Bloomberg Markets Full Show (03/16/2022)
From the financial centers of the world. This is Bloomberg Markets with Alix Steel and Guy Johnson. It's 30 minutes into the US trading day on this Wednesday March 16th here at the top market stories we're following for you at this hour. Pleading for peace. Ukrainian President Zelinsky makes an emotional plea to Congress asking for help to defend his country's skies. Meanwhile Russia says a neutral Ukraine with its own armed forces could be a compromised hinting at
possible progress in talks. Decision day the Fed is set to hike 25 basis points today. We know that what will matter is the dot plot the projections and palace news conference. We'll preview it all with Bertha Richards of Marathon Asset Management and plunge patrol. Beijing swoops in to intervene in the sell off in Chinese assets pledging support for financial markets and the economy. It boosts sentiment in Asia and around the world. From New York I'm Kailey Leinz with Guy Johnson in London. Alix Steel is off today. Welcome to Bloomberg Markets. And Guy well it is Fed Day Jarrett. Chairman Powell will be taking the podium later. It was President Zelinsky who took the podium first with an impassioned plea to Congress.
Absolutely. Frustration turned the Ukrainian sky into a source of death for thousands of people. Is this a lot to ask for. To create a no fly zone zone over Ukraine to save people. Is this too much to ask. Humanitarian no fly zone. Joining us now Kelly Bloomberg's Washington correspondent Anne-Marie Holder and she joins us from Capitol Hill Anne-Marie. The call was clear shot the skies or give us aircraft. How is the US going to respond. Well we're gonna be hearing from the president guy as well just before noon today in Washington D.C. and really. President Zelinsky there made this plea at the end speaking in English directly to the president. His tone and sentiment obviously
incredibly emotional imploring Congress to act to ratchet up the pressure on the administration. It was interesting when he renewed his plea for that no fly zone. He said if that is too much to ask then give us the air defense we need so we can protect our skies. And this all became as well. A bit came before he showed a really graphic horrific video showing exactly what is going on on the ground in Ukraine and then ended with a black slate just asking Congress yet again to close the skies. Yeah Anne-Marie it absolutely tugs on the heartstrings. So let's talk about how Congress would respond. Is it going to take
congressional pressure to get the Biden administration to move on this. It potentially will and we've already seen some of that when it comes to a no fly zone. There is bipartisan support to not go there yet. President Biden has said this would mean World War 3. Jen Psaki was asked about this yesterday briefing the press and
the message from the White House is that they believe this would be escalatory and that Russia would view that as the U.S. or a NATO member entering this conflict directly. But when it comes to sending them those Polish fighter jets there is already some Republican support for that. And I imagine the pressure is just going to be ratcheted up after this really emotional plea from President Zelinsky. Emery we understand that there's also been a conversation between the Russians and the Americans regarding weapons being sent to Ukraine from the West. The Russians want it to stop. Is
there any chance of that happens. I don't see that happening as the president just before noon is going to talk about the military aid they are sending to Ukraine and the billions of dollars they are helping Ukraine in terms of not just military but also humanitarian efforts and economic efforts. This call. We have yet to hear the US read out. All we know right now is that Interfax is reporting but we spoke about this yesterday on this show. Jake Sullivan the president's
national security adviser was seeking a call with Nikolai pastry chef. That is his counterpart in Russia. He's the secretary of Russia's National Security Council. And what the United States was seeking that call was to warn the Kremlin about the use of chemical and biological weapons. Right now we're hearing just from Moscow is that Russians have asked and warned about
stopping supply to Ukraine. Emery we've talked a lot about potential aid that the U.S. could give in the ongoing conflict. Let's talk about the role it could play in an eventual peace perhaps. We have the Kremlin earlier saying that a neutral Ukraine with its own armed forces could be a compromise. Ukraine saying it needs security guarantees. What what role what the
