Russia, Vladimir Putin, Elon Musk discussed on Bloomberg Daybreak Europe


You A second bid to create safe passage for over 200,000 civilians trapped in the southern city of Mario pole in Ukraine failed over the weekend This morning Russia says there was fresh agreement for a temporary ceasefire to enable a humanitarian corridor in several cities but Ukraine has rejected a proposal to evacuate people to Belarus and Russia calling for routes to other areas in Ukraine Russian president Vladimir Putin has reiterated the war will continue until Ukraine accepts his demands and halts resistance This is lowering hopes for a diplomatic resolution A decree by signed by president Putin will allow Russia and Russian companies to pay foreign creditors in rubles the decree establishes temporary rules for sovereign and corporate debtors making payments to creditors from countries that quote engage in hostile activities against Russia Russian corporate bonds denominated in foreign currencies have plunged to deeply distressed levels in recent days as investors where the impact of sanctions And a teenager from Florida who saw to fame tracking Elon Musk's private jet is to pack of sanctions And a teenager from Florida who sought to fame tracking Elon Musk's private jet is turning his sights on the yachts of Russian billionaires Jack Sweeney started tracking the aircraft of Russian oligarchs at the end of February Now he's following their yachts as the tycoons come under increasing sanctions pressure following Russia's invasion Sanctions on Russia's elite are seen by many as a way to increase pressure on Putin who cancer the billionaires as part of his inner circle Global news 24 hours a day on air and on Bloomberg quicktake powered by more than a 127 countries in more than a 120 journalists You're listening to Bloomberg daybreak Europe Caroline Thanks so much Hannah George with all the latest news Now bear market for European indexes that Jackson catcalled down more than 20% from their recent high all in natural gas prices soaring as the U.S. considers an oil embargo joining us now as Gilmore chief economists at actor Jill very good morning Thanks for being with us What is the war in Ukraine mean for European economic growth and for inflation that is already running at close to 6% Surely this is going to mean a huge shock the potential for factories to shut down in Europe Yes it's very significant So the very beginning of the crisis we did a very simple simulation and looking at what an inflation could look like with oil prices that $125 per barrel and gas prices which met in more for Europe actually than oil and also €125 per minute hour And the result was that we should expect inflation to increase by at least one percentage points and GDP to be hit to the tune of one percentage point as well And it was probably a conservative calculation Now we have actually gone further than these than the threshold On oil and gas as well gas in particular is rising very very fast And an issue for Europe is that we use natural gas especially natural gas from Russia To plug any gap between supply and demand of electricity So there's a very direct link between the price of natural gas and the price of electricity So you end up with an impact on household persisting power very very quickly and you also end up with an impact on business input prices So it is detrimental to margins as well So as things stand today my 1% shock of last week is probably already obsolete and probably looking at at least 50% more than that So when does this tip over from being an inflation stock inflation shot we already have an inflation problem into a growth shock So clearly this is going to the oil price is going to trim a bit of GDP growth from western economies But when does this start to get to get serious Get serious very very quickly Because what's happening is that it's bad inflation in the sense that it doesn't reflect an improvement in wages and improvement in the labor market It's just an additional cost that has to be borne by existing disposable income So if you lose one one and a half percent of your disposable income are you going to reduce your spending as well by between one and one and a half percent So consumption is going to be hit pretty quickly It's already starting to show signs of weakness We had in for instance to disappointing figure for consumption in January already in France We already have strong inflation at the end of last year and in particular a very steep increase in energy prices especially in some countries such as Spain and Italy fits already having detrimental impact on consumption But I would expect also gradually the impact to start impacting our business investment decisions as well because all the sectors which are intensive and energy will be facing the generation and their margins and when your margins are deteriorate you usually don't want to invest too much So it's probably going to materialize first and consumption but then not much later in business investment as well Okay All of this is sort of things that we can think about things that investors can plan and perhaps model but how do you wrap your mind around the unthinkable the difficult question of the chances that Russia's invasion of Ukraine actually grows into a minute too conflict between Russia and Europe Maybe 12 days ago that seemed bit far fetched but perhaps it's not now So what is the framework for thinking about that Well we're not there as you say Boss yeah I mean we can always want to think about these things If we get into an allowance foundation it's the way our economies operate that will change War economics is very different from normal peacetime economics You've sort of state intervention covenant control That would shake probably the market very very deeply It would be an entirely different paradigm but we're not there yet.

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