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00:00From the world of politics to the world of business this is balance of power with David Westin. From Bloomberg World Headquarters in New York to our TV and radio audiences worldwide. Welcome. It's a balance of power. I'm Jill Matthew in for David Westin. Markets are swinging wildly again today with stocks lower but off their lows. And we're gonna get more on that this hour. But first we want to look at how the Biden administration is dealing with waves of turmoil. And joining us now is Bloomberg's Annmarie Horden and Emily Wilkins live from Washington D.C.. Thanks to both of you for being here. And Marie we're watching the stages of this standoff in real time here. I'm wondering when we're going to see this document that we heard about last week. The U.S. agreed to provide a written response following the meeting between Secretary of State Blinken and the foreign minister Sergei Lavrov. Do we know if that's about to emerge and will we get to see it. We're not sure yet exactly when we're going to see that written document. It does seem like the administration is taking their time. We do know that they are going to respond to what their Kremlin's want which is written responses to the President Putin's demands. We don't know yet on timing and unclear if they're going to make that public. If you remember Joe in Geneva Sergei Lavrov had said that the U.S. had assured him there would be a written document but he said it's up to United States if they're going to make that public to the press. Emily you covered the leadership in Congress Speaker Pelosi and Chuck Schumer the majority leader in the senator asking for briefings from the White House. They want to be briefed. Members want to be brief. Do we know if that's going to happen soon. So that's actually happening right now. You're going to see a leadership staff as well as some committee staff be briefed. Remember lawmakers currently are in D.C. there. Most of them I should say are back in their districts. And so there's going to be potential for a lawmaker briefing when they are back in D.C. next week. But you're also hearing now that a number of lawmakers from the House they are planning a trip to Ukraine to better understand the situation there. And that includes the chairman of the House Foreign Affairs Committee Gregory Meeks. I suspect it will take some time for rank and file to hear about that Emily. Is that going to be a separate briefing down the road. It could very well be I mean certainly the members who are going on this trip have had been selected for a reason and obviously they'll be sharing what they find with their colleagues. And really there's so much talk about sanctions in Washington and of course not everyone is on board. When you when you hear from our European allies things start to get a little bit more complicated. The White House talks about it like they've already done. Are there too many cooks in the kitchen to make this work. Well there's just a number of issues facing domestically. Different leaders and right now we're actually going to be listening in momentarily to allow Schultz the German chancellor and Emmanuel Macron the president of France. They're having a joint press conference before they meet. Of course this comes before. And that Kiran is going to hopefully get on the phone. He'd like to to speak to President Putin potentially a little bit of a Paris charm offensive. But what it comes down to is that the economic sanctions that the United States would like to put on the Kremlin would be incredibly harsh not just for Russia but the economic of Europe. We're talking about an economies that are very much tied to Russia when it comes to trade. It's their fifth biggest trading partner. The U.S. ranks something like 30. And then the biggest issue with Boris Johnson the prime minister United Kingdom spoke to today at the House of Commons. He said that the issue he said that what we're discussing and this gets to the heart of it is that particularly our European friends are just so dependent on Russia for their energy supplies. And that is what really this really comes down to. We'll keep you posted on the Paris charm offensive with great reporting from Annmarie Horden and Emily Wilkins. Thanks to you both. With Russia continuing to mass troops on the border now with Ukraine the question remains about actions that the Biden administration can take sanctions. And I spoke specifically about that with deputy treasury secretary while the ISE ammo and asked him what measures the White House can take to restrict Russia's access to dollars. Late last year when we started to see Russian troops are massing near the Ukrainian border the president Secretary Yellen and the Treasury Department to start considering options that would mete out an economic consequence for Russia if one Russian troops were to touch foot into Ukraine. And that's exactly what we've been doing since then across the department but not just here at Treasury. We have the secretary and myself have had dozens of calls with our European counterparts to make sure that we're the actions we're taking here in the United States would be met by significant actions taken in Europe as well. And those conversations continue on. And what I can tell you today is that I was here in 2014 when the United States first took actions when Russia invaded Crimea. And the options we're considering today are far more significant than the options we have taken then. And they would only be taken if the Kremlin made the decision to invade Ukraine. But our preference of course is for diplomacy. But