warning signals that economic growth will slow. let's look at futures, the inverted yield curve happened last tuesday. after the good employment report on friday, maybe the story is a little different. still we are getting risk off after afraid -- after a strong session in china. this is barred by the fact that there has been pressure on chinese stocks to delist from the u.s. but now the audit is open and the u.s. could have a look at these companies and there is less of a risk of delisting. it is giving a lift to equities here, the etsy gaining .4%, the ibex gaining .3%. the fca is looking at what

happened at the lme. we had a great story looking at the inverted yield curve. it is harder to ignore than it was last tuesday. italy at 2.56 for the 30-year. if you look at spain, [indiscernible] across assets if you distill some of the stories, the hang seng thanks to that audit measure from china gaining. the u.s. 10-year yield is up. brent at $105, and gas features gaining 2.5%. this has been one of the main stories in the u.k. because we are not as dependent on russian gas, but with the wholesale price you saw on friday gas prices go up by 54%. let's get to our mliv managing

editor mark cudmore, you are looking at covid data? mark: good morning, francine. the news out of china continues to be negative. people are concerned not just on the human situation but what that means for markets and the supply chain. i want to provide some good news on the covid front. this is a chart of the seven day moving average of global covid deaths the last couple years since the start of the pandemic. finally over the weekend we reached a good milestone. we finally got back to the level as of yesterday march, 2020. we are below the level we have seen at any point during that period, i.e., the fewest deaths over the past week than in any week during the last two years since march 2020. it shows what investors are

right to look at the covid situation because vaccines are working overall. francine: our mark cudmore, we will see whether those figures translate into a change in policy. karim chedid let's get into market drivers with kristine aquino our editor and karim chedid from blackrock. we saw the session in china filtering through into european stocks. kristine: what's powering the rally particularly in chinese tech shares which were at the center of this audit issue and we are seeing a flow through to the early european equity session. the broader context in china is we are seeing covid and choose

-- issues and potential lockdowns continuing. but the reality is in terms of that situation on the covid front it is looking controlled. particularly on the death front. if you look at the context of the market that is ready for some good news, it looks like this is being received positively by investors. francine: it does seem that the market has not priced in the bad news. i don't know whether they are just looking for some returns. if you are fully invested, where you go if not stocks? kar: there is not much priced in terms of the geopolitical risks from february. we are looking at areas like quality stocks that are looking

attractive. we have earnings season next week and we will see that pete behind us. -- peek behind us. we will see slowdowns and you want to see names that can defend. we are seeing demand in inflation hedging. inflation sensitive sectors and so on. francine: the inverted yield curve, and the unemployment figure on friday as well. kristine: questions around the yield curve continuing and really shows how markets are thinking about this and how it is evolving on the round -- ground. the jobs data is driving home the point that the federal reserve will be tightening. there is a feeling that

investors are really starting to think about inflation hedges. on the equity side, they are looking at sectors that would be good for that. also on the bond market side, there is the feeling that they are to levels where investors could get something once again out of bonds. imagine that, francine. francine: most traders do not remember when you could get a return on sovereign bonds. karim, if you look at oil, is there some point where the price of oil will [indiscernible] and what does that do for etf's? karim: we are seeing inflation from a couple of areas. we talked about the jobs number on friday, you can see that wage inflation is coming through. that has been a strong indicator for further inflationary signals. but with oil and growth

commodity seeing prices higher, what does it mean for etfs? we are seeing significant demand to grow commodity exposure and darfur five. that diversify. this will not abate anytime soon, and we are seeing demand pickup in gold. march was a record month for gold etf flows. francine: is gold still a good hedge? karim: it is good when you about its diversification and safe haven properties. it tends to do well when geopolitical risk is high, and also in high inflationary regimes. it has properties because it is physicals that other assets do not. it is not good in all inflationary regimes, but it is

good in high inflation. francine: how do you see the oil story in china playing out? kristine: initially, the prices were propped up by the geopolitical risk that was playing out in the russia and ukraine war. there was that initial spike. but now it is more for the state of demand. particularly when you take into account what is happening in china. those lockdowns bringing into question how demand is going to look especially heading into the crucial summer months. and when we see the kind of potential, demand destruction or at the very least impairment, especially given the run-up of the past month or so, it seems like the path of resistance is lower in the oil price for sure. francine: kristine aquino joining us, and staying with us is karim chedid.

