Bloomberg Markets Full Show (03/25/2022)
From the financial centers of the world. This is Bloomberg Markets with Alix Steel and Guy Johnson. It's 30 minutes into the trading day on this Friday March 25th here are the top Marcus stories we're following for you at this hour. Yields spike bonds selling off. Stocks are trading with a cautious tone. Meanwhile Russian stocks take a hit as the ruble strengthens reversing yesterday's market moves. Biden's final European stop at president business Poland a key NATO member on Ukraine's doorstep. We'll bring you an interview from a top adviser to President Zelinsky. And cutting dependence. The US and the EU will push to boost LNG supplies to Europe by the end of the year. But how viable is the plan. We'll talk to the
German ambassador to the United States for her take from New York. I'm create a group that would Guy Johnson in London. Alix Steel is off. Welcome to Bloomberg Markets guy. It's all about geopolitics here. But I think one of the big concerns is you have these very big grand gestures very big plans at the end of the day. How much of this can actually be done by the summer by the winter even in the next five years. Yet the details really matter and as you say some of the energy
agreements that have been talked about today are lacking in that detail. How those details get resolved will be critical in the way that Europe weans itself off Russian energy. It is geopolitics today but we've seen some really big moves over the last 10 15 minutes in the bond market. As you say gritty U.S. yields fronts and yields snapping higher over the last 10 15
minutes. And that's really worth paying attention to the cause. I'm not entirely sure but let's plug some data into what we're getting here. We're getting the University of Michigan sentiment numbers. They're coming in pretty much in line with expectations. The headline number fifty nine point four. That's a little weaker than the fifty nine point seven we saw last time
around and the expectations as well. Current conditions sixty seven point two. Again a little off but not much expectations going forward. Fifty four point three. Again pretty much in line with expectations. Then I think we get to the critical bet which is the forward looking inflation indicators five point four one year five to ten year inflation at 3 percent 5 to 10 at 3 percent. The big question to my mind though Kristie is consumers sounding downbeat but they got a lot of money in their pockets.
They continue to spend that money. Yeah. And we actually are getting an addition to those home sales data. We're also getting Michigan sentiment data. You are seeing a fifty nine point seven hand on the data there and fifty nine point four was the estimate. You are seeing it come into line a little bit. But once again the question is simply does this stick. Does this mean people keep spending and does the economy run or are you starting to the element of that demand destruction.
Absolutely. Let's get back to the geopolitics now and talk about that. President Zelinsky of Ukraine continues to ask for more. He wants more assistance. He wants the West to continue to deliver and deliver more. So the key question is what now needs to happen. What is the Lenski ultimately going to be looking for. Bloomberg's Maria Tadeo is now standing by with a key aide to President Zelinsky. So the question is what comes next. What do we need. Where are negotiations. Let's hand things over to Maria Tadeo. Let's go to Ukraine to Kiev the capital of a country that's been
at war now for a month is an undisclosed location of course for security reasons. But we're very happy to be joined by herself who is of course a key ally to Presidents Lansky and of course works very closely with him and his cabinet. And sir of course everyday we're very happy to talk to you. We know these are very difficult times for your country especially we think about the
people of Ukraine and the ordeal they go through every day. But I have to ask you one point. This war is going to have to an end or come to an end. And of course you're hoping for a diplomatic solution out of this. What is the state of play at this point. Because we hear a lot of contradictions between the Russian delegations and then the Ukrainian delegation and their take on things. Where are we now. Well thank you. First of all as far as the negotiations are concerned starting from the from the first round of negotiations we're hoping that Russia would be constructive during the negotiations. If you remember during the first rounds there were just not mere listening to two Ukrainians position. Instead they
were only talking about their positions ultimatums. Then they started to turn to listen to here. Now when the fourth round of negotiations. But unfortunately you know even those agreements which were reached during the negotiations are not fulfilled. I'm talking about the men there in corridors executive bodies humanitarian corridor from the city of Mariupol which you know functions not to the full extent. So whether a Russian delegation is serious work in struggling strengthening the time
for the currency. That's a big question because you know they were hoping to get too much achievements on the ground within the first three or five first days of war and then to build with a strong negotiation position. So since they are fairly now on the ground with their proclaimed goals they are waiting. What would what will happen next in order to strengthen their
position. But do is serious negotiations could be on their level. Presidents of Ukraine and Russia. My president keeps reiterating he's ready for negotiations. You ready to see to the negotiation table with President Putin possibly with some other world leaders but unfortunately for the time being with you. The lack of readiness from 14 himself to be a part of the negotiations. And sir you say that Russia is losing the ground or the war on the ground. I know a lot of this information is delicate and you can't disclose it. But when you look at the map of Ukraine at this point where is that the Ukraine is fighting back. Where are you
trying to push back the Russian army. And what is the state of this army. Who will give you two examples. Just just just just to be in the temporarily occupied port of better jobs for City of Brad Stone dissolves in the city of Oslo. We managed to blow up the big Russian transportation vessel carrying 400 manpower and several dozens of tanks and armored vehicles. This is the
example that any city even besieged or temporarily encircled occupied does not under full control of Russian Federation. Yes they tried to storm their administration. They tried to arrest peaceful citizens. They tried to deport peaceful citizens to to Russia or to the uncontrolled parts of Ukrainian territory just like a company in Mariupol. But indeed people are going out on the streets protesting against the Russian armed forces and occupation powers as far as Kiev outskirts are concerned. Also
the situation is much better now because we're where we were where we managed to take back some some smaller cities and villages and you know to reinforce our positions. So currently I would say that the war is about kind of position of war. They're probably trying to regroup their forces. They're trying to increase the manpower because with current amount of manpower they will not be able to to besiege any major city as they wanted to in the beginning. And sir on Sunday Russia gave an ultimatum for Mariupol saying stop the fight and give your weapons. Otherwise everyone will be
tried by tribunal. And Ukraine said we're not going to surrender any of our cities and we're not going to engage on our territorial integrity. Is that still the thinking of the government. Either you're not going to surrender anything but for you also the territorial integrity. And of course I talk about Donbas particularly Mariupol with that corridor of concrete to Crimea. Is that sacred for you. You're not going to give anything away. Yes absolutely. Position of the president government and all Ukrainian people. We will not surrender. We can surrender only one case if they kill all of us. You've been you know the last blood to our so-called blood the Ukrainians. Well we will we
will surrender. But never ever. Not in Mario. Not in only other smaller cities captured. No not in some encircled cities like Switzerland. We will not surrender. We will fail to rearm. As far as the territorial integrity of Ukraine of course. Yes. Never. We will trade away any part of Ukrainian territory be it Ukrainian. Dawn Brad Stone Ukraine Ukrainian. So this is not a negotiation position where we would meet their requirements. And of course we're on the Bloomberg TV or radio we're speaking three herself guy who is a key ally to our presidents landscape and the reasons are why I ask you this question is because today there was a report by the Turkish media suggesting that they had information that Ukraine and Russia had agreed on five points. And the only point of tension at this point was Crimea and Donbas. But based on what you say you're not gonna give anything away. This is not part of your peace deal. Is this report that
was reported today by the Turkish media. Fake is a false. Well let's not kid me on the media reports in all the media. They might be. Yea there is. And there is a principle in the NIKKEI diplomacy. Nothing is agreed to until everything is agreed. So no I will not demand these loans once again. Reiterate we will not trade away any inch any single inch reprints 33. And sir of course there has been two very intense days of
diplomacy here in Brussels with NATO and that of course with the European leaders. But I want to ask you about NATO. It is very clear in your country now says as openly. We've had a brutal reality check. NATO's not going to help us on the ground. And of course maybe we may not have to apply for NATO membership because we're not going to get it. So if you don't get NATO what else do you want to get. And the question of course here is if you don't have needle then are you going to double down for EU membership. You want to be part of a member of the European Union for a peace deal to come to fruition.
Absolutely. Nature is not ready to do to accept Ukraine a strong Ukraine a Ukraine with a strong armed forces like we can see. It's my president told to NATO members please do tell me not about north hearings of Ukrainian armed forces to NATO standards. We proved that the Ukrainian armed forces our highest standards. So yes I mean we are we are. We are not. We will feel the reality. Fifth NATO's regular in Ukraine will not knock on the open on the closed door. My question is whether NATO's capable to defend even its own member states. I mean let's not talk about Ukraine but let's
talk about eastern members eastern flank members of NATO. But make sure we are absolutely Putin our whole plan on having the EU membership. My president applied with the implication of the end of February. Today we're here in the middle of the march and we want this application to be deliberate and to be processed in a very high speed because we don't have enough time to fulfill the usual type of bureaucracy with divers who were thankful for yesterday's decision. You've been constantly reinforce or to reiterate it's you know appeal to the commission to study the process of preparing NIKKEI billion. But once again we talking to all the leaders of the European members please do not you know drag on the time Ukraine is fighting now. Ukraine Ukrainian fighting also known for itself but for all the European countries be in the forefront. So please Ukraine deserve to be a
part of the European family. And what Ukrainians doesn't deserve and agree and people do not deserve you know 2 2 2 2 2. Dick our application in the bureaucracy routine well some reflection period. So yes we are ready to become a member of the European Union as far as as soon as possible. So sorry just to make it very clear because this is very important especially here in Brussels. You've made it clear you don't trust the Russians. You always cite the Budapest Memorandum. You say you gave a lot of away for nothing. Russia is a country that you do not trust. So I wonder and that international peace deal security guarantees that you want. Are you going to insist that EU membership is part of that deal.
Absolutely. Membership of Ukraine to the EU is a part of our security guarantees. But secondly we want to have a set of security guarantees from the world leaders such as US United Kingdom Germany France and Turkey to guarantee that the aggression against my country or any other European state to international partners will not happen in future. Because right here we had this piece of paper with this Budapest Memorandum which never worked. Neither in 2014 when Russia started its aggression nor in 2022 and is an open war. So we did not need another beautiful memorandum. We need a streak. Hard security guarantees a system if you will of security guarantees a new system of security in Europe if you will.
Ukraine should be a core cornerstone of this security system. And yes we are already negotiating with our partners to think about possibility of establishing such kind of guarantees. And saw a lot of this of course hinges on the Russian side too. And Vladimir Putin at this point is very difficult to figure out what he wants because we barely hear from him. But today he did repeat this line. Our goal our military goals will be completed and in particular the liberation of the Donbass. When you hear that. What does it mean. What is it that he wants. Is it just about eastern Ukraine. Are they changing their military goals
because this war is not going well for Russia. Well it's hard to commend Mr. Putin. I mean he come from public himself. No one else within Russia. Good good good good good. Exactly. No. What does it mean. But look just remind you just started from dawn. They started from Donbas eight years ago and they didn't even managed to capture the old Mark Crumpton must know. We see if she's saying this that clearing means he's fiddling with his original goals. Mark Gurman. As far as Donbas system soon we will look let human fulfill is more dumbass as Ukrainian territory and believers.
And sir when he says another thing that I want is that the rights of Russian people are protected in Ukraine and in this country that he believes in many ways is historically connected to Russia and the Ukrainians or Russians are one people. Is that something that for you could be a problem too to concede that perhaps the Russian speakers or Russian background in Ukraine should be treated differently to Ukrainians. No no we absolutely. You know as far as the rights of people are concerned means Ukraine beats Russians Ukrainians jewelry stores. I know Crimea on Tatars overrides. So there are of these people are absolutely treated equally was where are and always be. So this is the artificial prerequisites for his for his campaign or his war against Ukraine. And we do not break. We have to get all the international treaties as far as the
language is concerned as far as the education is concerned as as far as the country is concerned. We were tricked and absolutely rightfully the people in the Crimea. So please do not follow this narrative. It's absolutely no problem for guaranteeing the human rights in Ukraine. So that wouldn't be a problem and of course the other big question is is a Russian oligarch. There has been a lot of debate about how powerful they are and what kind of influence they have on Vladimir Putin. And in particular we hear always the name of Roman Abramovich. Is he participating actively speaking with you and the Russians to try to get to a diplomatic solution. Is Abramovich really playing a role in this.
Well I do not want to come down to the rumors which are now in the press but table terror talk to your answer. You like this any help or if any individual or any international leader to bring peace to Ukraine is absolutely avowedly. And of course yesterday we heard from the president the ISE states say we are not going to actively participate in the war but will want to help Ukraine. And there's already weapons on the way to Ukraine. Are you seeing those weapons and how bad do
you need them. Because of course a war really does reduce a lot of risk. Resources is very intensive when it comes on the weapons. What are you receiving any of this. I guess where central to to our western partners to the U.S. and other countries. Yes we're receiving the weapon. It's not enough. It's too slow. But that's what we need. And what will be further needs. Definitely. I will look them and hear about concrete pieces and items and amounts to war games. But without the support to my western partners would be much more difficult for us to do. It's a struggle. And I'm talking not only about
ground weapons to anti-tank surface to air missiles but about air defense capability. That's what we really need also because we have to close our eyes and any possibility such as fighter jets such as anti air warfare system or into missile system systems. And it's important for us. And sir I know this is a very difficult question to answer but as my last question to you it's been a month of war. You make it clear you're not going to trade Donbas for you. Crimea
definitely is Ukraine that a corridor in my ruble is something you're not going to accept either. And you also say the negotiations are still at some point where the two sides are far apart and you have weapons and you want to continue to fight. So how long can this war continue to go on for. We have heard from some members of your own delegation that Ukraine believes that the fight could possibly continue until the end of April before it settles to the actual talks. Well let's not speculate about the drums of war. We are ready to end this for today or tomorrow. I mean we are ready for peace negotiations. Well the struggle will struggle till the victory not even not ever and never ever will surrender neither in
deceitful part of Ukraine or generally in Ukraine. Definitely all the people of Ukraine and of. Sorry if I could just interrupt you just very briefly if I could just disrupt you very briefly what you say to us is that the West is interpreting what's happening in Ukraine wrong that you don't want just any peace deal. You don't want just any ceasefire. What you say is that you're convinced you can win this war. So you're going to fight as long as needed. Yes absolutely. We will look to be bombed once the peace agreement on the Russian terms. They wanted us to have a peace agreement with the Russians from the beginning. They wanted to all their
provisions to be implemented and their demands have dreadlocks. No we don't have any agreement any any peaceful agreement or peaceful any terms. We will want a peaceful agreement. But you bring in terms because we have Serbian where survive and we will be. Well Sara thank you so much as always we appreciate your time
and of course is similar to say this but of course stay safe and is such a difficult time for Ukraine. Guys back to you. I hear the sirens in the area and you write to this story has to give the children. OK. Maria Tadeo speaking with egos Oscar a top adviser to President Zelinsky bring home rates at the end of the interview just how difficult this situation is. Just how difficult it is to run a government's amazing performances in terms of the the media that the Ukrainian government is running at the moment. RTS President Zelinsky speaking to parliaments after Congress after parliament.
Absolutely amazing. I want to bring you the other headline that seems to be dominating the story related to what Maria was just talking about. Russia saying the Ukrainian operation is now focused on the Donbass region. That according to Interfax. So how do you factor this in to your portfolio. How do you think about investing in such a difficult geopolitical crisis. It seems trite to talk about this maybe at a time when so many are suffering in Ukraine but you've got the geopolitical crisis and you have a very aggressive fed it now seems. Let's put this all together. Joining us now is the founder of WikiLeaks Management such an CAC. He is a former partner Apollo Global Management. Also with us Bloomberg Wall Street reporter Sonali Basak. So let's bring you into the conversation.
We find ourselves in a situation where we have a war in Europe. The inflationary impacts of this as a result of what is going on with Russia is absolutely enormous. You have a Fed that is stepping on the brake very aggressively. Does all of that come together basically to signal a recession. Is that the way that you are now thinking about the world. So I think 12 months ago we talked about the markets being hooked on stimulus and liquidity. And I think this year could be the year that we start
to see what cold turkey really looks like in an atmosphere of heightened valuation uncertainty. And so if we start with credit know I think there's a few things that people are not talking enough about. I think the first one is that the cost of borrowing is not going to be free anymore. The hurdle rates are not going to be ultra low anymore. And what that means is buying a basket of credit diversified and adding leverage on top to get to where you you'd like to be in terms of return. I'm not sure that's going to cut it this year guy. And so I think that you know when you have
equity valuation cushion ahead of you in debt which is less stable because of possibly a recession or at least a slowdown with these rate hikes and central bank printing less money or reducing their balance sheets you probably want to be higher up the capital structure and senior secured than chasing the yield that's at the bottom. And the other reason I say that is if you look at all of the high yield debt that was issued in the pandemic in the 5 percent coupon zip code that's starting to look like it would need some kind of repricing or readjustment when rates are having steadily you know north of 3 percent. And so I think there's not enough talk about this right now. What about the fact that that borrowing costs going up could put many investors in a squeeze here who are relying on leverage to engage in these markets. Do you see when you look around yourself at your rivals at your peers that there's a lot of pain out there.
I do. I'm not sure it's going to be today but I think we're creeping into it. And that's why I said I'd rather be looking senior secured. You know they're looking junior at the moment. And it's also why we see something of a bit of a pivot. So when you have public markets which are in the state they're in right now and what we're anticipating to happen we're probably pivoting a bit to private markets and taking that illiquidity return premium because we can take advantage of some things you're talking about whether it's secondary stakes whether it's private credit where asset managers are bypassing Wall Street entirely whether it's other sectors that you know hopefully are less correlated to the macro economy like inflation like insurance or infrastructure and real estate. Well you were talking it was crowded in here. By the way you were talking about simply the risks that are coming to the economy. Let's talk about its liquidity of the markets the liquidity of the consumer and really corporate America here. There is still a lot of money flowing around simply from the excessive amounts record amounts I should say of fund raising that happened in 2020 arguably 2021 as well not to mention that government stimulus. How does that factor in terms of really preparing I guess the end consumer and a lot of these
corporations for perhaps demand destruction perhaps as commodity shocks. So I think it's a little bit early to tell because it depends on the pace of the developments. We talked about whether you're talking about rate hikes or you're talking about slowing down the economy. But I think as far as investing is concerned and
our pivot let's say to private markets I think you'll see a real flight to the first tier because it'll be quite apparent within a few quarters of mark to market valuations which investment firms have been able to navigate that environment in private markets as things have just become a lot less easy than than let's say in the last few years through the pandemic. It was a very profitable period through the pandemic for a lot of these firms. And I think we'll see much more differentiation in the near term. And if you look at if you look at for example pretty what's going to happen with the repricing of buyout debt and
some of the other securities we've talked about they're going to be repricing into a much less benign financial environment to watch. And so I want to talk about repricing and I want to talk about private assets in the vein of Roman Abramovich over here because you have a lot of peers you know a lot of the folks that are involved here when it comes to the Chelsea Football Club and buying the asset from a brand which whose assets are frozen. Can you talk to you about the difficulties here in an asset sale like this and the dilemmas that are arising for the folks looking to buy assets here from billionaires who are Russian. So look I think there'll have to be transparency when the sale clears. I mean I'm not sure whether you're going to get a full sources and uses page to figure out exactly where the money is coming from and exactly where it's going. But you're probably not that far off because everyone's going to want to know you
know exactly where the proceeds are going. But I think a lot of that has been addressed by what's been announced already that I understand at least the proceeds will be going to victims. What's interesting here is that you have you know the forced sale of a first class asset and operating assets that employs a lot of people and represents one of the important cultural icons of you know of the sports industry in the UK. And there's no surprise I think that you have investors who have a financial background looking at this asset precisely Jihye Lee because it's complex. You have the real estate which is a complex set of parcels the pitches owned by one entity. You have properties around the stadium that will need to be unlocked in
order to develop the stadium. So I think you know in terms of looking at where to put money to work in a in a sort of complex geopolitical environment I think there's no surprise that you're going to have people with the financial background looking at that asset. So I think Casuarina Achilles management founder and Bloomberg Sonali Basak thank you very much indeed. Gracie on set. Thanks for joining us here in London. OK. When we come back we'll read a preview of the situation in the markets. Huge snap higher in front said yields over in the United States. We have moved sharply higher in the last hour actually on both sides of
the Atlantic. What underlies those moves next. This is Bloomberg. Well we're an hour to the U.S. trading session boomers Abigail Doolittle is tracking the moves. We have some moves in stocks but I think a bigger move might be in the bond market. I think you're right about that creating. We have this continued sell off for bonds right now with that 10 year yield at two forty five. That's really pretty incredible. But to go to the top of the board the S&P 500 now up for another day up three tenths of one percent heading to a second up week in a row a gain of greater than 1 percent on top of last week's big move. So there is a bit of a rally here. The Nasdaq 100 sort of fluctuating the
dollar down slightly. But to critics point bonds selling off once again. And relative to a chart that I've shown before above that resistance is going to be very interesting to see whether or not yields come back in on what's called a false initial reaction during the break. He was asked me do you know what's going on with bonds. And I said what comes to me is things can go longer and further than you think. That's what this looks like. However it could also be the fact that the work the world's interest rate probability function of Bloomberg is now pointing to eight hikes this year two percent rate by the end of the year. So you can see this. I mean this is just an incredible backup. And in fact Citi their chief economist was telling John Farrow on the open that he's expecting the next four meetings to be meetings of 50 bip hikes at each meeting. I mean just incredible this catch for inflation. Let's see whether or not it happens. There's lots of debate around this of course. But this
could be of course one reason for the 10 year yield in particular to be flying higher. As for commodities not as much. You can see that gas futures are up. However European natural gas futures down. Oil down two point three percent but up on the week and then we down just a little bit. Lots of mixed moves. But overall guy it does feel as though especially since you have the S&P 500 higher haven bonds lower that we're in this risk on streak that started probably last week.
Yep certainly dead at the moves today are fascinating. I causality I'm trying to work out still but as you say there are a few options out there today. We're also coming into obviously the end of the month which is worth bearing in mind as well. Abigail Doolittle great stuff. Thank you very much indeed. Let's turn back to geopolitics. President Biden has now arrived in Poland. His visit firmly puts the spotlight on US aid to both Ukraine's military and the several million refugees who have now
fled the country. Many of them remain in Poland's. Earlier the US and the EU announcing a deal to help Europe also deal with its energy crisis. United States together with our international partners they're going we're going to work to insure an additional 1 15 1 5 15 billion cubic meters of liquefied natural gas LNG for Europe this year. That's where we place the LNG supply we currently receive from Russia.
Europe is going to need a lot of help on a number of different fronts not only on the energy from but also in managing this refugee crisis that this conflict has created. Bloomberg's Amari our Washington correspondent is in Poland with the president. What message does the president bring to those millions of refugees in Poland right now. Well Guy the message is clear that the United States wants to be able to do whatever they can in order to help relieve Europe and especially these surrounding countries of Ukraine like Poland when it comes to the refugee crisis. UNHCR says 10 million
people have been displaced from their homes more than 3 million on the surrounding countries around Ukraine. And just in Poland alone it really is the epicenter of this humanitarian crisis. More than 2 million people have crossed the border fleeing that Russia's invasion of Ukraine into Poland. And Guy I am right now at the Ukrainian consulate in Poland where you have volunteers here trying to help alleviate some of the issues at this consulate is dealing with an influx of people who have fled Ukraine without proper documentation or they have children who are just too young and they never got a passport for the translation issues. All the basic needs you would need in terms of documentation to live in everyday life to get a bank account
to sign your children up for school to get medical aid. This is what Poland is dealing with right now. And there needs a lot of support. And that is really what I heard as well just a few blocks from here when I was talking to the Ukrainian ambassador to Poland. Humanitarian effort is needed but also the message really from Ukrainian officials that this humanitarian crisis
will not stop unless there is more military support in Ukraine. I'm really glad you mentioned the military support piece of the equation because we've been hearing about countries trying to build up their defenses. Talk to us a little bit about what's going on on that front. How quickly can that defense actually be built up. We had Maria Tadeo actually interview the Ukrainian adviser to President Zelinsky or one of them the as you say to Presidents Alinsky. And he said we're not going to surrender until we get the terms that we want. So this is a war that could last a while. Speak to us a little bit about the defense part of
the equation. Well it is a war that could last a while. You know we have to remember that there's been fighting eight years since 2014 and the Donbas region of course since the annexation of Crimea of Ukraine. A war in Ukraine has been going on for the past eight years. So when you talk to Ukrainians they don't see a very quick easy cease fire because there's been Minsk 1 there's been Minsk 2. And now we have an all out war in Ukraine. What we are seeing from the United States and the president has remained steadfast on this. He will not send any U.S. troops into the into Ukraine.
There will be a no fly zone sir said Press Secretary John Kirby said to me yesterday that sounds like potentially a nice way for a policing of the skies. But he said actually that would lead to direct fighting between the United States and Russia. But what you are seeing is a mass influx and a robust support on NATO's eastern flank. The president has made very clear that he will defend all territory of NATO countries and that would invoke potentially Article 5 if Russia were to hit one of those countries. Secretary Kirby though when I asked him does this mean we could see U.S. troops long term on the eastern flank. His answer pretty much was maybe they just don't know yet. But bloomers
Annmarie Horden and thank you so much for your time and for your incredible reporting over the last couple of days. We are actually looking at a live shot as we were speaking to Emory of President Biden. It looks like he is speaking to troops that are of course in Warsaw right now. We will give you the latest as we get updates from the situation there. For more on the policy front. Let's talk to Greg Valliere EGF investments chief U.S. policy strategist. Greg thank you as always for joining us. Talk
to us a little bit about where Emery left off the defense piece of the equation. Talk to us about what this actually means when it comes to uniting the EU and the United States and what the timeline on that really looks like. But I think this weekend is going to be remembered for a lot of things one is the incredible unity we're seeing within NATO. Another is an agreement apparently on liquefied natural gas. And the other story the biggest of all is that the Ukrainian military is advancing.
They're on the offensive right now. What a story. And there are more and more pieces one this morning talking about problems with Russian missiles not working. Problems with huge Russian casualties. A really dramatic turn of events. Greg the president as we speak is sitting down. He's eating pizza with the eighty second airborne in Poland. It is very clear. Judging by the polling data at the moment that Americans want the president to take an aggressive line on this conflict. They want the president to do more. He has indicated very strongly that he will not be putting boots on the ground as
we've just been talking about. What else do you think the president could and should be doing. Well obviously a guy more humanitarian aid more and more arms more threats of sanctions to Russia. So I think you'll do more of the same. But the polls are tricky right now. They show that the public wishes Biden had moved sooner. The public did not like the way we get out of Afghanistan. But at the same time if Joe Biden committed troops I think the polling numbers would
turn sharply against him. Greg I'm interested in that piece of the equation when you talk about the polling numbers could turn against him. I'm curious about what this actually means for Russia on the on the side of us. I mean we mentioned at the very start of your very first answer the idea that they're losing some of the steam some of the momentum on the battlefield. But does that mean that the effect or the momentum from Russia I should say the decision making from Russia I'm sorry I'm stumbling over my words. Does that intensify. There seems to be some of the concern for the people from the reporting we've heard from on the ground in Ukraine. I think really the key factor here is going to be
Russian generals. They've lost five maybe six Russian generals have been killed in action. I am sure I hear like you reports of a bad morale of the troops not being adequately fed or clothed with big big losses big surrenders on the part of the troops. So I think the Russian military is getting cold feet. Can't prove it. But that's my hunch. And I think in Moscow there are a lot of wild cards that oligarchs and the generals. Greg in Syria we talked red lines. Those red lines were bleach breached and then the policy response was now was not there. How
would you anticipate that the Biden ministrations would respond if we were to see chemical weapons being used in Ukraine. How different would it be. The Obama administration's response. That's a tough one guy. I think that we can't respond. Exactly has the attack occurred. But at the same time I think that we would probably reconsider the open skies policy. We reconsider sending jets. We'd double down on sanctions. But in terms of an overt military response from the US I don't see it right now. Greg we're going to wrap it up there. Thanks very much indeed. Greg Valliere are EGF investments chief U.S. policy strategist.
Sir have a great weekend. Thanks Greg. Really appreciate it. OK. What we going to do next. We're going to have more on that deal designed to wean Europe off Russian gas and to replace it with American gas. We're going to talk with Germany's ambassador to the United States Emily Harber joining us next. This is Bloomberg. This is Bloomberg Markets could get you you're looking at a live shot of the principal room coming up. Clinton Warren the J.P.
Morgan Private Bank global investment specialist. That's it. Three thirty p.m. here in New York. This is Glenn Beck. Let's check in on the Bloomberg Businessweek News Hour which could get. U.S. officials are worried that Russian President Vladimir Putin may lash out dangerously. They say Putin's tendency when boxed in is to escalate rather than back down. Russian troops have found themselves bogged down in Ukraine and Western sanctions have begun to take a bite.
Speculation is that Putin might respond by using chemical or even nuclear battlefield weapons. The mystery is deepening over that crash of a China Eastern Airlines Boeing 737. At least one piece of the plane appears to have broken loose. Well before the impact it was found about six miles away from the main wreckage area that could indicate the plane suffered some kind of midair breakup. And the US and the European Union have agreed in principle to a new data transfer pact that potentially averts a doomsday scenario for tech giants such as Facebook parent metal platforms and others who rely on free flows of information. A previous agreement was struck down due to concerns over the power of American agencies to snoop on the data. Global news 24 hours a day on air and on Bloomberg Quicktake powered by more than twenty seven hundred journalists
and analysts say more than a hundred and twenty countries can get down. This has been that guy. Thank you very much indeed. Let's talk energy policy. As we've been mentioning the US and the EU announcing a plan to replace some of that Russian energy with American LNG liquefied natural gas. Joining us to talk about this is Germany's ambassador to the United States Emily Harbour. She was in Russia during speeches rice in the 1990s. She knows therefore a little bit about the Russian president's trajectory. Emily Harper thank you very much indeed for your time. We really appreciate the time that you're giving us today. Let's
talk about energy policy. Germany is saying that it will be almost completely independent of Russian energy by mid 2024. How realistic is that target. First of all it's a sea change in German and German thinking. Previously hyper connectedness
was considered to be part of the stability. And I think that at the war Putin's war against Ukraine has buried that notion. We understand now that getting ridding ourselves from energy dependence from Russia is a requirement is of paramount importance for our national security. So the announcement you have mentioned just before the American president for LNG exports to Europe would be a huge part of that picture. And estimates say that it may replace about one third of the
energy imports in a two to Germany to Europe from from Russia. So am I thinking is right now by some of this year the German economic minister has said that we want to slash and burn imports from Russia by half. We want to get out of their dependence from coal by September. We want to get as far as we can totally from the dependence from it
by the end of the year. The gas markets as you know a bit different because they're not available in pop global markets. That may take a slightly longer time that knowledge. And we want to be free of energy dependence from Russia. Ambassador it's creepy in New York. We know the German economy minister just returned from Qatar. He's occurring longer term
purchase agreements. We also know that exports are starting to ramp up when it comes to LNG from the United States as well. Can you speak to us a little bit about Nord Stream one. Is Germany willing to halt purchases from that pipeline. We're focusing now on art and on a Covid and on gas and obviously it should be free of you pinch from gas will not happen overnight because the gas market is not a global one as the market is. But make no mistake we are determined and we're doing a lot to be able to replace gas imports from Russia. You mentioned LNG purchases in Qatar in the United Arab Emirates and
we're talking to Norway. We are taking and we're taking note of the announcement of the American president. We are feeding LNG contaminants in and in Germany. We are altering the architecture of our storage facilities. We are accelerating renewables. All of that is designed to cut off our dependence on gas imports. Ambassador you have been a student of Vladimir Putin's career for decades. Why did Germany not see this coming. Why did Germany put so much of its eggs in the Russian basket. From an energy perspective only a few months ago we were arguing about
whether or not Nord Stream too was going to be opening on time. Ambassador why did Germany get this so wrong. Because it had an axiomatic element of German stability thinking that hyper connectedness and that interdependence would be conducive to stability. And I would point out at that event the past 14 30 years from Russia with regard to Germany had been a reliable partner. But that has altered overnight. When Russia made clear that it was going to challenge the fundamentals of
the European coastline and post Cold War order and that it was ready to weaponize energy dependence energy exports and energy relations. And that's a sea change for us. And we have taken swift action to drop our policy conclusions from that. Ambassador in the same vein we know that Germany and Europe broadly has made a lot changes when it comes to renewable energy and we know before the war in Ukraine really broke out there was already issues when it came to energy supply this past winter. Do you feel like the transition perhaps or the speedier
transition to those renewable sources has perhaps left Germany and Europe broadly more vulnerable to these commodity shocks. It has become blatantly clear also as a consequence of Putin's war against Ukraine and that transition to renewables is part of the national security picture overall. So it's not only about environment about combating climate change and moving towards renewables is part of the national security requirements. So I would not totally agree with what you just have said. It's not. It does not delay. It actually will accelerate and transition. Ambassador is Germany now ready to provide its own security or
provide enough to ensure its own security. We are going to see a significant rearmament. My question to you is how do we ensure that that rearmament is delivered effectively. And also what is the primary security architecture in Europe going to be going forward. Is it going to be NATO based or is it going to be EU based. It's good to be NATO based. And it's going to be EU based. They are like communicating pipes. And you should see that European efforts in re ordering its security environment is actually a security asset to NATO as well. The way we operate is that happens in an environment where we are mutually reinforcing what
NATO and what EU can do respectively. So both is important. Ambassador Emily Haber German ambassador to the United States. We thank you so much for your time and for your insights. More conversations coming up next. This is Bloomberg. Want to point out that this snap higher we're seeing in the US 2 year is accelerating now to the upside. We're at session highs with session lows depending on your point of view in the bond market. Let's talk a bit about what's going on in Russia in terms of the energy policy from its perspective. Lawmakers in the country are suggesting that Russia accept Bitcoin as a form
of payment for oil and other resources. Bitcoin currently trading at just below 45000. Kristie this is interesting. So they're only going to allow their friends to do this. This is according to the heads of the state do most Committee on Energy. This is Mr. Ze'ev Zavala. He is saying that friends should be able to pay in Bitcoin. Enemies apparently can only pay rubles. Yeah. And what's interesting here is I mean there's no surprise that this conversation is coming as we see the weakness that you are seeing in Russian assets across the board whether it's the ruble whether it's the stock market even I think bonds I think very very light liquidity. I think to your point what's interesting is that bitcoin is seen as a positive for those
friendly nations. That isn't necessarily something you'd hear in the United States right now. Yeah I think a bigger concern is what is going on visibly oligarchs and billionaires except to try to circumvent sanctions using crypto. That is certainly a fear. I want to come back to this move that we're seeing in the two year a huge leg higher in the two year in terms of yields over the last couple of seconds. Keep an eye on what is happening here. We'll certainly be discussing that with our next guest. James RTS Aberdeen investment director coming up. This is Bloomberg.
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