the choice belongs to the Kremlin. Do you speak to some of the measures that you're considering though. Would you. For instance support cutting Russia out of the swift financial system kicking them out of swift. Joe what I can say is that all options are on the table. And what we've done is that we've worked closely with our allies in Europe to make sure that we have a carefully designed set of sanctions that would have a significant impact on the Russian economy. You need to have the buy in of our European allies. If I could just interrupt before you approve any sanctions in the US. So Joe the president has made very clear that our goal is to make sure that we work in unison with the Europeans and what I can tell you is that in our conversations we've been aligned in terms of the sanctions that we will and the actions that we want to take. We have a shared goal in terms of respecting the sovereignty of Ukraine. And in terms of standing up and ensuring that we have sanctions at the ready in case a Russian troop enters Ukraine you let a review of Treasury sanctions policy. So I know you have a better sense of this than frankly most people in the department. What would be different this time to your earlier point how would you make this hurt as we have not seen in the past with sanctions. To Joe one of the things that we have done following the sanctions review is ensure that early on in the conversations we have started to talk with our allies. Because one thing that we recognize is that when the US takes actions it has an economic impact on any country. But taking actions in collaboration and coordination with our allies has an even more and more increasing of an impact on those countries. And that's why we've worked so closely with our European allies. And now we're also working with our allies and partners in Asia to make sure that if Russia takes an action that violates Ukraine's sovereignty we'd be in a position to have economic costs that would be brought to bear. Well Deputy Secretary if I could transition to the other story we wanted to ask you about this tax filing season is officially underway this week and we're hearing reports of massive backlogs that you're facing at the IRS. Millions of unprocessed returns. What warning do you want to give our listeners and viewers today as they prepare to file. So Joe what I can say is that this is going to be a frustrating tax filing season for the IRS but also for tax filers. What we can tell them is that the IRS is going to do everything they can to reduce that frustration. But in lots of ways the challenges the IRS faces were brought on by the pandemic but also by being underfunded for the last decade. Today at the IRS they have as many employees as they had in 1970. Last year the IRS received more than one hundred and nineteen million calls when on average they'd been receiving 35 million calls a year. So the president recognized this from the beginning and that's why he's called for a budget increase for the IRS and also as part of the build back better massive investments the IRS to deal with these challenges. But in the short term the key thing that we can do is make sure that people filed their taxes online that they make sure the information is accurate and the IRS is going to do everything they can to both deal with the backlog but also answer questions from the American people as they go forward. Well can you also give them some breathing room by moving back the deadline again the filing deadline. So Joe the reality is that we wanted to open up filing season as early as possible because the American people who want their refunds. We want to make sure that they could get their taxes in as quickly as possible. The truth is that if you file your taxes online and all the information is accurate you should get a refund within 21 days. That's why we're committed to opening up filing season as soon as possible. And we're encouraging people to do this online because that's the fastest way to get your refund and to make sure that you don't. Making sure you don't have errors. You mean that the IRS is able to process your return quickly. It sounds like though you are sticking with April 18th as a filing deadline this calendar year. So that's our plan. People have options in terms of making sure that kind of getting information get the information in. Our goal is to make sure that we process that information as quickly as possible. You're proposing an 80 billion dollar infusion right. That was part of the build back better plan that has yet to be passed. Obviously I just wonder how much of that money would be used for enforcement for enforcing the laws on the books. So a great deal of the money. Joe as you mentioned will be go towards enforcement but it's important to realize that one of the greatest tools we have in America is we have a highly compliant citizenry. People comply with tax laws and they want to comply. Eighty three percent of Americans pay their taxes on time. That's where we are. And we think that in order to help those people it's also important that as part of that 80 billion dollar proposal there's money for services to improve services so that we have more people answering the phone. But then the last piece of course is technology. Today the IRS has systems that were built technology systems were built in the 1960s and 1970s. Improving that technology will help people who want to call the IRS can go to go on mind rather than going on the phone. It also put us in a better position to go after those people who are trying to avoid paying their taxes because we'll have technology. They'll allow us to better