g in 2027. we will need more gasoline capacity going forward. it's not enough to have long-term refinery investment. at the end of the day it might end up coming down to demand destruction, particularly in the u.s.. where, we are already starting to see about 500,000 to 600,000 barrels per day of destruction, >> volume and rebalancing. at least relative to typical seasonal trends. kriti: fascinating. bloomberg markets starts now. we will see if your prediction is right. ♪ danny atkins, thank you as always for joining us. the s&p 500 is down .2%. it is the last day of the month, kriti: when we started the the quarter, and the half of the year. a lot of this will reverse session, it was not exactly tomorrow ahead of a long attractive. weekend. they become a rivers the week futures down over 1%, down 1.5%. after. at least that is the hope. from new york i am kriti gupta. and then the losses, that tells you a lot. this is bloomberg. today's trade is simply rebalancing flow and it has to do with getting ahead of not only a long weekend, but the

back half of the year. do we continue to see the same price action in the back half? we talked to brent donnelly and a second, but let's look at the rest of the markets. there is a lot of volume in the stock market, certainly the bond market as well. down 11 basis points. that volatility we have been missing in the past few days, i say missing with a massive grain of salt, it is back today. people cashing out of salt -- stocks. as yields lower, it drags the dollar down as well. differentials are at play. what is interesting is even his -- as you have the weaker dollar, it is not helping commodities. the commodity index is down 3.4% already. pain across the board. a lot of this has to do with the r word, recession. fueling fears of exactly that. mark from bnp paribas's spoke

about more companies -- >> it is important to look at history and understand how both - [announcer] imagine having fuller, thicker, more voluminous hair instantly. economic and business cycles go. we are starting to see this all it takes is just one session at hairclub. rotation in what i call introducing xtrands. corporate confessions. companies are not just talking xtrands adds hundreds about supply chains and impacts or even thousands of hair strands on margins, but demand. to your existing hair at the root. they're personalized to match your own natural hair color and texture, so they'll blend right in particularly around durables. for a natural, effortless look. call in the next five minutes and when you buy 500 strands, we need to see more of that. we need the corporate sector to you get 500 strands free. confess and markets a price in. call right now. (upbeat music) -hi, i'm smokey bear and i made an assistant to help you out. we had conditions tightening further, then potentially because only you can prevent wildfires. moderate. kriti: powerful words. -hey assistant smokey bear, call me papa bear because i'm "grrr-illing" up dinner. haha, do you get it? let's point corporate confessions to our next guest, brent donnelly. -yes. good job. -so, what should i do with all of these coals? -don't just toss them out. he has built his career in the put them in a metal container because those embers can start a wildfire. fx pace, but i want to ask you -i understand, the stakes are high. about what we just heard from mark howard of bnp paribas.

assistant smokey vo: ha-ha, ha-ha. is that with the market is -see, smokey think's im funny! waiting for? corporate confessions? >> interesting point. talking about with the fed is going to do next. we are in the really bad part of the they are looking at lagging data like cpi that includes equivalent which lags prices by 12 to 18 months just as one example. so, if you look around and see what commodities are doing in trucking, shipping. to me, probably housing will weaken as well. so, essentially, this environment of prices going to the moon everywhere is just not the regime anymore. now, prices have stopped going up and many prices are going down. but, the reason that is still bad for the market is that the fed, first of all have to get a neutral. second of all, they have now pinned their policy on various

types of lagging data. >> here is the first word. so to me, this weakness in i'm mark crumpton. equities is probably set to continue. president biden announced today because, no better how -- no hundreds of millions of dollars of new weapons for ukraine saying the u.s. will support matter how bad things get, it kyiv for "as long as it takes." will end up being more of a time thing that i how bad does a good the president was speaking to thing. reporters on the final day of the nato summit in madrid. the amount of time it takes >> the nice two days we intend before cpi and pc rollover in a to announce more than 800 million more including more meaningful way that will satisfy the fed, it will just be a advanced air defenses for matter of time. ukraine, more artillery and so, i think that is bad for risk ammunition, battery radars, assets. one more point. additional ammunition, multiple an interesting thing that has launch rocket systems. been going on is there is this pavlovian desire to buy the dip among professionals and retail. it has something that has worked well since 2010. there's a lot of different ways you can do that. a lot of people use the american association of independent investors data as a contrary indicator. but, the thing is, so, it varies right now. -- it is very bearish right now

