>> welcome to "bloomberg markets ," i am sonali basak. a warning that this could be a choppy earnings season. we are seeing a flight to the safest corners of the market. we will get a check on these markets. we are watching the s&p 500 near session lows at 1.2% lower. the nasdaq 100 also lower, about 1.5%.

we will talk more about this. more than 2.8% on the day. crude on the rise significantly. $85.92. wti hitting the highest level since october on the news that israel is bracing from up possible attack from iran or proxies. because of uncertainty you are seeing a bid on the two year yield, it is now at 427% -- 4.87 percent. seven basis points of a move. the 10 year yield, a lot of dynamics. the u.s. dollar on the rise in conjunction with yields. gold, ever higher. now roughly unchanged. but gold has been on the move outpacing any equity market this year.

we are watching chipmakers after a report that china asked if telecom carriers to start phasing out foreign ships by 2027 and that would hit american chip giants like intel. jp morgan did not raise its net income guidance. the benefit of higher interest rates could be winning. citigroup profit topped analyst estimates. consumers leaned in on credit cards. another signed a prolonged interest rates will benefit big banks but it is a different story at wells fargo. it missed estimates in the first quarter and it is a sign that loan growth is muted. tough out there for these banks and the s&p. we will talk to stephen biggar at argus research. if you think about what we are seeing told to us from the big

banks, how are you thinking about this dynamic between the idea that consumers are ok, the economy is doing all right but they are not able to set the bar higher when it comes to lending profits? dr. biggar: thank you for having me on. it is a dichotomy that exists today with net interest income. they have not been able to expand the net interest income as much as they would like. very little loan growth across the spectrum. that is a big part of this. it is what the fed is doing. it will persist. banks are inherently asset sensitive vehicles. they cannot do so when rates are this high. in the case of jp morgan, as you mentioned, they guided higher

with expenses. $91 billion. i think that is giving investors a little bit of pause. it bears mentioning that jp morgan was up 17% coming in. that is quite a bit higher than the market. i think expectations are a little bit high for the stock. sonali: how do you think about that expense guidance? when you look at jp morgan, the big difference is they have added head count but they are spending more across the board. the fbi see assessment, a lot of banks are feeling -- the fdic assessment, a lot of banks are feeling the pain. stephen: they will do so will ahead of that to take advantage of the better market opportunity when it comes along.

as you said, some of the guidance was a special assessment, lingering effects from the fourth quarter. we can overlook that. banks are not immune to the inflation story. if inflation is higher than expected you would expect costs for banks and businesses all over. it certainly bears watching. i would have liked to see revenue guidance move up a bit with a higher interest rate environment. we did not get that. on the flipside, what was better-than-expected was provisions. notably so. that tells me they feel like they reserve enough coming into the corner and they do not inspect many delinquencies going forward. that is an offsetting benefit for banks. sonali: how do you think about some dynamics here when you

think about the idea of spending from consumers? on one hand you have jamie dimon and his deputy saying, ok, consumers are holding up, wages have been increasing at a healthy enough clip but lower income consumers are feeling pain. when you look at revenue from citigroup's cards, can it keep growing? are consumers tapping out on credit? stephen: well, most indicators would say yes except of the affluent spending level. most consumers continue to spend healthfully as compared to low income consumers who have had difficulty in the high inflation environment. the worry with credit cards -- banks have a lot of flexibility. they can go out and market

aggressively. it is a very high interest rate for those customers. it is a great boost and income. the downside is the credit cost. right now we have 12-year highs in 30-day and beyond delinquencies for credit card customers. very much a double-edged sword when it comes to the credit card space. the consumer really has held up this economy, as most economists would say, and a big way and they will need to continue to spend like they are. for banks, the one major driver in terms of credit quality is employment. as long as the employment picture stays ok we will not get those delinquencies and charge-offs. customers generally feel good about spending and mow continue

