Closing Bell - Closing Bell: Stocks surge to end the week, Wells Fargo CFO on earnings, Solar CEO on Manchin comments 7/15/22

Episode Date: July 15, 2022

Stocks surged to end the week on the back of strong retail data and a jump for the banks. Wells Fargo CFO Mike Santomassimo joins to discuss his firm’s quarter and if he sees a recession in the cards. Solar stocks sat out the rally after Sen. Manchin reportedly poured cold water on new climate change funding. The CEO of Sunnova weighs in on what that means for his sector. And market experts Barbara Doran and Bob Doll discuss the outlook for stocks as earnings season kicks into high gear.

Strong consumer data and a big rally right now in the financials, sending stocks higher to close out the week. The most important hour of trading starts now. Welcome, everyone, to Closing Bell. Happy Friday. I'm Sarah Eisen. Take a look at where we stand near the highs of the session. S&P 500 up 1.7%. We are recovering a little bit from losses on the week, though we're still down about 1%. First gain, though, if we close positive for the week for the Dow and the S&P. The Dow is zooming right now up almost 600 points.

High of the session was just over 650. The Nasdaq up 1.6 percent. The best performer right now on the S&P 500 is Citigroup after earnings. Right behind it is State Street off earnings as well. Look at the S&P 500 sector heat map. Lots of green on the screen. In fact, every sector is higher right now. And the banks are on top for a change.

That sector up 3.7 percent. Health care is up 2 percent right behind it. Communication services rallying. Netflix is up almost seven and a half percent ahead of earnings. Meta is also doing well and so is Disney. Consumer discretionary doing strongly. And it's the defensives that are lagging like utilities and staples. Coming up on today's show, we will talk to the CFO of Wells Fargo about today's earnings results, which initially sent the stock lower and then it rebounded sharply to the upside of more than 6%. Plus, look at these solar stocks. They are sitting out today's rally. Clean energy names getting clobbered on comments

reportedly from Senator Joe Manchin about climate funding. We'll talk to the CEO of solar firm Sanova. Stock is also lower on the news about the Wall Street reaction. First up, let's start on this rally. Several factors pushing stocks higher right now. One, another round of bank earnings. Wells Fargo and Citi soaring on the back of their reports this morning. Two, we got strong numbers for June retail sales up 1 percent from the month. That is a decent jump compared to the 0.1 percent decline in May, though a lot of people say a lot of it was driven by higher price stuff. Inflation goes into that report. And three, St. Louis Fed President James Bullard saying earlier that inflation can come down quickly to 2 percent in 18 months if the Fed plays its cards right. Let's bring in Barbara Duran from BD8 Capital Partners and Bob Dahl from Crossmark Global Investments. Bob, I think the most impressive thing today is the banks and the performance and reaction to the number. Citigroup

right now is up 14 percent. Yes, this was the cheapest of the big banks coming in. But what do you think is behind this kind of very strong enthusiasm we're seeing now for the whole group? Well, as you know, those stocks have been hit hard. And so people have gotten out of the way. And you get any good news and these things pop. I hate to be a bear of bad news, but I think this is typical of a bear market rally. What goes down the most often pops in a bear rally. I'm not convinced we've seen the bottom yet.

We've had a bunch of mini bottoms, but I'm not sure we're there yet. But look, the banks have decent balance sheets. They didn't get into a lot of the trouble they did before the Great Recession. So any good news at these cheap prices gets them going. Barb, are you a buyer on any of this news we've gotten? Interestingly, J.P. Morgan, which declined on its results yesterday, has come back today. Well, I think going into the earnings, these stocks were looking very attractive. It really comes down to risk-reward. And I think what you're seeing today is a big relief rally, not just in the banks, but it's the start of the six-week earnings period.

The banks are always looked at as a bellwether for what's going on in the economy. We get real-time information. And the news there was very good. Even Jamie Dimon, who talks about the hurricane and really upped his loan reserves and looks down the road and says, hey, typically when you raise interest rates as aggressively as the Fed is doing, it doesn't mean good things down the road. However, things right now are very good. And I think he's, if you look what happened in 2020, in terms of all the banks really upping the reserves in anticipation of who knows what would happen in the shutdown, and they didn't need them. And so I think that Jamie is just doing good risk control here. And I think that investors are seeing that and going, wow, this is a good start to the earnings season because

everybody is worried, what are the earnings going to show? What is company guidance going to be? And this is a good start and very constructive for what may lie ahead this next few weeks in earnings reports. So would you be buying the banks since they have been battered, Barb, even though we're seeing suspended buybacks? Citi did it again and we're sort of teetering on the edge of this recession, even if we're not hearing that out of the companies? Yeah, well, you've had big move today, like Citi up 14 percent. I think that when you see a rally like this, we've had so many false starts. It'd be hard to say, oh, let's go all in. But I would think that if they come off at all, you could be at it. And I would

have been at it before this and would have had to live through the drawdowns yesterday. But I think you could start buying in here. I think, again, the risk-reward is extremely attractive. And I think a lot of the worst case, unless we went into a deep, deep recession, which just does not seem possible given full employment and the wage increases and lots of other positive things going on. So I think they were discounting bad news. What about you?