U.S. feasibly play in that. Well imagine the U.S. would play a role in terms of security guarantees. That's what Ukraine would ask for security guarantees from NATO which the United States is part of potentially. But we should know when it comes to diplomacy there are tons of headlines coming out from Moscow from from Kiev and they are in the middle of these negotiations. We need to be very careful with how we read especially the markets how they read any of these signals of potential posturing from from both of these channels. And we should note that it is hard at times to take the Kremlin at face value given the fact that you just have President Putin right now. Also on state TV talking about the
need to protect a sovereign Russia as Russia is invading a sovereign country of Ukraine. We should also note weeks before the invasion for weeks the Kremlin had maintained that they had no plans to invade Ukraine. Obviously we know that is not true. Amery final quick question. Congress looks united today. Does it extend any further than simply the US's response to the
Ukrainian crisis. Is this going to be a pivotal moment politically domestically in the United States. It is it is a pivotal moment domestically when it comes to this issue guy and I think you bring up a really good point. It's this issue that has brought Republicans and Democrats together. Yes there are fractures in that relationship even when it comes to this issue. Yesterday we heard from Senate Minority Leader talking about yesterday McConnell talking about the fact that he thinks the administration is dragging their feet. And remember when the White House came out with the import ban on Russian
crude and other fossil fuel products that really was pushed ahead and the pressure came from Congress from Capitol Hill. But right now they are united when it comes to Ukraine. I don't see that at the moment extending to other domestic issues. All right. So we'll see how pressure from Capitol Hill regarding those jets and other issues that Zalewski has raised today may come forward. Thank you so much to Bloomberg's Annmarie Horden reporting from the U.S. Capitol. Now coming up in just a few hours we'll find out how aggressive Fed policymakers are when it comes to fighting inflation amid an ongoing war in Ukraine.
We'll get a preview and the perspective from Citigroup's global chief economist. Nathan Sheets this is Bloomberg. The Federal Reserve is set to raise interest rates for the first time since 2018. Later today policymakers. All but certain to boost their rates by a quarter percentage point at the end of their two day meeting. Joining us now Citi global chief economist Nathan Sheets. He's a former Treasury undersecretary and was director of the international finance division at the Federal Reserve. Nathan 25 basis points is the move. Chairman Powell has all but directly told us that. So what could
constitute a hawkish surprise out of the Federal Reserve today. I think this is a defining moment for the Federal Reserve and I agree that the question is not so much where does policy go. The 25 basis point move has been well telegraphed but I think it's about Tony it's about analysis. It's about the Fed's take action. Worried are they about stagflation. On the one hand yes inflation is is is running hot. On the other hand we're also seeing a massive increase in global economic uncertainty and stresses arising from that. And how does the Fed balance those those challenges. So I think here hawkish would be
more of an emphasis on the inflation risks that we face and a downplaying of some of the growth implications of of of this episode. Nathan presumably at some point high inflation will impact growth. How do they deal with that. Well they say that you know the best the best cure for high prices is high prices but that happens through demand destruction. And I would say that with inflation running at the pace that it's at the DAX a risk going forward. That said for the moment it feels that the consumer in particular has continued to be pretty well positioned to be able to manage through the pricing increases as a result of the hot labor market and also the strong balance sheets. But that may be ultimately where where this thing lands is particularly some of the higher commodities and materials prices in a being a tax and a headwind on spending. And the economy in some sense kind of
cools itself. But that's probably six to twelve months down the road. I would say I'm not sure the Fed wants to wait that long to get some traction on this problem. All right. So demand destruction maybe a little bit farther away. Obviously when it comes to inflation forecasts we won't get new projections out of the Fed today. We've also got a new dot plot. Nathan what matters more the number of dots in 2022 or the terminal rate all the way at the far right side of the chart.
