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Biden's second day in Israel; the U.S. economic outlook; what's happening in Sri Lanka

RACHEL MARTIN, HOST:

It's been easy to miss this with so much going on, but Iran is in position to make a nuclear weapon quickly if it wants.

STEVE INSKEEP, HOST:

A U.S. diplomat told NPR this month the Iranians have enough uranium to make a weapon. They have slowly been going out of compliance with a nuclear agreement since the United States withdrew from it. And that is the backdrop for an announcement today in Israel. The U.S. and Israel do not agree how to approach the Iranian threat, but today, President Biden and Prime Minister Yair Lapid signed a declaration agreeing that Iran must never get a bomb.

MARTIN: We find NPR's Daniel Estrin in Jerusalem, where President Biden has been visiting. Daniel, thanks for being here.

DANIEL ESTRIN, BYLINE: Sure. Good morning.

MARTIN: Explain how Iran is coming up in these meetings.

ESTRIN: Israel and the U.S. are not on the same page at all about returning to the Iran nuclear deal. Biden is emphasizing diplomacy. Israel has reportedly been engaged in sabotage attacks on Iran. But today, the leaders of the U.S. and Israel will sign a declaration, and Biden will commit to using all elements of our national power to prevent Iran from getting a nuclear weapon. And yesterday in an interview, Biden said that the U.S. would attack Iran as a last resort.

Now, that is not new. That is just Biden reassuring the Israelis, and that is Biden's mission on this trip. He wants to reassure Israelis about their security and reassure them about him, after most Israelis embraced Trump. I mean, look at the way Biden greeted Israelis yesterday. He gave Israeli leaders fist-bumps at first, and the White House said that that was COVID protocol.

MARTIN: Right.

ESTRIN: And I guess it's also a convenient way for Biden to avoid a handshake tomorrow when he meets the Saudi crown prince, who the U.S. implicated in the killing of journalist Jamal Khashoggi. But then very quickly, Biden went for close physical contact, and he even kneeled on the floor and spoke to two elderly Holocaust survivors and gave them kisses and clasped their hands. And that scene touched a lot of Israelis.

MARTIN: So, I mean, there's a lot on an agenda any time an American president goes to Israel. Biden will meet with Mahmoud Abbas, the president of the Palestinian Authority, tomorrow. What do we expect substantively to come from that meeting?

ESTRIN: Substantively is the right word because, I mean, Biden yesterday said he wants to see a Palestinian state established alongside Israel, but he said it's not going to happen in the near term. And so what the administration is doing is exerting a lot of pressure behind the scenes for smaller steps to improve unequal conditions for Palestinians. They have pushed Israel to finally agree to let Palestinians have 4G mobile internet. And, you know, Israeli-Palestinian progress, historically, doesn't happen without the U.S. pushing for it. So the Palestinians, you know, they want to see the U.S. offer a path forward for political improvement, for freedom.

MARTIN: Right.

ESTRIN: Biden is much more focused on smaller steps and on integrating Israel in the wider Arab region, and he thinks that will help lead to an eventual peace deal with the Palestinians.

MARTIN: Before I let you go, I want to ask about this other issue, the killing of a Palestinian American journalist who was covering an Israeli military raid in the West Bank in May. Do we know anything new there?

ESTRIN: Yeah. Before Biden's visit, the U.S. announced that they thought an Israeli soldier was likely the one who shot Shireen Abu Akleh from Al Jazeera. Israel has not accepted that conclusion, and Democrats in Congress say they want more answers. We've been in touch with the family of the journalist. They wanted to meet Biden. Instead, Secretary Blinken called them, invited them to the U.S. The White House says this will be addressed on this trip. We'll have to see.

MARTIN: NPR's Daniel Estrin in Jerusalem. Thank you, Daniel.

ESTRIN: You're welcome.

(SOUNDBITE OF MUSIC)

MARTIN: Prices are rising at their fastest pace in more than four decades. Just in June, they surged up 9.1% from the year before.

INSKEEP: So how long could that trend continue? It can be worth listening to the companies that spend a lot of money trying to answer questions like that.

MARTIN: NPR's David Gura joins us now to talk about all this. Hey, David.

DAVID GURA, BYLINE: Hey, Rachel.

MARTIN: Companies have started reporting earnings for the second quarter, the last three months. What are we learning from them?

GURA: When it comes to the economy, we spend a lot of time looking at information that is backwards-looking - jobs, data, consumer prices. You know, commentary from CEOs and forecasts of future earnings can shape our understanding of what the economy may look like in the future. So while earnings reports and calls executives do with analysts may seem dry, not relevant to most people, they are worth paying attention to because companies have access to tons of data about themselves, their customers - talking about customer spending patterns, how they're feeling.

You know, companies have data about their inventories, their supply chains, how higher interest rates will affect them in the coming months, and all this informs forecasts and shapes the guidance they give on how they think their company and the economy will do. And in this moment, amid all this economic uncertainty, that is what's most important to investors like Liz Ann Sonders, who's the chief investment strategist at Charles Schwab.

LIZ ANN SONDERS: It's very much the, you know, Wayne Gretzky - you got to look to where the puck is going, not where the puck is right now.

MARTIN: Oh, hockey.

GURA: A good one there from the great one, Rachel. And picking up on that metaphor, the Fed, investors, executives, the rest of us, everyone's trying to figure out where that puck is going, what inflation is doing and where the economy is headed.

MARTIN: All right. So can we get specific, though? I mean, I have to admit, it's a little harrowing to think about all the data that these companies do have on us.

GURA: (Laughter).

MARTIN: But what can we learn about inflation from companies' earnings?

GURA: Well, they've told us in past quarters how they've navigated really persistent problems with supply chains that have led to higher costs. And for a while, companies were able to pass that on to their customers. People were just simply willing to pay more. The reason being - coming out of the darkest days of the pandemic, demand was so strong.

MARTIN: Right.

GURA: Stephen Whiting says that's changing. He's the chief investment strategist at Citi Global Wealth.

STEPHEN WHITING: We're getting into an environment now where consumers, of course - the big story - are facing inflation without income supports from the government.

GURA: Of course, those stimulus checks are long gone. Prices have continued to climb. And, you know, from these earnings reports, we should get a better understanding of whether people are still willing or able to pay a premium for cars and travel and hotels or if demand for all that has diminished. We'll see how companies are dealing with the Federal Reserve's response to high inflation. The era of easy money with very low interest rates is over. It's more expensive to borrow, to grow. And many companies, Rachel, are retrenching as a result.

MARTIN: So these earnings seasons - we talk about them in seasons - starts with the big banks, right? So what is Wall Street listening for specifically from financial firms?

GURA: Morgan Stanley reports today, along with JPMorgan Chase. Then we turn to Wells Fargo, Bank of America, Goldman Sachs in the coming days. And these big banks are integral not just to the U.S. economy but the global economy, and they lend money to all kinds of companies, which gives them a really unique perspective on how the economy is functioning broadly - who's getting loans, who isn't, how tight credit is right now. And the last thing I'll say is when the CEOs of these big banks speak, people listen. Jamie Dimon of JPMorgan caused a small tempest a few weeks back when he said there's an economic hurricane on the horizon. So during earnings season, there could be more pronouncements like that from these very powerful people, Rachel.

MARTIN: NPR's David Gura. Thank you so much, David.

GURA: Thank you.

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MARTIN: We're going to go to Sri Lanka now. There has been another day of confusion, this after days of chaos. The president fled the country on Wednesday but didn't resign, and the man he made acting president isn't welcome by many protesters, who've brought the country to a standstill in recent days after a monthslong economic meltdown many blame on the government. A curfew was imposed overnight in the capital, Colombo, and a state of emergency remains in effect. Reporter Raksha Kumar has been following the story, and she joins us now. Thank you so much for being here.

RAKSHA KUMAR: Thanks, Rachel.

MARTIN: Just explain what the situation is right now. I mean, have things quieted down at all since yesterday?

KUMAR: So, Rachel, yeah, it looks a bit like things are slightly quiet since yesterday because the protesters have announced that they will be leaving the buildings that they have occupied since the weekend - so the presidential palace, the prime minister's official residence and certain other official buildings as well. Curfew has been lifted in the western provinces, but curfew remains in Colombo, the capital, until Friday. So the speaker of the Parliament, who belongs to Rajapaksa's party, has asked for Rajapaksa to submit his resignation, or, he said, quote, "we'll consider other options to remove him."

So there's a lot of confusion, really. Rajapaksa was supposed to return to the country and kind of turn it around economically when he was elected in 2019, but that's clearly not happened.

MARTIN: What did happen? How did things get so bad? Because the protesters, I mean, they're demanding economic reforms, right? What do they want to see happen?

KUMAR: Yes. So they obviously want some economic stability in the country. However, they are aware that political stability is the immediate requirement. So the protesters I spoke to are saying that they want a president who will be accountable to the Parliament. So Sri Lanka now has something called an executive presidency, where the president is actually above the constitution. So they want that abolished. It's also important to note that the protesters have largely been nonviolent, except for when the administration has used tear gas and water cannons on them.

MARTIN: So this is the political problem that's most urgent, but talk a little bit about how the economic situation deteriorated so badly.

KUMAR: So the Sri Lankan economists I spoke to said that there were a slew of bad decisions that the Rajapaksa government took. So top of the list would be tax cuts for the rich and a sudden ban on chemical fertilizers for the farmers. So what this meant was that Sri Lankan farmers could not produce as much as they used to, and that also meant that the country did not have food security anymore. The situation only worsened because of COVID, especially because the country is reliant on tourism. And the Ukraine war kind of pushed the country over the edge, in many ways because supply chains for imported goods were cut.

So before the protests, Sri Lanka was negotiating with the International Monetary Fund to try and find a way out of the current economic situation that it found itself in. But, of course, now with everything being so uncertain politically, it's hard to see how or when those talks will resume with the IMF.

MARTIN: Reporter Raksha Kumar in Mumbai. Thank you so much.

KUMAR: Thanks, Rachel. Transcript provided by NPR, Copyright NPR.