Market Jitters Amid Geopolitical and Tech Uncertainty

Summary

Bloomberg Surveillance Podcast

Episode: Market Jitters Amid Geopolitical and Tech Uncertainty

Date: July 13, 2026
Hosts: Tom Keene, Paul Sweeney, Lisa Abramowicz, Annmarie Hordern
Featured Guests: Stephen Othman (Federated), Annika Trian (ING), Edward Morse (Hartree Partners), Henrietta Meghan McCain (Veda Partners)

---

Overview

This episode focuses on the intersection of market volatility, earnings, geopolitical uncertainty (especially in energy), and the ever-present impact of artificial intelligence (AI) on global markets. The hosts engage in in-depth conversations with leading strategists and policy insiders, providing perspectives on US versus global equities, the state of the energy market post-Gulf tensions, and the shifting sands of US politics as the midterms approach.

---

Key Discussion Points & Insights

1. US Banking Strength & Earnings Cycle Expectations

Guest: Stephen Othman, Federated (02:08–09:03)

• JP Morgan’s Consistent Outperformance

  • Discussion on JP Morgan averaging nearly 21% returns over the last decade and whether its strength is a surprise.
  • Othman attributes success to diversified business and rising nominal earnings in the US economy.
  • Quote: “Stocks eat nominal earnings and nominal earnings are going higher.” – Stephen Othman (03:41)

• Upcoming Earnings Season

  • First quarter set a high bar; second quarter is expected to be solid but possibly not a market-moving catalyst.
  • Notable that companies, particularly banks, are raising guidance and increasing dividends.
  • Othman expects stability, not correction. (04:26–05:17)

2. AI’s Evolving Role in Markets

Guest: Stephen Othman, Federated (05:17–06:22)

• AI’s Evolution
  • Moved from companies spending on AI (hardware) to beneficiaries (chips) to now broader economic gains (efficiency, margins).
  • This is driving the “broadening out” of market gains beyond mega-cap tech.
  • Quote: “Margins across the board are going higher. AI is part of that, and you know, that could drive the broadening out trade.” – Stephen Othman (05:44)
  • Large-cap growth now seen as ‘value’ due to relative performance. Overweight small-caps and US equities; underweight bonds and European equities.

3. US vs. International Market Outlook

Guest: Stephen Othman, Federated (06:22–07:17)

• US Favored Over Europe
  • Othman prefers US equities; only international overweight is emerging markets (for cheaper, tech-driven exposure).
  • Europe seen as lagging in both energy resilience and technical innovation.

4. Market Psychology and “Do Nothing” Investing

Guest: Stephen Othman, Federated (07:17–09:03)

• Discipline & Humility in Investing
  • Othman promotes patience, noting that sometimes the best action is “doing nothing.”
  • Real money is made by holding through downturns (“confidence at the lows, humility at the highs”).
  • S&P 9,000 in three years is a plausible target, driven by steady earnings growth.
  • Quote: “Sometimes doing nothing is the best thing.” – Stephen Othman (07:53)

---

5. European Equity and Tech Perspectives

Guest: Annika Trian, ING (12:14–17:49)

• Persistent US Outperformance

  • Europe still lags the US in earnings and growth; energy dependency and the Iran crisis complicate Europe’s outlook.

• Tech and AI in Europe

  • Tech leadership conversation shifting: narrow focus on the “Magnificent 7” and broad software doesn’t work anymore; winners and losers diverge.
  • Market breadth finally improving, moving away from being driven solely by a handful of mega-caps.
  • Quote: “We’ve been complaining a lot about narrow markets...that’s changing actually underneath our eyes, that’s really starting to change, which I think is a good thing.” – Annika Trian (13:56)

• AI Discussion with European Clients

  • AI is the topic—major confusion and curiosity among investors, especially with layoffs, looming disruption, and long-term investment impact.
  • Quote: “On one hand we’re at the cusp or...at the earlier innings of the next big technological revolution. On the other hand, people are...confused as to what does that mean for companies tomorrow..." – Annika Trian (15:35)

---

6. The Geopolitics of Energy: Gulf States, Oil, and Global Markets

Guest: Edward Morse, Hartree Partners (21:11–30:02)

• Legacy of Qatar’s Leadership

  • Looking back at Qatar’s transformation from a desert state to LNG superpower. The Gulf states now have resilient revenue streams and global investments.

• US and Gulf State Energy Security

  • Despite war and instability, countries like Qatar, UAE, and Saudi Arabia have diversified income and export routes to withstand shocks.
  • The Asia (esp. China) energy calculus is changing; the Strait of Hormuz “will never again be totally free.” (24:41)

• Changing Energy Intensity

  • Oil’s share of GDP is falling; electricity’s share (helped by AI/data/cloud) is rising.
  • Saudi Arabia’s weaning off oil for domestic power frees more supply for export.
  • Quote: “The last century was one where...the oil intensity of GDP around the world was growing...Now, for every 1% increase in GDP, there's about a 0.3% increase in oil demand.” – Edward Morse (25:07)