Are there any sectors of the market that you would say you would tell people to buy right now? On Barb's idea that risk reward looks very favorable, that these stocks have a lot of stocks have gotten very cheap. And maybe we won't go into a very deep, ugly recession. As Barb points out, the real question is earnings. And I think we're going to get mixed earnings given the slowdown in the economy. Look, I think we're in a period of time where it's not necessarily prudent to chase strength. I like buying on the big red days and I trim on the green days because I think we're going to have more volatility to the side wise pattern before we make the final low and hopefully that soon. I also wanted to point out one other quick data point today, Bob, which is that in the sentiment

data for consumers, we saw the long term inflation expectations decline by more than forecast. So they're 2.8 versus 3.1. And we know the Fed is watching that very carefully. In fact, a lot of people thought it's what led to that triple-sized surprise rate hike last month. How significant do you think these data points are as far as what it's going to mean for Fed policy and for the market? Very significant. I'm glad you pointed out, along with the good earnings, this is the good news of today. The consumer expectations around inflation are falling. Our view is inflation peaked in the second quarter. We just got the last reading for the second quarter and that the numbers will come off here and the balance of the year, not back to two percent, anything close to that, but enough

take some of the sting out of the concerns people have. Bob Dahl, Barbara Duran, thank you both for joining us with some of the strategy today. With the Dow up almost 600 points, Wells Fargo joining in the bank rally. Big intraday comeback here, falling initially when earnings crossed, but getting a big lift throughout the session. Up next, we will talk to the company's CFO to break down the results and share his outlook for the consumer. You're watching Closing Bell on CNBC. Still down about a percent on the week, but we're recovering nicely, up one and three quarters percent on the S&P. Check out today's stealth mover, Vertical Aerospace. Shares of the electric aircraft maker soaring after announcing European jet operator Flying Group ordered 50 of its flying taxis.

The company also says American Airlines has confirmed delivery slots for the first 50 aircraft of the preorder that it placed last year. The stock up 70 percent. This is one of those companies that went public via SPAC post-COVID, 2021 or so. It's been on a downward trajectory, but not anymore. Flying. Take a look at Wells Fargo. The stock is jumping despite missing revenue estimates this morning. On the earnings call, CFO Mike Santamassimo said the bank is expecting net interest income to grow by 20 percent this year, but also warning that things probably will get worse for the economy. Joining us now is aforementioned Wells Fargo CFO Mike Santamassimo. Mike, it's always good to have you on Earnings Day. Welcome. Thanks, Sarah. Thanks for having me again.

So I just wanted to get the top and bottom line myths out of the way, first of all, even though the stock is reacting to some of that better guidance and just the overall enthusiasm right now around banks. The myths related to equity investments, explain that. Well, you know, earnings decline primarily related to our cyclical businesses, you know, having, you know, coming into the quarter with headwinds against them. Both the mortgage business, as rates have really impacted that in a really substantial way over the last two quarters. And then, as you said, our private equity and venture businesses. And given what you're seeing in the public equity markets, that has an impact on the valuations

there. But when you really look through that, as you mentioned in the lead-in, both rates and higher loan balances are really helping propel net interest income growth, not only in the quarter, but as we look at the full year. And so that should really help us as consumers are continuing to be out there spending. We're seeing good activity across both the consumer and commercial portfolios. And I think that really bodes well for the environment we're in right now. Right. It does hurt the mortgage business, though, as you mentioned, and as one of the biggest home lenders in the country, Mike, wanted to gauge how you're thinking about what's going to happen next and how bad it's going to get for housing. Well, you know, it's really, you know, a function of

rates going up over the last, you know, couple of quarters, and that's really a function of rates going up over the last couple quarters, and that's really impacted the refinance volumes that we've seen in the mortgage business as they've slowed as rates have gone up. We've seen a little bit of weakness in the purchase market as rates have gone up, but that still has some good activity to it. And so, as I said on the call this morning, we do expect it could go down a little bit more in the third quarter and then look to stabilize over the next over the next couple quarters and you know there really are some positive parts of the