I'd say they're both they're both very important. My expectation is that the Fed will be hiking rates most likely at every meeting in 2022. I'm not sure that they're going to be willing to admit that in their dot plots and maybe it's five or six hikes. But I do think that's important. But I also think that that terminal rate is something no longer term investors particularly in the bond market watch very closely. And if we were to see that in this episode migrate up I think the the long
end of the yield curve would definitely notice that. And that could be a source of volatility. I would be surprised if we saw that at this point. Any meaningful shifts in that terminal rate. But if it happened it would be quite significant. Nathan you talk about volatility. You're an expert in building economic models. How how is your economic model coping right now with the kind of volatility that we're seeing. The inputs are all over the place. Oil is just one of them. Huge volatility
there but you're seeing it in other inputs as well. What are you getting out of the model right now. What are you putting into the model right now. How effective is it in terms of giving us an idea about where we go from here. What I'm really asking is how much certainty do you have about the course that the U.S. economy is on. I don't want to overstate but I think in this environment when there is such a potpourri of shocks we're looking at energy shocks. We're looking at a massive increase in just global uncertainty. At the same time we're still fighting a pandemic
and we're worried about lockdowns even as we speak in Asia that the guidance that our models can give us are very very limited. And I think that you know we're where we're going more right now just by by gut instinct and thinking about well what are some plausible scenarios. And one scenario was there's enough momentum to get through this and that the global tensions are resolved fairly quickly and the global economy's able to go on its way again maybe with a half point or so less growth than we were expecting a few months ago. But I think we've also got to substantially mark up our probabilities of global recession and the three areas. Similar kinds of nightmare or. If I can just if I could just jump in there. What do you see currently. Given. Yes. How cloudy and uncertain things are the probability of that recession is. Or for the global economy. I think one in three. We see a very marked and sustained slowdown in global growth. I think the
reality is that Russia and Ukraine are big materials exporters and the extent that tensions are persistent the disruptions in materials supplies could be very very substantial. I would say the United States is probably a degree removed and maybe the probability here is a little lower maybe like 1 in 4. But if as Greenspan said once United States count long remain an oasis of stability. So if we seen these big shocks in the rest of the world. The US has more momentum but it wouldn't last an appreciable period. Nathan if we see increasingly the global economy retreating from globalization and falling into spheres of influence that are going to impact impact supply chains and trade routes are we moving into a world of structurally lower growth structurally higher inflation and higher rates.
Guy I think you did. Globalization in the aftermath of the string of shocks that we've seen goes back to the trade wars to pin down and the disruptions in supply chains. And now this ongoing geopolitical situation that we have I think that the prospects for globalization ah ah are meaningful and as we globalize them means fragmentation and fragmentation may suggest less efficiency for the global economy. And the implication of that would be softer weaker global growth now parameter rising. All of those effects is very hard. What exactly how much weaker. But could it be a quarter percentage point weaker. Absolutely. And if you think about that relative to baseline growth in three or three and a half percent
and aggregate up that all over a number of years that's quite substantial in terms of human welfare. On that note that slightly gloomy notes. Nathan we will leave it. Thank you very much indeed for your input today. Really appreciate it. Nathan Sheets of Citi thank you very much indeed. What we've got coming up for you next. The clock is ticking on
Russia and some of its dollar debt. What ratings firm is already warning that Moscow is on the verge of a default. We will talk about this next. This is Bloomberg. I just want to draw your attention to the front page of the Financial Times right now. I know we probably shouldn't be pointing in that direction. But let me do it anyway because it's having a market impact. The front page of the FTSE website says
that Ukraine and Russia Caylee drawing up neutrality plans to end the war. How exactly that is going to work. We don't know. But the FTSE is pointing to a 15 point draft plan that would involve Kiev renouncing NATO membership ambitions in return for security guarantees. The devil is going to be in the detail in all of this. There was a report coming from a Ukrainian. A little earlier on saying that this is where the kind of the talks are. It's about
security guarantees. But we are seeing a market reaction to this. We are seeing yields picking up the dollar down on the back of this report Caylee. It does sound as if maybe this is the direction of travel at the moment. But as we've seen before details matter. And I imagine every single one of those 15 points is going to be debated very closely. Yeah absolutely. I would note that in terms of the market reaction guy you're also seeing it showing up in oil. It's been fluctuating throughout
the day but sending it back into negative territory on the prospect that potentially a plan to end the war would mean less supply disruption. And then you're also seeing stocks at session highs. I know we barely blink at a 3 percent move anymore but that's how high up Europe is on the day in the Nasdaq 100 is getting near that territory. Guy. One of the interesting aspects to all of this is where we see some sort of a cease fire in it it appears that there's a lot to talk about here. What we did see some sort of a cease fire. What would that mean in terms of the sanctions that have been imposed on Russia. What would it mean in terms of Russia's isolation from the global financial system. This is obviously a key question today. This is we wait. Payments on some key dollar bonds that Russia has has coupon payments. You got a Eurobond
