russian gas is a breach of sanctions. goldman, citi, and morgan stanley are next to report. gains in the s and p and on the nasdaq are very pronounced. yields were lower and that led to a supportive environment. some investors are starting to bet that inflation is starting to show signs of. eking. -- show signs of peaking. the ftse 100 currently range bound. you're looking for the geopolitics as well and the focus on china. chinese markets performing well on the back of a potential stimulus or cuts to the rrr ratio as well. president xi jinping coming out to say that the zero covid policy has to be maintained.

still focused on the policy response out of the pboc. the cac is gaining 0.2% and we continue to keep and i on the earnings picture. the german dax is gaining around 0.2%. the spanish ibex is a range bound. let's move and see how things are playing out across assets. it is worth mentioning that the nikkei performed well in the sanction -- in the asian session today. we see gains on those futures. we look at the front end of the yield space because that is where we saw the front amount. coming out 2.33 on the u.s., now down two basis points. the bloomberg dollar index shorter by 0.2%. and brent currently at $107,

lower by 2%. wti also above $100 a barrel. let's get over to bloomberg's mliv managing editor, mark cudmore. you're looking at the cost of u.s. debt. mark: this is a chart of the estimated annual debt payments on the u.s. debt pile and you can see they are suddenly starting to surge again. this is a parabolic line that will continue to rocket higher because every time the debt is an option, almost every single time, it is being reissued, the new options, at a much higher yield. this is just another one of those issues which isn't too much of a trading issue for the dollar right now, but as we get on later this year and we have to make a fresh seat around the time of the midterms in the

u.s., it is an expense to the u.s. government that has spent so much on infrastructure. the costs are getting more and more and the solution is to either spend less on programs, or issue more debt. it will be long-term on the dollars of people are not trading it just yet. tom: the strong sustained strength of the greenback is being focused, down 0.2% to support the point you are making. mark cudmore, thank you. let's get some of the key market drivers with kristine aquino and caroline simmons, u.k. cio at ubs global management. kristine, let's start with you. the move into bonds, whether or not we are seeing a cap for these yields, what do you make of what we saw yesterday? kristine: very interesting.

there is a ceiling that we have hit the peak in bond yields and the fed is strengthened by what we saw out of the u.s. earlier this week. the cpi figure that lent momentum to this move. it is counterintuitive as well because there is a lesson to be learned from the fed that they saw from the new zealand and canadian central banks which heightened policy in their own ways, but saw that counterintuitive rally in their bonds. that drives home this idea that this could be the scenario that the fed could be walking into in may. they try to sell the rumor by the fact of the situation for bonds once they start delivering those rate hikes. also to the point that this move in bond yields could be self-limiting, the mechanism that could limit the rise in yields and give a little bit of

recovery momentum for the bonds that have been driven lower. tom: we are seeing the relief on the equity sector in the past few days. caroline, let's bring you in. as the selloff on the bonds happening now? caroline: we are near the inflation peak and we are seeing some elements of inflation now, the same month on month decline. these should start to play out stickier is in second half of the year. if that is the case, and we do not get a further increase in commodities, that should be the peak location and that is when we expect the peak for the bond yields. we also expect to weigh what impact the balance sheet shrinking will have on the yield is low and that is unknown. tom: that takes us to the ecb. that is a different situation

for the euro zone. what do we expect the messaging to be from christine lagarde? kristine: the expectatio is that they are going to affirm that they are on this path to tightening. markets have gotten ahead of themselves when it comes to the ecb. they have moved on from focusing on the asset prices program and ramping up the rate hike expectations. what we are seeing now for the ecb complex and how markets are viewing it is where we were for the fed 15 months ago, slightly behind because the ecb is behind on policy tightening. it will be interesting if we see any pushback at all with regards to the rate hike bets and any attempt from lagarde to rein in markets and get them refocused on the purchase aspect of the policy rather than the rate hikes which are further down the road. tom: inflation clearly essential. what are you looking at in terms