housing market to where you know there's still the demand and supply you know imbalance across there we're still seeing good home price appreciation and so there are some positives to it as well but it'll take a couple quarters to really stabilize but but again when you look through the you know consumers there the consumers there that are impacted here, we're seeing really good credit performance still, maybe slightly off of low levels, historic lows that we've seen, but really good performance across all the portfolios. And I think that really sets us up pretty well as we go into the uncertainty that's there in the environment. But Wall Street is very nervous, Mike, as you know pretty well as we go into you know the uncertainty that's there in the environment but Wall Street is very nervous Mike as you know about recession so you saying you're just not seeing it or you're not seeing it yet yeah well

we're certainly not seeing signs of stress yet you know across really any of the portfolios that we have but but we know as rates rise and the Fed has been pretty you know pretty clear about what they're trying to do in terms of stemming inflation, that will have an impact on growth. And that is going to have an impact on not only the economy, but also consumers and businesses over time. I think you'll see that first in the low-income cohorts across the consumer space. Not a big piece of our business, but I think that's where you're going to see it first as the impact of inflation really takes hold there. But you sort of have to look through these environments. And we're continuing to execute on the things that are our priorities around building out new capabilities. We've launched new credit cards.

We're seeing good uptake in a lot of that. What we're seeing, we're executing on our efficiency plans. And so really our focus is to stick to the things we can control and make sure we manage all those risks that are out there. Right. No, the credit card business, I think, was a highlight. You've seen strong spending. And what about delinquencies, Mike? Any signs that that's picking up? Not in our portfolio. I mean, very, very small ways, but still very, very much below where they were pre-pandemic. And so, you know, very, very small ways, but still very, very much below where they were pre-pandemic. And so, you know, and as we launch our new products, we're seeing really good uptake. But we're also seeing really great credit quality, you know, in terms of the customers that are both applying and getting approved for the new products.

And so all that's actually working quite well. We're not seeing that in the card business in any substantial way yet so do you think the market has this wrong what's gonna happen to the economy as a result of these aggressive rate hikes well you know the it will have an impact right and you know I'm not I'm not gonna you know try to project whether there's a recession or not a recession when it's gonna happen you know I'll leave that to others you know I do find it interesting that people are taking out the rule books now around what a recession really is, and particularly given the employment situation we have here, almost full employment. And so I think it's clear that the rising rates will have an impact on the economy. It's just exactly how that's going to impact customers

and corporate clients, I think, is still to play play out because we're not seeing that stress yet in any significant way. Right. And Wells Fargo, you have your own sort of remain a self-help story and a turnaround story. Expenses have been a big part, expense cutting, a big part of Charlie Sharp's strategy. The expense number did come in a little bit higher. What are you telling investors about where that goes if we are facing a trickier economic environment, more volatile one? Yeah, no, I think of it as really driving

efficiency across our business, not cutting expenses. And I think, you know, when you think about it, you know, we've got hundreds of different initiatives across the firm that we're on track to execute. And when you do that, you're not just reducing spend, you're actually in most cases improving the way you deliver services to clients too. You're automating things, you're making it faster, you're making it easier to get their information or set up a new account.

And so there are a lot of benefits as we go through this plan, but we laid out a plan about a year and a half ago, we're on track to that, we're delivering real results there. And I think you'll see it continue to come through the numbers over the coming quarters. I guess you can't say anything about the Fed asset cap, right? No guidance on when that changes, if that changes.

Yeah, we stay focused on the things that we can control, which is executing our priorities, making sure we're doing all the things we need to do. All the risk and regulatory work that we've got is still our top priority, and that's where we're focused at this point. Finally, Mike, I didn't really zero in on the loan story, but that was also good news on consumers, on commercial loans. How do you guys see that holding up if we do go into a little bit of a bumpier period? And where would you expect the weakness and the warning signs to come from? Well, we've certainly seen good growth really across all of our portfolios, which is good to see that it's not coming from just one spot or one nook and cranny of the portfolio. You know, some of it on the commercial side is, you know, increased working capital needs, some of that

supply chain, some of that's inflation related, but some of it's new business that we're winning as well, particularly in our commercial banks. That's good to see. On the consumer side, you know, it's really, you know, been pretty measured in terms of the growth that we've seen. We're still seeing really good payment rates and products like credit cards. We're seeing really low delinquencies on all the, most of the other products. And so, again, as we said, we're not seeing the stress there though. But as we said earlier today, you know, I do think that some of that growth will moderate a little bit as we get further into the year. You know, some of that's just the overall impact of what's happening in the markets and the economy. But, you know, so we'll see if that plays out.

