mark: i'm mark crumpton with the first word news. president biden is in saudi arabia today. bloomberg has learned he will leave the middle east without any public announcements on increasing the oil supply. president had hoped to come away with something that could help lower soaring gas prices in the united dates. mr. biden is meeting with mohammad bin salman. he will talk with other leaders from the oil exporting persian gulf on saturday. in the president says the time is in his words, "not ripe," to restart negotiations with palestinians and israel. after meeting with palestinian authority president mahmoud

abbas, mr. biden said he would look for ways to reinvigorate the peace process. president abbas urged president biden to take steps toward a two state solution. the house has passed legislation to restore abortion rights nationwide. nancy pelosi says more needs to be done to minimize the consequences of the supreme court's decision last month to overturn roe v. wade. >> we must ensure that the american people remember in november, because they is two more democratic senators who will be able to eliminate a filibuster when it comes to a woman's right to choose and make reproductive freedom the law of the land. mark: the legislation has little chance of becoming law, with the necessary support lacking in the senate in italy prime minister mario draghi as a signaled he is determined to resign because he

does not have the backing of the parties -- all of the parties -- in his governing alliance. the president rejected his resignation on thursday, urging him to try and shore up support. mario draghi is set to address lawmakers in rome next week. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i'm mark crumpton. this is bloomberg. >> welcome to bloomberg markets. kriti: let's dive into the price action. green on the screen when it comes to equity markets. it is not just about the bank earnings. it is about this economic data. really great retail data.

that has been the trade all day. although lower, inversion lower, but still not as bad as yesterday. meantime that risk on trade goes cross-asset. jon: definitely the tone in bank earnings, if it than yesterday, citigroup and wells fargo moving higher. unitedhealth higher after its quarterly results, helping managed-care companies. as we look ahead, you have netflix, which is moving higher. guess we will find out about the health of consumers, whether they are keeping those netflix subscriptions. kriti: we are going to dig into all of that. let's get back to the eco-story. randall crossan or spoke about the importance of consumer expectations dropping. take a listen. >> the key thing the fed worries about and that we all worry about his inflation expectations becoming unanchored we saw it take up last month, and if they continued to take up that meant people are losing faith in the fed, in jay powell and his

colleagues, and that would mean the fed would have to drive rates even higher. so i think not that they can totally relax, they need to go 75 at the next meeting, but i think this will be consistent with that other than a push toward a full percentage point. kriti: for more in today's economic data and what it means for the fed's rate hike, joining us now is mike mckee. thank you as always for joining us. some pretty great data coming out today. it doesn't -- does it change anything? mike: it doesn't change anything, and it is a matter of interpretation whether you think it is great or not. retail sales came in better than forecast, but when you deflate them they are not adjusted for inflation. when you deflate them the retail sales numbers for the month of june were negative. in much of that came from gasoline prices. with gasoline prices going down in july.

we will see if people can move their cash from their gas tanks over to other things that they want to buy. it may be also that people are spending more on services right now. we will find that out at the end of the month. jon: then on a day where we also got consumer sentiment data and just alluded to the comments earlier, the ticking clock right now on how long elevated prices, increases, the odds people really reflect that in your behavior? mike: the interesting thing about the university of michigan survey is, it is heavily influenced by gasoline prices. the conference board is much more influenced by the job situation in the country. with gas prices going down for the last 30 days, americans seem to be feeling better. they are concerned down the road that the economy will not be as good, and there has been a lot of talk about recession. but the feeling about the

current economy has improved, and the big number, the inflation expectations number, fell down back below three, significantly lower than it was when the fed went 75 last time. whether there is a green light for 100 basis points or not, a kind of looks like we are not there. cpi, and maybe the june jobs report, suggests they should go ahead, but retail sales, industrial production, inflation expectations number, even the empire index suggests things are good enough the fed does not need to do that. the economy is slowing, and maybe there is pressure coming off on the inflation front. jon: great context, as always. bloomberg's mike mckee with the latest on the consumer portion of the economy. all of the latest u.s. economic news, certainly getting investors into a buying mood, with the s&p today, especially when it comes to the financial sector, which was under pressure yesterday.

let's get more perspective on the broader markets. lisa shalett joining us, morgan stanley wealth management. the recipe of data today working in favor of those who are bullish on stocks, but there are still so many wildcards. it is that leave you as a someone trying to position over the longer term? lisa: look, i don't think we really got a big change in direction here at all. my read of the data is that it continues to be extraordinarily mixed. with, you know, some things like the new york empire today saying, you know, maybe manufacturing is not quite yet falling out of bed, but retail is ok, being pressured by prices . then, of course, the suddenly-important university of michigan inflation expectations sentiment that the fed seems to be looking at. i don't put any weight in that

whatsoever. we have so many other metrics that demonstrate what consumers are feeling and what they are saying. to me, the small business sentiment index and the concerns around inflation are what i am looking at. i don't think that suddenly consumers -- consumer inflation expectations have eased and it is all clear for the fed at all. kriti: let's talk about the cross-asset signals we should be watching. we have seen a dollar that gets stronger, stronger. how much of that is going to weigh on the equity market from a fundamentals standpoint, but from a flow standpoint as well, discouraging investors from hopping into a market they have been in confident in for a decade? lisa: he made two really important points. one is the flow data. that is relevant for both stocks

and bonds, which both asset classes are heavily, heavily dependent and influenced by foreign investors. i think the bigger thing -- and i'm not hearing anyone talk about it, really, is the role of a strong u.s. dollar in s&p 500 earnings. what we have to remember is, the s&p 500 is not the united states economy. the companies that make up the s&p 500 are disproportionately multinational manufacturers who actually derive about one third of their activities from outside the united states. on a year-over-year basis we are looking at a u.s. dollar that is now up about 16% year-over-year. by our analytics that translates into a headwind to corporate earnings of about half of that, or 8% headwind to corporate

earnings. based on the current estimates that is literally what the expected growth rate is. so, we are continuing to look for some earnings disappointments here from things like the dollar that no one is talking about, as well as the obvious, which is lower volumes and higher costs. kriti: lisa shalett, morgan stanley wealth mining meant -- wealth management, we thank you. coming up, the chilean peso rallies to a four-decade high after the central bank finally intervenes. we are going to explain all of it. this is bloomberg. ♪

kriti: this is bloomberg markets.

financials are leading the way in today's s&p 500 rally. this comes as adjusters rehab -- readjust their bets on fed rate hikes. margins had suffered during years of historically large borrowing costs. let's bring in sonali basak. who is on the tail end of this week's super bowl, it feels like. walk us through the results here. city and wells fargo, what is wall street and main street telling us that morgan stanley didn't yesterday? sonali: you are seeing a stunning 13 percent jump in citigroup's share price today. it is telling you they can make money even in a tough time. their fixed income traders blew through the roof, with a more than 30% jump in that fixed income trading unit. trading is volatile, but guess what? after the quarter ended it remained volatile. the fact that they are able to

make markets and not really lose a lot of money while doing so -- in fact, make a lot of money while doing so -- is encouraging to investors. there is another reality in which they are making a lot of money on that interest income. yesterday and today, remember jp morgan and citigroup have said they are suspending share buybacks to meet higher regulatory requirements. however, that is not necessarily a bad thing for the banks in a tough economic environment. you are seeing investors go both ways, however you are seeing them be happy about fact net interest income is rising in the face of a tough economic environment. jon: to your earlier point, i like how you phrased it this morning, the volatility at a time where i imagine there is going to be questions for the rest of the year on deal flow, on issuance. but the trading environment has been quite robust. sonali: absolutely. and another fun part of

citigroup's earnings is the advisories also be estimates. they were able to still kind of hold stronger than wall street expected. underwriting is the real problem here, and you see a huge drop off in ipo volumes, obviously spacs are next to nonexistent, and you see them drop off in that underwriting, which you also saw at jp morgan and morgan stanley. you will probably see it next week with other banks as well. jp morgan also cited issues with spreads widening and taking some marks on its buyout loans. he saw a similar issue at wells fargo. those losses are contained in hundreds of millions of dollars, so the question is, do they really get worse from here, what do you see the banks get really, really cautious here? even if they do get cautious here and you see that underwriting flow, they are still making money on currencies and commodities. for a bank like citigroup, and

potentially goldman sachs, it is a good sign. jon: a great breakdown, as always. bloomberg's sonali basak. we are also watching the chilean peso, rallying after the central bank announced a $25 billion foreign exchange intervention program to support the battered currency. for more let's bring in emerging markets editor. we watch in canada what is happening with the price of copper taking a huge tumble with the strength of the u.s. dollar, then specific policies within chile. it seems to be the perfect storm working against the currency. >> that is totally right. it has been a combination of bad drivers for the peso. as you said, copper prices are slumping. there is also political turmoil because they are trying to rewrite the constitution. this kind of uncertainty is never what investors want, so

the currency was hit hard. yesterday we had the central bank announcing an intervention program. $25 billion is really sizable for the amount of currency that trays -- traits daily and we are seeing this big rally today. it is the biggest in at least 40 years. kriti: this follows the biggest plunge in the currency two days ago. what is interesting is they said they were not going to intervene. they said they were not going to do it, and now clearly have those worries. you mentioned this is a sizable amount. in an fx market that trays about $4 trillion a day, one of the concerns when it comes to the yen and other currencies that talk about currency intervention is, this is not something that is distain about in a market that large. is the chilean central bank going to go bankrupt in terms of trying to keep this currency alive? aline: that is a good question.