• Prospects for Oil Prices

  • Despite geopolitical risk, Morse sees a global oil glut, with new supply from UAE, Iraq, the Americas—limiting price spikes.
  • Quote: “We definitely have an oil glut that is there and emerging...” – Edward Morse (28:27)

---

7. US Politics: Congressional Gridlock Ahead of Midterms

Guest: Henrietta Meghan McCain, Veda Partners (33:18–38:07)

• Economic Issues and Gridlock

  • With Congress effectively stalled (partly due to the passing of Senator Lindsey Graham), no new fiscal packages or relief are expected before midterms.
  • Voters will face current realities: gas prices, housing affordability, and a lack of major new policies.
  • Quote: “This is the affordability landscape that members are going to be going into. And that's largely because there's just a complete stall of activity in both the House and the Senate...” – Henrietta Meghan McCain (33:59)

• Democratic Momentum in Polls

  • Democrats lead the generic ballot by wide margins, bolstered by recent electoral gains in a range of states.
  • Despite “not feeling the vibes,” Democratic momentum persists in polling and local elections. (34:41)

• Challenges for Republicans

  • Republicans face legislative challenges, slim chances to pass housing or affordability bills before the election, and limited paths to majority in the Senate.

• Call for Institutional Respect

  • McCain reflects on loss of civility and reverence in the Senate, formerly embodied by figures like McCain, Graham, and Lieberman.
  • Quote: “It just brings down the entire institution. And that's what's really made me sad over the last decade is the downfall of these institutions that so many of us hold in very high regard...” – Henrietta Meghan McCain (37:17)

---

Memorable Moments & Notable Quotes

• On Market Discipline:
  “Sometimes doing nothing is the best thing.”
  – Stephen Othman (07:53)

• On Market Rotation:
  “Margins across the board are going higher. AI is part of that, and you know, that could drive the broadening out trade.”
  – Stephen Othman (05:44)

• On Global Oil:
  “That strait will never again be totally free. In all likelihood..."
  – Edward Morse (24:41)

• On Congress and the Election Climate:
  “This is the affordability landscape that members are going to be going into. And that's largely because there's just a complete stall of activity in both the House and the Senate...”
  – Henrietta Meghan McCain (33:59)

---

Timestamps for Important Segments

| Segment | Timestamp | |------------------------------------------------|--------------| | JP Morgan, US Banks & Earnings Outlook | 02:08–05:17 | | AI’s Market Impact & Equity Preferences | 05:17–07:17 | | Market Psychology: "Do Nothing" Philosophy | 07:17–09:03 | | European Market & Tech Views (Annika Trian) | 12:14–17:49 | | Energy Geopolitics & Oil Market (Ed Morse) | 21:11–30:02 | | US Politics & Congressional Gridlock (McCain) | 33:18–38:07 |

---

Additional Cultural Notes & Sidebars

• Annika Trian shares her enthusiasm for Netflix’s chess series “The Queen’s Gambit” and the social value of slow, traditional chess (16:19–17:49).
• Light banter among hosts on topics from fast food to European cultural traditions add levity throughout.

---

Summary

This episode delivers a tour de force across market dynamics—combining institutional investment wisdom, global macro themes, and the human factors of investing and politics. While AI and US equities remain leading themes, listeners are reminded that discipline, humility, and broad perspective are critical—whether navigating volatile markets, energy geopolitics, or a polarized political landscape.

Transcript

[Paul Sweeney]

The thing about AI for business, it may not automatically fit the way your business works. At IBM, we've seen this firsthand.

[Stephen Othman]

But by embedding AI across hr, IT

[Paul Sweeney]

and procurement processes, we've reduced costs by millions, slash repetitive tasks, and freed thousands

[Edward Morse]

of hours for strategic work.

[Paul Sweeney]

Now we're helping companies get smarter by

[Stephen Othman]

putting AI where it actually pays off,

[Paul Sweeney]

deep in the work that moves the business. Let's create smarter business. IBM when you're running a business, the best days are the ones where priorities stay on track. For midsize and large companies, risk can affect multiple parts of the organization at once, from property and liability to cyber and regulatory challenges. At that level, managing risk becomes an ongoing discipline. At the Hartford, the focus is on helping businesses manage risk before it turns into something more disruptive. And when losses do happen, that work is paired with insurance coverage shaped by years of underwriting, risk engineering and claims experience. Learn more@the Hartford.com riskmitigation policies provided by Hartford Fire Insurance Company and its property and casualty affiliates.

[Bloomberg Host]

Hartford, Connecticut as industries evolve faster than ever, companies need an environment that accelerates strategic growth. And Michigan delivers on that promise. From emerging startups to global enterprises, Michigan offers what executives value most a resilient, innovative ecosystem, diverse communities that attract top talent, and a quality of life that supports work life. Balance with our unified team Michigan approach businesses, scale faster and compete at the highest level. Michigan Pure Opportunity Seize your [e-mail] Bloomberg Audio Studios podcasts Radio News. This is the Bloomberg Surveillance Podcast. Catch us live weekdays at 7am Eastern on Apple CarPlay or Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts or watch us live on YouTube.