But I do think it'll moderate a little bit as we go. Mike, thank you for joining me, as always, on Earnings Day. Stocks up more than 6%. Mike Santomassimo, the CFO of Wells Fargo. Show you where we are overall. That financials rally is really helping propel the S&P. It's up 1.7%, though every sector is higher right now. Healthcare is right behind it. Communication services, consumer discretionary, all going strong. NASDAQ up 1.6, 1.5%. It's down almost 2% still for the week. But again, we're cutting

into the losses for the week. Solar is sitting out of the rally after Senator Manchin reportedly poured cold water on climate funding from the administration. We'll talk to the CEO of Sanova about what it means for his industry. That's stocked down 4.6 percent. Time for today's market dashboard. Mike Santoli has a good one. He's got an eye here on the health of the consumer's balance sheet, which really goes to the heart of some of these bank earnings and the reaction today. Yeah, it fits with what the bank CEOs are telling us, that in fact consumers are not showing much distress,

but also relatively decent retail sales today. And a lot of what we're seeing that may be an imminent recession is certainly not going to come from the consumer side. Also, economists saying, oh, even if we dip into recession, it won't be a harsh one. This is one of the reasons. This is the household financial obligations ratio. Essentially, all debt service burden on households as well as rent and mortgage. So it's not just interest.

It's actually those other monthly household expenses. And you see it just plunged to historic lows. This is a 42-year chart back in the pandemic when there was all that stimulus. A huge use of those direct stimulus checks were to pay down balances and build up a little bit of a savings cushion. That has not yet gone away. Now, this is a quarterly number, so this is still not up to the minute. But clearly, we're coming from such low levels that even if we get back to where we were before the pandemic, it really is not pre-recessionary type numbers. That's what you saw right here in 07, 08. Actually, in the late 90s, it had dipped from its highs, but still was

at a higher absolute level. So this kind of explains some of what we're hearing, which is in contrast to some of the market-based indicators of potential. Well, it explains why some people are saying no recession or not a deep recession. I mean, the great recession, as you noted, 2007, one of the reasons the economists cited it as so painful is because of the buildup in household and financial leverage and debt. And so if we're going into a recession this time, you just you're not seeing it's odd. You're not seeing that. And it took years to work off. Now, this right here, that was basically people just walking away from debt and mortgages going bust. And it wasn't just so much people paid it down. It was just that the debt had to be swept away. So, yeah, that's absolutely the case. Now,

rates going higher is going to drag this up, right? You're going to have balances roll to higher rates, you know, revolving credit, things like that. But again, there's a little bit more room for this to go up before you worry about it. Yeah, way deleveraged compared to the fall of Lehman is the headline. Mike, thank you. We'll see in the market zone. Solar stocks not having a great day today on report. Senator Joe Manchin will not support climate change funding in a new spending bill. Up next, the CEO of Sanova discusses what it means for his industry and his stock. Plus, we are getting word that President Biden is expected to deliver remarks in Saudi Arabia this hour. He is there for his first presidential visit.

We'll take you there live as soon as it happens. The Dow's up about 560 or so. The high was just above 650. We'll be right back. Solar stocks taking a dive this morning. Coming back a little bit this afternoon. This comes after NBC reported Senator Joe Manchin will not support increased spending to address climate change. President Biden releasing a statement saying in part, quote, if the Senate will

not move to tackle the climate crisis and strengthen our domestic clean energy industry, I will take strong executive action. Joining us now in an exclusive interview is Sinova CEO John Berger. And John, just a warning that might have to cut you off to go to the president who is in Saudi Arabia, expected to speak any moment now. But first, tell us this news on Manchin. How critical was this federal spending for your business? Well, it's unfortunate that Senator Manchin reportedly decided not to move forward with something that's been under negotiation for quite a while. I suspect that it is not over and that there'll be something that will happen, whether it's under a tax extenders package by the end of the year,

but something will happen here. But the critical point to make here with regards to Sanova and a couple of my competitors is that the investment tax credit is still in place and is still in place for next year and is still in place for next year and is really even beyond that, although there's a step down post-2023. So this does not affect our growth plans at all for 2022, for this year or for next year. And so it's something that when we're looking at the long term and we're really looking to see what the impact is, this would have lowered inflation. It would have lowered energy prices. It is going to hurt some people in the field in terms of the men and women that actually do the work in the field. Those wages are going to have to come down