analyze that data. Leslie deputy secretary as we walk into another Fed meeting this week I realize that you're going to defer questions about interest rates to the Federal Reserve. But as an economist as someone who works at Treasury helps to run the agency I wonder how concerned you are about repeating history that the tightening regime could go too far and push the economy into a recession. Joe you're completely right. One of the great things we have in our country is an independent Federal Reserve and I'm going to defer to them. One of the things that we do here at Treasury is we look at all economic indicators and my conversations with CEOs over the last few weeks and months. What they've told me is that they're confident about the American economy in 2020 to demand for their goods and services is high. Yeah the labor market is tight. And one of the things they're asking us to do is take every step we can to encourage more people to come to work. And the thing we're going to focus on in the administration is taking steps to expand the capacity of the US economy by bringing more people into the labor market by dealing with supply chain issues because we want to make sure that the growth we see in the economy continues not only for 2022 but for the years to come. My conversation with deputy treasury secretary while Adi Amo. Coming up Congresswoman Marcy Kaptur of Ohio co-chairs the Congressional Ukraine Caucus and will be with us next. This is balance of power Bloomberg TV and radio. This is balance of power on Bloomberg TV and radio. I'm Jill Matthew in for David Westin for Bloomberg. First World News. We go now to Mark Crumpton Martin. Joe thank you. The U.S. troops on heightened alert for deployment to increase. NATO forces in Eastern Europe are quote ready to go at a moment's notice. White House Deputy National Security Adviser John Finer told CNN today this isn't an aggressive step by the alliance. He called it a defensive stance and quote a reassurance step in response to what Russia has done and quote The European Union is aiming to make travel within the bloc easier. It's adopting a new system of Covid related travel rules based more on a person's vaccination status than on where they're coming from. Travelers with a valid digital Covid certificate wouldn't be subject to additional restrictions. Exceptions will still be allowed for travelers from high risk zones. China is offering to help Hong Kong ramp up a mass testing blitz to stem an all macron outbreak at the financial hub. Health officials are struggling to contain a growing cluster of Covid infections and a massive public housing complex. The government has imposed five day lockdowns on towers housing thousands of people. But Hong Kong chief executive Carrie Lam told reporters today water lockdowns are not yet necessary. Global news 24 hours a day on air and on Bloomberg Quicktake powered by more than 27 100 journalists and analysts in over 120 countries. I'm Mark Crumpton. This is Bloomberg. Mark thank you. For more on the situation in Ukraine let's bring in Ohio Democratic Representative Marcy Kaptur who is co-chair of the Congressional Ukrainian Caucus and joins us now from Toledo. Congresswoman it's great to have you. You know the people of Ukraine better than most in Washington. You've certainly traveled there more than anyone in Congress. You know Presidents Lenski on a personal level. We heard the defense minister from Ukraine say they do not expect an open invasion from Russia. Is he right. Well Russia's invaded already. I mean she has been inside of Ukraine since 2014. So I don't think you can take anything from Russia at face value. She has made her intention clear not just in Ukraine but in enjoining nations in Moldova and Armenia in Georgia. She is about trying to reconstruct the former Soviet Union a piece at a time. And by taking chunks of nations it prevents their accession formally to entities like NATO our secure defence alliance our umbrella of liberty over Europe. Sounds like you would not be surprised to see Russian troops cross the border is that right. They're already across the border. Whether I get your point what I mean a new invasion from the Eastern Front I they could come north they could come east they could blockade at the Black Sea. They have many alternatives. They have they have a very ready military. That's not posturing though Congresswoman. That's actual military activity. Should it be matched by military activity. Well I believe that when a nation's border such as Ukraine which in the early 90s voted for independence from the Soviet Union which collapsed that the people of that country that voted 90 percent 90 percent for independence and have worked mightily over three decades to try to build a society with constant. Constant interference and invasion now by Russia. The people of Ukraine deserve the right to be free. Their borders should not have been crossed. And I do believe that the free world has a massive responsibility to allow Ukraine to access West and to use every means we have to stop the Putin led regime that is causing such havoc in a part of the world where people have a right to a better way of life. Are you in touch with the Biden administration. Congresswoman I know that the leadership in Congress is being briefed today but Speaker Pelosi is asking for all members to be briefed by the White House. When will that happen. I know the speaker is trying to get that secured on schedule. We have been kept informed by the Biden administration. I actually traveled with President Biden to Ukraine in 2014. He Senator McCain and I was the House representative