you as well. The rating agencies are making it very clear that a payments is not made that we will see a default. Let's try and get an idea of what is happening here. Joining us now is our chief emerging market strategist over at Bloomberg Intelligence Damian Sasser. David the understanding at the moment is that a euro bond payments earlier run was made but the financial plumbing didn't allow it to be paid. Can we assume that the same thing is ultimately going to be happening here when it comes to
the dollar bonds as well. Yeah. So let's take a step back. I mean look to be very clear. I've talked to a lot of investors overseas Russian local debt. Coupons have had to been paid on. They haven't been page edge. You know some guy I know the local bonds are a little bit different but Russia is still not paying its foreign creditors the rubles that they're deserve. So now going to the dollar bond market Russian corporates from GTL K Russian rail Gazprom Rosneft have all paid principal and coupons to their foreign creditors in dollars to date. Today's hundred and seventeen million dollars in coupon payments that the
Russian government itself owes to dollar creditors is is under discussion. And what I'm hearing is finance minister suing off is trying to make that payment. But because clear stream and euro clear have cut Russia off from the global payment system they cannot make that payment. So what they've tried to do is create these type C accounts where foreign creditors have to
open up an account in Russia in order to collect payment. But once it's there they can't repatriate those dollars. So it's a blocked account effectively. So this is what creditors are trying to wrap their brains around here on a Wednesday morning. Right. It's not that Russia doesn't have the money it's just that it can't use it. Now correct me if I'm wrong if they do indeed default there is a 30 day grace period. Right. Could we see things changed during that time. Absolutely. Well GTL CAC
didn't pay until yesterday. Their payment was due on the 10th. So yes they're all kind of trying their best to get the dollars they can either offshore or however they can get their hands on it get it into the clearance system to make payment to their creditors. But yeah you know I mean it's going to be an interesting 30 days for certain given some of the headlines that you guys rightly pointing out here about you know maybe a little bit of a de-escalation in Putin's war in Ukraine. Were there to be a default. Damien what would be the long term implications. Well I think the long term implications are clear to me guy. I mean Russia is a pariah. You know investors are not going near it. In fact you know the last print we saw on many of these
bonds including the bonds that they were 20 cents on the dollar. My sources are telling me that you know big fund managers mark those bonds all the way down to five cents on the dollar. So you know clearly people investors are preparing for the worst case scenario. Well talking about maybe not the worst case scenario. Let's shift to one of the other markets. I know you will watch closely and that is China. What are your thoughts on the verbal intervention we got out of Beijing overnight. Well it's interesting because it's the first time that Leo had that the China's highest economic and finance had basically made retraced all four major issues affecting investors all at once. And so I'm talking about stable capital markets the ADR issue here with foreign listings property curbs their crackdown on big tech all at once. What's interesting here though for me is you know that
big rip we saw in Chinese equities you can call it a short squeeze. You could call it play protection buying. You can call it a lot of different things at the end of the day. Markets were severely severely oversold not just in China but globally. So I think a lot of this is kind of you know I don't want to say a dead cat bounce. I hate that word. But yeah I mean I mean maybe a little bit of bloodletting here was in order. Damien is there any action behind these words. Just very briefly. Well guy I do not see China adhering to financial fast B to the E the USA Accounting Oversight Board as it relates to many of the companies that are listed in the ISE here in the U.S.. You know I just don't see that happening anytime soon. There's been no real progress on that front despite what you would hear otherwise over the last 24 hours. And I think that's a real key
issue here. And that's why you're seeing the Golden Dragon Index why you're seeing 80 is really still under pressure amidst it all. All right Damien Sass our Bloomberg intelligence thank you so much for your great expertise. Now coming up we'll talk about China. We'll also talk about the Fed. The CEO of Marathon Asset Management versus Research is joining us next. He thinks the Fed will move eight times this year. What that means for credit. This is Bloomberg. We're an hour into the U.S. trading session. Bloomberg's Abigail Doolittle is tracking the moves. Abigail we still have a while to go until that Fed decision but the equity market is already making its moves. It is certainly making its
move. Kaitlyn It looks like it may stick. We have this relief rally in place for a second day. In fact the S&P 500 right now on pace for its best two days since the end of January. Up more than three and a half percent. You can see ISE nice gains for the Nasdaq 100 in the stocks but it is this Golden Dragon China index that Kailey Leinz Damian and Guy were just talking about. It is extraordinary. Up 25 percent in one day to my memory I cannot remember another index up twenty five percent in one day. That's the best day ever for this index. Not surprisingly on that rebound whatever is behind it the oversold the talking four out of Beijing relief rally. There it is for sure. Now of course the Fed is ahead.
