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tv   Bloomberg Markets European Close  Bloomberg  April 13, 2022 11:00am-12:00pm EDT

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europe. this is bloomberg markets: european close with guy johnson and alix steel. guy: european stocks are drifting lower this wednesday. we are heading into a long weekend. people are going to adjust positioning. we are down by .2%. we are seeing yields moving higher. we had inflation today out of the u.k., 7%. that is a 30-your high. how is the bank of england going to react to that? the ecb tomorrow, then we come to the yen. and is at a 20-year low versus the dollar. kriti: you also have to talk about the yield differentials pushing the dollar higher. that translates to the u.s.
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session as well. the nasdaq 100 up almost 1%. i'm sure some of that yield dampening you are seeing him actually helping with that. it is also translating to the numbers you are seeing out of jp morgan, down 3.3%. the biggest move lower for jp morgan since early march. let's see if the other banks follow jp morgan's lead when it comes to that downside move. should also talk about commodities. wti at $102. it is not just oil, food prices continued to surge higher. april is planting month for a lot of ukraine, the grain harvest. as we see the war, we see no end in sight, the commodity index marching higher. guy: let's return to the situation we were focused on yesterday, the shooting in brooklyn. the man described as a person of interest in the subway shooting is now being called a suspect. here with the latest is shelly
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banjo. what we know about the manhunt? shelley: progress that has been made is that they upgraded the person from a person of interest to a suspect. they have zeroed in on this one man. they do not know yet, or they have not shared with us where he is, if he has left new york city. we do know he was attached to a vehicle, a u-haul van that was abandoned a few blocks away from the subway. however, he had residences or was linked to places in philadelphia and in wisconsin. this could be a hunt that not only spans new york city, but also much of the united states. kriti: let's talk about the implications of what this means for -- means for new york city, for mayor eric adams. no he campaigned on reducing crime. a double whammy that are taking a hit right now. i'm also curious about what this means for his role. i believe yesterday kathy hogle, the governor of new york saying
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when it comes to school safety mayor adams may have more to do with that. shelly: this is probably the worst thing that could happen to eric adams at this time. he is about a hundred days into office. he staked his claim on running for new york city mayor on crime and reducing crime. and has introduced a number of police -- policing initiatives. this is the worst shooting event we have seen on the subway in the last number of decades and one of the worst in new york city and been -- new york city in general. the mayor is telling new yorkers, get back to the subways, go to restaurants, let's move on from the pandemic, but now if crime is going to present to these people, to new yorkers, it is going to prevent some of that reopening. guy: shelley, crime and mental health is often a blurred boundary. to be know about the motives here? shelly: right now we do not know anything about the motive. it has been a youtube channel
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brought up linked to him, but because the police have not necessarily verified it has belonged to him, we have not gotten too far into that. but there are questions, what is the headspace of a man who goes on the new york city subway, releases gas canisters, then starts shooting left and right among people who are then trying to escape at the next stop? mental health is certainly something that is going to be addressed in this investigation. kriti: walk us through the next steps here. we have an ongoing manhunt, we have school in session, but we are waiting to hear from authorities. does the next news event look like? what does the schedule look like in terms of hearing from the authorities? shelly: the next step is a suspect apprehended. the police are following leads. it is not just the nypd, it is the ftp -- the fbi, the atf. state law enforcement authorities. they are all after one thing,
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which is, where is this guy and can we find him? until that no other questions matter at this point. we are likely to hear from the nypd at some point today. if they do not catch them today there has been no indication there is any kind of formal press conference or anything like that. course, the new york city mayor means in quarantine with covid. guy: you bring up covid. the cdc, ap reporting within the last few minutes, extending the travel mask mandate for another two weeks. people were already cautious about getting back on the subway . mask-wearing is increasing, voluntary mass cap and wiring. we now have this incident what's -- which follows on the heel of another incident you have highlighted. what needs to happen next to get people back on mass transit? how big a focus will be of encouraging that? look at the authorities do? shelly: right now they are starting with leadership. governor hochul kathy hochul rode the subway yesterday.