traveled together. It was a remarkable moment in history. That was the year that Russia invaded by what you did know. I have never in all my travels experienced what I did in Ukraine as the people of Ukraine cheered for the United States of America as we marched in a long parade with all the nations of the world. And President Biden and Senator McCain and myself waved to the crowd representing this country. The applause reverberated across these old cobblestone streets and buildings. No other nation was treated that way. And now President Biden and Vice President Biden was seen as the leader of the free world. Well based on what you're hearing from the administration now fast forward several years. Would anything short of crossing the border trigger sanctions or should it trigger sanctions against Russia. Well I think we have to tighten sanctions right now during the Trump administration. President Trump allowed the construction of the Nord Stream to pipeline across Europe from Russia right into the heart of Germany. There were no sanctions applied. And so it was Congress that actually took the lead in trying to stop that kind of freewheeling behavior across Europe to make Europe dependent on dirty Russian gas. And I'm very proud on a bipartisan basis. Republicans and Democrats stand together for Ukraine's independence and for tight sanctions and more as it is necessary. I want to get to this from a slightly different way. As you know the Pentagon says more than 8000 American troops are standing by now at the ready to move into Eastern Europe the Baltics if need be. Should we be having a conversation in Congress. And if that is the case would you pursue a new use of force authorization a new piece of legislation to make that happen. I am very open to that. I think we have to work with our allies certainly those Olathe Estonia Lithuania Poland Hungary all the nations that are right at the edge. And they know how. Ruthless Vladimir Putin really is. So I think that we have to put that coalition together you can see it forming right now. We have normal structures like NATO. Ukraine is not a member of NATO because Putin doesn't want it to be right now along with several other bordering countries. But I think we have to employ both a defensive posture that's strong. And it's got to be clear. And also we have to apply very stiff sanctions including on the Nord Stream to pipeline. Thanks to Congresswoman Marcy Kaptur Democrat of Ohio. Coming up we'll check the markets for you. The S & P 500 down about 2 percent at a very volatile day of trading. This is feeling familiar. This is balance of power. Bloomberg TV and radio. This balance of power on Bloomberg TV and radio I'm Joe Matthew. Thanks for being with us. We check on the markets now and bring in Christy Gupta. Another wild ride today. I have to start with what happened late yesterday though to see that remarkable recovery that I was seeing on the air last evening. Who's gonna write the first dead cat bounce column. I'm not sure it's out there but is that what that was. It kind of felt like it right. But here's why that might not have been a dead cat bounce or perhaps why should be a one of the consensus calls here essentially that when you see that kind of volatility intraday volatility in the market then you had the VIX at one point hit a thirty nine handle four. For context here a normal number on the VIX pre pandemic is about 12. Getting below 20 has been kind of a new less of a risk gauge during the pandemic area. So to hit 39 in one session is a really strong kind of signal that perhaps this kind of optimism in the market. I think a lot of people are counting on well we're not quite there yet. And that really shows goes to the point that you are starting to see the selloff really intensify. You aren't necessarily seeing it stop. The big kind of consensus on Wall Street once again is going to be do you start to see or question I should say is do you start to see the technical selling stop at a 10 percent technical correction which is where we are right now or do you see it hit 15 20 percent. What's pulling us lower now and in who's in charge is retail back to betting on sports. Is this institutional. Who's driving it. Yeah. Well it'll be a mix of both. I mean we don't know for sure exactly because the flows come in a day after when you have the market action. But based on yesterday what you did see was a lot of the kind of initial selling was retail driven and the dip buying that you saw was institutional. So to see that happen again would be interesting. Notice though that a lot of this kind of moves happened towards later in the session. They happened the last hour or so of trading and that tends to be a play or look ahead of what you're going to see in the Asian session or flying into the Fed meeting the decision tomorrow and some really important earnings especially from big tech this week. You expect more volatility because of all of this. Yeah. Well there's two pieces to it. One more meeting about valuations for tech which is a major conversation for the stock market broadly. You are going to look at two factors. Price and earnings were hitting the price part. Right now we're seeing a lot of that steam let out of the markets. The earnings piece is going to be the other part of the equation. But for the people were weighing earnings versus the Fed. Of course the Fed is going to take the cake. Thanks as always to critique GUPTA. Coming up Dr. Daniel Roth of Michigan's Trinity Health Talks Omicron and how hospitals are handling the latest wave of cases. This is balance of power burg TV and radio. This is balance