[Tom Keene]

Stephen Office Federator Ms. He's like Justin Verlander. He's like doing the major league touring. Yeah, he's going interview to interview. You know he's going to retire. Are you retiring? Is it 20, 28 or 20? Is that is is that young whippersnapper Chevron pushing you out?

[Stephen Othman]

He is and he's going to do a heck of a job too. He's, he's great. A very bright guy. Yeah, he's really, really, really loved by, by the team. So he's going to do fine.

[Tom Keene]

So it's not what they say about you. I got to ask you this because long ago in Sweden and I were younger and Gerard, Cassidy, Tucker, Anthony, RL Day and young Stephen off if you'd said JP Morgan would make 20.98% per year for the last 10 years, you would have flunked the exam and yet there it is. How shocked at you are you by the excellence of Fortress Diamond?

[Stephen Othman]

I, I hate to say, Tom, I'm not that shocked. I mean we, we. It was one of our favorite stocks six or seven years ago. At the time it was trading at 10 times market multiple. It looked to us like earnings were heading quite a bit higher. And here we are now it's trading at 15 times. You guys have been making the case for the last 20 minutes on JP Morgan. Why can't it trade at a market multiple? Why shouldn't it? This is one of the biggest banks in the world. It's got a very diversified business background. It participates in the US Economy. The US Stock market earnings are going higher. And one of the great rules I've learned over time is stocks eat nominal earnings and nominal earnings are going higher. For JP Morgan. Stock has just broken out to a new high. But why can't it go higher?

[Tom Keene]

Paul wants to jump in with questions. Folks, what you just heard there is religion. The economist people are all in the real space, inflation adjusted. Steve Aust knows that the real world out there think reminiscence of a stock operator. Paul is in the nominal world.

[Paul Sweeney]

Yep, absolutely broadly defined here. Steve, what are you guys and your team looking for from corporate America this earnings cycle? Because boy, the first quarter was just outstanding. High bar to clear, I would think.

[Stephen Othman]

Well, it's, it is a high bar to clear. We've run into them. So I think the spot market for stocks could be a little bit ragged, maybe the next few weeks. But we're going to be beating, I mean, you know, the company, stock companies have been raising numbers into, into this season. We're up like 4% versus where we were just three months ago. Normally you're cutting into the season so the analysts have a lot of confidence in these numbers and usually that momentum continues into the earnings season. The banks are going to lead us off. They just declared a whole bunch of them, another set of dividend increases. You don't do that if your earnings are falling apart. So, you know, I think people expect a good earnings season. I think it's going to be solid. I don't know that it'll be a catalyst to make a major move higher as a result. But I don't see it as a catalyst for a correction. Really.

[Paul Sweeney]

How do you guys at Federated kind of think about the AI theme in the marketplace? It's been one of the bigger themes that we've all experienced in our investing lives. This evolution into artificial intelligence. It seems to be permeating throughout the economy. How do you guys try to play it at this stage?

[Stephen Othman]

You just said, Paul. So the first stage was the spenders. The second stage was the beneficiaries with the chip companies. And now we're moving in or not this the benefit of the spending, but now it's the the guys who are actually benefiting from AI, which is the broader economy. So we've been thinking we're moving into that third stage. Margins across the board are going higher. AI is part of that. And you know, that could drive the broadening out trade, so to speak, that has actually been working beneath the sheets here. I mean, you know, small caps are wildly outperforming everything else. So we're overweight there. We think the large cap growth stocks have become value stocks now. So we actually like those stocks here. The only thing we don't really like are bonds and European equities.

[Paul Sweeney]

That's exactly where I was going to go. US versus the rest of the world. Because we did have a rotation out of the US when those tariffs started rolling in and Europe certainly benefited there some of those equities. Where are we today?

[Stephen Othman]

We like the US versus the rest of the world. The only thing we're overweight internationally is emerging markets, which have become a kind of basically an alternative tech investment at a cheaper price than you're getting in the US because the emerging markets indices now are largely tech driven, Asia tech driven. So we like those, we're right there. But Europe is kind of ossified right now. They're in. This oil price increase has hurt them. They don't have the alternatives we have. They've been slow to pick up on the tech side. So there's some stocks out there we like, you know, kind of stock picking realm, you might say. But broadly we're underweight there.

[Tom Keene]

You have a new book coming out, the movie rights. It was a huge deal in Hollywood. Humility at the highs. 45 years of riding the bull, fighting the bear and chasing heaven. STEPHEN OFF and in it you go to the heart of the matter for a generation which is by it. And the hardest thing to do is to do nothing. We live in a frantic financial media. I'm as to blame for this. I mean it's all Alexis Christopher.

[Stephen Othman]

It's all her fault.

[Tom Keene]

The whole modern media frenzy trading go to cash. And you say the hardest thing to do is to do nothing.

[Stephen Othman]

Yeah, sometimes doing nothing is the best thing. And you know the other one is confidence at the humility at the highs. Confidence at the lows. Big, big lesson I've learned over the years. When things are going really well, we tend to think it's all because of us and we overstep. This is part of the job of the CIO at Federate, is to keep everyone humble when things are going great. But I'll tell you where the real money is made is when things are falling apart and the bears are coming out of the woodwork and they live, you know, I like to say the bulls live on the mountaintops, the bears live in the valleys. And you know, just look at this move we've had, right? The bears keep thinking we have to retest. That's why they keep calling about the percentage move off the lows. It's been spectac spectacular since March. I think it's almost 20% now. But on a year, you know, full year basis, it's really not that terrific. Eight, 10%, a little bit more than on average. So, you know, we look to the mountaintops. I'm looking out three years, we've got the S&P at 9,000. That's probably, you know, against an earnings number of 450 is not an unreasonable way to think about stocks here. So, yeah, we, we kind of look at it that way.

[Tom Keene]

Tom, Stephen, I thank you so much. Greatly, greatly appreciate it. Too short a visit this morning with Feder. Stay with us. More from Bloomberg Surveillance coming up after this.

[Paul Sweeney]

Support for the show comes from public.com if you're actively involved in your portfolio, you probably catch yourself repeating the same actions. Buying the dip, manually sweeping idle cash, putting on a hedge on public. You can now create AI agents that handle all these tasks on your behalf. Just describe what you want to do in plain English like if the Vix hits 25, buy a put option on the S&P 500. Or if my cash balance goes above $20,000, move the excess into my direct index. You approve the workflow and your agent handles the risk, monitoring the market, watching for your conditions and executing your strategies exactly as defined. An investing platform driven by your intent, not just your clicks. You can also get full read and write access to your account via the public API. Go to public.com market and fund your account in five minutes or less. That's public.com market paid for by Public Investing Brokerage Services by Open to the Public Investing Inc. Member FINRA and SIPC Advisory Services by Public Advisors LLC. SEC registered advisor complete disclosures available at public.com disclosures Amazon Health AI presents painful thoughts why did I search the Internet for answers to my cold sore problem. Now I'm stuck down a rabbit hole

[Bloomberg Host]

filled with images of alarmingly graphic source in various stages of ooze.

[Paul Sweeney]

I can clear my search history, but

[Bloomberg Host]

I can never unsee that.

[Paul Sweeney]

Don't go down the rabbit hole. Amazon Health AI gets you the right care fast. Healthcare just got less painful.

[Wasabi Representative]

Innovation is what gets your business to market and Wasabi is designed to give every business a shot at competition. How break free from skyrocketing storage costs and unpredictable egress fees from old and top heavy legacy providers. You know the big guys. Wasabi is the world's hottest cloud storage company and the go to provider for professional and collegiate sports teams and leagues around the world. And here's why. Innovation from Wasabi's AI enabled intelligent media storage, Wasabi Air to the industry's only cloud storage service with triple protection against cybercriminals, data deletion and ransomware. The world's top companies trust Wasabi. Remember, Wasabi is up to 80% less than market competition and doesn't charge a cent for businesses to access their own data. Wasabi another championship story. Check them out for [e-mail] Wasabi Hot Cloud Storage proud partner of iHeart Podcast Network.

[Bloomberg Host]

You're listening to the Bloomberg Surveillance Podcast. Catch us live weekday afternoons from 7 to 10am Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app or watch us live on YouTube.

[Tom Keene]

Annika Trian with us right now, global head of private banking Ing. We're thrilled that she could be with us here here this morning. The view from Europe. Annika, we were just talking to Stephen off about this is, well, is the only place to go the United States.

[Annika Trian]

It's that old adage that comes up over and over again. And I think the issue is which is the old issue which continues again earnings growth. Europe continues to lag the US in earnings growth. Again this year analysts are talking about approximately 20% plus earnings growth in the US and only around 10, 15% in Europe. And that's what makes it tricky. And I think next to that it's this vulnerability of the continent, especially when it comes to energy. And given again the recent escalation of Iran, that that brings complexity to the European narrative.

[Paul Sweeney]

What do you make of software? We think about the tech as one monolithic kind of trade here. But software, which has been such a good group for such a long time, decades, because of the recurring business model, the free cash flows, all the wonderful aspects of that, they're facing some pressure here.

[Annika Trian]

Yeah, it's been, it's been brutal for software and it's actually been brutal for the Magnificent seven. And I think you imagine you'd close your eyes and you'd woken up one year later, you just wouldn't believe what you'd seen. Because we're used to years of the Mag 7 just driving the whole S&P 500. And look, this year, but also the last months of last year, it's been pretty brutal. The way we look at software is this casual, this casual concept of my 7 or software as a whole. I just don't think it works anymore. I think it really starts to become much more stock specific, much more company specific, who are actually beneficiaries of AI versus being threatened by AI. And interestingly we've been complaining a lot about narrow markets, a lack of market breadth. That's changing actually underneath our eyes, that's really starting to change, which I think is a good thing.

[Paul Sweeney]

So Anika, for your clients, even for your European based clients, do they still feel the need to be overweight the US markets relative to European markets? We just had Stephen Othman, Federated and they are back to being seriously overweight.

[Annika Trian]

The us well, it's interesting because I guess market drift has made most investors very much overweight the US And I think two things that we are seeing. Number one, we see that just for the basic need of diversification, diversification from the dollar diversification, geographically, people are much more deliberately looking at European exposure for that reason. And two, we do tend to see a European bias from European investors. And interestingly, that's actually grown in the last six months. Maybe it's nationalism, maybe it's fear of, as I said, a need for diversification. But we do see conviction of Europeans

[Paul Sweeney]

towards Europe, the AI trade. It just is every conversation here from an investment perspective seemingly involves AI and the impact on a particular industry, a particular company. Is it as pervasive in your discussions with European clients?

[Annika Trian]

I mean, it's the topic and I think the reason it comes up so much is I think people are just confused because on one hand we're at the cusp or, I don't know, at the earlier innings of the next big technological revolution. On the other hand, people are quite confused as to what does that mean for companies tomorrow, what does that mean for earnings tomorrow? And when you see headlines of these huge companies that are laying off hundreds, thousands of staff due to AI and you sometimes get this kind of reverse narrative, whoops, maybe we went too far, maybe we're not quite there yet. I think it's just confusion. And people are very keen to seek advice, seek guidance. How should we position this? That's what we pick up.

[Tom Keene]

And again, one of my biggest supporters was a guy named Ken Rogoff up at Harvard. He's a chess player who, you know, happens to do economics. You were the United Kingdom chess champion, I believe, at one point. What was it like when you watched the Queen's Gambit, when you watched Anya Taylor, Joy and that, the whole chess thing. What was it like being an actual adult in chess when you saw Netflix Chess?

[Annika Trian]

Well, I can tell you it was a delight to see that chess has become cooler. It's quite cool. Netflix is on it. Everybody was talking about it. Loads of my friends wanted to start learning how to play, and it wasn't the case, let's say 20 years ago, that's for sure. So that's really fun. And it brought back some great memories. Indeed.

[Tom Keene]

Do you think now when the kids are learning all the digital chess stuff is efficacious, or do they need to be traditional and sitting? You know the park in New York City with six old guys learning how to do it?

[Annika Trian]

Well, look, I think, I think the park in New York City is beautiful. It's romantic. But it's also very important because the online chess is fast. You know, a lot of young people are going straight to blitz, and if you play on computers, it's a fast to undo. So it's, it's this slow thinking, fast thinking. I think we're not practicing the slow thinking enough. And if you've got a physical board with pieces, it forces a bit more. Slow thinking.

[Tom Keene]

That's brilliant. I've got a coffee table book, folks, who I'll put out on Twitter and LinkedIn that talks about all that authentic heritage here in New York was captured by the queen's gamut. Annika Trian, thank you so much from the worst chess player in the world. She holds court at ing. Stay with us. More from Bloomberg Surveillance coming up after this.

[Paul Sweeney]

Support for the show comes from public.com if you're actively involved in your portfolio, you probably catch yourself repeating the same actions. Buying the dip, manually sweeping idle cash, putting on a hedge on Public. You can now create AI agents that handle all these tasks on your behalf. Just describe what you want to do in plain English, like if the Vix hits 25, buy a put option on the S&P 500. Or if my cash balance goes above $20,000, move the excess into my direct index. You approve of the workflow and your agent handles the risk, monitoring the market, watching for your conditions and executing your strategies exactly as defined. An investing platform driven by your intent, not just your clicks. You can also get full read and write access to your account via the public API. Go to public.com market and fund your account in five minutes or less. That's public.com market paid for by Public Investing Brokerage Services by Open to the Public Investing Inc. Member FINRA and SIPC Advisory Services by Public Advisors, LLC. SEC registered advisor complete disclosures [e-mail] disclosures Amazon Health AI Presents Painful Thoughts I I can't stop scratching my downtown. Mm, yeah, but I'm not itching to go downtown and tell a receptionist I'm here to talk about my downtown. Some things you'd rather type than say out loud. There's no question too embarrassing for Amazon Health AI. Chat your symptoms and get virtual care 24. 7 Health care just got less painful.

[Wasabi Representative]

Innovation is what gets your business to market, and Wasabi is designed to give every business a shot at competition. How Break free from skyrocketing storage costs and unpredictable egress fees from old and top heavy legacy providers. You know the big guys. Wasabi is the world's hottest cloud storage company and the go to provider for professional and collegiate sports teams and leagues around the world. And here's why. Innovation from Wasabi's AI enabled intelligent media storage, Wasabi Air to the industry's only cloud storage service with triple protection against cybercriminals, data deletion and ransomware. The world's top companies trust Wasabi. Remember, Wasabi is up to 80% less than market competition and doesn't charge a cent for businesses to access their own data. Wasabi Another championship story. Check them out for [e-mail], wasabi Hot Cloud Storage, proud partner of iHeart Podcast Network.

[Bloomberg Host]

You're listening to the Bloomberg Surveillance Podcast. Catch us live weekday afternoons from 7 to 10am Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app or watch us live on YouTube.

[Tom Keene]

We are going to digress here. Paul's got a zillion questions for Edward Morse, definitive on hydrocarbons and the geopolitics of this strange energy that we use. But we are very fortunate for most Americans, Qatar is either. We don't know how to pronounce it. It's either Qatar or Qatar. But the answer is all of these tribes of the Persian Gulf started out in sand with dreams. Daniel Jurgen beautifully captured it in the prize years ago, but you lived it. We have just lost the Emir of Qatar Sheikh Hamad bin Khalifa Al thani, at age 74. Describe how you build out something like Qatar. How, what was it like when you first visited Qatar? Ages ago.

[Edward Morse]

I first visited them when they were just beginning to become an LNG exporting country some four decades ago, maybe a little bit longer than.

[Tom Keene]

No skyscrapers, nothing. A Mercedes dealership and that was it.

[Edward Morse]

A little bit more than that. So the minister at least had alcohol in his home and he did.

[Tom Keene]

There we go. That's when you work for John Reed. That's exactly. But, but I mean now with this war, with all your encyclopedic knowledge of the Persian Gulf, from the Strait all the way up to Kharg island in Iraq, to lose someone like that, what does it mean for these states, these crucial states, as they face Persia?

[Edward Morse]

Well, it's an interesting issue and you have to look at where they were and where they are now in terms of their income generation. So we have a very large LNG facility now opening up in the US and the Qataris are a major owner of that. If you look at their investment flow, it's external, not internal. So they are in a position where they can weather this much better than you would have thought with the closure of the strait of Hormuz 20 years ago or 40 years ago. And that's true as well of the UAE by intention. Both countries have relatively low populations and they found a way to sustain themselves. And of course they need as their major source of strategic alliance. The United States hasn't been fully reliable lately, but there's nowhere else to go. The Saudis are in a very different position. They have invested at home much more than they've invested abroad, particularly in terms of revenue generation. Although they've managed to do very well during this crisis a couple of months ago, they had their highest monthly revenue that they've had in well over a year. So a combination of factors there. They didn't invest in production abroad, but they certainly have invested in inventory abroad. And they have had a lot of inventory, maybe not enough, depending on where the war goes to from now, but they've been depleting inventory in the other side of the sumed pipeline, on the Mediterranean, in Japan, in China, in Korea, and that has served them extremely well. So they're not as badly off as they might have been several decades ago.

[Paul Sweeney]

How do we think about the oil, the energy in that part of the world, in the Middle east, if I'm Asia, if I'm China, broadly, can I depend upon that part of the world like I have in the past or something fundamentally change. That strait will never really, really be open again.

[Edward Morse]

That strait will never again be totally free. In all likelihood, there's some chance that there's an Iranian domestic upheaval. And you know, given the economic situation in the country, they are hurting significantly. Their unemployment was already at 50% before the war began, is up by 2 million more people at least. Their inflation rate is unthinkable. People are not extremely happy. So it could, there could be a revolution and it could make the strait more, you know, more secure again, more likely to be secure again. But no, you're right. We also are in a situation where, if you look broadly at the last century, the last century was one where from the beginning before World War II to sometime in the 1970s, the oil intensity of GDP around the world was growing and it reached a peak at around 1973. 74, where for every 1% increase in GDP in the world, there was a 1.3% increase or so increase in oil demand. We've been in a declining oil intensity of GDP nowadays and this is reliable data. You don't have to worry about year to year things. For every 1% increase in GDP, there's about a 0.3% increase in oil demand. And I think that what's happened with this crisis since February is that a lot of countries have found ways to accelerate getting off of that oil dependence. But we're in a new environment, a very new environment, and the uae, Saudi Arabia in particular, are taking advantage of it and that we're seeing the electricity intensity of GDP going up. You've had a lot of people on talking about AI and cloud computing. This is extremely electricity intensity. And the Saudis have been extremely lucky. They've got wind, they've got solar, they have battery power and they have been weaning themselves off. And you can see it in the oil numbers. They use a lot of oil for burning, for power generation, and by 2030 they'll be using none. Now the peak of it was like two years ago where they were on average using more than a million barrels a day of oil for power Gen. And now they're going to have that oil, depending what happens with Hormuz, but they have alternative routes to put it in the international market.

[Tom Keene]

When you're sitting at home, you're not doing your usual 60 hour Ed Morse work week. When you're sitting at home watching what we're all watching, except you have this prodigious knowledge of the Persian Gulf. You know, the Oil structure of Iran in awe. What's the number one thing the Trump administration is getting wrong about the resistance and the diligence and the persistence of the Iranian leadership?

[Edward Morse]

Well, I think the one number one thing they got wrong and it's related to that, is relying on their own instincts rather than on the advice of professionals in places like the State Department and the Pentagon. The Pentagon has thought about the Strait of Hormuz for a very long time that we've had since 1980, since the Iranian revolution, concern about disruption of supply. And they have thought about it in a way that a wishful thinking Trump administration thought that this would be over in a week, didn't think about what would happen if it was more than a week and didn't think about what the security of the strait were all about. So I'd say it was a little bit based more not on the thinking about Iran, but on the chutzpah of where they were.

[Tom Keene]

I got to ask this, Paul, be angry if I don't ask this. You absolutely nailed lower oil prices versus a large body of Wall street looking for above $100 a barrel, even this cacophony. Can you continue on a trend of lower oil prices?

[Edward Morse]

Well, yes and no. We there definitely is an oil glut that is there and emerging and you can see it in terms of what countries are doing. And we have to remember that the UAE left OPEC and OPEC in the month of May and they were producing before this war began and exporting, but producing around 3.2 million barrels a day. They're now producing, or were before this event happened. They were producing over 4 million barrels a day. They claim, and I believe it's true, they have a capacity of close to 5 million barrels a day. And they've announced that they're going to 6 million a day. And they're not alone. We have today the Iraq prime minister arriving in Washington. He announced last week before coming here in a country that is rich in oil, has multiple ways geographically to export that they're not going to be necessarily dependent on the strait. They already have a pipeline to Turkey. They're looking at reinstuding, reinstituting pipelines through Syria, through into Jordan, into Israel even. And their goal from a production of three and a half baby now to seven million a day by 2030. So we've got a lot of oil in the world. And I didn't talk about Argentina, the US Guyana and the like.

[Tom Keene]

I'm featuring the Rolling Stones new album all this week. Bloomberg Surveillance can I feature you all this week. Can you come back Tuesday, Wednesday, Thursday, Friday?

[Edward Morse]

I can't manage Tuesday, but I might another day.

[Tom Keene]

Okay. Edward Morse, thank you so much. Can't say enough about his work. Just just absolutely definitive, of course with the Council on Foreign Relations and with Hartree Partners. Stay with us. More from Bloomberg Surveillance coming up after this.

[Paul Sweeney]

Support for this show comes from public.com if you're actively involved in your portfolio, you probably catch yourself repeating the same actions. Buying the dip, manually sweeping idle cash, putting on a hedge on Public. You can now create AI agents that handle all these tasks on your behalf. Just describe what you want to do in plain English like if the Vix hits 25, buy a put option on the S&P 500 or if my cash balance goes above $20,000, move the excess into my direct index. You approve the workflow and your agent handles the risk, monitoring the market, watching for your conditions and executing your strategies exactly as defined. An investing platform driven by your intent, not just your clicks. You can also get full read and write access to your account via the public API. Go to public.com market and fund your account in five minutes or less. That's public.com market paid for by Public Investing Brokerage Services by Open to the Public Investing Inc. Member FINRA and SIPC Advisory Services by Public Advisors, LLC, SEC registered advisor complete disclosures available at public.com disclosures Amazon Health

[Wasabi Representative]

AI Presents Painful Thoughts why did I

[Paul Sweeney]

search the Internet for answers to my cold sore problem? Now I'm stuck down a rabbit hole

[Bloomberg Host]

filled with images of alarmingly graphic source in various stages of ooze.

[Paul Sweeney]

I can clear my search history, but

[Bloomberg Host]

I can never unsee that.

[Paul Sweeney]

Don't go down the rabbit hole. Amazon Health AI gets you the right care fast. Healthcare just got less painful.

[Wasabi Representative]

Innovation is what gets your business to market and Wasabi is designed to give every business a shot at competition. How Break free from skyrocketing storage costs and unpredictable egress fees from old and top heavy legacy providers. You know the big guys. Wasabi is the world's hottest cloud storage company and the go to provider for professional and collegiate sports teams and leagues around the world. And here's why. Innovation from Wasabi's AI enabled intelligent media storage Wasabi Air to the industry's only cloud storage service with with triple protection against cybercriminals, data deletion and ransomware. The world's top companies trust Wasabi. Remember, Wasabi is up to 80% less than market competition and doesn't charge a cent for businesses to access their own data. Wasabi Another championship story. Check them out for [e-mail] Wasabi Hot Cloud Storage, proud partner of iHeart Podcast Network.

[Bloomberg Host]

You're listening to the Bloomberg Surveillance Podcast. Catch us live weekday afternoons from 7 to 10am Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app or watch us live on YouTube.

[Tom Keene]

Henry the Tracer Veda partners with an update here on where we stand the middle of July. Henry, let me just look to the midterms right now. What is the shift, if you're gazing cook Political Report or anything else out there in your Washington, what is the shift in the House, in the Senate?

[Henrietta Meghan McCain]

Well, I would say that the main shift is that the economy that Republicans and Democrats and this White House are going into the November election with is the one that they're going to have on election day. So effectively what I mean by that is the probability of getting a new reconciliation bill through more money for the Pentagon, a gas tax holiday, any of those fiscal spend ideas that still percolate out in the market. The odds are effectively zero now that we move any of that kind of legislation. So for House members, they're going to have to run on gasoline at roughly these prices. On housing, you know, we're not going to get another major bill. This is the affordability landscape that members are going to be going into. And that's largely because there's just a complete stall of activity in both the House and the Senate in part because of Lindsey Graham's passing. But there are many reasons besides that.

[Paul Sweeney]

So does anybody have any momentum going into these midterms here? It seems like if you just look at the polling, boy, the Democrats should be just licking their chops here. But I don't really sense that.

[Henrietta Meghan McCain]

Yeah, you definitely want to look at generic polling data. That is what suggests who's going to win. And the Democrats have been in the lead on that for more than a year, if I'm not mistaken. And they're up by outside of the margin of error, 5, 6, 7, 8, 9 points depending on which polls you're looking at. So the momentum is definitely squarely behind Democrats. I understand your sentiment, Paul, around not feeling the vibes right now. I think that's definitely true. There's a lot else going on between interest rates and the Fed and the war with Iran. That's on again, off again. But I, I encourage you to sort of look backwards. Look to last November where Democrats started to see their outsized gains 12 to 21 point wins in all various cities and states around the country, from Tennessee to New York, that's been perpetuated in every single special election since. So it would take a lot to get that to change or die down. Just because we're not feeling the vibes doesn't mean that it's not persistently there for the Democratic conference going into an

[Paul Sweeney]

election cycle on the other side. What can the Republicans do if I'm sitting in a local race here for Congress? What's my play, man?

[Henrietta Meghan McCain]

You know, they had done the kind of unthinkable. They had really pulled it out of a hat to get that housing bill through. That, you know, certainly sells as bipartisan, certainly sells as trying to do something about affordability. It's about construction of those homes in the future. And then President Trump poured cold water all over that. They're going to be meeting in Camp David on the House Budget Committee side and with House leadership throughout this week, I think tomorrow, and they'll try to get a third reconciliation bill through. But I truthfully have 5% odds because you're down two men in the United States Senate. You have another in Susan Collins who is going to have a real tough time taking any reconciliation vote, given the election in Maine. I don't see a path to the 51 votes that you need. So I don't, like I started off, I don't see any bill that's going to pass, aside from a government funding bill that'll basically do the bare minimum of just not shutting it down.

[Tom Keene]

Henrietta Meghan McCain with a beautiful treatment on the senator from South Carolina this morning in the Washington Post. She reminds us when she was 11 years old and there were these three so oddly different, senators, McCain, Lieberman, and Graham. They were the three amigos holding court at Morton's Steakhouse. Morton's a steakhouse?

[Paul Sweeney]

Sure.

[Tom Keene]

I mean, I mean, Henrietta's there twice

[Paul Sweeney]

a week at least.

[Stephen Othman]

Players.

[Tom Keene]

And she says in a terse sentence, it just seems nearly extinct. Can we at some point post Trump get back to where we can have a McCain, Lieberman and Graham?

[Henrietta Meghan McCain]

You know, I served in the Senate when all three of those legends were there. And it was absolutely a different time. The reverence that we walked through the halls with when we saw any of those members. Mitt Romney is another good example of how we would sort of all operate and look not across party lines, but just incredible respect for these men. I know I certainly had it. I think a lot of that is lost when you sort of degrade members, whether they're Democrats or Republicans, in tweets. It just brings down the entire institution. And that's what's really made me sad over the last decade is the downfall of these institutions that so many of us hold in very high regard, in particular the U.S. senate.

[Tom Keene]

Henrietta, thank you so much for that. Remember Senior Trace of Veda Partners? I don't think she was at Morton Steakhouse.

[Bloomberg Host]

This is the Bloomberg Surveillance Podcast, available on Apple, Spotify and anywhere else you get. Your podcasts listen live each weekday 7 to 10am Eastern on bloomberg.com the iHeartRadio app, TuneIn and the Bloomberg Business app. You can also watch us live Every weekday on YouTube and always on the Bloomberg Terminal. Healthcare doesn't always work great.

[Paul Sweeney]

If you've ever waited on a refill or couldn't schedule an appointment, you get it.

[Henrietta Meghan McCain]

That's the kind of stuff Optum is changing.

[Paul Sweeney]

They're using data and technology to integrate patient care, pharmacy and everything else. So healthcare is connected, not complicated.

[Henrietta Meghan McCain]

What's that look like?

[Paul Sweeney]

Cheaper prescriptions that are easier to get and care that looks at the whole person how you need it.

[Bloomberg Host]

Optum is helping make healthcare work as one for everyone. Learn [e-mail]

[Paul Sweeney]

we learned how to love dogs from the dogs that loved us and waited for us to get home from school. They were the dogs that raised us. We returned the love with Pedigree Dog Food. It was good then and it's better now. Every bowl has 100% complete nutrition supporting six health essentials and now it includes Vitamin Good Bites, a nutrient boost your dog will love. Pedigree Good then, better now. It's called soccer.

[Tom Keene]

It's called football.

[Wasabi Representative]

Soccer Foot Ball Domino's Best deal ever

[Paul Sweeney]

lets you get any pizza including stuffed crust with any toppings for 9.99. Okay, we can agree on that. Yeah, fully so pineapple.

[Wasabi Representative]

Don't ruin it.

[Stephen Othman]

Get any pizza including stuffed crust with

[Paul Sweeney]

any toppings for 9.99. Finally, something everyone can get behind.

[Wasabi Representative]

And if the refs disagree, that's between them and Domino's. Which means the only thing left to fight over is who's ordering

[Paul Sweeney]

prices higher for some locations.

[Wasabi Representative]

Excludes XL and specialty pizzas.

[Paul Sweeney]

Select this offer from $6.15 to $7.26 online only.

[Wasabi Representative]

Size availability varies by crust tank max

[Paul Sweeney]

7 toppings, 6 for pan and New York style crust. Minimum purchase required for delivery prices, participation, delivery area and charges may vary.