because those cash flows from the tax credits are not going to be there. That's where the impact is really going to be felt. The manufacturing jobs for solar modules, batteries are not going to come as fast and as plentiful here in the United States. So it's hurting the little guy. It's not going to hurt the big companies like Sunova near as much. And so we're really hoping that the Senate and the House and the president can really get something done here. But in the near term and even in the intermediate term, not as much of an impact at all, but certainly this will be good long-term energy policy. The other thing I want to point out is this doesn't necessarily hit just solar. This is about oil and gas, carbon sequestration, biofuels, hydrogen. So it hits some of these other sectors

much harder than us, much, much harder than us. And so that's something that folks need to be aware of as well. Just wanted to raise one thing you said there, which you said it will lower inflation, because I think reportedly one of Manchin's concerns right now, as everyone's concern is, is inflation. And, you know, you can just hear the Republicans saying another spending package throwing more money into this economy at a time where it's already overheated and Americans are dealing with rising costs of living.

You say it's actually disinflationary. Explain that. Absolutely. It's a place where you can lower energy prices. And really, it's probably one of the if not the only place, one of the very few places you can where you can bring energy costs, power for your home and power for your car, even now with electric vehicles down in price. So you pull that subsidy out of the marketplace, that price is going to rise up, and therefore it's going to have a counter or an inflationary impact by not having the investment there. So this is actually something that's very good

for the working men and women in the country. So again, I think that's why Senator Manchin and others are going to come back and end up doing this. But at this point in time, really, you know, make a point here about all of energy to follow on this inflationary impact is if you love oil and gas stocks. And I know that a lot of people have these lately and looking for those prices of oil, natural gas and coal to move up. Then you love solar stocks because prices of oil, natural gas and coal, which we compete with, have moved up materially. So this this tax credit doesn't impact as near as much as people think it will do. And it's going to it needs to have an impact on the consumer to bring the price down for consumer

because oil, natural gas and coal have moved up so much. I think people look at your stocks as a little more discretionary than oil and gas when it comes to consumer demand. John, what does it cost to install solar panels right now? And how has that price changed as a result of you felt the cost inflation, too, and the supply shortage? Yes. Well, so we have on average, it's about $32,000 to install. We finance, and so the customer has an immediate savings, about 20%, but that's also climbed. Even after we've raised prices about 15% to 20%, depending on the region across the country over the last few months. And so we are still getting savings, and in some cases that savings can be quite significant, Sarah, as much as 50% savings. And so there's still a very powerful value

incentive. And when we're selling in terms of energy and power, it's a necessity. Nobody goes home even after you lose your job and say, I'm not going to pay the power bill. I'm not going to pay the water bill. So this is absolutely something that's not discretionary. We're not seeing demand drop off at all. In fact, we had our biggest sales day in our company's history on June 30th at the end of the quarter there. And so we're seeing tremendous, not just ourselves, but the industry, tremendous demand for something that is a necessity. This is not a discretionary sale. What about how many people fund it via loans and how have rising interest rates affected that?

The costs have gone up, but the utility prices and rates have gone up even more, much more. And we expect to continue to see that as we go into the year, even if oil, natural gas and coal were to flatline here in price and not, you know, not increase anymore, which I do think that we'll probably get a rebound here in those commodities as we move forward in the year. But you're still going to see quite a bit of savings, significant savings, despite interest rates, which looked kind of flatlined here a little bit for at least a little while here. But you're still seeing significant savings on that. Now, I want to point out in the loan comment, and that's a good

question, because the investment tax credit ends at the end of 2023 for individuals, but not for companies like us. So if it's the loan market you're really worried about, we'll have our lease and our power purchase agreements, and maybe the loans won't sell near as much. They won't in 2024. But as an individual, you won't have the option to use a loan. You'll have to come to big companies like us for the business. So we could actually pick up a significant amount of business as well as one or two other companies in the United States. Again, I don't think that's good policy as much as it would benefit us, but in a reason, again, that I think that the Senate will get this fixed at some point. Yeah, I guess TBD on what kind of executive action

the president is threatening to take, what that could look like. John, stay close. It's not going away. Thank you very much for joining us. Thank you, Sarah. Energy certainly will be one of the topics discussed during tonight's CNBC special, Taking Stock, the State of the Markets. Don't miss stock picks from top market experts tonight, 6 p.m. Eastern time on CNBC. Here's where we stand right now. Dow's up about 555. It's a broad rally. Every sector is higher in the S&P. Financials are leading the way. Not every day you see a double-digit move in Citigroup. That's been the reaction to earnings right now. The stock is up 14 percent, but all the banks are rallying right now. And almost all the Dow stocks are rallying

as well. You've got, I think, 30 out of 30. I know, P&G is the only one lower. Everybody else is higher. UNH adding the most, adding 157 points to the Dow. You'll hear from the CEO later. Up next, the big picture on whether inflation is starting to produce cracks in the luxury retail industry. A few new clues today.