of power on Bloomberg TV and radio. I'm Joe Matthew. Thanks for joining us for Bloomberg First World News. We go to Mark Crumpton. Joe thank you. Pfizer is beginning a study of a Covid-19 vaccine that specifically targets the Oma grown variant. The drugmaker and its partner buying tax said today the study will examine the new formulation as an initial two dose regimen and as a booster dose. Earlier this month the Pfizer's CEO Albert Waller said the companies were also developing a hybrid vaccine that would combine its original shot with an American fighting formulation. European governments are struggling to decide what specific actions short of a military attack on Ukraine should trigger sanctions on Russia. EU nations are focusing on other forms of possible Russian aggression including a disinformation campaign a cyber attack limiting gas supplies or attempts to destabilise the Ukrainian government. But officials say countries can't agree on how to respond to the different scenarios. More problems for British Prime Minister Boris Johnson over allegations of rule breaking parties during the pandemic. London police are now investigating the claims. And the prime minister's office has confirmed that staff gathered in Downing Street to celebrate his birthday. During the first lockdown in 2020 a government report on the party's may be published this week that could add to the political pressure on the prime minister. Global news 24 hours a day on air and on Bloomberg Quicktake powered by more than twenty seven hundred journalists and analysts in over 120 countries. I'm Mark Crumpton. This is Bloomberg joke. Mark thinks stocks remain lower but they have pulled off their lows of the day. Take a look at how the Biden administration is dealing with the volatility a bit now as we rejoined Bloomberg's Anne-Marie Hoard Dern and Emily Wilkins in Washington. Anne-Marie you spent some time talking with Brian Deese. He joined us last evening and I asked him about that remarkable swoon that we saw on Wall Street and some of the destruction that we've seen in the stock market so far this year. He made clear once again that this president is not only not obsessed with the markets like his predecessor but is simply not watching them as a gauge of the health of this economy. That's right. And that was a similar tone. Jen Psaki the press secretary struck yesterday when she was asked about the volatility in the stock market. She again said unlike his predecessor this president does not care as much about swings in the stock market. She also noted that since the president took office what this administration is focused on is working families and getting that unemployment rate down. And when the president was inaugurated the employment rate was at six point three percent. Today it stands at three point nine percent. So that's the kind of messaging we are seeing from the administration. It's about working families and making sure they continue to deliver on jobs. Emily we're going to get a Fed decision tomorrow. The conversation has been focused squarely on inflation not just in Fed circles market circles but in political circles in Washington D.C.. Do you expect the meeting tomorrow will arm Republicans with with more ammunition to go after the Biden administration on rising prices. I'm confident whatever is said at the meeting tomorrow. Republicans are going to find a way to spin it. Look they have really latched on to this issue of inflation. They know that the average American is being hurt by this amount of inflation. And they know that this is going to be something that they can really push throughout the elections should inflation continue to remain high. And you've seen the White House have to continue to respond. And they've talked about their most recent talking point has been about sort of breaking up larger conglomerates getting a little more competition of course at this point. There's so many factors that are going into inflation at this point including Covid and a lot of uncertainty there about what the next several months are going to look like. These questions Ann Marie tend to bring answers about the competition and innovation bill that the White House is really hoping to see pass the Congress. It would include the CHIPS Act. As we learned today the White House says the chip shortage will last well into this year the second half of this year. Yeah. And Gina Raimondo recently when she was asked about inflation higher gasoline prices she quickly pivoted to what she thinks needs to be done when you're when this administration is fighting inflation when you look at the inflation basket. So much of that price increases comes from the auto sector. And that is because there is this deep shortage of chips. And she's saying there's 52 billion dollars worth in semiconductors in that China competitive there which actually the House also just released today that what we should know be a big win for the administration because that has bipartisan support unlike the president's other centerpiece his economic agenda. Bill back better. We'll have a lot more with Annmarie Horden and Emily Wilkins later on this hour. Thanks to both of you. As we turn to Covid down the U.S. just posted the most virus deaths in eleven months. Even amid signs that a peak in infections could be close we are getting the. Joining us now to discuss all of it Dr. Daniel Roth Trinity Health chief clinical officer and executive vice president. Doctor. Thanks for being here. As we just heard from Mark Crumpton in reading about this on the terminal Pfizer buying tack or going ahead with a clinical trial on an all micron