Let's take a look at the 10 year yield because it is up a little bit on the day. But over the last several days there's been this massive massive backup. It does look like there could be some consolidation. You can see roughly an uptrend here and then you can see a range.
It would not be surprising to see the 10 year yield fall back toward the bottom that range around 175. Should that happen it might suggest the Fed could somehow in some way be a little bit more dovish than what investors are looking for even if that does include the one rate hike. And of course everybody's pricing in and a chart of the S&P 500 that we took a look at last week that shows a bullish divergence may also support this idea that the Fed could be dovish. Take a look
at the RSI or momentum indicator on the bottom. We see higher lows. The S&P 500 has these lower highs. That bullish divergence may suggest you could just see that S&P 500 on the bullish momentum guy climb. Let's call it forty five forty six hundred and be a nice relief rally in what does seem to be though a more bearish context on the year. Absolutely. How dovish how hawkish
will the Fed be tonight Abigail. Key question. Let's try and get an answer to it and figure out where we go from here. The last time we spoke to him he said he expected eight Fed rate hikes over the course of this year. Joining us now is the chairman and CEO of Marathon Asset Management. He of course is Bruce. Bruce Richards. Bruce great to have you on the show again. Talk to us about where you are in terms of expectations for the Fed right now. Are you pretty hawkish in the past. You expect Jay Powell to be hawkish tonight. What do you think's going happen. It's pretty remarkable. I mean think back just a second to reflect.
Is exactly this being exactly two years ago March of 2020 when Powell brought down rates 100 basis points then walked on a cue the tighten QE easing program that led to five trillion dollars of printing of money. And so here today we are with inflation raging out of control at 8 percent. We've never seen ever in the history of this world rates zero. With inflation raging like this having gone from sub 2 to 8 percent. So the Fed is so far behind the curve. I think what he says in his language is going to be to calm markets. But what he has to do is control inflation. And so every meeting this calendar year he's going to
have to raise rates. Well Bruce if the Fed is as behind the curve as you say well 25 basis point hikes do the job. But he's already shown his hand. He's already told you at his last correspondence that which is you know I don't think he's supposed to show the hand then but he did. They said 25 basis points. So that's in the market. That's what we all expect.
That's what we'll be. But what's more important than that is kind of what comes next which is a tightening in every Fed meeting over the course of the next year. And then one calendar year you have eight meetings and so the seven left this year. So every meeting this year and into next year a tightening expected to get Fed funds where it should be which is 2 to 2 1/2 percent. And mixed in there you'll see a couple of 50 basis point increases. And you know me. You know how bad inflation is when
even Tom Brady comes out every time. So don't get me on that. We're following Tom. It's just like every household's feeling. This is food fuel housing all goods all services. You know every company and every company call. We talk to you know he's talking about inflation and talking about their cost of inputs cost manufacturing right. Later. And so building froze. And when I say also guy clearly is that when you have the first second third and fourth. It's not could be problematic for markets when you have that fifth sixth and seventh. That's when the financial
conditions tighten enough. And that's when the pains could be felt in the marketplace. So when I think about markets I look at the equity markets where they are now properly priced at say 18 multiple. I think for the high for the year we'll get you back to where you started the year at forty eight hundred. I think we'll probably get around forty five or forty six hundred.
