mark: welcome to the bloomberg audience. president biden and president today -- is meeting with the mexican president to discuss the underlying strength of the relationship that of late has been more notable for disagreements over issues including energy and ukraine policy. president biden sought to reinforce those ties at the onset of the talks. >> ics as equal partners. it is vital to achieve our goals. everything in the fight against covid-19 to continuing to grow our economies, to strengthening

our partnerships and addressing migration and a shared hemispheric challenge. mark: president low press over door declined the invitation to the summit of the americas in los angeles last month after unsuccessfully urging the united states to include the leaders of cuba, nicaragua and venezuela, all countries with anti-democratic regimes. the u.s. panel investigating last year's attack on the capitol is holding a hearing, the seventh in a series. it has been detailing former president trump's refusal to accept the 2020 election results. panel members have said previously they would be a focus on extremist groups that took part in the planning and execution of the insurrection. in the u.k., the conservative party was to narrow a wide field of contenders who want to be britain's next prime minister. it is required candidates to

have the initial support of 20 tory members of parliament. nominations are set for today with the first ballots held tomorrow. the party's new leader and the u.k.'s next prime minister will be announced september 5. heathrow airport is moving to limit the league recent travel chaos. it's asking airlines to stop selling tickets for summer travel. the biggest airport in the u.k. will limit daily passenger traffic to 100,000 people through september 11. heathrow was scrambling to hire more staff and says new recruits are not up to speed yet. global news 24 hours a day on air and on bloombergquint take powered by more than 2700 journalists and analysts in more than 120 countries. i am mark crumpton. this is bloomberg. ♪

jon: welcome to bloomberg markets. kriti: it's been a quiet day when you look at the stocks. the stock market is flat right now. we are waiting for the cpi report. how many people want to be making the big trades right now? a question we are asking mandy xu in a second. yields are lower. treasuries catching up a bit by four basis points. the fx market and commodity market, a slightly stronger dollar. the euro-dollar almost hit parity. it did not quite hit that one-to-one ratio. it is a commodity market taking a hit. oil, $96 handle. over 7% decline in the commodity. is a recession fears or lack of participation? jon: if you go under the hood,

you see those energy stocks as laggards in the s&p 500. occidental petroleum, a warren buffett favorite, under pressure to the tune of 3%. a lot of corporate stories in a market to your point where people are trying to gauge where we go from here. american airlines surging 10% today based on a relatively encouraging revenue outlook despite some travel headaches. delivery news from boeing inspiring investors. on the other side of the fence at technology name like service now on some general macro concerns being raised i the ceo -- by the ceo reminding us this is a sensitive time for technology stocks. kriti: perhaps mirrored or forecasting earnings season. peter oppenheimer at goldman sachs. we talked about earnings season

as markets adjust for a potential economic downturn. peter: i think earnings will come down quite a bit. whether we end up with the recession or not, there's a good chance markets will price that probability as being higher than they have done as yet. jon: for more on a potentially volatile earnings season let's bring in mandy xu. in terms of us having to assess where we are going through the lens of earnings, how much volatility are you starting to expect for the upcoming weeks? mandy: i would say prepare for more volatility. heading into earnings season, more volatility priced into single stock options. part of that is normal. as you get into earnings season you get more idiosyncratic risk of being priced in. the last couple of earnings

seasons we have seen incredible moves on earnings at the stock level. stocks down 20% to 40% on earnings, that is what the market is pricing in. that kind of volatility going forward. if you break it down at the sector level, a few sectors that stand out in terms of dispersions to the options market, one is ech. -- tech. communication services and technology is where we see the most expected dispersion priced into the derivatives market. on the flipside, sectors where traders are expected to continue to remain more macro driven our financials and energy. energy will move on the back of oil prices. financials move on the underlying economic story. kriti: you touched on a point that is significant. the extreme reaction you saw in the last round of earnings. i'm thinking walmart.