to do so. the fed has to stick the soft landing so we do not get the spike. sonali: quickly now that we have the first view out of the gate, what are you watching the most for the rest of the financial season? you cover a ton of companies in your universe. stephen: next week, bank of america, probably something similar to jp morgan. they have that very large diversification and nationwide consumer branch networks. we will probably get something similar from them. the pure plays investment banks will be interesting. investment banking, financial advisory and trading in particular after moving in different directions. hopefully -- there was some commentary about that from the banks today that they expect a little bit of strength this

year. trading held up better-than-expected in the first quarter. . it is a bit ironic because typically when you have low volatility much higher than in the first quarter it is not a great trading environment but they did fairly well. the financial advisory, there was a 12% increase in the announced activity of the first quarter. banks will not see the revenue from that for the next few quarters until the deals closed but the commentary broadly about capital markets is what is the influencer on the revenues for these banks. sonali: we have to leave it there. we thank you for your time. have a great weekend ahead of another busy week ahead. argus research director stephen biggar. morgan stanley has a report that multiple u.s. regulators are scrutinizing the firm's efforts to prevent money laundering by wealthy clients. we will discuss.

when you are taking a look at what has been reported around this probe, how do you think it will be impacting morgan stanley, which is days away from its next earnings report. >> what is surprising is they share price drop. to some extent some of this group has been known. we have known since november that the federal reserve was scrutinizing. we learned just yesterday this was a lot wider and some offices of the treasury are also digging into whether morgan stanley investigated some of its risky clients to a sufficient degree. it does come at an awkward time because morgan stanley reports earnings next week and a lot of attention will be on its wealth management division because some of its flows have come under scrutiny. the second quarter where net inflows were less than $50

billion and executives pointed to the fact they may have lower margins that stick around. sonali: there is a financial issue and a regulatory issue. what this clout the picture for morgan stanley? it has been as much as 7%, it is less right now but it is the only bank of the big six banks that earnings were down on the year. are there concerns about the path forward for morgan stanley as a unit when it comes to the wealth business relative to the whole business? sally: indeed. the wealth business made steps to eliminate several hundred jobs which only accounted for 1% of the 40,000 employees. in regard to these problems, there is still a lot we do not know. we do not know the gravity attached to them or what the consequences might be. we do not know what.

-- those cc did send -- the occ send the bank a formal warning. we also know the sec sent morgan stanley a list of clients with questions about whether they were adequately vented. this is -- adequately vetted. this is a bit of a cloud. the prior ceo had built up into the crown jewel of morgan stanley. sonali: we thank you so much for your time. the market eagerly awaiting some update from morgan stanley on what is going on with that probe. coming up next we will talk with a ceo from ul solutions. after raising nearly $1 billion for today's ipo. stick with us. this is bloomberg. ♪ i'm thinking... (speaking to self) about our honeymoon.

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sonali: this is "bloomberg markets" and i am sonali basak. safety, testing and inspection company ul solutions going public today under the ticker uls. the company is offering 33 million shares starting at $28. we are waiting for the opening trade. let's bring in president and ceo jennifer scanlon at the new york stock exchange. when you look at the reasoning, you will see the reasoning of why right now is the time to take ul solutions public. people are wondering about the reopening of the ipo market.

jennifer: we are excited to be here at the new york stock exchange. we are a 130--year-old company. we have been planning this ipo for a long time. it has not been an ordinary time in the market but we are an extraordinary company. sonali: you also delayed this ipo to this year. i am curious about how you think about the market volatility as you go public. it is a tough take today but you are plowing through. jennifer: we have been around 130 years and hopefully we will be in this market for another 130 years. the market today is not concerning to us. as we look at the right time for the ipo we looked at longer-term trends around investors who are seeking high-quality assets, when they were ready to take on the ipo risk and jump on board with us. we were thrilled to upsize the

offering. sonali: how do you think about the state of innovation right now? you think about the rush of investor money that has come until the fed rate hike cycle. outside of the magnificent seven it has been a tougher time. you do work with a lot of large companies. how do you see the future of innovation? jennifer: the future of innovation is what fuels ul solutions. customers are each looking at the ways in which they can bring their innovations to market safely, securely and sustainably. the megatrends such as the electrification of everything address the needs of our industrial and consumer customers and we are right there by their sides for their innovations. sonali: i am curious about how you think about your presence across the u.s. and chicago as well.