so people would say that is contrary and. the problem is, that does not work in a bear market. that did not work in 2008. there is a bit of recency bias where people are so used to buying the dip since 2010 that they have their signals that say by the dip and the kind of funny outcome is that a lot of people i know are bearish from a macro point of view, but it is oversold and sentiment is too bearish. with you said poetically this pavlovian desire to buy the dip is not working in this target. in terms of buying the dip, what is the pivot point a lot of market participants are looking for? if you have this idea that the fundamentals are not changing and at the federal reserve is still hawkish, what do you need to see the turnaround if the by the dip mentality is not there

anymore? brent: a part of it is overshoot. we overshot valuation in somewhat bubble conditions. it is amazing that the series of crashes. we crashed in december 2018. bullish 2019. crashed in 2020. a bubble in 2021. then the biggest equity drop since 1970. basically, the future of these bubbles and crashes is they overshoot. i don't think it's really about economics. in my mind, i am looking at the data. definitely, retail has not been cleansed. >> i want to talk about the cross asset dynamics. we can't let you go without talking about the fx space. we have to talk about the dollar. how much of what you are seeing intraday in terms of pulling out of the market and who the investors are have to do with the strength of the dollar and

the hurdle for foreign investors a -- to hop into the market? brent: generally, you break currencies into offense and defense. defense would be the safe haven. because of the boj policy, swiss was not functioning as a safe haven. they broke that safe haven thing. now, the swiss national bank with their very aggressive hike is opening the door quote -- the door for swiss to be a safe haven again. we are seeing flows into swiss not only from speculators but hedgers seeing swiss as a potential hedge especially for european equities. that's an interesting change in dynamic. the dollar is quite bifurcated. dollar-yen is still strong but kind of losing its mojo a little bit. the dollar continues to rally

against pretty much every currency. it looks like it is ready to turn and it rips again. it is like this all weather situation where whether it is u.s. recession or equity optimism, they both seem to generate dollar positive flows. it's like the dollar cannot lose these days. kriti: brent donnelly of spector markets we will have to get you back again. let's get to the first word news with mark crumpton. mark: a historic day at the u.s. supreme court. judge ketanji brown jackson has been sworn in as the first black woman on the nation's highest court. the 51-year-old was confirmed to replace justice stephen breyer in april, but then had to wait until he stepped down at the end of the court's term. justice jackson is likely to join fellow democratic appointees sonia sotomayor and elena kagan. in the supreme court's liberal wing. the supreme court restricted the epa's authority to curb greenhouse gases from power

plants siding with coal mining companies. the 623 ruling is a blow to president biden's climate change agenda. the majority said that the epa can regulate powerplant emissions, but cannot tried to shift power generation from fossil fuel plans to cleaner sources. >> russian president vladimir putin reacted to nato's decision to admit finland and sweden i saying they are welcome to join. president putin says nato, including these two nordic nations, is different as compared to potentially allowing ukraine to join. the leader says if nato places military personnel and infrastructure in finland and sweden, russia will have to respond. russia is confirming it has withdrawn troops from snake island, a strategic important spot in the black sea. word of that came after kyiv said the russians were forced to leave because of ukrainian

missile and artillery strikes. moscow claims the troops were pulled act -- out as a goodwill measure to help with grain exports from ukraine. global news 24 hours a day on air and on bloombergquint take powered by more than 2700 journalists and analysts in over 100 20 countries. i am mark crumpton. this is bloomberg.

>> this is bloomberg markets. i'm kriti goop to. --gupta. a slowdown in m&a activity may be more than just temporary. sonali basak, work us through the story. cinelli: you have absolute volume down on the year and major deal announcements, activision, twitter. there have been large deals. look at this part of the year. you have so much choppiness in markets. what price do you pay that will still be relevant in the next two weeks?

what about rising interest rates? for dealmakers, private equity has so much dry powder on the sidelines. that they would increase deal volumes at the end of the day. but there are some issues to do with private equity takeovers, valuation being one of those. a lot of banks are stuck with loans that are difficult to offload to investors at this point. even financing for private equity deals is getting covered. things have gotten rough. kriti: how do dealmakers keep busy in this environment? sonali: not consolidation to make companies bigger, but in fact to make company smaller and more focused. spinoffs have been a major theme this year. you also have for example big tech companies buying a smaller high-growth tech company. a lot of dealmakers are working with equity capital market to figure out ways to get financing

to younger companies that do not necessarily take the public, but also get them financing such that they can keep valuations at a sustained level when valuations are plunging across public markets. kriti: we thank you as always. let's get insight on this topic with phil i sent. this company released its midyear m&a survey. i am curious what sonali was talking about. you had this flurry of deals at the end of the year. twitter, broadcom, a lot in the tech space sitting on a lot of cash. to what extent are they perhaps staying back from the m&a activity because of antitrust issues. ? phil: you might see some corporate's pulling back a little bit given the economic uncertainty. certainly what we are seeing for the private side of the market is money continues to remain