how much of that was an overreaction? it seemed like on the smallest news to have that big of reaction, was the market getting a little ahead of itself? mandy: i think there is a lot of focus and angst around earnings. particularly around the earnings outlook. what is moving stocks is not necessarily the print itself. that is backwards looking. the past quarter economic conditions were pretty good generally. investors are looking for the outlook going forward. a lot of attention will be paid on that. i expect big moves on earnings this reporting season. jon: given everything you have said, for those on the options market would have been popular strategies to prepare? with these different sectors and different expectations? mandy: dispersion strategies this year have done well. you are buying volatility

against index. i would point to dispersion as one of the reasons we have not seen a ton of volatility at the index level. why isn't the vix higher? why aren't we seeing equity volatility? we have seen a lot of volatility, it's just been at the sector level and the stock level. as we are seeing with energy and tech, financials, that's a trait that if you put it on at the beginning of the year, that obviously did well. kriti: one argument on that sector level versus benchmark level -- chris murphy made the point that perhaps we are seeing more hedging on the benchmark level then individual stocks. i'm curious about the hedging side. is the idea to navigate the market and remain defensive as opposed to inactive one? -- an active one? mandy: the trend is the opposite. not a lot of hedging.

that is why the index level and the vix has been so muted. instead of buying protection, a lot of investors, equity hedge funds and institutional investors have sold out of their stock exposure in the cash. we have seen defensive positioning as far as de-risking. the most we have seen since march of 2020. that is why we are not seeing the panic in the derivatives market. when you don't have any positions left or protect, your not running risk. kriti: fascinating stuff, mandy xu. we will have her on this event holds true. let's push the politics. a seventh public hearing on capitol hill on house committee reveals new details of the january 6 investigation. the hearing focusing on former president trump's potential ties to extremist groups, including the proud boys and oath keepers. joining us live is emily

wilkins. thank you for joining us. give us the latest on the hearings. emily we are outside the hearing room where it is taking place. this one is focused on the ties between the white house and those within former president trump's orbit and far-right extremist groups, the proud boys and the oath keepers. we will hear from a former member of the oath keepers later. the committee is delving into former white house counsel pat cipollone. he testified for them. what the committee is doing is really drawing a distinct narrative that trump was being told by others close to him and in his inappropriate he had lost the election. that points to this crucial moment in the series of days in meetings where trump decided even though he was being told he lost he was going to push back anyway and continue pushing the

story he had one. -- won. this goes to the larger point of these hearings showing that trump tried to overturn the 2020 election. we are expecting to hear more from pat cipollone and others who testified in the coming days. jon: just to build on that, now that you have been covering so many of these hearings, what is the general view at the end of the day the narrative that has been building with respect to where president trump at that time? emily: polls are shown these hearings have helped solidify the narrative for a lot of americans who initially had concerned about what happened on january 6. you are getting lots of different information at the time, different news stories. what the committee has done has pulled everything together. not just a narrative but

actually using voices from inside the white house. pat cipollone, ivanka trump, attorney general barr. put those together into a narrative that takes you through step-by-step the process of what happened. the committee is looking at what happened on december 14, the day that it was officially pencils down, everything in, biden is president. mitch mcconnell came out and said biden had one. it shows that inside the white house, even though there were those that who knew that trump had lost, trump was following and deciding to pursue the lie he had still won. jon: thank you for the reporting as always, emily wilkins. you can watch the hearings on the terminal using the function live go. we will continue to watch the headlines out of washington. protest in sri lanka making the top leaders exit.

the president and prime minister. did default it bonds. other developing nations are coming under pressure echo is the -- pressure as the economy slows. we will explore that next. this is bloomberg. ♪

kriti: this is "bloomberg markets." sri lanka was the first nation to stop paying its bondholders this year. other developing nations are seen as vulnerable to default, facing $237 billion in distressed debt. sending mackey, thank you for joining us. they said this when they

defaulted on their bonds. we will put funds towards the people. when you look at these warnings are coming up from the imf, this wave of e.m. sovereign default is coming. i'm curious what the driver is. what is driving this wave of defaults? sydney: it's a mix of the things you mentioned. a lot of these countries had to borrow extra forward money during covid to make a for the lost revenue from taxes. between these big unwieldy debt piles, the higher cost of food and fuel making it more expensive for folks to actually afford the cost of living, you are seeing these political pieces of unrest bubble up throughout lower-income nations like sri lanka. we are hearing warnings trickle into another couple dozen emerging markets. jon: the images out of sri lanka

over the weekend were remarkable. reminder of what an economic crisis can create. you talked about some of the borrowing with sovereign nations in the last couple of years. you really break down the fact there are some countries that have less of a track record with international investors. how is that influencing what is going on now? sydney: a lot of it has to do with investor confidence. the confidence governments can repay the debts they took out. a collaborative effort with bloomberg economics looked at the different pieces of the data to figure out which countries were especially vulnerable. those are lower income nations. el salvador, ghana, egypt, pakistan. increasing in terms of risk in the debt market. kriti: we have almost been here before talking about record inflation, recession in the developed world that will trickle out.

even the food inflation story linked to the arab spring in 2011. to what extent does this continue? pakistan has the fuel driven protests where they had to bring in russian troops to control it. similar with sri lanka. talk about the political versus markets. sydney: even in latin america and 2017 protests erected across the continent. people were feeling the effects of inequality. especially as food and fuel costs go up. you have countries like sri lanka with long power cuts. that impacts regular day-to-day people. that trickles into the political piece of this and you see these protests and political leaders pushed out of office like we haven't sri lanka. that is never popular in markets. investors like to know they will get repaid and what will happen next in terms of policy. when you have a giant question mark hovering, that is when you

see these bond yields go higher and higher and have a large pile of distress coming out of the emerging world. jon: given the bond risk premiums i imagine this idea of contagion is something you will watch closely to figure out where the market goes from here. sydney: absolutely. larger emerging markets that have been able to escape this narrative like brazil and china where the economies are less vulnerable. as we look at contagion risks it does stay in the lower income portion of the emerging world. those countries like el salvador which has a bond payment due in january, those are the places to watch. jon: thank you for your reporting. sydney maki on emerging bond realities. kriti: lots that i just here. a look at some of the biggest business stories right now.

the struggling electric vehicle startup won and order for 4500 vans from walmart. they moved to bentonville, arkansas. in may, the company warned of substantial doubt about his ability to continue. american airlines sticking with expectations for a jump in second-quarter sales. american said total revenue is expected to be up 12% compared to the same quarter in 2019. costs will rise about 12%. pepsico raised its outlook for the second quarter in a row. they expect revenue to grow 10% this year as consumer demand remains resilient. pepsico's north american business remained strong during the quarter. demand for convenient food helped international markets continue to perform. that is your business flash update. jon: thanks.

canadian telecom giant rogers is said to take a financial hit after a massive network failure last week. we have details on that next. this is bloomberg. ♪

jon: this is "bloomberg markets ." our number today is $70 million canadian. an estimate from one analyst who covers the telecom giant rogers. estimating the network failure we saw last week which had millions without phone service, caused pickups or businesses as well. now the government is looking to get the entire industry to work together to avoid a similar situation down the road. very similar to action we have seen taken in the u.s.

we heard from the industry minister. here is what he had to say. >> we depend on their network. millions of canadians were impacted. we want to take additional steps. this is in line with what the u.s. jested on the six of july -- just did on the 6th of july. it can deal with a different situation in the future if there is an outage. jon: the additional piece of context is that rogers is in the middle of trying to get to the finish line of a massive $20 billion acquisition of one of the other industry players, shaw. people saw this outage and said should there be less competition versus more? kriti: it's interesting we talk about this. it comes into this dynamic of how much we have to ration and have to, regardless of what the drivers are, how much we have to ration everything

from telecommunications, airline traffic, food prices, etc. jon: you are absolutely right. food is an essential. your argued -- you can argue your phone is an essential part as well. when you don't have access, the fact he have the banking industry in many ways very much tied to your phone service. many transactions impacted as well. people are trying to put the pieces together. we are still awaiting details from the government on whether they will sign off on that deal going forward. a lot of what's going forward. kriti: a lot to digest when it comes to these markets. it's important about how to price these issues. it does not seem like the investor base is pricing in much. looking at the s&p 500 that is flat on the day. especially when you have marginal outperformance by the nasdaq, up about .1%. yields are lower but it is not

that volatility we tend to see. i wonder how much of it is a wait-and-see moment from this side of the atlantic for a lot of the cpi data. this is bloomberg. ♪ vo: when times get dark,

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mark: keeping you up-to-date with news from around the world. i am mark crumpton. the house panel investigating last year's attack on the u.s. capitol is holding another hearing, the seventh. the hearing has been detailing former president trump's refusal to accept the 2020 election results. parts of white house counsel had said below'-- pat cipollone's testimony are being seen. the white house is urging americans to get an up-to-date -- get up-to-date on the covid-19 vaccinations and seek out free test