>> welcome to the bnn bloomberg with bloomberg audiences. as expected, the biden administration has asked the supreme court to step in to keep a widely used abortion pill available. a federal appeals court had partially stated a rule that would have suspended mifepristone's approval by the fda. in france, the nation's constitutional council cleared governments plan to raise the retirement age to 64. the body rejected demands for a process that could lead to a referendum on keeping the h2 cut off at 62.

while this is a post -- boost for macron. good news for people traveling into and out of florida this weekend, fort lauderdale airport has reopened two days after unprecedented they lose left travelers stranded and turned the city's streets into rivers. hundreds of flights were canceled. bank of england policymakers says you can economy yet to feel the impact of interest rate increases today. she has spoken against further rises. she has spoken to a panel at the international monetary fund in washington, d.c. today. >> it is still too early in the game. most of the tightening and monetary policy happened in the central half of last year. we are still seeing most of that tightening passing through the economy. i -- at one stage, we need to be patient. >> she is one of two on the senate committee and has voted

to keep rates unchanged for several months. global news powered by more than 2,700 journalists and analysts and over 120 countries. i am john hyland and this is bloomberg. ♪ >> i am john open, welcome to bloomberg markets. >> we have a selloff on our hands. i would not call this one to panic about. s&p 500 down by .8%. it is a broad selloff except for the financials. it is speaking towards the idea of retail sales and what that means. you are seeing the deceleration. does that mean the top line growth we expected as constant for most of the s&p 500 members is still there? seems there is still fear baked into the market today even though you have fairly good earnings from the bank sector.

two year yield skyrocketed off retail sales data. a 17 basis point intraday move, paring that higher by 12 basis points. it took that economic data forward to cross the 4% level. we tested it over and over. we are looking at 4.09 on the front end of the curve. how long does not stay there? going into the curve, movement. euro-dollar, 1.09. the weakness you have seen on the dollars side has mostly come from the strengthen the euro. some of that move getting. back today. spot gold at 2002. a stone throw away from the record. >> let's dive deeper into financials. a story of the haves and have-nots. if we are in that situation, a lot of people like jp morgan which right now is looking at a mere 7% increase in its stock. a number of analysts raising

their target prices after a impressive quarter and encouraging outlook specifically on net interest margins. citigroup with better-than-expected results up 4.5% market reaction depends on the bank. if we look at wells fargo, which had numbers that did top estimates, do not forget in wells'case, they have set more money aside for potential bad moves in real estate. home lending, pnc financial also interesting. we wanted to know how the regionals are faring. initially, the response was more positive. the revenue outlook, a little disappointment. we're going to have to watch the players in the financial space. kriti: we will stay with the bank earnings story. we spoke earlier about the recent baking turmoil. >> the banking crisis is a crisis of the banking system. this was a banking tremor. a few banks that were caught offside and badly supervised went down. the big banks are just fine.

the big banks are benefiting from this because they've got two things. not only are they viewed as safe, but they've got diversified business models. jon: let's get some more on today's results. bloomberg's wall street correspondent sonali basak joining us. is that the number sticker takeaway, the big banks are fine? sonali: i think they are more than fine. if you look at j.p. morgan, just had a record quarter in terms of revenue. to add the cherry on top of the cherry, they increased their net interest income. the projections by about $7 billion for this year. they expect to make a lot of money off of lending at a time where we are worried about lending contracting, provisions for loan losses taking up across the banking system. jp morgan is telling you they can make money and are showing you they can be profitable because the return on tangible common equity of 23% is stunning and way more than what wall street was expecting.

that means they were able to turn a significant profit even as headcount rose a bit. you have jamie dimon telling you, expect -- to be flat for the year. it is not like you are going to see jp morgan go on a hiring spree, though headcount did increase a bit in the quarter which is a welcome sign for wall street that is largely worried about profitability and worried about jobs. kriti: how long before that deposit success if you will, that is pushing the sheriff's higher, is reversed? sonali: you cannot bake this success into the deposits. jp morgan has told you it will not be that sticky. they can come out as they have come in. it is the fact they are making money in this higher interest rate environment that is not necessarily how big the regional banks. if you take a look at large, pnc was one of the worst performers then other banks in the kbw banking index. if you look at the difference between the original banks in the big commercial banks that have big investment banks, even

though investment banking has come down a lot, you are looking at jp morgan and citigroup meeting on fixed income trading. these volatile markets and the fact they are exposed to big institutions that are trading volatile markets are another way they are being helped in this environment. not only has that trend continued, big trading desks and offending more than just the consumer banks has continued on into this quarter and let's see if it continues on into the second quarter. kriti: certainly something we are keeping an eye on. a lot of different things to take away from this report from sonali basak for the highlights, thanks as noise. you can tune into our interview with the wells fargo cfo. we will stick with the bank story. there were big calls on interest rates during jp morgan's first order earnings call. executive saying "think about the five and 10 year rate, could be 5%. people need to be prepared for