news out of starbucks, the founder howard schultz took over as the chief executive. starbucks has also just announced it is suspending its stock buyback program effective immediately. i imagine it is the founder of saying we will stop to take a look at it. this is bloomberg. ♪

francine: welcome back to the open. 11 minutes into the european trading day. we are not holding onto gains. the dax has had a reversal down .2%, the cac 40 down .2% as well. there are questions about inflation and growth taking the upper hand. earlier there were going by the fact that audits coming from china could ease tensions between the u.s. and china. that means we could not see delisting possibly of chinese equities, that was a left but that was short-lived. telecom italia has been in a

takeover saga. kkr was doing due diligence. the share is down 5.8%. we understand that kkr could back off of that deal without due diligence. investors are buying equities, but they are shutting european stocks. after the second week of outflows lost. 4 billion was lost by etf's. still with us is karim chedid, blackrock head of investment strategy. karim: given the proximity of europe to the shocks we are seeing on geopolitics and energy, and the vulnerability to those energy shocks, we are seeing european equities become

less attractive. we downgraded european equities from plus overweight. when it comes to dm stocks because of those energy stock vulnerabilities. francine: what kind of vulnerability have you been able to track, do you think it is underlying something more symptomatic? karim: when we look at etf flows, the selling of european stocks is not that surprising. it makes sense in the context we have been discussing. it's interesting to see that buying in spread assets. this is linked to the conversation before around the shrinkage of negative yield assets in bonds. along with that trend, and it

was a shocking shrinkage that few of us expected. we are seeing buying in em of local, high-yield and investment-grade credit. francine: i think technology has been one of the main allocators for march, is this surprising or does it track what we are seeing in stock prices? karim: it's not, here i am looking at metrics such as cash on balance sheets, the tech sector really stands out. along with this trend of buying u.s. and buying mega cap quality, it makes sense to buy tech. when he think about it in the context of earnings, it is one of the most resilient sectors. francine: which is maybe why you have seen selling in financials. karim: in financials, i think there is an element of tailwind that might come. i don't know how much that trend will continue, if we continue to

see the yield curve continue to steepen, it is positive for financials especially on the backend. francine: this is a chart looking at investors shunning europe and seeking havens in the u.s. this is etf's that have seen the biggest outflows. what needs to happen for that to be reversed? karim: we need to see reversal of some of those energy pressures. what we are seeing is worry of outside stagflation. the technical recession cannot be rolled out in the second half of this year. it is happening at a time when inflation is really high. we need to at least see inflation showing signs of peaking. we are expecting that to be later than what we thought at

the start of the year and higher. we need to see time for that peak for those stagflation worries to calm down in europe and those outflows to slow. francine: bond traders on friday started to look at the yield curve may be as a signal of something ugly impending which they did not believe on tuesday after the employment figures. this is the 2-10's, do you believe we are looking at possible recession whether it is because of a policy mistake or that that? -- the fed? karim: last week was a short-lived inversion. now it looks to be a bit more persistent coming from the weekend. i think it's power as a recessionary signal has declined. it is no longer is no longer as accurate as before. look at 2019, a recession did hit in 2020, but we cannot

attribute that to the inversion. it was pandemic-related. francine: we had a conversation on friday saying economists are misunderstanding the second and third round effects of the war in ukraine. karim: i think europe is at risk of recession. we have to look at consumer demand. we could see a recession in europe in the second half. the u.s. and global, it is too early to tell. if you look at the ifn number, and the breakdown of surveys, we have seen a drop in new orders in the u.s. which is somewhat concerning. apart from that, the growth picture still looks strong in the u.s. it is on the radar, but we cannot definitely say it is recessionary. francine: the etf market is

smaller and more fragmented in europe, different from the u.s. given all the uncertainty in the markets, and the way that the bonds and stocks are leveraging what does that mean for the etf market in europe? karim: in europe, if we look at etf investor trends, we are seeing more of a mix. equities and commodities have been a big part of the picture in q1. a bigger share of commodities than they usually take. and we are seeing more exposure in that european etf market. it is that sector and factor exposures, the more precision exposures. if you look at bonds, it is more granular exposures. that trend is going to continue to accelerate. and lastly, we had on a

performance of sustainability exposures year to date. -- on underperformance of sustainability exposures year to date. francine: esg? karim: yes, when you zoom out the inflows into esg the demand is so big and has continued to grow structurally that i think this is important for the european etf market going forward. francine: that is karim chedid, head of investment for blackrock ishares. more on ukraine next. this is bloomberg. ♪

