21. global news, 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. dani: let's get to the top corporate stories. we have both retail and tech for you. lululemon and micron forecasting strong demand for products. with the details and what we are watching, let's bring in laura wright. it seems lululemon is overcoming supply chain issues. >> they are, and that is what we saw with nike. robust demand for athleisure. they announced a $1 billion share buyback program. a lot of the lifestyle changes we adopted over the pandemic are
here to stay. working from home, exercising outside. lululemon launched a sneaker connection -- collection earlier this year. dani: i certainly live in athleisure when i'm not at work. when it comes to micron, strong demand for chips and data centers. >> they are the largest producer of memory chips in the u.s.. they can be used in a wide variety of devices and that compensates for a flatlining in pc shipments has customers already upgraded their computer devices over the pandemic. notable headwind for micron, rolling lockdowns in china can disrupt supply chains and war in ukraine is a pinch point. that said, impressive results
for micron. dani: thank you for that round up. we will take a look at the european stocks when they open in about an hour and a half. coming up, the global battle to secure gas su if you're a small business, there are lots of choices when it comes to your internet and technology needs. but when you choose comcast business internet, you choose the largest, fastest reliable network. you choose advanced security for total peace of mind. and you choose fiber solutions with speeds up to 10 gigs to the most small businesses. that's virtually everywhere we serve. the choice is clear: make your business future ready with the network from the most innovative company. comcast business. powering possibilities™. (announcer) enough with the calorie counting, carb cutting, diet fatigue, and stress. just taking one golo release capsule with three balanced meals a day has been clinically proven to repair metabolism, optimize insulin levels, and balance the hormones that make weight loss easy.
one of the biggest crypto heist sever -- heists ever. moving into negative territory. is a recession on the way? we were just debating this earlier. it is a debate, it is a big question. as bill dudley says, it is recession on the way, because the fed has waited too long and now they won't be able to sustain a soft landing. balentine was clear and that they are more cautious on this market and specifically risk assets. it does not mean they are bearish, but this is part of the picture bank of america points to to say, maybe you should be a bit more bearish. you have the bond volatility showing stress. at the same time, the vix has been falling. this is a rare gap.
bank of america says stocks fell 7% the following six weeks. let's get your check on markets. we are looking a bond yields coming in about five basis points. some of the move unwinding. yields still elevated compared to recent history. you also have the s&p 500 down 0.2%. the big techs positive for the year. is it irrational exuberance? the boj stepping up their bond buying program. finally, calm in oil markets. brent crude of 0.7%. let's stay with the energy picture and european gas prices, which have been edging higher. investors are bracing for colder weather and a supply crunch. europe needs to rethink the role of natural gas in its energy mix.
let's get more without reporter who leads bloomberg's european gas, power, and renewable coverage. what are the main threats to energy prices at the moment? >> i think the main threat right now is the russia demanding payment in rubles. we have a deadline. putin has given the central banks a deadline for how these payments are going to happen and that deadline is tomorrow. the g7 is standing against it. at the same time, it is just turning cold, so demand is getting higher again. dani: it is easy to forget that there was still stress on this market before the war broke out because of the cold. >> europe really has to hope nothing is going to happen because the industry in europe could not run much more than a week or two without russian supply. especially the german industry will be hard-hit.
the energy intensive industry, the fertilizer producers. it would really bring down the european economy. dani: isis, thank you so much. we are watching for the best case scenario. we are joined exclusively by the -- our guest. flex lng is an lng shipping company. thank you for joining us. when you have buyers looking to move away from russia, specifically those in europe, can you quantify just how tight this market is? >> the market is extremely tight. it has been tight for a long time. it was tight even before we had this situation in ukraine. just two years ago, the price dropped below one million per btu.
even in 2012 last year, before the situation happened, we saw higher gas prices in europe. kind of the energy crisis, there was an energy crisis before this question because it was very tight before the winter. dani: sometimes i have a hard time working out in my brain what megawatts per hour means. it is interesting to hear those prices and terms of barrels of oil. russia is demanding gas payment in rubles. the german finance minister speaking to bloomberg said this is blackmail. what position does this put corporate sin? -- corporates in? >> everything in shipping is paid in dollars.