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new yorkers are pretty tough and pretty greedy, and they're going to keep going on the subway. however, that does not prevent people who do not have to take the subway from not, from getting into an uber, from writing a city bike down to where they need to go. for a lot of people who work in manhattan and live in sunset park, they cannot afford a $70 uber ride to and from the city every single day if they are commuting. it is going to be a really big problem and a really big challenge for the mta to keep ringing those people back. guy: shelley, great stuff. thank you. we appreciate the updated reporting. shelly banjo on what we have learned, what we potentially will learn. we continue to bring you the latest developments here on bloomberg. this is bloomberg. ♪
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guy: welcome back. let's talk about inflation in europe. or specifically in the u.k. economists scrambling to raise forecast after the latest shock read we had from the ons. inflation in u.k. hitting a 30-your high. the data showed it was 7% last month. the rpi index, the older index, what it includes housing, up by 9% from the previous year. you are seeing is headline inflation up 7%. core still rising, still 5.7%. not far behind where we are in the united states, but the rpi index up to 9%. there is this idea of the bank of england can use higher inflation, as a cure will reduce
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demand. i wonder if that is being called into question and whether or not it is going to act further following those three hikes it has delivered. kriti: a lot of questions and it comes from the ecb as well. joining us now is reinhard close, the chief economist for europe. thank you for joining us. let's start where guy left off, talking about affordability, the strength of the consumer in europe. unless ago we had a headline from janet yellen saying she is more worried about recession process -- prospects in europe. talk about those recession prospects. >> it is obvious that the russian invasion of ukraine has greatly changed the economic outlook for europe as well. we are certainly going to pay a price and terms of we could gross in the first, probably also the second quarter of 2022. at this stage we do not expect europe to enter a new recession. it makes the whole situation for
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the ecb complicated. we had an all-time high of inflation at 7.5% in march, and we are going higher in april. we could see inflation rates above 8%. they could be even higher, given upside risk from food prices, also from supply chain problems in russia-ukraine, but also china. at the same time labor markets remain reasonably resilient, which means there is now a risk of rates ticking up, second fx kicking in. this would normally mean the ecb would have to step in urgently, however with the russian invasion of ukraine the picture has become a lot more difficult. what we believe tomorrow is, in tomorrow's meeting the ecb will just discuss the latest data and not take meaningful policy decisions. instead it will defer the key decisions to the next meeting, she is on the ninth of june.
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at that stage the ecb will once again have to issue new stock market forecasts. based on those they would decide the road ahead. guy: downside risks, though, prevailing. is that the language we are going to hear from madame lagarde tomorrow? edward: i think so. the ecb's baseline forecast implied we would see a growth rate of 3.7% this year. that was a downgrade of only 50 basis points. the street more broadly, we as well at ubs have downgraded our growth. the risk is to do that -- the downside. kriti: sitting here in the united states i am not a student of europe economics the way you are, but i'm curious about europe and it has been stuck in this deflationary spiral for almost a decade. is there a scenario, perhaps in the near term, but in the long term where europe can climb back from that? edward: yes, i think so.
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the outlook for the next couple of years, that is the next 2, 3, 4 years we are likely to see higher rates of inflation in europe. that has to do with the way we have come out of the covid crisis. that has to do with meeting will -- meaningful fiscal stimulus. it has to do with monetary policy response. that means that not only would we see a major overshooting in inflation this year, but also see that inflation rates in 2023, 2024, perhaps 2025, could be at 2% or higher. this implies after a number of years where the ecb had to worry more about deflation in the foreseeable future, in the next two to three years the main problem will be higher inflation. over the long term i think the jury is out. we might well go to deflationary, or at least a cycle sped up where we are concerned about inflation being too low, but that is not the key
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worry for the foreseeable future. guy: how worried are you and how worried should the ecb be worried about spread-widening in europe? how worried should be -- should we be worried about btp's blowing out? with the ecb the right to put some sort of tool and place to control that? if so, what would it look like? edward: i think yields will go higher. that is clear, and that also means there is a risk spreads will grow -- will widen. we need to differentiate between a modest widening, which is inevitable, and a major widening. we talk about these contingency plans, with the ecb has in mind is the risk of a major widening in spreads that would undermine the uniform transmission of the ecb's monetary policies throughout the euro zone. so it is a risk. it is not the best case scenario, from the ecb's perspective it makes sense to
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prepare for that now. guy: we already have a tool called the omt. edward: yes, the omt is still on the table. the key issue is that the omt is tied to such a strong conditionality -- guy: the ecb would never go for? edward: we have to say the stigma might be very strong. the way you, bloomberg, wrote the story made it clear the ecb has in mind an instrument that would kick in in the event of a major spread-widening that is not to be blamed on individual governments outside of their control. for me this means it is probably an instrument which involves relatively little conditionality. a bit like the s&p program, the securities and markets program we had them placed between 2010 and 2012. kriti: i want to go back in history. forgive me, i was a history major. going back about 10 years we look at the last global financial crisis in 2008 you saw this recovery in the united
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states, only for europe that really had to deal with european sovereign debt crisis, which was a function, from my understanding, simply of the effects of the recession that preceded it. take the war in ukraine aside for a second. could you still see that applying as this historical precedent for white europe is doing now, and is it still going to take years for them to recover or for the subcontinent to recover from the effects covid-19 had left? edward: i think the big problem in europe, in the global financial crisis and eurozone crisis in 2010, 2011, 2012, was that fiscal policy was way too restrictive. the austerity we had undermined the economic recovery in europe, and that has changed fundamentally during the covid crisis. so in the covid crisis europe learned lessons from 10 years
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ago and essentially staged a much stronger and ties -- anti-cyclical response. the european recovery from the covid crisis was much stronger, much faster. if we were to go back into, perhaps a recession in the context of the ukraine war, i think the europeans would not hesitate to, you know, come back with a stronger fiscal stimulus. this is already happening anyway, but they could clearly scale this up so that this would partly address the recession risk. here, europe has definitely learned from the history. kriti: the war in ukraine is largely affecting europe simple because the commodity dependency you were seeing from europe, which is essentially pushing the cost of living higher, there's been stories from bloomberg and other media organizations that a lot of european buyers of commodities are going to other parts of the world.
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italy going to algeria, for example. texas coming to louisiana to get natural gas. if that dependence is moved by the end of the year, which authorities are hoping for, is it fair to say that european fiscal authorities, to your point that they had to correct from austerity, will they be incentivized to remove the european version of the punch bowl? reinhard: we talk about energy we need to differentiate between coal and oil and gas. replacing russian coal can be done. in fact, a decision has been made by european leaders that a ban on russian coal will,. and given that russian coal has only a share of about 2% in european energy consumption, this can be done. also, local markets for coal work fine, so we can ship in coal from other locations. with oil it will be more
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difficult, and for gas it will be a lot more difficult still. if, going forward we were also to see a ban on russian gas, for example, i think we will come to a situation where european industrial companies would suffer a lot more. this would apply -- imply weekend industrial production. it might cost jobs, so a hit to confidence, hit two also spending power that is currently coming from higher energy prices, higher food prices, would then be aggravated, because people would also be concerned about losing their jobs, and they might potentially cut back their spending even more. that would then amplify -- amplify the downside risk. european policymakers could once again intervene with the fiscal policy, but it would still be a difficult set up. guy: the -- have you thought about the economic implications of marine le pen entering the palace? reinhard: we still think that
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the base case scenario is that president macron will be reelected. but obviously, you know, there is some risk involved for financial markets. guy: always great to catch up. we greatly appreciate it. reinhard cluse, ubs ag economist for europe and emea. coming up, we are going to focus back on british politics. force johnson says he has paid a fine for breaching the coronavirus lockdown rules. the chancellor offering an unreserved apology. you're going to look at potential fallout from what has been called a party gate next. this is bloomberg. ♪
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>> it did not occur to me that this might have been a breach of
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the rules. but, of course, the police have found otherwise, and i fully respect the outcome of their investigation. i paid the fine and once again offer a full apology. it is my job to get on and to deliver for the people of this country, and that is what i'm going to do. guy: the british prime minister very much on script, reading from notes as he delivers an apology to the fine that has been issued to the metropolitan police into the investigation that parties that the lights at 10 downing street. question everybody is trying to figure out his, what next? are there more fines? what will the gray report? what happens in the local elections? can boris johnson survive all of these? joining us now bloomberg reporter alex morales. that is what everybody's trying to figure out. boris johnson has been fined. it was no expectation that would happen. there could be worse news to
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come. is boris johnson able to survive this if the local elections coming up shortly go ok for the tory party? alex: there is a lot of if's in there. first thing to say is that, boris johnson has received one fine. the police are still investigating numerous other gatherings, some of which we know the prime minister was at. he could face more fines. and they could come in before the local elections. and you get to the local elections, and he is sort of lucky in the sort of makeup of the local elections, because it is not the whole country. it is largely labor seats. labor-held areas. the tories could still lose quite a lot there, and that damages the prime minister. if he survives the local elections and he survives also more fines, you have to imagine he will be leading the tory party and to the general election due in 2024. guy: a lot of people were
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wondering, who would he be replaced by? alex: that is another thing that protects the prime minister, in a way. if you wound back half a year or so, there was a clear successor in rishi sunak, the chancellor of the exchequer. if boris johnson were to fall over party gate, if his party were to out stem, they could not put rishi sunak in his place, because rishi sunak has also been fined over party-gate. he's also been immensely damaged in the past week or so by revelations about his wife's tax affair and his holding of a u.s. green card the main challenge to boris johnson appears to be very damaged at the moment. that leaves people like liz trust, foreign secretary, lots of senior conservatives have doubts about her. in wallace, the defense secretary is popular, but he has indicated he is not interested. guy: briefly, is there any hint
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that the chancellor could resign? alex: there is a story last night saying he did consider resigning. it suggests it was not a serious consideration. it depends if the slew of damaging stories we have seen about his private life, his wife's personal affairs, if that keeps going on you can imagine a situation where he feels, i need to call, draw a line on it. guy: alex morales, think you very much. we are heading into the european close. equity markets are about to set up shop for the day. these are the numbers as we go into the close. we are looking at a fairly negative picture. the dax is down by .3%. this is bloomberg. ♪
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guy: it is a holiday-shortened week.
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today's wednesday session fairly flat, which may be an indication about our upcoming holiday. the ftse 100 flat. the dax down by .5%, or just shy of it today. not really much happening at an individual market level or index level. you can see that clearly with the stoxx 600. individual stocks interesting, that a headline level, not much happening. we are down by less than .1% on the intraday for the stoxx 600. the grr, let's take a look at how the sector story breaks down. we are coming into earning decision. more broadly the macro store is still very relevant. basic resources are up today, so the commodity story along with the energy story, doing well today. basic resources and energy up .8%. luxuries down. i will show you lvmh.
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insurance, real estate, retail all tracking lower. not much. lvmh out with some numbers this time yesterday. the numbers are really good. earlier today there was a bit of a wobble, and the reason for that seems to be concerned -- concerned about what is happening in china. this giant luxury company and a france, but also with tentacles spreading into every single part of the world. up by around .5%. in the retail space, tesco, u.k. retailer down by 2.4 percent today. out with a fairly cautious statement. it comes on the same day we are seeing inflation data coming out at 7%. basically talking about how they are going to struggle to keep prices under control for consumers pushed hard by the cost squeeze. but in some ways after years of a deflationary environment, this inflationary environment for a grocer is fairly good. a lot of this stuff is an
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elastic. people have got to buy it. in theory, top line on an inflation basis should be ticking along nicely. k+s, this fertilizer company out of europe, up by four .9%. unsurprisingly. because of the war in ukraine it is upgrading its guidance. today the company confirming up by 4.94% as we see fertilizer rises and everything associated with agriculture going through the roof right now, kriti. kriti: let's go down to what is going on in d.c. the pentagon will host leaders from top eight u.s. weapons many factors to discuss the industry's capacity to meet ukraine's needs. annmarie hordern, thanks for joining us. i believe 700 $50 million is what the biden administration is targeting when it comes to that weapons assistance to ukraine. how much of that is going to get there? annmarie: it is under
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presidential drawdown, so you can move the weaponry from u.s. stock right through ukraine. it doesn't have to be going through congress, and this is done so it can expeditiously get into ukrainian hands. he comes today is pentagon officials are going to be meeting with the heads of major contractors like raytheon and lockheed martin. the new york times is reporting that part of this conversation is because the u.s. thinks it will be a protracted war, so that would mean these contractors need to boost supply. we heard from deputy secretary of defense, taking to twitter. this is what she had to say. we have seen members of industry indicate their willingness to work together. that is what we are getting after with constant dialogue. the white house has been cleared the president is leaning forward where we think we need help. congress is too. it is making sure all of the supplies are working, because the u.s. is going to need more supplies as they shift or to ukraine. guy: we're just getting some
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heads coming through, annmarie, this is a briefing happening where you are in d.c. some nations have provided ukraine with advanced weapons covertly, but there is a push to provide significant quantities of heavy weapons. as you say, this meeting will be moving in that direction. u.k. and others providing them out of europe. talking of rearmament, talking of the security architecture we are moving into as a result of this conflict, we are starting to see nato membership potentially being expanded. we will talk about this it -- this in a second, but let's listen to the finnish prime minister about her thoughts on nato membership. >> everything changed when russia invaded ukraine. i think people's mindset in finland, also sweden shifted dramatically because of russia's actions. that caused a need for a process to have a discussion about our own security choices.
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also, discussion about nato membership that we are having right now. we are giving today to the parliament a paper which will analyze different options for finland in the future, for our security. guy: unintended consequences. annmarie, what are going to be the consequences were we to see sweden and finland joining norway in joining nato? annmarie: we have already heard from russia, and they would view this as a massive escalation. even on friday as you see these countries, especially finland shift in what the people on the ground think in terms of, really never wanting to join nato, and now you see there is so much support for this endeavor. on friday what you had was cyberattacks on finland's government. i spoke to a finish official on friday and he said, we are used to this and we are prepared for more of this.
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now they have this white paper. you heard from the prime minister is this significant shift -- and i will read you a quote from the paper. fundamental change has taken place in the security and operating environment of finland and europe. this is the basis of their case, of this white paper, to potentially join nato. that is in finland. you look at sweden, the papers are reporting that the ruling party, the social democrats, which have for the most part and apprehensive to take this step, are actually on board. you are seeing that shift toward brussels almost overnight. guy: annmarie, great stuff, thank you very much. annmarie hordern running us from washington, d.c. let's get more insight with elisabeth braw, resident fellow at the american enterprise institute. nice to see. what are the implications of an expanded nato? elisabeth: the implications for nato are clear, sweden, finland,
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if they were to decide to apply to membership, if they were to be accepted would add enormous military expertise. they would add parts of the european geography that is not in nato, so it would be a massive asset to nato. for russia it is a different picture, and that is why russia has been processing and hurling verbal assaults toward these two countries. but they seem undeterred. kriti: i think we have had the president of eurasia group, ian bremmer, on. he says there has nothing quite so uniting for nato as this invasion into ukraine. talk to us about what might pull apart that unity we are seeing in nato right now. elisabeth: there is a difference in opinion between some member states of nato as to what exactly should be done, they should be doing for ukraine. have seen the germans being quite slow in deciding to send weapons, and deciding what sort of weapons to send.
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that culminated in a sort of rift with the ukrainians just in the past 24 hours or so, when the ukrainians said the president of germany is not invited to ukraine, so his fellow nato leaders from the baltic states had to go without him. on the other hand we had a number of newer nato states, including the czech republic and poland, which are very clear, very eager to help ukraine in sending is much weaponry as they can. the president -- and how they should replace that weaponry. guy: lot of the weapons have been gdr weapons, they have been soviet-arrow weapons. we are increasingly starting to arm the ukrainians with more advanced weapons. what are the implications of that shift? this increasingly looks like a nato-russia conflict. a proxy war, but nevertheless with weapons provided by nato and doing significant damage to
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russian forces. what are the longer-term implications of that, what are the shorter-term implications of that? elisabeth: this is a comeuppance of heat -- of east germany. its military equipment is now being given to ukraine by various european countries. that is the first part. then, what are the implications of nato member states individually becoming more involved? it is that we as nato can no longer separate ourselves from this conflict, and i think nato leaders of member states have made the decision that it is inevitable, because the objective for everybody outside ukraine, everybody who does not want russia to win, as to be to help ukraine, ideally as soon as possible, but at the very least eventually even if it stretches for months or years, there has to be the objective, because if
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kriti: kriti: ukraine loses, the nato member states in the region are next. elisabeth raises a good point in terms of the quality of weapons being sent to ukraine. it is interesting to me is, the west is not necessarily a stranger when it comes to proxy wars or getting involved on the ground. what is the west waiting for in terms of actually sending higher-level weapons? what would be the catalyst for that? elisabeth: the reason the western leaders won't say what the catalyst would be, is because then russia would know exactly when they will react, and we saw in syria when obama said, if you use -- if the assad regime used chemical involved, then the assad regime used chemical weapons, and the u.s. did not get involved, and so that is the reason western leaders are not specifying the event at which they will escalate their support to ukraine. i think it is becoming clear that they are increasingly willing to send what is called offensive weapons, so opens that
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are bigger and more powerful, because the idea is that this will help ukraine win or prevail against the russians. and that is a shift from the early stages when it was mostly about sending them helmets and the like. guy: military strategists are suggesting variable is clinging on by fingertips, that the city may fall. there has been no reporting on that yet, but certainly it is a concern. were that to happen, is that the catalyst for the next offensive from the russians, and what do you think that offensive is going to look like. elisabeth: the russians are clearly keen to get something achieved by april 9 -- may 9, the victory parade. that would be, at least a respectable victory for them. that is why mary opal -- mariupol has to win.
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they have to claimant, and as a result ukraine and the rest of the world can expect violence -- violent classes there, and the rest of that stretch of land, because it is so central of russia is going to defend this mission at all. kriti: something else that is on the northern coast, essentially of the black sea, is also odessa. one question here is for other member countries that share that body of water. turkey is prime on that list. talk to us about the role turkey place when it comes to the defense picture. elisabeth: turkey is never particularly popular member of nato and various nato member states at various times suggest that maybe turkey should be expelled from nato, because it is really pretty cantankerous at times. now in situations like this one,
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it has proven it is absolutely crucial as a nato member state. it has some standing with the russians, and it also has the military capabilities to at least put up a fight in the black sea, and, for example it has promised to clear out the minds there. we should remember the black sea is not just about military action, it is a crucial body of water for global shipping. at the moment it is extremely dangerous for shipping companies to operate in the black sea, and the ones that do have to pay enormous insurance for the privilege, and, yes, we all depend on products coming in and out of the black sea. guy: the russians are preparing a new offense of. have sanctions failed? elisabeth: the sanctions are directed against the russian economy, and i think what we have gone wrong as we are thinking the russian economy matters to vladimir putin. i don't think he cares whether
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the economy fails, because this is not about saving russia or making russia phenomenally powerful, it is about, he has a different motivation, which is to win a sliver of land, or ideally a whole country. if he had the russian economy in mind he clearly would not invade another country. i think what would work better is to target out his effective wife and children, who live in switzerland. that is clearly something that would hurt him personally, and i hope the swiss decide to expel this woman and her children. guy: we will see what happens next. elizabeth, thank you very much. elisabeth braw, aei resident fellow. let's take a look at where european markets have finished up. indices, a little more movement when it comes to individual stocks, but the london market, the french market, barely budging as we have come through to the end of the day. in germany, a little bit more of a negative session. we will talk about the
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implications of the inflationary number we have seen today out of the u.k. at 7%. a 30-your high. what does that mean for the chancellor of the exchequer? does that mean for the bank of england? i will discuss that with marcus ashworth on the cable show. 5:00 p.m. here in london. you can find us on your bloomberg terminal, of course. podcasts are available on spotify and itunes. this is bloomberg. ♪
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ritika: this is bloomberg markets: european close. coming up, a conversation with colombian president on balance of power at noon. this is bloomberg. >> the man who police identified as a person of interest in the
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subway shooting is now a suspect. eric adams spoke about this earlier. take a listen. >> based on the briefing and evidence we were able to accumulate, he has now been upgraded to a suspect. we are asking all new yorkers to assist us in his apprehension. please do not approach him. ubc him or noah's whereabouts, -- if you see him or know his whereabouts, please notify law enforcement. >> the attack left 23 people injured. shelly banjo joins us now for more on this story. talk to us about what the next steps are. what can we expect the next time we hear from the police commissioner? shelly: the next thing everybody is looking for is, where is the shooter? they have been able to upgrade him to a suspect. not just a person of interest. now they are launching into not
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just looking in new york city, but around in the country for where he might be. guy: what do we know about the victims? i think a lot of people are very surprised and delighted that nobody was killed here, but some have been seriously injured. shelly: this morning mayor eric adams said there were four people in the hospital. and number of these people were in their teens yesterday. kathy hochul went to visit some of these teenagers who had been on the way to school. anything about what happened yesterday with the gas canisters, the 33 shots fired in this tiny, enclosed space of a subway car, you heard the nypd commissioner say this could've been a lot worse. guy: thank you very much for continuing to keep us updated. kelly banjo -- shelly banjo. this is bloomberg. ♪
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guy: for the moment has finally arrived. j.p. morgan kicking off the earnings season for the wall street banks today. you're going to hear from wells tomorrow, you have goldman tomorrow, you have city. of america on monday. we like to get a pause in before we complete the earnings season and to give sonali basak time to regroup. she joins us now, our wall street reporter, correspondent. gp is down today. what are investors taking fright to when we had the call? sonali: a few things you see in the other bank trading, you see goldman sachs and morgan stanley holding steady or as jp morgan is down. it is telling you investors are pleased with the trading gains that are being made or the trading stability, because the drop-off is not as bad as
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expected. you and i have talked about this, that the volatility is raising the value at risk, so with that said, them balancing the issue of higher risk and better return is going to be of key importance. there is something fun to note when it comes to jp morgan and goldman sachs. jp morgan had a loss when it came to the newcomb market, but goldman sachs started making markets in nickel, and the bid they were taking, and the ask right now, nickel is trading above that midpoint of where they were making markets. so that will be very interesting to watch in tomorrow's numbers for goldman sachs. kriti: we have covered trading revenue with you, we have covered the bank bottom line. a question in the market is what these companies are going to do with these piles of cash they have. i'm curious about the advisory fees for jp morgan, because one of the questions for corporate america is, we but to go on an m&a boom before this cash is worth less? sonali: it's a great question.
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you are seeing the private equity firms dip into the debt markets here. early provide a lot of private credit and financing when a lot of the banks and their investors are shyer on that regard. that said, m&a has not bounced back to a huge degree. we see some one-off rumors about deals involving large, wealthy families, corporations, as far as i know and as far as our sources are telling us, it is not that activity is completely dead. a lot of it is being put on pause until there is some stability toll on two. all that said, and hundred billion dollars in debt underwriting is expected this quarter alone. jp morgan's underwriting was better than expected. that should read well for a firm like goldman sachs going forward, and bank of america. guy: let's go to main street. what did we learn about the consumer today? sonali: there are some areas of strength here. you had jp morgan, either way which is about to become the first $4 trillion bank in the united states, jp morgan really
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bellwether of the economy saying the consumer is strong, spending on dining -- on dining, leisure and travel. that is an area jp morgan has invested. with that said, we have talked about it all show, there is still big risks on the horizon, and the impact of rising rates depends on how fast those rates rise on the consumer and what that will do in terms of their borrowing demand. kriti: sonali basak, we thank you for your time and insight as always. tomorrow other than wall street earnings we will have that ecb meeting. we will bring you the latest on that. for now, coming up colombian president yvonne duke a is on balance of power. for myself and guy, this is bloomberg. ♪
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>> from the world of politics to the world of business, this is "balance of power" with david westin.
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♪ david: from bloomberg world headquarters in new york to our audience worldwide, welcome to "balance of power." i'm joe mathieu. joe: we begin with a search for the shooter in the subway attack in new york city. police are on the hot for frank robert james, the named suspect in the case. the new york mayor waited earlier on bloomberg. >> based on the briefing for my law enforcement officials, and based on the evidence we are able to accumulate, he has now been upgraded to a suspect. and we are asking new yorkers to assist us in his apprehension. please do not approach him if you see him or know about his whereabouts. notify law enforcement.

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