of how the inflation dynamics are impacting corporate balance sheets? caroline: this is where this will be important to look at the details from the commodities sector. other sectors may start to see mounting pressure. however we are still seeing a strong growth backdrop, so it could be that demand is enough to offset. there will be certain sectors where way -- they do see more sectors, but i expect companies to be looking for issuing guidance for what is coming in the next quarters and that is where they will take a hit. tom: what stood out to you on the bank earnings? we had jp morgan and the russian banks and also the rest of the u.s. banks. kristine: it will be interesting to see how the banks are taking the hit as a result of their exit from russia. some of those exposed to russia

among the banks reporting today, nearly 10 billion worth of exposure to the country in terms of assets and loans and everything else. it is going to be interesting to see whether that really shows up in a big way in earnings and it could have potential to look at reviews of any of the results. tom: thank you very much, kristine. have a great easter if we don't see you again. we look at the rest of the earnings pictures, particularly the banks stateside. caroline simmons, ubs u.k. cio, stays with us. coming up, goldman sachs managing director jari stehn. we will get his thoughts on the ecb decision. this is bloomberg. ♪

tom: welcome back to the open. let's check in on the stocks in the move is in the first minutes of trading. ericsson, it was mid of the first quarter results for the telecom company. they have an additional fine over a corruption scandal.

we know the department of justice stateside is looking into that so pressure on that stock. a major equipment maker within the telecom space. hermes, the first quarter earnings coming in stolid -- solid. this is demand from europe and the u.s. and france. they closed three stores out of 25 than china and they are building out additional factories in france to make the demand that they continue to see . 23 points up on hermes, following what we saw on lvmh. we had a solid handover from asia and mainland china had additional support from the pboc and wall street closing higher as was the nasdaq as you see move in the bond yields. we have updates on the atlantia

deal. you can see the stock gaining by 5%. the benetton family is teaming up with blackrock, looking to take over that family -- that company and they value it at 65.5 billion euros, a premium on the last close. we will continue to watch that deal is that progressives -- progresses. in italy, caroline simmons, ubs global wealth management u.k. cio, is still with us. caroline: we have seen the majority of the d rating from the bond yield rise already. for most markets, we see single-digit. tom: where does the u.k. stand in that's given the exposure to the volatility of this market. caroline: the u.k. is one of the

places where we have seen that upgrade the commodities prices so we are looking at 10% earnings growth for the u.k. this year. it is a rare combination that the u.k. gets to benefit from higher inflation and its defensive makeup. normally that suffers, but today people are worried about the growth outlook and the high inflation. tom: what do you avoid from the u.k.? caroline: you need to be worried about some of the consumer staples due to the higher input costs. they have seen margin pressures in the past, so we need to watch closely for that. the consumer discretionary space is already quite cheap. there are various subsectors coming on with extra cost so caution around that space. tom: when you say that you want to hedge given the list of risks, where do you send them?

are you looking at spaces like health care, commodities, another way to ensure that your portfolio is hedging the risks? caroline: the helmet -- the hedges against the volatility of the war are marty's, sectors like health care. stagflation where you would -- volatility of the war are commodities, sectors like health care. a lot of things people could be doing in this environment to manage the potential risks there. tom: we have seen an interesting play on the chinese markets today with further cuts to the rrr for the banking sector. president xi jinping reiterating that he is not moving from the zero covid policy. how do you look at the chinese market? do you want to start to line up bets to align with that policy response or is it still too on loan -- too unknown?