specific vaccine. My question for you is what's the point if this is already burning out. It might be gone by the time that vaccine is approved. It's great to be with you. Joy it's a great question. I think the point is is that we still have many people across the country who haven't been vaccinated. And even if they have had a previous infection with ISE her daughter are still at risk of serious illness. And so we still have that need. In addition we do want to do everything we can to minimize people's risk of getting ongoing infections and severe illness. And so like the flu shot where we've gotten used to getting an annual shot which encompasses the most common variants Covid will likely as it becomes endemic will likely be in the same place where we will get an annual shot which encompasses the most recent variant of the virus. Am I right by the way to suggest that Omicron is beginning to peak. Does do you see that in the data. We do. So we see that in the data in the communities where where we are serving where across the country we are seeing the numbers peak. Now let's remember a couple of things. One is they pick up there peaking at a very high level levels that we've never seen before both as far as the number of people infected as well as people in our hospitals. And so although they're peaking we'll be in a very high level and a very high risk situation for the next few weeks. And it's not the same across the country. So we saw peaks in the East Coast and really we're seeing those numbers come down. But in places in the West and Midwest we're still seeing cases increase. It really also depends where you live how much of a concern are overcrowded hospitals. I know this may be peaking now but that's the point. If we haven't crested the peak of this wave yet and we're seeing admissions in some areas at dangerous levels Dr.. Yeah and that is the ongoing concern even as we think about well when does this become endemic and when do we just live with it. We can live with it when we get to a place where we're not overwhelming a health system you know with each of these surges and so on that requires things like vaccination and then precautions and masking. But today we still have exhausted caregivers across Germany often across the country who are dealing with a hundred fifty thousand people in the hospital after 22 months of this. And so it's gonna be a few weeks before they get a welcome respite. And we hope that that respite will be enduring. Well living with it also means preparing for the next variant. Yes. What are your thoughts on that. What can we do to get ready for the next one. And do you expect that we'll see a weakening of the variance continuing like we saw with Omicron. I think one thing's for sure is that we don't know. I think we proven anything in the last 18 months. It is that each of the variance has been a surprise. And the next one will bring its own surprise. I do think over time they'll become less incrementally you know more severe or infectious. But that remains to be seen. I think what we can do we can get vaccinated. We can reduce the amount of spread both within the country and globally. The other to keep in mind is the most recent variance both Delta and Micron developed outside of the United States. And so we also have a global problem. It's a global pandemic. And so we need to make sure that we're vaccinating across the country across the globe to reduce the risk of future variance. Doctor I had to show my vaccine card when I went out to dinner the other night as I'm joining you from New York. I've got three shots on mine at one point. I wonder at what point rather will that be expected to have evidence of a booster to be considered vaccinated. And could that even go to four shots. I think two parts of that question. So one is I think today you know even in the CDC says you should be up to date with your vaccine. Yeah pretty overwhelming number of people. That's three shots. For some people what's for today if you have an immune deficiency. But for most of us adults that's three shots. You should have two shots in your MRI and a primary series and a booster. And so that that is what people should expect today. That's the best protection that we can provide for people. And I think that we all should expect that on an ongoing basis we probably will see annual boosters or annual shots. And so that number will continue to grow over time and your card will continue to evolve. What worlds are you envisioning spring and summer time. Obviously there's a seasonality to this as well. Are we all going to be back together going out to eat going to shows going to concerts in the summertime. So here's our hope into your earlier question in our hope is also dependent on not having another variant catch us by surprise. But I do think that like many people on the heels of this I'm a crime surge will have a significant amount of people who have some degree of exposure and with that immunity to the virus. And so subsequent surges in the spring and summer. If there are any will be smaller in scale or size and hopefully also in severity. So hopefully we'll see the spring. I don't think it'll be gone. I think sometimes people have said well this is the last I don't yet understand relapse and we may see smaller ones. And then lastly remembering it's a heterogenous country. We're a big country. And within some communities we have varying degrees of immunity both from vaccine and previous infection. So we'll also see variation state to state in the level of uncertainty here almost two years later is remarkable. Thanks to Dr. Daniel Roth chief clinical officer