lng is paid in dollars. pipeline gas is a bit different. if the russians are demanding to be paid in rubles, it is more a political situation, i would say. dani: right, but it is something that corporate's are caught in the middle of. are you seeing at this point because prices have moved so high, what does flo look like? have you gotten to the point where you are starting to see demand destruction or is just demand and the difficulty of rerouting from russia mean that it is a pretty steady flow? >> we are seeing demand disruption. we are in a totally different picture in the flows happening in the last six months or so. back last summer, 16 went to europe. today, three out of four u.s. lng goes to europe. it has flipped from being
centered on asia to going into europe. it is a pipeline shifting all the lng they can to alleviate the energy crisis. dani: part of the reason is there is a financial incentive. you have the premium in europe over asia. do you see the lasting and how much longer will that likely last? >> you also have an energy crisis and other developing countries like pakistan. it is a global energy crisis. the lng prices are high not only in europe, but also with european prices in asia. in terms of the flows, we do see this from u.s. and the european union.
it is the pricing that is going to push. longer-term. dani: i found this agreement between the u.s. and the eu really interesting. the supply deal to cut dependence on russia. it is really left up to the corporate world, the private sector to figure this out. is this something that can be done? you mentioned the number of cargo already going to europe. can anymore be done at this point without investing a lot of time and money? >> it takes time to build lng export paths. the time has fallen quite a lot. generally, it is easier to build them in america. it takes generally three years at least to get these volumes.
what we can do in the short-term is to squeeze out as much volume out of existing capacity as possible. everybody will have an incentive to maximize exports. dani: let's get into that a bit, beyond relying on the u.s. and the short-term measures, what does europe need to do to achieve energy independence from russia? >> the biggest gas consumer in europe is germany and they don't have a single lng import, so they are fast tracking import terminals. that is in the context of the last five years. we are seeing that others in europe are doing the same.
they need to have more import terminals. what is happening is that europe is gobbling up all this lng. india and pakistan are not getting access and they are consuming more coal because that is the alternative in the short term. dani: it has been a remarkably volatile environment for lng, but as we have been talking about prices of also been very elevated. what has this meant for flex lng specifically in profitability? >> actually, short-term it has been more positive because we came from the strongest stockmarket ever in q4. in q4, the flows were mostly toward asia. u.s. volumes, that volume can go wherever it wants.
most want to asia. the energy crisis has become so severe, they are short. going from u.s. to europe, the panama canal, you have 15,000. in the short term, the market has become much weaker. on the other side, the market has become stronger. with these kinds of prices, people have become very concerned about having access. people are willing to pay up to secure ships for longer duration while the stock market has been a bit soft in the beginning of the year.
i would say the stock market shifted in terms of about a month ago. dani: great to have you on the program this morning. thank you again for joining us. let's get to the first word news with juliette saly and sing up or. -- in singapore. >> sergei lavrov has arrived. it is the first opportunity for high-level in-person discussions between the diplomatic allies since vladimir putin's invasion of ukraine. the team of technical experts could help unravel why a bow and 737 jet crashed earlier this month. the ntsb says they issued visas for its staff along with technical advisors from the u.s. aviation administration and from boeing. the jet nosedived into the ground, killing all 132 on
board. australia has handed down a series of spending measures in its latest budget. key announcements include a temporary 50% cut to fuel excise. the spending plan highlights priorities as it tries to reverse an opinion poll slide with an election due no later than may 21. uber is taking its ambitions in delivery beyond food and into retail. in an exclusive interview, the ceo compared huber's offering to the canadian e-commerce company shop of five, which helps merchants operate their digital storefronts. he says the delivery business could grow to be bigger than rides. >> i think that amazon is an incredible company and no one is ever going to replace amazon. so we can essentially use our technology, local logistics
capabilities to power the local merchant or restaurant to deliver anything within an hour, which we think is a delightful experience. >> 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. dani? dani: thank you. coming up, sanctions against russian billionaires are meant to cripple the country's ability to wage war, but not all of russia's richest are being hit. that is the subject of today's big take next. this is bloomberg. ♪
half of russia's 20 richest people have been sanctioned over the ukraine war, but four of the five top billionaires remain free to operate without legal restrictions. they are among a group of powerful russian tycoons who have so far at least escaped penalties and that is the subject of today's big take. joining us is bloomberg's senior editor whose team wrote the story. before we get into what you found, what you and your team found, let's start with the basics. white even investigate this? why look into who has been sanctioned and who hasn't been? >> good morning and thanks for having me on. it is important for so many people across government, across business, across all of our readers in many parts of the world. people need to know who they are dealing with and how they check who is on the sanctions list. after the invasion of ukraine