when you think about the future of talent, do you see any changes in the workforce when you think about expanding your base? jennifer: over 2/3 of our workforce are highly technically skilled. we have 15,000 employees globally and the majority have some type of technical accreditation all the way up to our engineers and scientists with multiple phd's. we have to do everything we can to attract and retain that talent. we believe being a public company will help us do that and continue to make investments in the right markets all over the world to attract the top technical talent. sonali: let's talk about the home city, chicago. there are questions about the changes on the horizon in the chicago public school system. what would this mean about your ability and the city's ability to attract talent and nurture talent within the city? jennifer: we have been in

chicago 130 years. we were founded there when the world's fair was addressing the technology of the day, electricity. we intend to be in chicago another 130 years. we opened a second office in chicago last year to attract that talent because chicago is a great city for young kids to move to and was the number 2 city. we will continue to be in any city that attracts the type of talent that we need. sonali: it is important for the job market. i got my start covering technology out of chicago. looking forward to your debut. we are waiting for the first-rate. ul solutions ceo jennifer scanlon. we will talk about rising tensions in the middle east. more on the oil market, up next. this is bloomberg. ♪

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sonali: this is "bloomberg markets" and i am sonali basak. the major driver of today's trading is the flareup in geopolitical risk. a news report that israel is bracing for an unprecedented attack by iran on government targets as soon as saturday. oil prices are shooting to levels we have not seen since october. how do you think about what happens over the weekend? nick: this is the thing that is occupying our minds at the moment. the u.s. intelligence community and israel and u.s. and israeli allies across the region, what we are hearing is there is a high potential for an iranian strike on israel in the next 48

hours or so. there are a lot of questions around that. for example, is this something that iran would consider striking israeli assets from another country? would it be a direct attack from iran? the situation everyone is afraid of is iran would launch a direct attack on israel. there have been proxy battles and strikes across the region where the two sides have been able to stay in the shadows. if open conflict breaks out where you have iran and israel trading blows that is certainly provoking fears of a much wider war and regional conflict than anything we have seen since the october 7 attack from hamas. sonali: how do you understand u.s. officials are preparing for the conflict? nick: it is u.s. officials in tandem with the u.k., france, italy, g7 allies.

everyone is trying to get messages to iran to tell them not to escalate. the white house has said on the record they are doing everything they can to get iran not to escalate for the reason they do not want a larger war. the fear is a tit-for-tat situation that results in a spiral where iran attacks israel and that israel respects -- reacts with an attack on iran. a white house spokeswoman said the u.s. commitment to israel is ironclad. there is a fear that if israel responds that it pulls in the u.s. and u.k. sonali: we have reported that diplomatic back channels are in overdrive. what is going on under the surface? nick: the u.s. has several means of communicating with iran. it can do so through switzerland

, which is basically its representing power. the u.s. does not have an embassy in tehran. and is also doing so through allies. david cameron talk to the foreign minister. the italians have done so. there is a lot of messaging in these back channels to deter iran and he designed clear what the response is. some say there is indication that iran may be stepping back and others are saying iran is determined to go ahead with the 48 hour time window. everyone is bracing for what may come. sonali: we thank you so very much for keeping us in the loop on a complicated situation. stick with bloomberg tv after the break for balance of power from our washington bureau. markets are having a tough tape today on the back of the geopolitical conflict and earnings that did not meet the excitement investors had coming in.

1.4% down on the s&p, 1.7% on the nasdaq. i am sonali basak. that does it for "bloomberg markets." this is bloomberg. ♪

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>> from the world of politics to the world of business, this is "balance of power."