caroline: the assumption that many people are making is that it will. we have a preferred on chinese equities in asia so we think there is scope for the potential outperforming, but we need to see those earnings delivery come through. that needs to be a place for that trade to work and the volatility we have seen around regulation, we need communication from central bodies about how they cut the bulk of the regulation behind them. it is now about the growth and the stimulus play. tom: when it comes to technology , it is probably a longer term view for your clients around tech, a number of those companies have been punished given the ground where we are in now. how do you make the case of getting exposed to those sectors? caroline: the run-up in yields of tech has a big impact on

technology, particularly stocks of the year. yields may go a little higher what we are getting close to the top of the yields and that is the rating on tech that is behind us. we would focus more on our mid-cap spaces and also areas we see high structural growth, so artificial intelligence, cybersecurity, those are areas we think are likely to outperform more rather than the large-cap cap -- large-cap tech. tom: we continue to look at innovation and exposed to that as you look at the pressure on bond yields and what that means for the u.k. maybe 10% on the upside when it comes to u.k. equities. caroline simmons, u.k. cio at ubs global wealth management. then you for joining us. coming up, we are joined by michel paulin, from ovh.

we talk about the earnings for the company this morning. we speak about microsoft and the european commission. don't miss that. this is bloomberg. ♪

tom: welcome back to the open. we are 20 minutes into european trading day.

paring some of the early gains we saw. the dax is still up about 0.1%. we have 20 points added to the cac. the ftse 100 lower by 0.3%. technology performing quite well and bond yields are slightly lower. telecom going lower and energy under pressure by 0.2%. let's stick with technology, the technology services company ovhcloud reported their first 2022 results this year with strong performance in public and private cloud programs. it is one of the major contenders within the european cloud space. joining us now is michel paulin, ceo of ovhcloud. good morning. what are the key takeaways for

you as the ceo of this company and how does that set up ovh for the years ahead? michel: we have reports of strong revenue. we had 14.1% additional growth which supports our model. we continue to recruit and we have for this year, our revenue growth, we have decided to increase our gains for growth because we believe we have strong momentum. we are close to 20% growth. in the cloud, we are in a strong position today in europe. it is important to mention that we have strong growth outside of europe in the u.s., north america, and asia.

we have especially in the digital channels very strong integration with growth for the u.s. and six percent growth in asia. we are confident to make things up for the full year. tom: let's unpack that. you talked about the international expansion. what are the key drivers of the demand? is it the new products you are putting into the market or does that pickup from declines from other customers in asia? michel: we are a cloud provider which allows the customers to have a multi-cloud. it is a private and public cloud in the same time. we are open reversible, and we allow customers to have different vendors and we can provide solutions that provide

open solutions to our customers. the second part of the international is that we do not compete with our customers. in north america and asia, some of our cloud providers are direct competitors. the third pillar is that we extend our international footprint by working with new investors in north america where we have new data centers in north america but also asia. we have a new center is singapore and india. this is innovation. we are introducing up to 40% this year new services which is very rapid innovation and we are providing new platforms for the service solutions. we believe that innovation is up

the heart of our capacity to grow. tom: we can't talk about this without microsoft. the antitrust regulators within the european conduction -- european commission. what do you want to see microsoft change? michel: we are not the only one. a german company has a similar claim and there is also the u.k. company which has a similar claim against microsoft. we believe today that microsoft has a position where they are using the positioning in some software like 365 in the storage positions to impose their cloud solutions in a way that is not reversible, and that is the reason why we make this claim. we do believe that our customers deserve the diversity of the cloud and they should have the freedom of choice and should not be imposed by the stickiness of those solutions or legal

constraints, tightening constraints of technological constraints where you have no choice. we are asking all of these cloud providers to be open, reversible, and treasure a bowl. it means a change of contract, a change of tightening. you want to take some data from one cloud provider to another one, you need to pay a specific amount, which is a way to not help the customers to migrate. tom: unfortunately we are running out of time. i do apologize for interrupting, but we are running against a hard break. we appreciate your response to that issue, with microsoft that continues within the european commission and also on your earnings. you for joining us this morning

-- thank you for joining us this morning. coming up, how is the european central bank going to navigate increased inflation and a war in europe? we speak about it next. this is bloomberg. ♪