francine: if welcome back to the open, 23 minutes of heavy european trading day. a bit of a reversal when it comes to european stocks. the next trading .4% lower. -- fedex -- fedex trading .4% lower. -- the da trading .4% lower. delivery hero a german stock predicting profits next year. russia facing further economic isolation as european governments worn off more

sanctions after images from bucha showing mass graves with civilian casualties. ukraine is per -- accusing russia of committing war crimes. russia claims they are fake. we are joined by maria tadeo in budapest. the international reaction to the horrible scene out of ukraine, will it change the way that sanctions could be put in place? maria: we saw the international condemnation here in europe. the pictures coming out of bucha are horrifying. the ukrainian say they found mass graves and more than 400 civilians dead. reports of the sectional -- sexual violence. these are clearly war crimes. we heard that french president saying we are going to assist of the ukrainian government in their investigation. it was the russian army that was in bucha.

at this point, we have seen the european union put forward four different packages. but the reality is when it comes to the limits, they have probably already gotten to the limit of what targeted sanctions can do. the big question is energy. there has been no majority or unanimity, but now for european politicians they have to match the condemnation with actual action. one thing that was striking to me over the weekend was that the political debate in berlin is changing. we have a number of common politicians and economists suggesting if we have to think the cost of pulling the plug will help to put an end to this war and shorten the suffering of the ukrainian people. francine: how exactly with this package increase more pressure

question mark so far, you could argue it has not done anything if you look at the pictures of those atrocities. maria: that was the point from the polish prime minister who put out a facebook post saying it is clear that sanctions are not working. the idea that russia would pull back the economic damage and it would stop the war. we are seeing atrocities on the ground, and of course, we need to remind ourselves that there is still a revision going on. -- an invasion going on trade we have not seen the full extent or the end of it. what i know is that up until saturday, european officials were working on another package where energy did not feature. what you hear from the baltic countries is that they want to call an emergency summit and this time energy has to be on the table. a lot of this will depend on

countries like germany, and even in hungary where viktor orban won an election and is repeating that he does not want to get involved in the war in ukraine. francine: coming up, find out how the european central bank plans to tackle soaring inflation. this is bloomberg. ♪

francine: welcome back to the open, 30 minutes into the european trading day. here are your top stories. global outrage grows, russia faces new sanctions for possible war crimes after reports of troops executed on armed civilians. chinese stocks rise as beijing says it will agree to u.s. audits. the treasury curve inverts flashing more warning signs that economic growth will slow.

this is the picture for equities. we struggled to hold onto gains. they are struggling for traction as traders waited developments in the ukraine war. some european governments are posting -- pushing force to first sanctions. -- force different sanctions. -- for stiffer sanctions. traders are weighing threats on demand for oil from the covert outbreak in china. the picture for some of the sectors as we are struggling for traction. we saw that technology would be supported, -- thought that technology would be supported. we also have auto parts, banks and chemicals as well on the way down.

and ecb executive board member has said the bank's right to push for policy normalization. her comments came the day after the euro inflation rate hit a record in march, rising to 7.5%, triple the ecb target. the dutch central bank governors said the banks main task is to ensure that inflation trends do not become entrenched. >> our task is to make for this temporary inflation does not become permanent. for that, we closely watch the medium term inflation outlook, two years from now. there are indications that inflation is still to converge back to our 2% target. as long as that is the case, we can afford to be gradual. joining us now is anna titareva, we have heard from knot who is a

hawk. what kind of trajectory are using for inflation? anna: it reached a new record high, we expected to go above 8% and stay there for the next three months. in the second half, we expected gradual decline once energy prices stabilize and once the supply pressure bottlenecks start to ease. francine: what would you do in terms of kiwi right now? anna: the ecb faces a very uncertain inflation outlook. we keep getting upside to prices indicating stronger second-round effects. on the other hand, we are also facing weaker demand outlook. the ecb needs to calibrate their policy response in order to get the balance between two factors right. a policy make would be to over

tighten or to go too fast, or underinvested aiming -- underestimating how week demand will get. francine: how does that filter through to the economy? anna: we expect that it will end in september, but we acknowledge that with a continuous upside surprises on the inflation front, there is rising pressure on the ecb to act earlier. in terms of how likely it is to happen, i think the key trigger would be if we start seeing strong indications on the wage growth side that would give the ecb more confidence that the medium term inflation outlook is going to say stronger. francine: given the numbers and the second or third round affects of ukraine, while the ecb be forced to revise its

inflation forecast for this year and next, how can it not? anna: the two inflation prints we got at the last meeting came in much stronger than what the ecb's baseline assumed. we have to keep in mind that a lot of the inflation at the moment is still driven by external factors, specifically energy prices. with energy accounting for around 60% of the march print itself. we think that inflation projections are likely to be revised higher. but it is all about the messaging and the second round affects of the second round affects of medium-term inflation also. francine: how me hikes are you expecting this year? we are trying to figure out with a terminal rate is in europe. anna: our baseline is we expect one rate hike in december. we have to acknowledge that if abb comes in earlier there could be another hike in september. for terminal rates, we expected

to be around 1%. that would assume another three hikes next year and two hikes in 2024. that terminal rate is very uncertain. if you look at the recent speeches by the ecb governing council, they talk about the concept a lot, but they never give specific numbers. francine: would it help for economists to understand it, or is it tricky territory? anna: if we look at economic models available in terms of estimating a way to determine that terminal rate for this hiking cycle, these models are very sensitive to different parameters. i think there is an underlying reasoning that we don't want to jump too early in case those estimates come down. francine: how do you see the external dynamics away from what is happening with ukraine, and

filtering through to inflation, if wage growth goes up. if china continues with the zero covert policy, how does that impact the world and especially europe? anna: it will be in the supply bottlenecks. if we look at the inflation last year, there is a high contribution from the foreign goats component lovely driven by supply chain bottlenecks. it was not just from asia, it was a global picture. but of course, given the zero covert policy in china, there is a risk. we are already seeing some first signs of that in the survey indicators in the last set after pmi that supply bottlenecks are starting to come back to some extent. francine: we have a chart, i know you are not an equity analyst, but with european stocks seeing a 35% discount to

u.s. stocks on the p/e ratio, this chart gives an indication of the dynamics. and uncertainty of the european union, -- economy because of the proximity. what happens if there is a full on oil embargo, how difficult or possible is that to model? anna: certainly very difficult to model. we don't have a good precedent for that. we did global scenario analysis where we model two scenarios where it was only about energy price affect. we assumed that growth will slow down, but you will avoid recession. i'm in the scenario where we get an oil embargo and potentially severe disruptions and switch off the supply of gas, that would be the scenario where we would expect europe to go into recession. crucially we expect to see three consecutive quarters of negative growth. in terms of annual averages, we

would expect statistical carrier from last year . francine: we will have more on this inflation modeling of the embargo. it is unprecedented and extremely difficult to do. cavities with over 250 employees must expose their gentle -- japanese with over 250 boys must expose their gender pay gap in the u.k. -- companies with over 250 employees must expose their gender pay gap in the u.k. this is bloomberg. ♪

francine: welcome back to the open. 41 minutes into the european trading day. stocks in europe struggling for traction. u.s. indices futures slipping. traders weighing the latest from the war in ukraine. european governments pushing for stiffer sanctions and that can have second-round effects on the european economy. what's at the first word news with laura wright. laura: the hungarian prime minister viktor orban has scored a crushing victory to clinch a fourth consecutive term. he is expected to maintain a two thirds majority in parliament. the hungarian leader who has traditionally held close ties

with moscow has challenge they use -- t democratic norms. he eu's china added more than 30,000 covid cases with nearly all of shanghai's 25 million residents now under some form of lockdown. the financial hub has emerged as the epicenter of the countries worst virus outbreak since the early days of the pandemic. state media reported a new subtype of the omicron variant which was isolated from a patient with mild symptoms. in the last hour, sri lanka central bank governor has quit admitted the worst economic -- amid the worst economic and political crisis in the country in decades. this follows protests over soaring living costs. citizens across the island divided sunday curfew -- defied a sunday curfew continuing to call for the --

pakistan's minister imran con has thrown the country into chaos after he abruptly canceled a no-confidence vote. the constitution forbids the dissolution of parliament during a no-confidence debate. 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. francine: let's pivot to the u.k. today is the deadline for companies with more than 250 employees to disclose the gender pay gap. the statistics look bad yet again particularly in finance. charlie wells is here to break down the numbers for us. the numbers have barely changed, but why, what are we doing wrong?