very strong, muted versus last year, a historic year. if you look at 2022, it is certainly close to 2019, if not slightly above 2019 levels. that's had that hardly about here. kriti: it seems like deploying cash in disinflationary environment, essentially these massive piles you are sitting on our words less tomorrow given the inflationary dynamic. they are not being deployed. why not? phil: some people are pulling back with there is still used demand. our survey indicates that the vast majority of ceos believe m&a will be an important part of the strategy this upcoming year. what we are seeing is transactions, while they might be slightly slower to get done, they are still getting done in noncyclical industries. from a valuation perspective, valuation is coming down

slightly but has not dropped off a cliff. that is what we heard from ceos throughout our survey. kriti: you said industrial manufacturing companies are perhaps most bullish when it comes to trying to pursue more in mandate. -- more m&a. talk about how this breaks down when you look at sectors. phil: there is a convergence of sectors. long-term industrial companies are looking for technologies, efficiencies, and frankly, new business models to pursue. what we are seeing is the real kind of blurring of the lines across industries. it is an opportunity for companies to be a little bit more aggressive as the markets of come back a little bit too. so, some company see a buying opportunity. i am curious --kriti: i am curious about the financing here. you say there is appetite for him monday. his -- for m&a.

can you talk to us about leverage financing, debt financing. how do you get the money in corporation america right now to make the deal happen? phil: certainly, the financing markets have gotten a little tighter. they have not shut down over high-quality transactions. if you look at the private equity side, certainly, the equity checks they are writing might have gone up slightly. in the more mental markets, we are not -- middle markets, we are not seeing a slowdown or tightening on the credit side. we have 2500 investment bankers across the world. i cannot tell you that we have a very long list of deals that fall apart. for reasons that are wholly financing. kriti: i have to put this into the perspective of markets and widening credit spreads. does that mean we could see debt issuance dry up?

what is servicing these kinds of deals? phil: it's reasonable to assume credit markets will get tighter. there is mass-market uncertainty. you have geopolitical risk, inflation, interest rate increases, and frankly, people are looking for where the markets go and what the direction is an we have seen that play in in the stock markets. i think companies that are taking a much longer term view are looking at ways to maintain real cash on their balance sheets and focus on corporations. certainly, there is a huge amount of dry powder still sitting with private equity firms looking to deploy it. there is a time frame there that they need to deploy that capital. so, the uncertainty -- as the uncertainty moves away i think you will see the market get more aggressive. kriti: phil isom, global head of equity at kpmg thank you for putting that into context. opec and its allies have ratified a plan to increase oil supply. more on that topic next.

this is bloomberg.

>> all the gulf states, we indicated to them i think they should be increasing oil production generically, not to the saudi's in particular. i hope we see them in their own interest concluding that that makes sense to do. kriti: this is bloomberg markets. i'm kriti gupta. as invited speaking earlier in madrid before his july trip to the middle east where he is hoping to get a higher promise of production from golf allies. opec-plus today radel -- ratified a plan to add 648,000 barrels per day in august. all of that effort just to lower gas prices. we will dig into it with our bloomberg new energy finance guest today. he developed a new report on

gasoline demand. let's go international first and talk about spare capacity. this has become a major point of conversation with president biden. there are two countries in the world that have spare capacity to offer. saudi arabia, the ui you, how much do they really have? >> that is really the question. they will certainly be able to raise production for a period of time but the question is whether opec and opec countries can fully get those targets. they have a few million barrels a day, about one billion each from sally and the uae. they will have to reject -- reach record output, which they have only had for eight weeks total in their history of production. but, it could potentially lower gas prices. oil prices specifically. but at the end of the day, there will be a question of whether or

not we have enough refining capacity to meet gasoline demand. kriti: it is almost like markets sometimes react to spare capacity but not refining capacity. you could have a barrel of oil in your living room but you have to turn it into gasoline to make it useful. but you have not actually had any new refining capacity in the u.s. for, i want to say decades. >> you have actually had the opposite. about a million barrels of day -- a day of refining capacity taken off-line since 2020 in the u.s.. and another 2 million per day taken off-line globally. this led to a shortage of gasoline supply even though we have sufficient oil production. even if opec production growth reduced oil prices, we would still have the issue on the refining side. kriti: there is a lot going on when it comes to ways to perhaps make gas prices a little bit

more easier to digest, for lack of a better term. a price cap, adding refining capacity, that would take much longer. will any of that work? >> adding refining capacity is out of the question, especially with gasoline demand peaking in 2027. we will need more gasoline capacity going forward.