- [announcer] imagine having fuller, thicker, more voluminous hair instantly. all it takes is just one session at hairclub. introducing xtrands. xtrands adds hundreds or even thousands of hair strands to your existing hair at the root. they're personalized to match your own natural hair color and texture, so they'll blend right in for a natural, effortless look. call in the next five minutes and when you buy 500 strands, you get 500 strands free. call right now. (upbeat music)

tom: welcome back to the open. here are your top stories. staying the course. the ecb is set to prioritize the inflation spike over the economic risks from war in ukraine. president biden sends $800 million of u.s. weapons to ukraine. the eu claims that the russian demand for ruble payment for the gas would be a breach of

sanctions. and jp morgan sees losses tied to the war in ukraine. wall street ending thoroughly in the green with a bid of bonds and some relief around the edges that may be in some areas, inflation might be stunning with yields coming up. that story continues at a less exaggerated pace today when it comes to u.s. treasuries. you see the dax up 0.2 percent, adding 30 points. the ftse 100 is lower by 0.3%. we had jp morgan out yesterday and we talked about the hit from russia. we have others in the midst as well, the likes of hermes coming in strongly with the first quarter results that beat the

concerns around other companies like ericsson. in terms of how things are playing down sector by sector, let's walk through where we stand. we have travel, leisure, and consumer staples. consumer -- technology also getting back. at the bottom of the list, telecom touches down at 8%, ericsson part of the list. it is a mixed picture across the sectors. the central banks are front and center. we had the bank of korea and the bank of canada as well. now the attention switching to madame lagarde and the ecb. the bank's latest monetary policy decision in frankfurt with the war in ukraine weighing on growth prospects. even the ecb a pressing case for further steps towards policy

normalization. for more, we go to maria tadeo. another meeting clouded by that war and conflict in ukraine, all of the ramifications it has on the european economy, the energy mix, and the hit to demand. what can we expect? maria: it is another meeting complicated by the further prospect of the war in ukraine. when you look at the metro -- accra picture for the euro area, the growth forecast has been cut. the inflation sector continues to point to growing price pressures. we have seen double-digit inflation. this will be discussed in the governing council today where a lot of the issues they cannot control and they don't have the answers to. we don't know the full impact of sanctions. and we are not done with them yet. at the same time, you have the biggest question which is what happens if we get an energy

embargo? it is safe to see that year bets -- to say that your bets would go off the charts. we are expecting a big debate in terms of where. we go from here. . there are three issues we can expect that madame lagarde is pressed on. do we get anything that looks like a final date for the fcc? then we have the implications for the first rate hike and another question is do we have a plan b in terms of if we see market volatility, with the ecb preferred to calm down spread from adjusting and growing harder? tom: maria tadeo in frankfurt and what to look for as we lead up to that ecb meeting. joining us on the ground from frankfurt, thank you. joining us now is jari stehn,

chief european economist at goldman sachs. good morning. how do you weigh the growing risks when it comes to inflation and growth and what the ecb should prioritize? jari: it is a tricky spot faced with lower growth. we have cut our estimates quite significantly for 2% for the euro area and at the same time inflation continues to climb, we have the peak headline inflation moving the extent somewhat. it is a difficult trade for the ecb but we think the message today is going to be step-by-step normalization process that remains on trap -- ontrack given inflation is high. we also think that will say we are watching demand indicators, watching the potential here. we also have an eye on the high inflation numbers that could accelerate the timeline they have played out. tom: you talk about 9% come

summer as the potential peak. is getting back to zero for the ecb, which is what some markets have been betting on, for the end of this year, is that enough to combat inflation of 9%? jari: most of this 9% is energy and food inflation where core inflation is running much lower. that is around 3% and we do think that as we move into 2023, inflation numbers are going to cool again somewhere around 2%. what we expect the ecb to do is to hike back to a normal level of interest rates. we think 1.25%, which is a friend from the chance that the fed is going to be facing -- which the bet -- which is from