And we're awaiting those remarks from President Biden. We will take you live to Saudi Arabia as soon as it begins. We'll be right back. In today's big picture, a pulse check on the luxury consumer. Turns out she's doing mostly just fine everywhere except for China, where there have been lockdowns because of COVID. Burberry reporting only 1 percent sales growth, but 16% if you take out China. On the U.S., Chief Operating and Financial Officer Julie Brown said there's been a big shift from buying slides and sneakers to higher-priced items like outerwear and leather goods as trends have shifted post-COVID. But she says she sees no real impact from the rising cost of living on the consumer. In fact, Brown did reference strong credit card spend in higher income consumers, saying it's, quote, still a positive move in our sector. Similar story for Cartier and Van Cleef parent Richemont. European sales in that company up 42

percent, up 25 percent in the Americas. It's still getting stung by Chinese lockdowns as these luxury players are heavily exposed there. And that's been punishing the stocks lately. But outside of that, the company did cite, quote, robust domestic demand and a return in tourist spending. It all jibes with the latest Saks Luxury Pulse survey of shoppers, which found 76 percent of respondents with incomes of $200,000 or more said they plan to purchase the same or even more luxury items in the next three months than they did in the past three months. Vacation and travel ranking first on the spending priorities, followed by shoes, accessories and handbags. Bottom line, inflation hasn't hit the luxury buyer just yet, and neither has the falling stock market. Everyone's getting

prepared for a slowdown or even recession, but these big global luxury players just aren't seeing it at this point. UnitedHealth adding well over 100 points to today's Dow rally. Find out why investors are so excited about the company's earnings beat straight ahead. That story, plus another wave of big tech price target cuts and banks bouncing back when we take you inside the market zone. Dow up 556, S&P rallying more than one and a half percent. We're taking you straight to Jeddah, Saudi Arabia, to hear from President Biden. The crown pinch and all the ministers from the energy minister to the sports minister all the way down the line and got the chance to talk to basically the entire Saudi government. And thanks to many months of quiet diplomacy by the staff, we've accomplished some significant business today.

First, as you saw this morning, the Saudis will open their airspace to all civilian carriers. That is a big deal, a big deal, not only symbolically, but substantively it's a big deal. It means Saudi airspace is now open to flights to and from Israel. Not only symbolically, but substantively, it's a big deal. It means Saudi airspace is now open to flights to and from Israel. This is the first tangible step in the path of what I hope will eventually be a broader normalization of relations. Second, we concluded a historic deal to transform a flashpoint at the heart of the Middle East wars into an area of peace. International peacekeepers, including U.S. troops, will leave Taron Island and the Red Sea, where they've been for over 40 years since the Camp David Accords.

Five American soldiers died on this strategically located island in 2020, and it's important we remember them today. Now, thanks to this breakthrough, this island will be open to tourism and economic development while retaining all necessary security arrangements and the present freedom of navigation of all parties, including Israel. Third, we agreed to work together to deepen and extend the Yemen ceasefire. And you know there's been this carnage been in Yemen of late. And it's been in place more than three months, resulting in the most peaceful period in Yemen in seven years. We further agreed to pursue a diplomatic process to achieve a wider settlement in Yemen.

The Saudi and Saudi leadership also committed to continue to facilitate the delivery of food and humanitarian goods to civilians. In this context, we discussed Saudi Arabia's security needs to defend the kingdom given very real threats from Iran and Iran's proxies. Fourth, we concluded several new arrangements to better position our nations for the coming decades. Saudi Arabia will invest in new U.S.-led technology to develop and secure reliable 5G and 6G networks, both here and in the future in developing countries, to coordinate with a partnership

for global infrastructure and investment, which I put together at the G7. This new technology solution for 5G called OpenRAN will out-compete other platforms, including from China. Saudi Arabia will also partner with us on a far-reaching clean energy initiative focused on green hydrogen, solar, carbon capture, nuclear, and other projects to accelerate the world's clean energy transition and to help the U.S. clean energy industry set global standards. And fifth, we had a good discussion on ensuring global energy security and adequate oil supplies to support global economic growth. And that will begin shortly.