you see how costly it is for the country. they will do that for a while, and from what we heard from investors they think it is a big support. no one expects it to. we will see if they keep supporting through monetary policy. they already said more hikes are to come, so i think it will be a combination of factors. kriti: this comes as we talk about a stronger dollar. let's talk about the ripple effects here. we are still dealing with inflation -- food inflation that is hitting the chilean people. talk to us about the economy and

how long it can tread water. aline: inflation there is running at 12%. that is almost four times their target. kriti: and here we are worried about 9%. aline: exactly. by chilean standards that is normal. it is hard, and the economy is facing the impact of those higher consumer prices. as a said, for the political side it is also a challenge ahead. so i think it is going to be very interesting to see how policymakers there will deal with that growth versus inflation trade-off. kriti: continues to be an issue. jon: no doubt. kriti: go ahead. jon: obviously a lot to watch. appreciate your time. when we come back we are going to talk about the story of oil obviously president biden is down in saudi arabia. he may leave the middle east, however, without any public announcements on increasing energy supply. we are going to have the latest

details on that next. this is bloomberg. ♪

jon: this is bloomberg markets. time now for what it's worth. we are all over what is happening in the energy market. brent crude, one of the traits we are tracking, back above $100 a barrel as the president makes his trip to saudi arabia. obviously it has been such a rocky right in energy recently, even the recessionary concerns. if you think about energy stocks as well, you pay a lot of attention to them here in canada. we have now seen a bear market, a decline of 20% in just over a month's time. kriti: that is the price action. you have to talk about what is happening on a fundamental basis. there is only one country in the world everyone is looking to, especially president biden ticket capacity online, the question is, does saudi arabia

have this bear capacity? this chart goes back 20 years. you can see that spare capacity story that started at the beginning of the century. it has dropped significantly. just how much ability saudi arabia and the uae has to do about this? that potential is limited. you start to see the effects of president biden's trip in the next opec meeting? that is what i'm going to keep my eye on. jon: on that note let's bring in annmarie hordern, who has been traveling with the president and leading a lot of the reporting on what will not be happening on this trip. just got the chart there from greedy -- from kriti. what can you tell us about what ultimately comes out of these conversations? annmarie: well, the administration has been working with saudi officials about this discussion, about adding more barrels to the market. even during the entire covid pandemic and coming out of the

pandemic the saudi's have taken a cautionary tone. during the pandemic it was about making sure they were not out of the woods yet. now they are worried about a global recession. what you have coming out of this meaning is not going to be any emphatic decisions on whether or not they are going to come to the aid to the president in washington to bring down gasoline prices. but what could potentially happen, what we saw at the last opec meeting is an all of branch. potentially the saudi's will bring the presidents concerns on board and start to boost production. kriti: speaking of boosting production, any signs that perhaps president biden is going to change his policy when it comes to production capacity here at home? [no audio] kriti: it looks like we have lost annmarie hordern. it goes back to this question --

where is that production going to come from? no president biden is law -- is lobbying saudi arabia at a time where spare capacity is low. they are already struggling to meet their quotas. what if they were to change their policy right here at home? jon: we also talk about it, but it is worth repeating, the complications of the opec-plus alliance and the relationship between russia and saudi arabia at a time, as we head into the winter, concerns in europe about retaliatory efforts by russia on the energy front. so, having these conversations now in the hopes things get less complicated. kriti: to your point about the price action, it really comes down to, what is the bigger issue? is it inflation or recession? those are contrarian indicators when it comes to what is going to happen next with the oil market. that is why you are seeing those fluctuations above and below

$100, at least for brent crude, at a time when some people even talking about $300 a barrel. we are going to discuss this in the coming hour. stick with us. this is xfinity rewards.

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romaine: -- mark: keeping you up-to-date, here is the first word. i'm mark crumpton. janet yellen slammed russian officials at the g20 finance meeting in indonesia. she said they "should recognize that they are adding to the horrific consequences of this war through their continued support of the putin regime." she also called on the g20 to increase aid to ukraine. for the first time in two decades, house democrats are moving forward on an assault weapons ban. the house judiciary committee will host a hearing next week on a bill to ban the sale and manufacture of certain