the chance that the fed is going to be facing. we have september followed by december for the end of the year and we have three hikes for the ecb next year coming at 1.25% at the end of 2024. tom: are you starting to see evidence of those second-round effects that you mentioned in the previous answer? jari: we are seeing some pipeline pressures. for example, the surge in diesel prices in some of the surveys, input costs and also the unemployment rate that has dropped to an all-time low. at the same time, i would say inflation expectation metrics that are still important have around 2%. the key indicator to watch is tomorrow's special forecasters for q2, whether that shows

pressures building beyond 2%. then on wage growth, we are not seeing second round effects. nominal wage growth is still somewhere around 10%. we think it will climb throughout the year but we are not seeing the same kind of wage numbers we are seeing in the u.s. or the u.k. tom: clearly the ecb is behind the fed in terms of the tightening cycle. many would expect the fed to get above its neutral rate at some point in 2020 three, being around 2.4%. that differential, are there concerns around that gap of what it may mean in terms of financial conditions and the slow of -- and the flow of capital between the eurozone and the u.s.? jari: the differential is logical given where these underlying inflation pressures are that i have described earlier.

the ecb officials have been quite comfortable with that. they have talked about policy normalization rather than policy tightening. the difference meaning that normalization is to go back to a normal tightening rather than a restrictive setting. we have seen this differential has an effect on the exchange rate. the euro has weakened quite a bit against the dollar. we do think that some of that is going to be reversed as the ecb starts to hike and importantly, interest rates in europe and policy rates go to zero when we see some of these reserve flows that have the euro area might come back. tom: jari stehn, always excellent. chief economist at goldman sachs, we will get his views on china after the break. coming up, now is the place for

choosing your place in the world. bennett yellen makes a firm state -- janet yellen makes a firm statement to china to end its zero covered policy. -- zero covid policy. this is bloomberg. ♪

tom: welcome back to the european market open. janet yellen has challenged china to choose white wants to stand on world orders. beijing may face economic repercussions -- has challenged china to choose where it wants to stand on world orders. beijing may face economic repercussions. >> we will have resolute action against russia. tom: meanwhile president xi jinping has said that the country will stick with a zero covid policy. this is amid outrage and challenges for the country's economy. jari stehn from goldman sachs is still with us. can that policy response whether it is took cut benchmark rates or the rrr, is it enough to offset the economy pressure

based on the lockdowns we are seeing? jari: it is pushing it together with more expansionary fiscal policy and infrastructure spending and higher credit roles. offsetting it completely is difficult. we are seeing the covid restrictions are weighing on activity. some of the incoming data points have weakened significantly if you look at the lines particularly in services. we think growth will come in below expectations for this year. we have a 4.5% forecast for china this year. tom: are they constrained by the fed? we know they have dry powder but is that a constraint? jari: to some extent but i think the difference is you have a lower and weaker inflation picture in china than in the u.s. and you do have pretty

rapid slowdown in growth. that does provide them with more room to ease both on the monetary side and physical side. -- fiscal side. tom: how do you map that growth picture in china to the euro zone? jari: china is acutely important to european growth, particularly to germany given the industrial interest there. it is going to be something that will be a headwind for europeans. keep in mind that it also matters what kind of spillover we get paid we have found the past that a slowdown in industrial activity in china had a bigger spillover effect into europe rather than a slowdown in services because industrial goods are much more tradable. we need to observe how this

slowdown in china falls to be able to anticipate those spillovers with more accuracy. tom: still uncertainty around that -- around how that plays out in china, xi jinping not walking back his zero covid policy. jari stehn, thank you for walking us through the economic implications of the china growth and what to look out from the ecb later today. twitching focus to the baltics -- switching focus to the baltics, the next country to join nato could be coming in the next weeks. finland and sweden are reevaluating their relations to nato in the light of what happened in ukraine. >> the sentiment has shifted

dramatically because of russia's actions and that is very clear. that has caused a need for process in finland to have a discussion about our own security choices. also discussion about nato membership that we are having right now. we are giving today parliament the paper which will analyze different options for finland in the future for our security. tom: for more we are joined by our reporter. how likely are finland and sweden to actually signing up and joining nato and what kind of timeframe could we be looking at? >> thank you for having me. finland is in the process of moving very fast and all of yesterday the government has shown paperwork of possible paths for them to join nato or go on alone.