charlie: some studies say we have gotten a head start. but academic say that over the past five years, that the disclosures do not have teeth. they do not say what companies need to do to address this gap. that will have to change for us to get more progress. francine: which companies have the worst pay gap? charlie: hsbc's investment banking arm was the worst. they had a 54 -- 64% average pay gap. we already seeing some improvement though. . francine: that is a lot of figures to look at. does it stack up worse internationally? charlie: the u.k. is in the bottom half in the oecd. we did better than the u.s. and

japan. francine: it is a voluntary framework for increasing the number of women on the ftse board. janine, thank you for joining us. why is the u.k. performing so badly compared to its counterparts? janine: what we have understood is that this takes time. the u.k. is driving hard. there we have 30% women in the ftse a350.

but that is not good enough. we couple of weeks ago launched our third report of recommendations for the next five years. the issues that face women are complex. and they are compounding. francine: is it really that complex? five years of disclosures and barely any change in the u.k. gender gap. do we need quotas, it cannot go on at this pace for much longer. denise: this is tough. you are talking about behaviors. you are talking about attitudes that have been grown up with for many years. and it takes time. but i think we are making really strong progress.

we have just got a way to go. francine: are we doing progress on putting women on boards, but not paying them equally? denise: this is all about which jobs women are in. there are 40% women on ftse boards, but there are not nearly as many that are in chairs and the chief executive roles which are the highest paid. that is where we have got to go in the next stage to make sure women are not just at the table, but getting the really high-paying roles. francine: what about introducing penalties for chief executives or heads of departments, and track their salary depending on how women are paid? denise: incentives are helpful in any organization that does not have that kind of incentive. clearly we all care about what is in our back pocket.

but there are many ways of shining a spotlight, promoting executives that are taking this seriously and treating it like a core business attribute. you need to lift the lid on every single process. it is a multi-year task, and organizations have to be robust about it. and certainly incentivizing executives who treated in that way is an excellent start. francine: shared regulators step in? denise: no. i firmly believe that in the u.k., we can achieve under entirely voluntary means. every company needs to look at structure and what works within that culture and business structure. and choose progress. pressures drive progress very quickly, but there are unintended consequences too such

as women being appointed by the culture does not change at the table. that is where the focus is now in the u.k., it is around behaviors, dismantling the stereotyping and stripping out bias. those are insights that we have uniquely in the u.k. in those companies that have taken that approach. but we have got three or four years to go, and gender balance is the goal and none of us should rest until we have got there. francine: there is a new u.k. poll saying that women who ask for a pay rise are less likely to be successful, how do you change that? denise: i don't doubt that. there is evidence through covid that women have negotiated less well for themselves in the workplace. again, it is around changing

expectations. women are not expected to ask for money as much as men are. we all have choices. if the organizations not taking the subject seriously, for many women there are also choices. i would like to see women looking at which companies will do as well, and making choices based on that. francine: leaving a job because you are not paid equally is not may be the right solution, but point taken. denise wilson, chief executive of the ftse women leadership. carrie lam will step down as hong kong chief executive after turbulence has dramatically changed the city. this is bloomberg. ♪

should francine: welcome back to the open. the hong kong chief executive carrie lam has said she will not seek a second term. as the financial hub became more isolated. carrie lam is stepping down,

what does this mean for hong kong? >> the future of hong kong's most unpopular leader in history. they passed a security law in the city. its financial state as a hub is in danger from these strict covert policies that have shut its borders for more than two years. this represents the end of an era of a very tumble to his term , -- very tumultuous term, and the potential for a new leader. francine: what is the latest with the crisis in china? >> covid cases are going down. they are stabilizing. the city is officially still in covid zero.

china in shanghai is facing similar problems with the unvaccinated elderly population. china's covid zero policy is still very much in play, but it is getting to a point where officials are probably having to rethink how long they will keep this in play. francine: our greater china editor on the nuances there. we will keep an eye on that very interesting dynamic, and the read across that it has for europe and the u.s. futures are now flipping. if you look at what traders are looking at, they are trying to figure out ukraine with european governments pushing for stiffer sanctions on reports that russian troops executed on armed -- unarmed civilians.

early edition is up next. this is bloomberg. ♪

>> concentrated people has visited our land. the killers, executioners and robbers who deserve only death after what they have done. >> we have made very clear that china if not support, at least not interfere with our sanctions. >> banks and businesses talking about what's happening on the ground. the banking sector is fully committed. >> this is bloomberg surveillance: early edition with francine lacqua. francine: