>> i am mark crumpton with first word news. the group of seven nations is set to announce efforts to set a price cap on russian oil. officials are saying there is not yet a hard agreement on curbing it is a key source of revenue for russia. the were in ukraine, limiting its profits from rising energy prices have been the main topic so far for the g7 leaders gathered in germany. the leaders of finland and sweden are set to meet with turkish president in madrid tomorrow in a bid to convince him to drop the objections to their membership in nato. ahead of the summit, the

secretary-general and swedish prime minister held a joint news conference in brussels. a special session will be convened to discuss the fight against terrorism. >> we all agree we must redevelop our efforts in the fight against terrorism. that is why, at the summit in madrid, i have convened a special session devoted to make those efforts. mark: turkey has accused finland and sweden of providing safe haven for outlawed kurdish militants his insurgency against the turkish state has plagued -- has claimed tens of thousands of lives. european union government are confronting the risk of a splintering energy market, as russian costs -- russian cuts natural gas supply in response to the war in ukraine. an increase in gas supply disruptions following eu sanctions in russia has member

countries upping winter preparations as they seek to refill the pleated storage. in china, the covid zero policy appears to have the spring outbreak under control. new infections have been less than 100 a day for almost two weeks and no major cities are in a widespread lockdown. in addition, restrictions in shanghai and beijing continue to be lifted. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. i am mark crumpton. this is bloomberg. ♪ >> welcome to bloomberg markets. kriti: we started the session with green on the screen and quickly turned around.

such a scene, such a landmark of weeks. the s&p 500 is down only to tense of 1%. that is a big deal, given the volatility we have seen it year to date. look at the nasdaq continuing to underperform. the stocks that were leading you higher in the premarket are leading lower in the regular session. outside the u.s., in canada or even let america, you can see real outperformance. the question is, is this an america story or will the rest of the world catch up? jon: certainly in the canadian market, there is the energy influence. we are seeing oil prices back up today, hovering around 110 dollars per barrel. when you look at the s&p 500 leaderboard, it is littered with energy companies, examples like marathon oil. technology is still a concern. if you've got news that is not all that inspiring for investors or, in this case, coming from the analyst community, whether it is fc or coinbase, those are

taking a hit in trading. we continue to look for any signs on the earnings front on what is happening with corporate america, the outlook on the economy, and we will a late -- we will await those numbers later. maybe they will give us a few more tidbits on the economy. kriti: that continues to be the theme, this idea of where we go. are we in the middle of recession, is it behind us? where do we go from here and how do you player in the market? for a little bit more market analysis, let's get in with matt maley. thank you for joining us. i have to ask, where we go from here? we have major calls coming off this morning that this recession, however long or short it may be, the next couple of weeks are really going to be seen as a bear market rally. do you agree with that. >> i tend to agree with that. every bear market in history has seen some very sharp rallies. several, as a matter of fact.

we even had a small one in february. this could turn out to be a bigger one. we have something coming up on thursday, so maybe some windowdressing there. after the corporate lies, we all know and have heard about how gdp is forecasted to be almost cut in half. we are going to start off with bank stocks. they have actually been a little poorly. they did really well right after the stress test came out last week, but they come at the very beginning of the earnings season. that is going to be very important. jon: against that backdrop, is it fair to say you don't think the markets have yet bottomed? >> i think we have only gotten through part of the process. one of the key things is pricing in a recession or not.

the first test of what we needed to do, the vast majority of what we seen -- what we have seen so far is pricing the change in valuations. we have had to bring those valuations down because we no longer have the fed and other global central banks for liquidity, masses of mounts of liquidity into the system. that gives artificially high valuations. now, we are barely getting close to fair value. of course, the earnings come down and that means the market will have to fall through to meet fair value levels. i think we are going to have lower levels at least before the year is out. kriti: you brought up valuations in particular. i'm wondering how much of this is recent valuations seen in the post-pandemic era, especially after extreme games. -- extreme gains. >> it's funny, because a lot of people forget or may be don't realize that the lead ups in

2020 were actually induced, too. it got to 20 times earnings on the s&p 500. what happen in september 2019, we had that repurchase agreement catastrophe it that market froze up, -- i used to call it the non-qe qe program. these to say it wasn't qe. that push the market up to an expensive level. we had some artificial moves over the last seven years. i think that reevaluation level still has some big swings. jon: let's talk about positioning right now. given your concerns about where the equity market will go from here, i know you are leaning a little bit more toward defensive names. can you give us a little bit more on the strategy play? >> i turned bullish on crude oil way back in 2020.

crude oil and energy stocks. at the end of may, i became a little more concerned on a technical basis. they have come down quite a bit. i just worry that the situation with people saying oil is going to come down further because of the demand, for the innovation in t -- before the invasion in ukraine, oil was about $75. yes, demand had something to do with that, but a lot of it has been this thing with ukraine. as long as russia is not pumping oil to the rest of the world, i think oil prices are going to remain high. therefore, this group is going to bounce back nicely. i like that area. other areas are high dividend payers because they pay you in weight and allow people to have more confidence when the bottom comes to really bite. -- two really by. kriti: we thank you, as always. matt just mentioned guy argan,

whose surprise leaving disrupted plans early this year he will now become the ceo of greystone, the commercial property lender, expending it to wealth management and private banking. he spoke with scarlet, along with steve rosenberg, about handling risk management. >> for retail investors, it is really important to focus on cash flow. liquidity is not the same. we all know that. [indiscernible] we are going to the environment right now. there are a lot of great tailwinds at the same time. supply constraints, millennials being first time homebuyers, and extremely tight labor market still, and we are also seeing a much healthier balance sheet.

when there are uncertain times and volatility in the market, like there are right now, a lot of the competitors actually go hot or cold. it is a great time for a financial organization like greystone to stay warm in the market and be able to serve our clients in good times and bad times. that leads to market shares. it brings great opportunities and the real estate market is presenting one right now. >> you are looking at the opportunistic, which makes sense. there is a reduced demand for loans. jp morgan, for instance, announced they will lay off thousands of people. i know that commercial and real estate are two completely different animals. could we see layoffs or reassignment of people? >> mortgage rates are definitely ratcheting up.

the more they ratchet up over the last few months, we have seen some cooling-off and moderation in home price activity in the growth deceleration and the growth of home prices. the last time we have seen this fast of a rise in mortgage rates was in 1994. around that time, we saw new home purchases come back down. it also leads to realistic opportunities and continuing to serve your existing clients in times when they are uncertain. having the liquidity and good funding position and cash flow position enables greystone to be able to do that. jon: coming up, the five continues for spirit airlines as spirit boosted its proposal and competes with jetblue's offer. we will have the latest, next. this is bloomberg.

♪

>> i think, if you look at the headline today, yes, make the -- maybe they are offering something that may be see more, but it is losing. what you are looking at is a clear choice between the frontier of spirit merger versus jetblue spirit merger. we will lower fares for consumers, create value and benefit for consumers. kriti: you were just listening to barry biffle, frontier airlines ceo speaking earlier. frontier airlines is entering the final days before a critical shareholder vote about an offer from frontier.

let's bring in our analyst george ferguson. as always, think you for joining us. what are the odds here that spirit takes jetblue over frontier? george: i don't know. the jetblue offer is an all cash offer. i think if you are a shareholder and looking at an all cash offer in front of an economy that is slowing, if the frontier bid is predicated on savings and cost to the company, and valuations out in 2024, i think jetblue has a pretty good chance to sway shareholders. it is all cash, $33 in. you could be out of it by the end of the year. if you want to invest in low-cost carriers, you could take that rate is the last remaining low-cost carrier in

the marketplace. jon: what do shareholders think about it? the idea to your point about all these headlines on the economy and getting back to the appeal for both of these airlines, being able to see some growth through an acquisition like this, what are the competitive strengths that would come from whoever emerges victorious year? george: this is the fight to be the fifth largest carrier in the u.s., right? jetblue has long been an east coast, caribbean carrier. it is been a little bit on the sidelines. i think they want to get in the middle and compete across the country more. for jetblue -- i'm sorry, for frontier and spirit, i think they can merge two similar cultures into one large low-cost carrier, which can produce pretty good competition across the country. this acquisition, whoever gets it, gets more have.

it is easier to recruit more pilots in a larger company with more career opportunities. you obviously have more aircraft because you are flying airbus airplanes right now. it is a it difficult to get hold of airplanes right now because the key was a bit out right now. both of them are sort of fighting to be the fifth largest carrier in the country. kriti: fifth largest carrier in the country, but let's talk about andy here, because it does crate this ultra low-cost carrier. to what extent do they get in the crosshairs of regulatory action. -- realtor reaction? debt blue, i know has dealt with that. what about spirit in either direction, what did he have to think about that? george: i think there is nothing from either party, from either jetblue or frontier, that cannot be managed through divesting routes.

none of these carriers, actually all three, are so big and important to the u.s. economy that there is not a way around it. i guess the challenge becomes if you are divesting pieces of the combined network that you thought were particularly lucrative. we don't really see it. we think there is a good opportunity for both of them that they will get their antitrust. jon: real quickly, at the end of the day, where you going to be watching most closely? once we get to the summer travel season, there is a lot of pent-up demand for the airlines, but looking at jet fuel cost and the headlines of the economy, what is the next six months to a month going to look like for the airlines? george: we are getting pretty concerned about what we think is going to happen. fares are up significantly, consumer budgets under a lot of stress right now. higher food prices, higher energy prices. we are starting to see a tick down the number of transactions

when we watch airfare data that we get. we are concerned that it could slide here as we get into the fall and winter. jon: we will be watching closely. george ferguson from the bloomberg intelligent -- intelligence team. meanwhile, it is the second day of the g7 leaders summit in germany. energy security and russia's invasion of ukraine are among the key topics on the agenda. we will have the latest with a live report, next. this is bloomberg. ♪

jon: this is bloomberg markets. it is time now for what it's worth. our number today focuses on the

russian default, $100 million at the end of the day on sunday. the grace period on $100 million contract interest payments is due, basically expired. we know that at the end of the day, this has much to do with the sanctions we have seen focused on russia, russia saying they had the funds to make this payment, but obviously right now is just another example of the sanction stories we have been watching tied to russia's invasion of ukraine. kriti: tier point, a lot of that is coming from the reactions of what the united states and g7 have said. we have the money, but we cannot seem to pay. that is going to be a similar theme. how do you deal with russia, especially at this g7 meeting in germany? speaking of, joining us from bavaria is our reporter covering all things g7. what consensus are they coming to when dealing with russia? annmarie: they definitely want

to maintain this unity, but you will hear from leaders that they are worried about what the war in ukraine means to our economy. he had the sanctions. we see that playing out every day in the oil market. this has exacerbated the inflationary pressure. they want to maintain that unity, they want to continue the sanctions. they want to continue that support for ukraine. you should know that president zelenskyy virtually joined these leaders today, asking for more support, whether it is defense, humanitarian, politically, or financially. that they need to also figure out how to deal with these anxieties they are feeling at home. there is one deal that has particularly gotten a lot of attention. we don't yet have the text for it. it is not a deal yet uncapping oil prices for russia, but what they want to do as they are going to at least agree to work out this mechanism. that has never been done before. to keep russian crude on the market, but make sure that russia is smelling it on a much

smaller price. president putin last month brought in $20 billion from exporting fossil fuel. they need to curb the market, ease some inflationary concerns, but they don't want him to continue having this war chest of funds. jon: turning up the heat, quite literally also shaping the conversation this week. annmarie: yeah, when it comes to climate change, also a little bit of a side. it is got a lot of attention on twitter and the internet. officials have literally been taking off their close, their jackets. boris johnson even suggested that. they took off their ties. it is very hot here in bavaria. yesterday was almost 90 degrees fahrenheit. me and one of my colleagues have a story. it's a bit of a scoop, a funny one. i think it speaks volumes of the issues leaders face when people sometimes believe, they call for these big plans but don't really execute.

there is a fireplace burning in what we call the reception. there is no air conditioning, the fire is burning at 96 degrees. not only in the sweltering heat to they had this going, but we also know that this kind of fire also causes air pollution at the same time, they're trying to tackle huge problems like climate change. jon: there you go. some great on the ground reporting. thank you very much for sharing that one. we will continue to watch for her reporting on the g7 leaders meeting. you're also looking at what's happening in the markets today, where there has been a little bit more of a cautious trading tone as we come to the end of june. kriti: a cautious trading tone, starting to contrast and volatility we have seen your today. i wonder how much of the price action is really less about what we're seeing at the g7 or even the federal reserve, but perhaps early signs that some sort of exhaustion is in the markets. jon: absolutely. this is bloomberg. ♪

>> give you up-to-date with news around the world, i am mark compton. january 62020 u.s. capitol, the hearing tomorrow to present hearing for evidence and were witness testimony. the announcement comes after the committee said last week i plan to take a pause. the announcement comes after the committee said last week they planned to take a pause through july. abortion pil