And I'm doing all I can to increase the supply for the United States of America which I expect to happen. The Saudis share that urgency and based on our discussions today I expect we'll see further steps in the coming weeks. Finally we discussed human rights and the need for political reform. As always, as I always do, I made clear that the topic is vitally important to me and to the United States. Respect to the murder of Khashoggi, I raised it at the top of the meeting, making it clear what I thought of it at the time and what I think of it now. And it was exactly, I was straightforward and direct in discussing it.

I made my view crystal clear. I said very straightforwardly, for an American president to be silent on an issue of human rights, is this inconsistent with who we are and who I am? I'll always stand up for our values. So that's a quick summary of tonight's outcomes. Tomorrow, with nine leaders from around the region, we'll have more. One thing we will discuss is the multi-billion dollar commitment of the GCC to invest in the Partnership for Global Infrastructure Investment, which I announced at the G7 last month, to help address infrastructure needs of low- and middle-income countries who don't have the wherewithal

to borrow the funds to meet the needs of their people. And after years of failed efforts, we have now finalized an agreement to connect Iraq's electric grid to the GCC grids through Kuwait and Saudi Arabia and deepening Iraq's integration into the region and reducing its dependence on Iran. And it was pointed out to me that I was reminded by staff at the time at the meeting that I tried to do that back when I was in the early days of my vice presidency. Finally, it's done, being done. Tomorrow, I'll also be laying out an affirmative framework for America's engagement in the Middle East to build on these important steps going forward. The bottom line is this trip is about, once again, positioning America in this region for the future. We are not going to leave a vacuum in the Middle East for Russia or China to fill.

And we're getting results. I'll take a couple questions now. Mr. President, what was the Prime Minister's response to your comments about Khashoggi? He basically said that he was not personally responsible for it. I indicated I thought he was. He said he was not personally responsible for me, a violation of human rights. Sir, two quick questions, if I may. First, we just heard from Jamal Khashoggi's wife who said after this visit, the blood of MBS's next victim is on your hands. What do you say to Mrs. Khashoggi's wife, who said after this visit, the blood of MBS's next victim is on your hands.

What do you say to Mrs. Khashoggi? I'm sorry she feels that way. I was straightforward back then. I was straightforward today. This is a meeting. I didn't come here to meet with the Crown Prince. I came here to meet with the GCC and nine nations to deal with the security and the needs of the free world, and particularly the United States, and not leave a vacuum here, which was happening as it has in other parts of the world. On gas prices, if I may, you said that we'll see relief at some point in the not-too-distant future. What is the message to Americans who are looking for that relief now? When should they expect to see a real change in prices, though they've already been coming down? There's been a real change.

They've already been coming down. That's right. They've been coming down every single day, to the best of my knowledge. When will we see the impact of this visit? I suspect you won't see that for another couple weeks. Mr. President, can I ask a question? And we'll see more when we see gas stations start to lower their price consistent with their paying for the oil. Mr. President, do you regret calling the Saudis a pariah? I don't regret anything

I said. Do you still feel that way, though, Mr. President? I just answered your question. Do I regret it? I don't regret anything that I said. What happened to Khashoggi was outrageous. Mr. President, you're coming under a lot of fire for your fist bump with the crown prince. I just wanted to give you a chance to respond to that. But also, how can you be sure that another incident, another murder like Jamal Khashoggi's won't happen again?

God love you. What a silly question. How could I possibly be sure of any of that? I just made it clear, if anything occurs like that again, they'll get that response and much more. Look, you've heard me say before, and when I criticized Xi Jinping for slave labor and what they're doing in the Western mountains of China, and he said, I had no right to criticize China. And I said, look, I am president of the United States of America. For the United States president to remain silent on a clear violation of human rights

is totally inconsistent with who we are, what we are, and what we would do, what we believe. And so I'm not going to remain silent. Can I predict anything's going to happen, let alone here, let alone any other part of the world? No. But I don't know why you're all so surprised the way I react. No one's ever wondered, I mean what I say.

The question is, I sometimes say all that I mean. The Press And what about your response to the Bidz Bop? The Press On the issue of climate, Joe Manchin obviously made significant news right now, which appears to be torpedoing what was one of your biggest priorities as it relates to energy and to climate back at home. Your message to those Americans right now who are looking for that relief

that would have a wide impact as it affects the climate and energy specifically? I am not going away. I will use every power I have as president to continue to fulfill my pledge to move toward dealing with global warming. Thank you. Mr. President, is Joe Manchin negotiating in good faith? I didn't negotiate with Joe Manchin. I have no idea. Thanks, guys. Just about 11 p.m. there in Jeddah, Saudi Arabia. President's first visit as president there said we have had a series of good meetings in Saudi

Arabia as it relates to energy, which is, of course, something that investors globally have been watching. The president, Biden, did say that he had a good discussion on ensuring global energy security and adequate oil supplies. He sort of teased that there would be something to come. He said he's doing all he can to increase the supply for the U.S. And based on the discussions that he has had with the Saudis, Biden says he expects further steps in the coming weeks and then was asked about it again on oil,

said expect something in the coming weeks from Saudi Arabia on energy. He also did address Jamal Khashoggi and the murder, saying that he brought it up directly. There was a question going in about whether that would come up, obviously controversial

in the discussions with Mohammed bin Salman, the crown prince of Saudi Arabia. With that, let's go straight into the closing bell market zone because we've just got about five minutes here into the close. And we're just about a session high near there. 620 on the Dow. The high was about 650. Driven by strong performance in the banks, the financials are at the top of the market. Mike Santoli joining us. We've also got Wes Krill from Dimensional Fund Advisors. And apologies, Wes, we're going

to have to keep it a little short because of the president. But Mike, just want to go to you first on on oil prices, which actually are firmer. Biden said he believes they've been coming down every day. Not today. They're up almost two percent. Ninety seven fifty. And teasing that Saudi may do something like boost energy supply. Is that a surprise? I don't think it's a surprise that that's the objective. We'll see if there's actual supply, incremental new supply that comes out of it. I think, you know, with crude down 20-some percent from its highs,

wholesale gasoline prices down again and steeply in the last few weeks, it sort of has taken the pressure just slightly off that part of the market. And I think it's one of the reasons why you have not seen new lows in equities since mid-June, along with the fact that yields have been able to come in as well. So obviously more help would be welcome. But so far, we've kind of stepped back from the ledge on that issue. Wes, I wanted to get to you because we don't hear from you guys very much, a dimensional. So tell us a little bit about your strategy, your longtime value quant kind of firm, manage a ton of money. What are you seeing right now as far as the models

and the opportunities in this kind of market? Yeah, and thank you for having me on today. You know, we have a systematic investment approach that seeks to pursue higher expected returns. You can think of it as taking the appealing aspects of index investing and then having a flexible daily approach. And the importance of that daily approach is really so that we can use up-to-date information in market prices. When you think about some of the conversations that have been happening today with the energy sector and even going further back in the year, just looking at the defensive sector rally, you know, to us, that's connected to a value play. You know, that's using market prices. The sectors that are performed particularly well in 2022 so far have been on the lower price to book ratio portion of the spectrum. So we believe in value investing and we also see the value premiums have been showing up even within those sectors. So it's an opportunity for investors to pursue higher expected returns,

but do it broadly diversified across different sectors. Even if we are seeing signs that inflation is peaking, not just in oil prices and a lot of different commodities, the food prices, and even within some of the inflation expectation data like we got today from University of Michigan. Yeah, it's another reason why I like to look at market prices. Market prices are a good sign of what investors expect for the future, and we see it in the inflation data. For example, if we look at a break-even inflation rate, which is the difference in yields between nominal and inflation-protected treasuries of the same maturity, That's a proxy for the market's expectation of inflation in the future. And the one-year break-even inflation has been interesting because it peaked at over five back in March. It's now down under four. Last time I checked,

it was about 3.4. That's telling us that the market is expecting inflation to cool. That would imply an inflation over the next 12 months of 3.4%. So stick with value. Wes Crowe, we'll have to have you back on because we definitely want to talk to you a little bit more about the approach. $650 billion in systemic assets under management. Appreciate it for now, Wes, from Dimensional. As we head into the bell here, into the close,

640 points higher on the Dow. That is near a session high as we speak. You've got most Dow stocks higher. We're still down for the week, but today has been a pretty nice recovery. United Health is adding 173 points to the Dow. Strong earnings this morning. JP Morgan also back above its price that it lost after earnings yesterday. American Express, Goldman Sachs. It's all about the banks today. Financials very strong in the session. They're rallying three and a half percent. Citigroup, the best of all of them. It was the cheapest going in. Really strong reaction to earnings up 13 and a quarter percent. But every

sector is going to go out with a gain on the day. The Nasdaq up one and three quarters percent. Again, still declines on the week, but the first up day for the week and it ends on a high note. That's it for me.