Supposed to sell into that I think at some point this year later this year as conditions really tighten. You can look at wiping out all two thousand twenty one gains which is giving the S&P back down to 30 hundred as it relates to credit is the war starts credit and the worst for start for fixed income that we've seen ever with high yield down 6 percent thus far down 9 percent. Emerging markets down 4 percent and is also really good opportunity with the coupons that they provide to be owned by credit at very very cheap valuations. Bruce when we talk to the asset managers when we talk about the
idea that you should still be fully invested they say absolutely a hundred percent. You need to be fully invested in this market. When you ask them about cash and how big a part of your portfolio should be cash right now they put a face because they say that you should not be in cash. What do you think cash does to a portfolio right now. Do you want to be in cash. How much cash do you have. What are you thinking about when it comes to cash. Well in the public markets in the credit markets you know our outlook is yielding in the liquid markets. You know 5 6 7 percent. And you take a look at emerging markets. When you take Russia out of emerging markets which comes out of all the
indices at this month's end you talk about being down 4 percent on the year with a 7 percent coupon. And so we think when that market recovers it could be up 15 20 percent total return. That's the liquid markets in the private credit markets because we provide a lot in the private credit markets in the form of lending in the form of capital solutions. And I think violence
is going to be a big year because equities are down and the leverage loan market floating rate assets people like and so real will provide all kinds of financing to the buyouts. And so I think it's going to be a big big year for buyouts. And private equity is attractive multiples. And how open the leverage loan market is. And so our campus solutions business our asset based lending business is a deal. It is a double digit type return with very low volatility.
And so I wouldn't be in any cash. I'd be taking any cash I have and finding private investments both in private equity and private credit and deploying cash that way as it looks to the liquid markets. Look you have to be able to trade. I think this is trader's market. And so I think there's times to be in cash when the equity markets go up and you're talking up 40 600. S&P is first off. Let go a portion of your equities because you'll be able to buy back 15 percent lower before this whole Fed tightening cycle is over. So I think it's tougher. It is more a lot of volatility. Cash isn't going to earn you anything is
going to get it right by. Inflation is not a very smart thing to do. All right. So if you don't want to be in cash another place where it hasn't been fun to be for the last couple of weeks is anything that touches Russia. What can you tell us about your Russian exposure. While rush hour exposure here at Marathon remains some index
price it's part of the index is coming out of the index. Except we have no Russia exposure and so we're very proud of the fact that we were defensive as it to to Russia and you know a little listen Z Belsky is is is the person of the year. And you know I think you know teachers all the world leaders what it is to be brave and to have vision. And so watching him address Congress this morning to a standing ovation is amazing. But this is Putin's war. And Putin has turned Russia into a very difficult place to invest. Some characterize that as a pariah country. And we don't want to have any capital deployed in Russia. So there's other places for us to go. What I'd say is you know you just look at what happened yesterday with the
nationalization of all the airlines. And so there's 523 planes that the West US and European investors have a lease with with Russian airlines. And all those planes have been seized. All five hundred twenty three of them. And then on top of that Putin yesterday signed a decree to nationalize the Russian airlines. So which other industries is also going to nationalize. You know
Marathon has a nice sized aircraft leasing business. And we don't have a single plane in Russia no single plane on leased to any Russian companies. And so I'd be very cautious with Russia. I don't think the West should be deploying capital there. And I think that defaults and we talk about this earlier today in our call with Europe clearing and the freezing out and sanctions and regulations and the freezing of their capital the Russian sovereign overseas that the fall is going to be rolling in one after another after another. It will take a few weeks yet but sometime in the second half of the second quarter. So you're talking about May in June. You'll see the fall after the fall after the fall hit. As the West has characterized Russia as a
private country. Bruce let's turn our attention to China. Chinese stocks are coming roaring back today after being blasted for quite some time. But nevertheless a massive rally is the Chinese authorities seem to get in behind the Chinese asset markets and say that they have their back.
What do you think about the Chinese economy. Are you allocating cash there. What do you think of it right now. And do you think a rally like we're seeing today has legs. So yes I think the rally has legs. But I'll tell you why in just a second. So China China's economy is growing at 5 percent. The Chinese government is lowering rates not raising rates. So you got ahead of that curve and they're making those adjustments. And hey who's the vice premier to prison. She came up make some very bold
statements today. That's going to help Chinese CAC Chinese economy. You talked about the easing of regulation. He talked about the we'll have to see what follows up with that. But these are regulation and the support that the Chinese government is not provide both markets as well as. It is very clear. Vice Premier hey who is the second in control in charge of all economic policy in China was very clear to say not only the economy and housing markets. And so with that ADR sit rep. I wouldn't want to be those folks that capitulated yesterday to date before selling their 80 Rs selling your Chinese holdings in the hole because I think it's we're in recovery mode. They came in very very cheap on a valuation basis. And what we were worried about is geopolitical risk. And you were also worried about you know taking regulations which would further prohibit
these companies to prosper. And they've come out and made some very bold statements they have made in the past. So. So I think those folks at Seoul will deathly regret that. I think this move that we're seeing this morning will have legs. But this is initial jump of that and they retrace some of that. But over time I think it will prove as the Chinese government realizes that they don't want to destroy their private companies. All right. Bruce unfortunately we have to leave it there. Time is always too short. But thank you for giving us your time this morning. That's very rich chance. Marathon Asset Management
chairman and CEO. This is. This is Bloomberg Markets I'm Justin Martin and you're looking at a live shot of the principal room coming up tonight on peer to peer conversations with David Rubenstein Arab co-founder and CEO Brian Chesky. This is Bloomberg. Keeping you up to date with news from around the world. Here is the first word. I'm just a Morton. South Korea says that North Korea's latest missile test appears to have failed.
That comes days after a report that Kim Jong un's regime was funny to fire its first ICBM in five years. The South Korean military says the missile was presumed to have failed shortly after launch. The Kremlin is hinting at a possible progress in peace talks with Ukraine. A Russian spokesman says that a Ukrainian proposal
to become a neutral country would retain its own armed forces could be viewed as a certain kind of compromise. Talks between the two sides are underway. The president of Ukraine made a dramatic appeal to Congress for more help fighting off Russia. On a video link Vladimir Zelinsky invoked 9/11 in the attack on Pearl Harbor. And he pleaded for U.S. help in clearing the skies of Russian warplanes. Russia has turned the Ukrainian sky into a source of death for
thousands of people. Is this a lot to ask for. To create a no fly zone zone over Ukraine to save people. Is this too much to ask. Humanitarian no fly zone. President Biden has rejected the idea of a no fly zone. There's concerns it could escalate the conflict into a war between two nuclear armed nations. Global news 24 hours a day on air. Anton
Bloomberg Quicktake powered by more than twenty seven hundred journalists and analysts and more than 120 countries. I'm just some Morton. This is Bloomberg. Justin thank you very much indeed. Let's pick up on where Justin left off. We need more on Ukraine. Let's go now to the European Commission vice president Morose Shevchuk which. Commissioner thank you very much indeed for joining us. There are various reports today floating around and the FTSE has it on
its front page right now. The Financial Times Ukraine and Russia draw up a neutrality plan for Ukraine to end the war. Austria and Sweden are both neutral countries. They are both members of the European Union. If we see neutrality for Ukraine as being the way forward to peace would that rule out the possibility of Ukraine joining the European Union. I think first and foremost we all have to admire the skill of President Zaleski and his courage not only in leading his people but also to form the public opinion about this atrocious war in Ukraine and his ability to bring it really to our living rooms and to make sure that we do everything possible to stop this terrible war and to help Ukraine to develop to rebuild.
Hopefully now the sooner than the late term after this conflict and of course we have to support Ukrainian getting good peace. And I think that good space for me would be something which should be supported by Ukrainian leaderships and by Ukrainian people. And as you know the state is very very clearly that Ukrainians brought such a sacrifices for fighting for European ideals and European values that are clearly demonstrated. They are part of a European family. And of course I would like to see
them to be part of family rather sooner than later. And I think that we should do everything possible to make sure that we will prepare them well for the next week next month and also for the European perspective. Well speaking of doing everything possible is the European Union doing everything it can to support Ukraine in the ongoing conflict. What else can it do.
I think we just approved four packages of sanctions I would say of unprecedented scale and on an unprecedented pace. Because if you look what's happening with the Russian economy and I think you just reported on it a few minutes ago the ruble is crashing stock market disclosed. European companies are the least state assets of the Central Bank of Russia are frozen. They they planes are not flying. Their ships are now sailing. And we've just adopted a strategic decision to reduce our dependency on Russian and fossil fuels which is a major source of income by two thirds already by the end of this year. And on top of it what we are doing for Ukrainians is again unprecedented support materially for the first time European peace facility is used and I'm talking about half a billion euros not only to help with non-lethal but also lethal equipment to help the Ukrainians to defend for themselves. And the last point I would mention because it's very human want and it's a very important one. We open our arms to currently more than 3 million of refugees women and children are coming from Ukraine especially to central eastern European countries. As you know I'm from Slovakia and I never thought that we would have a war on our soil within two
weeks. One hundred eighty seven refugees and the poles are almost approaching 2 million. So this is I would say unprecedented show of solidarity. And we are paramount into looking what more we can do. OK well let's talk about what more you could do with the chef here which would the European Union prepare. Be prepared to guarantee the security of Ukraine in a peace deal. I think that
we will of course explore all the possibilities. What I can tell you is that we all do right now thinking together with the United States of America. That's part of my mind my visit here to really further strengthen this stellar trans-Atlantic bonds which I think again be demonstrated how important they are over the last two weeks and already think how can we not only stop the war but rebuild the Ukraine to build again the houses apartment blocks to give the investors confidence to go back and also to create the future for for these young young generation. And of course we will be discussing with our allies what more we can do to guarantee to guarantee that Ukrainian stability and Ukrainian peace. Unfortunately here we are dealing with a very tough real politics situations because it was the Budapest Agreement. There have been you know the parties chart and all these was violated by Russia. And therefore I think we have to learn from that experience and make sure that next time when we will do building these new global and European peace and security architecture they have to be much stronger in that respect. Mr. SHAPIRO IBEX we're short on time here but of course another difficulty is the
European Union's energy dependence on Russia is an oil embargo like the US has undertaken entirely out of the question for Europe. As I said we decided just a couple of weeks ago that we are going to reduce our energy dependence. They've been then see by two thirds by the end of this year. It's enormous task because if you look at the prices we are already paying in Europe. It would represent so that American viewers would understand it a little bit better. Something like twelve dollars per gallon. Our electricity is currently six times more expensive gas nine times
more expensive than here in the United States. But nevertheless we clearly said and demonstrated we are going to get rid of the dependency on Russian gas. And my request here was let's work pretty closely with our American partners. We need LNG. We need 60 to 100 DCM. We need to work together on energy security. And I and I believe that the goal to get rid of this dependency on
Russian fossil imports it's clear our objective and we will achieve it. All right. We have to leave it there. But thank you so much for your time today. Morass Chefs Covid European Commission vice president for Inter Institutional Relations. Thank you. This is Bloomberg.
We have breaking news out of Japan a seven point three magnitude earthquake has hit off of Fukushima and a tsunami advisory has been issued. This is according to NHK that Japan's public media organization. But again a seven point three magnitude earthquake guy. This is a very big quake and we understand it's shaking buildings in Tokyo. Absolutely so 2016 Fukushima. That was initially reported at seven point three. Then upgraded to seven point four. We know the damage that that cause. We need to watch and see what the impact of this is going to be. Clearly the Japanese have made significant advances in terms of dealing with such quakes. But nevertheless this is a huge quake. This is a major earthquake
that has just hit Japan. This is Bloomberg.