at Trinity Health. Coming up we take the geopolitical impact to talk about the impact on the markets with you and rally of BDA Partners. This is balance of power Bloomberg TV and radio. This is balance of power on Bloomberg TV and radio. I'm Joe Matthew. U.S. stocks taking a beating amid concerns over the Fed and rising tensions on the border between Russia and Ukraine. There are a lot of drivers though. And for more insight let's bring in and rally co-founder and managing director of BDA Partners. You and I wonder how much of the loss we're seeing. Some so much of the destruction that we've seen in these recent days on Wall Street have to do with concerns about geopolitics as opposed to market fundamentals the Fed and earnings this week. Investors didn't need another reason to feel skittish. But they've got one. Ukraine is really really I think terrifying investors globally at the moment. We're hoping of course for a diplomatic solution but I think there's a real lack of confidence about what might happen. And when you combine that with uncertainty around inflation and the Fed and also uncertainty around Mark Gurman and Covid it's really feels like a witching hour with triple triple triple threats at the moment. Triple witching. If only would take me into that trade though. Yuan why sell your investments because of something unpredictable may or may not come together on the other side of the world. Is this institutional trading. Is it retail that's worried about what might come next. Shery Ahn I think retail retail we're seeing a lot of nerves among retail investors. That may be evidenced by the sharp declines in crypto among other things for sure. You know a rational investor should should buy the dip not sell a. But I think that that nervousness that sense that you know we might be at the end of a super bubble at the end of a super bubble perhaps comes a super implosion. So people are really worried about quite significant corrections. And I think that's why why you see whipsaw markets to 2% moves in. Stock markets are now routine and I suspect may be routine over the next few weeks. What's the biggest concern that you have about the standoff with Russia in Ukraine as in energy prices. I think energy prices. You know the overall effect of I'll say yes energy but also food inflation. I think globally you know President Biden is getting a lot of criticism here in the U.S. for inflation but actually it's a global problem. And Ukraine is responsible for roughly well as them is the number three grain exporter in the world. Russia is responsible for 35 percent of of Europe's natural gas. So any interruption in supply chain both for agricultural products or for energy products is going to be really painful again in markets which are feeling a bit fragile today anyway. You mentioned the triple risk facing this market. It might be more than three. And we're going to hear from the Fed tomorrow. What do you expect in the statement. But more specifically what do you expect from the markets. What do investors need to hear to prevent another down day tomorrow. We want calm. And I think people recognize interest rates have to go up over time. I think people recognize inflation is more persistent. It's not transitory. But actually conversely or perversely typically the Fed turns a bit dovish when there's real geopolitical risk in the markets. It may be interesting to watch whether the Fed comes up a little softer than we than we expected might even delay some of those interest rate or signal that they are potentially going to delay some of those interest rate rises that we expect for later this year. Is that the kind of event that might help to have to form a bottom in this market. Look I think I think that you know low interest rates are going to be received well by the stock market. They always also said if if we think that interest rates aren't going up too sharply then then the market will like it. But again if supply supply chains look like they're at risk if we continue to to be really concerned about food and energy transportation across Europe then then the markets are absolutely ready to to take another day. I'm afraid while we're talking shortages here there's the computer chip shortage as well. The White House today says it will likely last longer than first thought likely well into the second half of this year. It's just another layer you and for investors to worry about. How damaging is that news. I'm not so pessimistic about semiconductors. I think there is a shortage. I think it's interrupted the automotive supply chain over the last year. But we're seeing very positive efforts by suppliers to ramp up supply. And actually in many parts of Asia we're seeing manufacturing yields go up gradually. We're also seeing very strong comments by some of the biggest players globally notably TSMC and Intel about building more capacity. So yes there will be some short term challenges but I think in the medium term there's some reason for optimism around semiconductor supply. You are not going to be talking about a chip glut a year or two down the road. It sure as eggs is eggs. Glop follows a shortage that's for sure. Many thanks to you and rally co-founder managing partner BDA Partners. Good to see you sir. Coming up we'll head back to Washington for a look at whether President Biden could get any part of his agenda through Congress this year. This is balance of power. Bloomberg TV and radio. This is balance of power on Bloomberg TV and radio. I'm Joe Matthew. Thanks for being with us. Joining us now Bloomberg's Annmarie Horden and Emily Wilkins in Washington D.C. as we consider the way forward this year if there is one for the Biden agenda. And Maria I'll start with you. Build back better fell apart the end of last year. Voting rights didn't go any further this year. We do seem to have some momentum in the aforementioned Competition and Innovation Act that ships act. But what about that massive plan. Build back better there. Talk about breaking it up and maybe voting on individual items. Is that a realistic thing. Well it's quite a blow to the president right. When he started his new year following the end of last year when Senator Manchin said no and basically we have to start from scratch. And the president pretty much signaled that last week in his press conference saying he thinks he can get pieces of it chunks of it. But what exactly would that look like. Because he still has the same problem. He has to get all 50 Democrats in the Senate on board because he will likely have no Republican support potentially. There's movement on climate potentially Elder Claire. But I think the big hurdle is going to be those child tax credits that a lot of progressives in the president want to see. But seems like a massive situation in terms of trying to get Senator Joe Manchin on board for that. Is it a distraction to talk about build back better Emily when I know we have this omnibus that could be passed and keep the government funded past February 18th and maybe be a vehicle for some of these individual items. What do you see. I don't really think any one of the lawmakers who I talked to see build back better as a distraction from this necessary government funding. I think they see both of them as very critical. I mean look the thing about the build back better that socials hacks and policy plan is that you can't necessarily just move something smaller through recommendation. You could potentially slim down the bill but you might not be able to move a single piece through it. And so there's a policy aspect to consider as they try and figure out what they can or they can't move forward with. But one thing I've heard from progressives from moderates just across the Democratic Party is that if they want to win in the upcoming midterms they need to pass something else. They can't just sort of throw up their hands and say well we're not going be able to move with Joe Manchin even if it's just a smaller piece. They need to move something. I always point back to the memo. And Marie you remember the memo from Joe Manchin last summer. He was very clear about what he wanted. And he really was has been rather consistent with that agreement. Going back to what June July with Chuck Schumer. Why not. And I know we've talked about this idea before but now that we're in the new year why doesn't the White House sit down with Democratic leaders on the Hill and just go through that list. If that bill was written and it was passed it would still be over a trillion dollars. The Democrats would have something to take credit for. Well do you like the president was trying to do that all last summer and the fall and into the winter. It just is it speaks to where the party is right now. And there's a great piece in The Washington Post specifically looking at his chief of staff Ron Claim which many in them on the moderate side of the party think that he is pushing the president too much into the progressive hands. And if you go back to that letter that Joe Manchin has written about and that he has spoke about over months. One of the issues Joe Manchin mentioned takes with is the fact that inflation is running so high right now 7 percent. This is the biggest problem facing the White House going into the midterms. It shows up in the polls. And clearly yesterday it got the best of the president and his frustration. That'll be certainly all the talk tomorrow. Emily when the Fed makes its announcement issues the statement and so forth. But Kevin McCarthy the minority leader in the House was way ahead on this. Right. Republicans have made this issue number one. Oh absolutely Republicans know that this is an issue that impacts your average American and that this is something that is really big for them and they've been very clear in pointing that out. Republicans they see this as something that if inflation continues throughout this year something that can really help them in the midterms which frankly Republicans are already in a great place to win. Just from a historical precedent it's usually the party that's not in the White House. That is the one that that's going to do well in the midterm. Amari is the CHIPS Act. The nearest thing to a potential win the White House has right now. I would say so. This already was voted on in the Senate and the House with bipartisan support. They just need to come together and make sure they can agree on one final package. And the bottom line to this chip package is how are we going to be competitive with China. And every Democrat Republican can get onboard with that. Thanks to Bloomberg's Anne Marie Heartburn and Emily Wilkins. We'll keep you posted on all of these coming up. Balance of Power continues on Bloomberg Radio. Our second hour. We'll talk to Roger down the U.S. Travel Association. This is Bloomberg.

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"Bloomberg: Balance of Power" focuses on the intersection of politics and global business. U.S. Deputy Treasury Secretary Wally Adeyemo and Rep. Marcy Kaptur discuss the next steps in U.S. policy toward Russia and Ukraine. Plus, insight into whether the Biden Administration is concerned about market volatility. (Source: Bloomberg)

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