began, we started realizing that the united states, the european union, and the united kingdom, the main sanctions jurisdictions, were issuing these lists and wildly different formats and places and it was difficult to find one central place where we could find who had been sanctioned and by who and what that might mean. at the very beginning, we decided to try to build this, to put this together from these disparate sources and then we started to look at what we might find within that data cross-referencing it and overlaying it with what we already do with our bloomberg wealth index. dani: that being said, what did you find? >> it was pretty clear quite quickly that in the early stages of this, the united states, which had been sanctioning people quite regularly since the
annexation of crimea in 2014, had been overtaken in terms of sheer numbers by the european union, which came out and sanctioned hundreds of people from across all different -- for their links to the kremlin, members of the russian legislature, and members of russian business. the united kingdom quickly passed a piece of legislation which enabled it to sanction more people quickly and they grabbed the headlines by being the first to sanction prominent billionaires. the united states was suddenly seen as a little bit behind and only last week they did a mass sanctioning of another few hundred people. looking more closely at the top billionaires, the men who operate some of the most vital industries and businesses for russia, but also for global markets, what we found was that out of the top 20, 10 of those
20 have been subject to sanctions by one of the three jurisdictions, but that leaves 10 who have not. our reporter started looking into why 10 of those would not be sanctioned and it is impossible to be entirely sure, but what is clear is that a significant number of those men -- and they are all men -- operate in areas that are very sensitive to global markets. the richest russian man, who has not been sanctioned, and clearly does not believe he should be sanctioned, he works in the nickel industry, and that is crucial to global nickel markets and has been in your run downs very recently a very volatile sector. we have others who you can see on your graphic, the only one in the top five who has been sanctioned has been sanctioned not over his business interests
and production of raw materials, but because of his links to russian media and his investment decisions. some of our analysis said that experts who spoke to us said that there are certain reasons to go after some people. it is easier to identify links to the kremlin, links to vladimir putin. and a little harder perhaps to isolate people who have significant interests in producing oil and gas, raw materials used in vital parts of global production, such as semi conductors and other rum materials as well. dani: really, really fascinating. i love one sort of metaphor that has been made is that this is like the financial crisis, trying to figure out your ties to the some prime mortgages. great work with you and the team sorting that out seeing where the sanctions are hitting. that is bloomberg's senior editor. you can read more about this in our big take.
dani: welcome back. i'm dani burger in london. hackers have stolen $600 million in one of the biggest crypto heists to date. thieves connected to the popular online game axie infinity. the breach took place march 23, but it was only discovered yesterday. good luck to unpack, but let's do it with our asia crypto editor. office through the basics. what happened here?
>> basically, the hackers were able to exploit this bridge that is operated in conjunction with the axie infinity owners and they were able to siphon away about 173,000 ether and 25 million, so they were able to get away with one of the biggest crypto hacks today. it is an issue, these bridges, basically software that allows you to change tokens into things that can be used on other networks. so it is glue that lets crypto operate between networks, a lot of the code isn't really audited, you don't necessarily know who is managing it. clearly, there was some sort of vulnerability here and they were able to take this crypto out. dani: what does it say about a
crypto that you have these bridges, the glue that holds things together, be so vulnerable? >> it is a huge concern. this is the sort of thing that gets the attention of regulators because regulators are worried about people losing money. they are worried about enforcement of this sort of thing. it is also true that the crypto community tends to come together when something like this happens. numerous exchanges are saying they are trying to help, they are trying to work with law enforcement and get this sorted out. it is true that since blockchains are largely public, but you can see where a lot of the crypto has gone. even when people do these big hacks, they don't necessarily get away with a ton of the crypto because it can often be taken back and am way -- in some way. it will definitely get the attention of people like regulators. dani: we have certainly seen that in the past.
anna: good morning. welcome to bloomberg markets europe. i'm anna edwards in london. mark cudmore joins us from singapore to take us through all the market action this hour. the cash trade is just less than an hour away. slashing recession. the treasury curve inverts, reinforcing fears of a downturn. we get inflation prints from germany and spain today.
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