the potential of higher rates for longer. it will undress problems in the economy." michael, a pleasure to have you. your first time, i believe. we welcome you with open arms. let's start with the rates story. 5% on the 10 year yield peered we are a far cry from that now. is the equity market prepared for that bond market reaction? >> i do not think so. 5% is a long way from here. my guess is, that has topped out. i think i could be markets are prepared for higher rates in general. frankly, i think one of the things that is keeping this grind higher going in on equity markets is the fact you can get 3% or 4% on your money right now. it is a comfortable place to be with this turmoil on the sidelines at counterintuitively, there is a bunch of metrics i can go through with that. you do not need to come into this market right now right away because you can get a this return on your money right now. i think slowly if the market

continues to work well, you continue to get these drifts and assets working its way into the markets. jon: let's talk about the metrics around earnings. there is a lot of specific storylines within banking. now that we are kicking off earnings season, the bearish few out there have been, look out on the profits side. whereas the bulls are watching to see how companies fare over the next couple of weeks. what do you see when we look at the earnings landscape right now? michael: it is tricky. it is different in terms of what you are looking at. i happen to trade the banks. i cannot comment on individual banks. the earnings this time around, we did not expect anything other than this. outside of the fact of a couple of regional bank incomes we are seeing, not much has happened in terms of jamie dimon saw his rate outlook a quarter ago versus now. on the flipside, the thing or worry about when people hear the

new strategist and myself talking, we are worried estimates for a full year 2023 on the s&p are a little too high. i think it is tied to inflation as well. one of the things we are focused on is, when you see inflation starting to roll, which it is, and you see the consumer starting to slow down, which we have seen signs of, we have seen releases from the banks today in terms of credit art activity slowing down, being robust but tailing off towards the tail end of march, it could be indicative the consumer is slowing down a little bit. as prices come in, it creates a weird catch for companies. as prices go lower, they are taking their prices down. as the consumer backs off, it is possible sales drift lower. labor costs are more sticky. what i worry about in the future is gross margin, earnings, sales. i think the street and our house few internally, our base case is for -- i think the straight is

ahead of that. these earning estimates need to be revised down and when you do that, if you assume 200 is a fair number, we are trading at 20 or 21 times, which is expensive. i could go on but i do not want to take too much time. kriti: i'm glad you mentioned the margins piece of the equation. one of the biggest debates on wall street is, where is the pain coming from, topline growth or bottom-line growth? sounds like you are more worried about bottom line and a market trading closely on margins. if the margins story is always getting played out and we're starting to see the margins -- peak margins, where's the upside in this market? michael: i would argue we have seen peak margin. i am not an economist. that is the good question. i think with -- the markets at a weird point right now. positioning is generally light. if you look at prime brokerage down the street, you can look at

-- a lot a flight into money markets. it is the strange period where the s&p is at 4150, the multiple is high and people are not all that invested. the issue is going to be, what causes the market to selloff? on the gross margin story, what are we looking at? if you would seem we have seen peak margin, which we probably have, and prices rollover and you are looking at those credit card data which shows you could have slowing, if you have a slowing consumer and labor costs are sticky, i think gross margins will be under pressure and that hardens earnings. that is going to have that gap or that delta between where the market is trading and valuations that are currently trading right now and where we think their value is. kriti: something we are going to keep an eye on. michael lewis, head of america's crash trading at barclays. we have breaking news. elon musk planning and ai startup to rival open ai

according to reporting coming from the financial times. it looks like he is assembling a team of ai researchers and engineers according to people familiar with the matter. you have a little bit of investors in spacex and tesla being discussed talking about the new venture. this is coming amid a background of a lot of people in the tech community hitting the brakes on the ai space, starting to talk about security concerns. how much of the privacy in the ai story start to overlap? elon musk, a crucial part of that conversation peered we will keep your private of any -- we will keep you apprised of any updates. coming up on the show, after just getting back and years of turmoil, boeing facing another hurdle. it is our stock of the hour, next. this is bloomberg. ♪

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jon: this is bloomberg markets. time for stock of the hour. shares of boeing under pressure, worst performer on the dow today after the company said it is pausing deliveries of some 737 max jets to address a production issue. this coming as it ramps up production of the model. that is a major cash cow for boeing. stop not just the worst dow performer today. having the worst day since october. kriti: ripple effects we are seeing across arrow systems, which makes that faulty part as well as southwest dealing with the backlog. joining us now, bloomberg's simone foxman. walk us through what is going on. >> i have to preface this by saying i am not an engineer and cannot walk you through the intricate specifics. it has to do with the way parts

used at the rear of the plane were produced. the supplier of these parts found that standard manufacturing processes were not followed in some cases when they were producing these parts. that spirit arrow systems telling boeing, this is a problem, we may need repairs in certain cases. going today coming out and saying, not just pausing deliveries but also saying the delivery that we expect to see in the near term a decline. he concern here, how long this lasts in order to rectify these potential issues in planes that are on their way out the door as well as planes that are already in service. does not seem to be a major safety and security issue, but the boeing 737 max crucial to the company's cash flow. $10 million of cash flow per plane according to jeffries. the 737 max going out the door

is a big problem for the company. jon: kriti was mentioning the selloff we are seeing in spirit arrow systems today would you reference. a company that has worked with a host of players. in canada, we watched bombard a do deals in the past with.. this is the reality of the airline industry. you've got partners, you've got to rely on those partners. you mentioned this has been an important cash cow product for boeing. simone: spirit is responsible for producing 70% of the boeing 737, those are built in wichita, that is where spirit is based. this is not the first problem that spirit has had recently. it has problems with supply chain, problems having enough staff to build these massive planes. that is what we see when we look back at the stock over the past year, down 38%. the latest to, not helping. we have seen a little strength

so far this year, but that has gone away today. kriti: the third piece of that equation, the ripple effect is, who gets hurt by that backlog almost getting larger. i think southwest, the heart of that story. simone: southwest expecting a few planes to come from boeing. united also in that picture. that does potentially have an effect on the broader consumer as well, who was looking to take flights this summer. the important summer travel season. if you see fewer delivery of new planes, that could be a problem for them. paying higher prices, maybe traveling less. jon: we will watch the story and that stock reaction. simone foxman on the latest with boeing. as inflation fears return, we get some perspective from olivier branch hard -- glenn chart and silvana on the central

bank's next moves. this is bloomberg. ♪

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jon: this is bloomberg markets. u.s. near term inflation expectations jumped in early april by the most in nearly two years. traders are mulling not one but two more interest rate increases that could be in-store this year. bloomberg's tom keene spoke to the senior fellow at the peterson institute on whether he believes in inflation at 2%. >> that is an interesting question. you have to think about -- the future. i have been a proponent of the higher target inflation rate. i started at 4% 10 years ago. i have concluded inflation to salient and change too much.

i have cut the pie in two at 3%. two things. perfectly happy with central bank saying we do not want to discuss it now, they want to indicate they are committed. i am perfectly happy to have received myself in the central banks. the other point is, people say 1%, who cares? to give you a sense of things, if we had 1% average inflation and therefore 1% average higher nominal rate, this would give 1% more room for monetary policy to adjust. 1% does not seem to be a lot. that is exactly what we got from qe. there is a way of saying if we had 1% more, we could achieve the same result. i think most of us would feel this would be worth it. on this, i think something seriously has to think about.

tom: what i want to do here because this is a wonderful panel, i want to jump in. you are going to not office lee. the general lady from the bank of england said hello to me. i want to respond. respond. please, doctor. >> coming back first to the point of the comment made about central banks being too late, we need to move the discussion from the correlate of to the quantitative. how much it would have gained. right now, we have done these exercises. the picture does not change much. in the europe or u.k., you would have needed to raise interest rates a couple of digits in the middle of the pandemic when we were trying to keep the economy from collapsing. i think it is important to do the numbers of have been quantitative and qualitative discussion of this. i want to reinforce something that olivier said.

inflation has increased everywhere, but the traders of inflation have not in the same. arguably, quantitative exercises to the u.s. arguably stronger, demand has been bigger trigger of inflationary pressures. kriti: olivier blanche hard and silvana speaking earlier today with tom keene. i listened to the whole thing. i think i deserve five gold stars for doing that. i think that was the most important part of the entire conversation. are we in a new era where the 2% inflation target just does not matter anymore, it is not relevant? jon: it is obviously a challenge for investors to navigate not knowing the answer to that. even today, there is that conversation around, are beginning to the end of the rate hiking cycle? you've got christopher waller

with the comments on the need to continue the fight to inflation. markets will have to respond. kriti: at a time where we do not know if we are going to get another rate hike this summer. 10 year yield at 3.52. more markets coverage ahead. stick with us. this is bloomberg. ♪

>> the fed's job might not be done. more economic data, bank earnings and a lot of concerns about macro conditions. counting you down to the close on a friday afternoon. >> it is a friday. you look at the stock market, not too cheerful laughter that double dose of retail sales and the university of michigan numbers did not disappoint. romaine: even some of the factory numbers and their. it gets to this idea of