the big thing to remember here is that sweden and finland are tightly intertwined so the rationale is often to look at where finland goes, sweden goes. while finland is a less bold than sweden at this stage, there is still internal policies among the social democrats of whether they should change their stance to be pro-nato rather than not wanting nato as they have so far. tom: is this a huge shift for the geopolitical region? >> it a huge shift. there were comments about putting nuclear arms and the baltics again. sweden and finland joining nato would put the nato border just next to finland and looking at sweden, for example, they have been claiming themselves to be a

neutral country for centuries. them joining officially and aligning with nato would be a huge deal. tom: thank you for joining us and walking us through the implications of that shift i finland and sweden as both countries seem to look to line up with nato. nonetheless, a significant shift. coming up, investors will be interesting to see if jp morgan, goldman sachs, and morgan stanley will be able to live up to their expectations. we discussed u.s. bank earnings next. this is bloomberg. ♪

tom: welcome back. we are looking at the equity markets across europe. the stoxx 600 up about 0.1%. travel and leisure and consumer products are leading the gains. telecoms, ericsson part of the mix that they missed. energy a little lower. there are some saying that inflation may be peaking ahead of a move into the bond markets. currently on the front end of the curve. let's switch focus to what is

happening with the conversations we have been having. only 5% of the companies listed in the u.s. have a female ceo. at the time, pepsico ceo told francine lacqua that it was tough being a ceo from an ethnic minority. >> at the early days, i could look at myself as an -- as a woman in -- i couldn't look at myself as a woman in power. i looked at myself as an alien showing up. there was always this feeling that i was so different from the others and i had to learn a space basharat the table -- earn a space at the table. but now, 2018, 20 19, things

started to get better. i will say that it still isn't easy. it was hard work. tom: that was a former ceo of pepsico speaking to francine lacqua. you can catch the full conversation on leaders will flock what. -- leaders with lacqua. goldman sachs, citigroup, and morgan stanley all reporting earnings in the next hours. jp morgan had their results released yesterday, which saw their results marred by the fallout from ukraine. let's start with jp morgan. they have taken a hit from russia. what actually came through and can they whether this going forward? >> we saw that in many ways. we saw this $524 million loss from russia but we also saw

jamie dimon talk about volatility and that has been on the increase because of this war. we have seen it in the pipeline of deals that we have heard so much about. that has slowed down. it is still on the upside with marty's ratings but overall it is having a negative hit that this work inaine has on bank earnings. tom: and what are other things investors should look at? >> we are looking at how these investors and banks will look at the speed of the fed moving rates. if they slow economic growth, they could potentially trigger a recession. we also her jamie dimon talking about a recession yesterday and that is quite serious. that is on the cards. tom: what about the individual players we are expecting? sydney, golden -- citi, goldman sachs. >> these are all large banks but

they have different stories. citi is the largest american bank with exposure to russia. contrast that with wells fargo. they are not as exposed to some of this geopolitical risks. it will be interesting to see how goldman sachs compares with jp morgan of yesterday. goldman has a lot of trading business and it was the number one m&a advisor over this year. that activity is down so what we are going to see is different data points from different banks with lots of different stories indicating how the american economy is working. tom: therefore focusing on the bank earnings that are coming out. dinky very much to charlie wells. -- thank you very much to charlie wells. range bound on the s&p and the nasdaq is gaining 0.2%.

the stoxx 600 in europe is paring some of their gains. "bloomberg surveillance: early edition" is up next. happy easter to those who celebrate it. this is bloomberg. ♪

>> we will try to maintain strongly the markets and bring inflation down, but it will require an offense. >> it has been interesting since covid see the positive, high correlation between the nasdaq 100 and crypto. >> this following the lockdowns in china, this will have an impact on oil demand. >> this is "bloomberg surveillance: early edition" with francine lacqua. dani: