Market Moves on Fed, Oil, and Tech Earnings

Summary

Bloomberg Surveillance — “Market Moves on Fed, Oil, and Tech Earnings”

Date: July 31, 2026
Hosts: Tom Keene, Paul Sweeney, Karen Moscow
Featured Guests: Greg Dacoek (EY-Parthenon), Victoria Fernandez (Crossmark Global Investments), Malika Sakeva (Deutsche Bank), Ellen Wald (Atlantic Council), Leslie Vinjamuri (Chicago Council on Global Affairs)

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Main Theme

This episode dives into the key market-moving stories of the week: the Federal Reserve’s recent press conference and leadership transition, dynamics in oil/geopolitics due to Middle East conflict, and essential takeaways from tech sector earnings. The hosts and their expert guests analyze how these themes intersect to shape business investment, currency markets, and global economic risk.

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Key Discussion Points and Insights

1. The U.S. Economy & Federal Reserve Policy

Outsize Growth and Investment Dynamics

• Guest: Greg Dacoek
• The U.S. economy shows sustained momentum, but Greg Dacoek points out that the growth is "very concentrated":
  • “When you look at what’s driving growth, it’s really more the affluent consumers and AI driven business investment. If you exclude those, you don’t really have much breadth in terms of economic momentum.” (01:33)
• There are concerns about “structurally higher” costs of capital in the U.S.
  • Causes: Fiscal imbalances, demand for private capital, volatile inflation, and questions on central bank credibility after recent Fed communications. (02:11)

Fed Chair Wash’s Performance & Credibility

• Market disappointment stems not just from rate guidance but inconsistencies in Fed communication.
• Dacoek notes:
  • "Having a new Fed chair that's criticizing the old Fed but not doing much about it... That's a risk... Talking about resolute commitment to the 2% inflation target and then... talking about moving the goal post... is another inconsistency. And those are the real issues." (03:16)
• The Fed’s attempt at “economic philosophy” is seen as too abstract for the moment.
  • “You can't hide behind the Lucas critique... these are valuable... but they're not going to help you when it comes to setting policy in the very near term.” (04:59)

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2. U.S. Markets & Tech Earnings

Portfolio Management in a Bull Market

• Guest: Victoria Fernandez
• Families and investors are debating how much to chase tech in a volatile bull market. (07:10)
• Fernandez recommends a more “tactical” approach:
  • “Little bites at the apple… don’t go in and make big bets because it can turn around the next day and bite you.” (08:14)
• Stock correlations are low outside of energy/utilities, making stock picking more critical.

Earnings Quality and Risks

• S&P 500 is posting impressive earnings growth ("over 30% for Q2", (09:04)), especially for energy names.
• Concern: Many high-spending tech names aren’t rewarded unless they can show future ROI.
• Risks: If earnings turn or consumer spending slows (noted that recent consumption is above real disposable income), the markets could be exposed.
  • “Consumption higher than incomes… that’s unsustainable over the long run.” (11:26)

Fixed Income Opportunities

• With higher yields, locking in some long-dated, high-quality fixed income is advisable: “Why not go ahead and lock a little bit of that in, maybe up to 10 years or so… just collect your coupons.” (10:53)

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3. Global Currency and Central Bank Policy

U.S. Dollar and Yen Outlook — Central Banks in Focus

• Guest: Malika Sakeva
• The dollar weakened post-Fed meeting due to lack of urgency on rate hikes.
• Japan’s central bank is highlighted for a “hawkish hold” and major intervention to support the yen, spending ~$53bn in one day—a record. (17:21)
  • "For yen to truly strengthen... the Bank of Japan has to lift rates... keeping rates at 1% is simply not enough." (16:51)
• The new market dynamic: U.S. dollar strength is now more tied to equity inflows than traditional Treasury demand.
  • “In the next big equity correction, it’s not necessary the dollar will do well… the dollar is now much more linked to… equity capital than in the past.” (18:51)
• Looking forward, the dollar’s outlook is driven less by euro/sterling and more by what happens in Asia (esp. Japan/Korea). (19:47)

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4. Geopolitics and Oil: Middle East Tensions

Popular Sentiment and Regional Solidarity Against Iran

• Guest: Ellen Wald
• Media often oversimplifies regional dynamics as merely “Sunni-Shia,” missing stronger regional solidarity—particularly Gulf states uniting against Iran:
  • “A lot of the attacks... have really kind of solidified at least popular sentiment against Iran…” (22:00)

The Strait of Hormuz and Oil Risks

• Insuring oil tankers is now deemed “an absolutely massive risk.” Iran and U.S. are locked in a standoff; the situation is likely to become the “new normal.”
  • "Iran is not going to give up any way to control this strait unless something really, really shifts." (23:21)

Navigating Regional Alliances & Workarounds

• Saudi Arabia’s geography offers workarounds, but militia actions in the Red Sea and Mediterranean now threaten oil supply routes. (24:34)

Tribal and Political Relationships

• Gulf Arab states cooperate, but with complex tribal and historical relationships.
  • Example: History between Saudi Arabia and the Hashemite Kingdom of Jordan. (26:16-27:08)

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5. U.S. and Western Diplomatic Strategy in the Middle East

Can the U.S. “Extricate” Itself?

• Guest: Leslie Vinjamuri
• The U.S. likely cannot exit; it must focus on managing and stabilizing the current mess.
  • “This is a manage it… try to get things into a stable position. But there’s no sign of any plan in place to bring that stability.” (27:33)

Regime Change Prospects in Iran

• Vinjamuri finds no evidence that ongoing military or economic pressure will provoke a popular uprising or regime change in Iran.
• The best realistic outcome: stabilization, not regime change or a nuclear deal soon. (32:05)

Shattered Western Alliances

• The U.K. and U.S. are preoccupied with domestic problems; focus is drifting away from the Gulf toward Russia.
  • “The West was already dividing internally… Europe is leaning into what it perceives as its number one security threat—Russia.” (33:20)

U.S. Diplomacy Seen as Confused

• Ellen Wald: States in the Gulf perceive “confusion” due to mixed signals from the State Department and the White House.
• Leslie Vinjamuri: Repairing U.S. diplomacy is unlikely under the current administration.
  • “If anything, the current administration is aiming to do exactly the opposite—to disrupt America’s most recent long-standing alliances…” (34:55)

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Notable Quotes & Memorable Moments

• Greg Dacoek (Fed credibility):
  “Talking about resolute commitment to the 2% inflation target and then delivering actual thinking, again an issue and then finally saying that you're going to deliver… but then talking about moving the goalpost at the next strategy review is another inconsistency.” (03:16)
• Victoria Fernandez (Portfolio tactics):
  “Little bites at the apple is what we’re saying... add a little bit to your portfolio. When it runs high, say thank you very much, take some profits off the table.” (08:14)
• Malika Sakeva (Dollar’s new risk profile):
  “In the next big equity correction, it’s not necessary the dollar will do well… the dollar is now much more linked to… equity capital than in the past.” (18:51)
• Ellen Wald (Oil risk):
  “If I was an insurer, I would not be insuring these ships. I think you’re taking an absolutely massive risk…” (23:21)
• Leslie Vinjamuri (U.S. options in the Middle East):
  “This is a manage it, try to get things into a stable position...but there’s no sign right now of any plan coming into place that brings stability.” (27:33)
• Ellen Wald (Diplomacy confusion):
  “I would say there’s probably a lot of confusion because it does seem like there’s one kind of diplomacy maybe coming out of State Department and another kind coming out of the White House.” (34:30)
• Leslie Vinjamuri (Shattered alliances):
  “Unfortunately… we’re not seeing the strategy… If anything, the current administration is aiming to do exactly the opposite…” (34:55)

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Timestamps for Key Segments

• Fed and U.S. Economic Momentum:
  Greg Dacoek, Tom Keene: 00:57–05:40
• Tech Earnings and Investment Strategy:
  Victoria Fernandez: 07:10–13:50
• Currency Markets & Yen Intervention:
  Malika Sakeva: 15:06–20:53
• Middle East Oil, Insuring Tankers, Regional Dynamics:
  Ellen Wald & panel: 21:27–34:30
• U.S./UK Diplomatic Strategy and Long-Term Outlook:
  Leslie Vinjamuri, Ellen Wald: 27:33–35:26

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Episode Tone and Language

Conversations are informed and frank, blending market analysis with geopolitical realism and occasional banter. The panelists do not shy away from expressing doubts about institutions’ credibility or the durability of global alliances, while offering pragmatic guidance for investors and policymakers.

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Transcript

[Karen Moscow]

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[Karen Moscow]

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[Tom Keene]

scheduled as Greg Dacoek Let me explain this folks. The national association for Business Business Economics, of which I was a member for years, is really viscerally within the economic dialogue of American business. Mr. Dacko is served gloriously as President of the Shop and he joins us this morning. Greg Let me start with the boom economy before we get to the Fed. John Writing writes to Ethan Harris this morning on LinkedIn that consumption puts business investment is something like an 8% GDP. Do we have a too boomy of an economy right now? Is it too effervescent?

[Greg Dacoek]

I don't think it's too effervescent, but we are seeing strong growth in underlying momentum when it comes to consumer spending activity and business investment. I would actually flip it slightly. I would say that we have too much of a concentrated growth environment because when you look at what's driving growth, it's really more the affluent consumers and AI driven business investment. If you exclude those, you don't really have much of breadth in terms of economic momentum. And that's really the risk to get

[Tom Keene]

to the press conference disaster that we saw this week. If we see you shift as they shifted in the press conference, what will that mean for American business?

[Greg Dacoek]

I think that's a key element to focus on. That's really one of the key points that I've been highlighting with a lot of the CFOs I talked to, which is this notion that the cost of capital is going to be structurally higher going forward, not because of what the Fed's next move is going to be, but because we have fiscal imbalances that are likely to be present for the foreseeable future, because we have a very large pull for private capital that's putting upward pressure on yields, including the big investment surge, because we have inflation that is much more volatile in this environment of layered supply shocks. And because we have questions about central bank credibility. And those were even more visible after the most recent Fed press conference. So those elements are likely to keep long term interest rates higher than they've historically been and be a constraint in terms of private sector investment.

[Paul Sweeney]

And Greg, you're higher for longer was echoed by a note from Torsten Slok at Apollo this morning. He's basically said the exact same thing here. We'd love to get your thoughts, Greg, as it relates to what we saw from the Federal Reserve this week, what we saw from Fed Chairman Wash. What were your takeaways?

[Greg Dacoek]

I think we have to distinguish two elements here when it comes to the critics. As to Fed Chair Wash, his performance, you can essentially have a view that maybe a rate hike is not necessary in September. That's very possible. You've seen the likes of Governor Waller, Governor Cook, Vice Chair Jefferson, New York Fed Chair President Williams, all arguing that we'll have to watch the data. If core inflation does not show signs of moving back towards the 2% target, then a tighter monetary policy stance will be required. I think what markets are penalizing right now is essentially the inconsistencies. Having a new Fed chair that's criticizing the old Fed but not doing much about it, saying that inflation is a choice but not doing much about it. That's a risk. Talking about resolute commitment to the 2% inflation target and then delivering actual thinking, again an issue and then finally saying that you're going to deliver on the 2% target but then talking about moving the gulp post at the next strategy review is another inconsistency. And those are the real issues so much whether you tighten or not in September.

[Tom Keene]

You know, I have no idea folks. The academic Craig here, credibility, I should say here. Greg Dacko came out of Leuven in Belgium and that is where the Giant Mark blog was on economic epistemology and theory. Let's layer on that, Greg, as one final question here this morning, the chairman is trying to do economic philosophy. He's trying to do almost economic politics with his comments. Can he get away with that? Or like Claudia Sam says, should he just look at inflation And PCE is a data point, a measurement point and not a lot of, you know, Mark Blau, George Soros theory.

[Greg Dacoek]

I think you have to be very careful in trying to be too intellectually out there in terms of trying to comment during the press conference. In particular, the questions from the journalists, including Mike McKee's question, were very clear. What is your reaction function. How would you react in terms of monetary policy in different circumstances? That's not very complicated. That's the basic for a Fed chair. If inflation moves in one direction, what are you going to be doing? If inflation moves in another direction, what are you going to be doing? You can't hide behind the Lucas critique or potentially the good hard. I mean, these are valuable laws and valuable theories, but they're not going to help you when it comes to setting policy in the very near term.

[Tom Keene]

Greg, thank you so much. Thank you for your service to NAB as well Mr. Dacos with EY parts and stay with us. More from Bloomberg Surveillance coming up after this

[Malika Sakeva]

Air is entering its most consequential phase where scale, safety and sovereignty will determine who leads and who lags. Join Bloomberg Tech in London on November 2nd and 3rd as global leaders across business, finance and policy examine the defined trade offs shaping the future of AI. Thank you to our presenting sponsor Salesforce and supporting sponsors Ida Ireland and Schneider Electric. Learn more at BloombergLive.com TechLondon

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[Tom Keene]

Victoria Fernandez is she's DEC Police Chief Market Strategist Crossmark Global Investors what's the biggest argument Victoria, families or couples are having in this booming economy? This big bull market like Tom, it's

[Karen Moscow]

got to be how they're going to invest around tech, right? Do we buy chips? Do we not? Do we buy memory? Do we not? With the volatility that we're seeing in these markets, I think that's going to be the biggest conversation people are having. And really and truly the we need to be tactical. It's what we're doing for our investors. There is so much going on underneath the surface right now, right? Even though you got a Vix that's like an 18 handle, the correlations are not high in anything except energy and utilities you don't have high correlations. So stock picking is important.

[Tom Keene]

Bloomberg Money question then we'll do that at 12 noon today. Victoria Fernandez, what does it mean for rebalancing? Do you less rebalance and let tech go or do you have increased scrutiny on rebalancing a portfolio?

[Karen Moscow]

I think it's going to be more of the latter, Tom, and I think that's because of what we're talking about in regards to these correlations. I mean, every day a stock can change, right? I mean, we've seen that with Microsoft, we've seen it with SK Hynix, we've seen it with a ton of names. You have to be able to be tactical. So little bites at the apple is what we're saying. Don't go in and make big bets because it can turn around the next day and kind of bite you in the rear. So little bits and pieces here and there. When the stock comes down, add a little bit to your portfolio. When it runs high, say thank you very much, take some profits off the table. That's what we're doing for our clients. I think that's the best way to approach this volatility we're seeing in the tech sector.

[Paul Sweeney]

Victoria, we're right in the teeth of earnings here. We got a lot of tech earnings this past week here. What's your view of kind of how corporate America is delivering on the earnings front?

[Karen Moscow]

It seems like they're doing quite well. Right. When we look at the blended earnings expectations, those that have reported plus expectations, I mean you're what, you're close to 30, a little over 30% earnings growth for the second quarter. That's amazing. And I think we have to be a little bit worried about is that as good as it gets? Looking at coming up quarters, but they're actually performing quite well. The problem is they're not all getting rewarded for that. We've seen that in some of the hyperscaler names. A lot of that coming down to the communication around what the ROI is on, on these names, what the future looks like in terms of the spending that we're seeing. When you're upping your capex by 10, 20%, investors want to know exactly how they're going to get rewarded for that. But all in all, earnings so and profits, I mean look at the energy names this morning. Profits are off the chart. So so far so good.

[Paul Sweeney]

It was also a big week for central bankers, particularly the U.S. fed and Chairman Wash. What did you take away from this midweek meeting?

[Karen Moscow]

You know, Paul, it's Interesting. After the press conference, you had so many people coming out saying how horrible it was, all the credibility issues around Warsh and what's happening. And I, I had to kind of, you know, do a double take because isn't this kind of what we expected? Isn't this what he told us was going to happen? I mean, he's not going to front run these task forces that he's put in place. So we shouldn't have expected there to be a lot of discussion around that. We didn't think there'd be hikes. The market wasn't pricing in really a hike for this meeting. So I'm really kind of surprised at the reaction that we've seen. I do think it sets up a lot more from now till the September meeting in terms of Fed speak and what we're going to hear, people will be listening closely.

[Tom Keene]

Do you take advantage of price down yield up out the curve, 10 year, 20 year, 30 year paper?

[Karen Moscow]

Well, I am. In our fixed income portfolios, I want to lock in some of that because our clients are using fixed income, high quality fixed income for cash flow. So if we're going to get some better yields, then why not go ahead and lock a little bit of that in maybe up to 10 years or so and have that in your portfolio, set it aside and just collect your coupons.

[Tom Keene]

That's like Sweeney Gospel.

[Paul Sweeney]

Yeah, right away. Why not? What are the risks here, Victoria, to this economy of the consumer seems to be kind of hanging in there. Earnings seem pretty solid. I don't know what are the risks here?

[Karen Moscow]

Those are the exact risks. If we see earnings start to turn next quarter or even later in the second quarter when we start to get more of the consumer facing retail names report. If those are weak, then I think we have to start getting a little bit concerned because we've got consumption higher than incomes. Right. Real disposable income was down with consumption higher. That's unsustainable over the long run. So I think let's watch earnings. If they start to drift a little bit, we have to start worrying a little bit more about the consumer. And we did see credit and debit spending up over 6% last month. So let's keep an eye on that.

[Tom Keene]

And now folks, on July 31, we look towards August, the first tinge of the leaves across Central Park. You're not even thinking about it. Why are you here on a Friday? Let's start with the. The autumnal glow is upon us and we do that always and only with Victoria Fernandez. First of all, do you have your Texas Texas A and m tickets for November 27th?

[Karen Moscow]

I do not have them yet, but don't worry, it is on my to do list so we will have them.

[Tom Keene]

I'll bet it is.

[Karen Moscow]

Are you going to come join me? Are you all going to come join me?

[Tom Keene]

Well, we would love to do a remote down there. Hallebaloo Canuck. Canuck. We would love to do that. Texas at College Station, folks. November 27th. That's Friday day after things that big, small. It's like that's like a state holiday. I'll be working in Texas to say

[Karen Moscow]

I won't be joining you on that day for the radio as we get

[Tom Keene]

to Q3 ending September 30th as we stagger into Q4 in your research note, Victoria, you say it best sometime this earnings joy is going to end. Is it going to end Q4 or do we stagger into 2027? Is Texas a and M goes to the Rose Bowl.

[Karen Moscow]

I like the way you think, Tom. For the Rose bowl at least. I do think that we'll probably do a little bit of staggering here at the end of the year into the first quarter of next year, mainly because we know how consumers are. We don't underestimate the US Consumer in the fourth quarter of the year around holidays they spend, whether they have it or not, unfortunately. And we know that the bottom consumer and some of the younger consumers are being held up by baby boomers and Gen X money supply there. So I think we'll continue to see a little bit of support in the fourth quarter, but we'll need to be cautious going into the new year.

[Tom Keene]

Victoria, thank you, Victoria Fernandez with the Cross mark at Global Investments. Stay with us. More from Bloomberg Surveillance coming up after this. As markets move and headlines break, what matters most is context. A Bloomberg subscription gives you unmatched reporting, sharp analysis and powerful tools that help you connect the dots. Visit Bloomberg.com podcast offer to learn more.

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[Bloomberg Surveillance Announcer]

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]

She has the worst job in London. Can you imagine waking up at Deutsche bank bank over by the wall like the Roman wall is across the street and you have to work with George Saravel. I mean it's, it's like difficult. Joining us now at Queen Victoria street. Finally, Malika Sakeva joins us, strategist at Deutsche Bank. Her research just jumps out of the screen. Of course, coming out of Chicago, I got to start with something I didn't think I'd start with. Malika. When you talk to Matt Luzetti in New York at the Deutsche bank building.

[Paul Sweeney]

Yes.

[Tom Keene]

At the southwest corner of Central Park Network. It's not the Time Warner bill anymore, it's the Deutsche bank tower. Malika, when you get briefed by Lizardi, how did the chairman of the Federal Reserve System change our foreign exchange strategy at that press conference?

[Malika Sakeva]

There's been a lot of focus on central banks this week, especially in the currency market. Certainly the Fed meeting earlier in the week was a big focus for the dollar, which weakened after we didn't perhaps get the degree of commitment to immediately acting on some of the price stability conviction that we'd heard in June. But the other central bank which has been in focus this week and where I spend a lot of attention is the bank of Japan which met this morning and had a hawkish hold and put a lot of emphasis on the currency. Obviously going into the bank of Japan meeting this morning, we had some signs of intervention in dollar yen yesterday. And so they certainly are sort of growing signs of policy comfort with where the yen is.

[Tom Keene]

But you know, off Dornbush 101 can an intervention be successful if it's alone and repeated?

[Malika Sakeva]

So I think for 4 yen for the end to truly strengthen back, the path really is the bank of Japan has to lift rates. But if, if, if officials want to give them a bit of a Runway, you know, give them some time to, to raise rates, then intervention can be very helpful. Japan not only has a lot of central bank reserves, they also have a tremendous amount of other assets across pension fund insurance balance sheets. So I would say Japan does have the resources to defend the currency if they so wish to do that.

[Paul Sweeney]

Malka Bloomberg News is reporting that Japan likely, likely spend around $53 billion USD intervening in the currency market on Thursday. A prop up the yen. That would likely be the biggest ever intervention on a single day by Tokyo. The question I think a lot of people are Asking is that enough? Do these interventions really work or are they just kind of short term in nature? Typically.

[Malika Sakeva]

So it's not the first time that we've seen intervention in Japan this year. The bank of Japan did intervene in April and in May. I would actually argue that considering what we've seen this year, we've seen a war, we've seen an energy shock, we've seen a tremendous amount of Fed volatility. Dollar has actually been relatively stable around 160. I do think the market will need the bank of Japan to walk the hawkish talk that we heard today. They will need to accelerate the pace of rate hikes. They are talking about inflation being north of 2% over their forecast horizon. So keeping rates at 1% is simply not enough. But I do think that, you know, there is a Runway here for them to use intervention to provide some room and some support for the currency.

[Paul Sweeney]

And Malik, as we came into 2026, I think as it relates to the US dollar, the consensus was probably weaker dollar but then the war in Iran started and that kind of reversed pretty suddenly. But now I'm looking at the that DXY index is at 100 spot 3. We did trade a little bit below 100 today on the DXY. How do you think this plays out?

[Malika Sakeva]

So I think the focus of my research over the last few weeks has been something very interesting is happening in the US Dollar. We are seeing a sort of a swap from a lot of interest in US Treasuries to a lot of foreign interest in US equities. And this tremendous amount of inflow into the US stock market over the last year or so has actually provided a good amount of support for the dollar. Now my thesis is that looking ahead, the risk profile of the dollar could start to change. So in the next big equity correction, it's not necessary that the dollar will necessarily do well because the dollar is now much more linked to and much more sensitive to equity capital than it has been in the past. So I think the change in correlation correlations between stocks and the dollar is really going to be a big focus for the market.

[Tom Keene]

Okay, so where are we six months or a year out? Give us levels there. Where are we on Euro dollar? Where are we on sterling?

[Malika Sakeva]

So I think when we think about the dollar, I mean the interesting things about currencies are their relative prices, right? So the dollar is strong because something else is weak against it. And if we look across the global currency universe, the currencies that are particularly cheap at the moment moment, our Japan, Korea and a lot of other currencies in Asia. So really I would argue that the outlook for the dollar in six months and 12 months is not really about what happens to the euro or what happens to the sterling. It's what happens to currencies in Asia. It's what the BOJ does. It's whether we see repatriation from Japanese investors back into Japan. The dollar yen is significantly lower from here. That's what's going to drive the broad dollar.

[Tom Keene]

So is Chairman Warsh central banker to the the Pacific Rim.

[Malika Sakeva]

So, so I mean I think, you know, we're central banks everywhere. There's, there's a lot of focus on whether they're going to be really, really serious about, about price stability. And I think what we've seen this week is, you know, where the market catches a whiff that, that they may not be then currencies could, could come under pressure. So I think Japan is going to be very focused on that probably in the US as well. The central bank is to going to be very focused on that.

[Tom Keene]

Malika, thank you so much. Really appreciate it. Thank you so much for being on Malika Sachever with this strategist with George Saravelis at Deutsche Bank. Stay with us. More from Bloomberg Surveillance coming up after this.

[Bloomberg Surveillance Announcer]

You're listening to the Bloomberg Surveillance podcast. Catch us live weekday afternoon 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]

Major shout out to all of our team in Dubai and across up to Istanbul and over actually to Dublin, Ireland for the coverage on the war. Ellen Wald is definitive on this. She's senior fellow at Atlantic Council and has a one volume in Saudi Arabia that is a required read for those that need to learn of the of the Arab peninsula. What does the media get most wrong? Ellen Wald about the Arab Peninsula from the Persian Gulf over to the Red Sea.

[Ellen Wald]

I think the media, I would say that the most common misperception is that everything is defined by the Sunisha conflict. I think that that's a very simplistic way to look at it. There's a lot going on, you know, there's a lot going on between different, you know, Islamic sex that kind of, it really transcends it. On the other hand, I would say that the one thing that has really stood out for me in conversations with people in the Gulf right now is that they at least the people are fairly united in their sentiment against Iran, that a lot of the attacks that Iran has leveled against These countries in, you know, in Saudi Arabia, in the uae, you know, in Kuwait, have really kind of solidified at least popular, popular sentiment against Iran and that they are potentially much more united in efforts to fight Iran than is, I think, being really portrayed in the United States, in the media and from think tanks at this point.

[Paul Sweeney]

Ellen, if I were an insurer whose job it is to insure these tankers, I think my base case today has to be as long as this leadership is still in position of power in Iran, the strait will never be open. Is that a fair assumption?

[Ellen Wald]

That's what I would advise. You know, if I was an insurer, I would not be insuring these ships. I think you're taking an absolutely massive risk if you are going to, you know, provide insurance for a ship that's, that's transiting. I really think right now we are at basically kind of a status quo, kind of standstill impasse. Iran is, is not going to give up any way to control this strait. Unless something really, really shifts internally or with their firepower ability, they're not going to give it up. And the United States seems like it's not going to give up its position either. So either we have to just dig in here for the long haul until something changes economically on either side, or we have to change something militarily, but otherwise we're kind of stuck. This is going to become a situation of attrit and the world may have to adjust to this new normal.

[Paul Sweeney]

But if I'm Saudi Arabia, not to mention all the other countries in that region, can I live with that? Can I live with that reality that the strait is closed? I would like to think those neighbors could exert some type of pressure on Iran.

[Ellen Wald]

You know, I think that they absolutely do have that ability. I think that the pressure they can exert is really finding the workarounds. And it's an interesting situation because Saudi Arabia is actually potentially, you know, differently positioned, I would say, than say Kuwait or Iraq or Bahrain or Qatar or even the UAE because it has a different geography. It has access to the Red Sea and it's been using that and it can continue to use that access to its advantage. Now that has all come into question now that we're getting other actors and in other geographic regions involved. The Houthis getting involved in the Red Sea absolutely threatens that. And then we have militias, apparently Iranian backed militias in Iraq that are now threatening ports in the Mediterranean. And so that definitely, you know, kind of enlarges the regional aspect of this, of this conflict.

[Tom Keene]

Okay, here's why you watch Bloomberg Surveillance, folks. And we're thrilled to do this, our team. It wasn't Eric Marlowe, it was one of the interns.

[Carl's Jr. Advertiser]

Oh, was it?

[Tom Keene]

Okay, they put Alan Wald back to back with Leslie Vinger Murray story. It's too much, folks. Ellen Walt, senior fellow of the Atlantic Council and joining us now, dropping in with Ellen Wald. It's a panel, folks, a surveillance Bloomberg panel. Leslie Vingen Murray, Chicago Council on Global Affairs Ellen Walt explained to Dr. Vinjamuri the relationship of the tribes of the Arab world. Does Saudi get along with the uae? Does the UAE get along with Bayren? Does Bayren get along with Kuwait, etc. Ellen, discuss that.

[Ellen Wald]

So so they definitely do get along, but it's not like they're all just brothers here. You know, they're, they're definitely different sex and they've definitely taken different approaches in particularly in, you know, modern times. But there's absolutely, you know, you could say kind of long seated bad blood in some respects. One particularly fascinating part, it has to do with Jordan. Okay. Jordan is actually, you know, the Hashemite kingdom of Jordan that comes from a that the Saudi king, the original king Abdul Aziz, he actually kicked out the ancestor of the current king of Jordan from Mecca.

[Tom Keene]

Wait a minute.

[Ellen Wald]

Over Saudi Arabia, we got to stop the show.

[Tom Keene]

Ellen, in Lawrence of Arabia was the Hashemite king that went to Jordan where their great grandfather was that played by Anthony Quinn?

[Ellen Wald]

I believe so.

[Tom Keene]

You believe so. I nailed that. Leslie's impressed. Leslie Venger Murray helps us out with Ellen Wall this morning. There's a lot Leslie's been just on fire with discussion at Chicago Council on Global affairs. All of her work previously at Chatham House. Leslie, the question every listener wants to know, including Ellen Wald, how do we extricate ourselves from this mess?

[Leslie Venger Murray]

If you mean the United States, I think the answer is we don't. We started, you know, it's a little bit of the Pottery Barn rule. Tomorrow you break it, you own it, you have to fix it. President Trump, I'm sure and many Americans would like nothing more, quite frankly than to return to the pre, late Feb. Status quo. But I think we all know at this point it's not on offer. So this is a manage it, try to get things into a stable position. And I think from the US Administration perspective, sooner rather than later and certainly sooner than the early early November midterm elections. But there's no sign right now of any plan coming into place that brings that stability. The U.S. is kind of doubling down on sanctions force. And Iran has demonstrated that it is in it to win it. It can bear those costs. It has that leverage over the Strait, and it doesn't seem to be flinching. So at the moment, again, we're seeing escalation, tit for tat, and the few proposals on the table don't seem to be getting the kind of traction that we need to see to get back to some sort of stability.

[Paul Sweeney]

Leslie, with a little bit of time here that we've had to kind of study this last few months, how did we misread this so terribly wrong?

[Leslie Venger Murray]

Again, I would ask, who is the we here? I think if you go back to the very deep bench of US Geopolitical experts, Middle east experts, experts, folks who've worked in the national security and intelligence agencies for decades, they've played out this scenario of Iran weaponizing the Strait of Hormuz. They understood the very disproportionate power advantage, the asymmetric leverage that was possible. And I think we're sort of telling the same story that we've been telling for a while. Originally, it looked like the United States was being pulled in by Israel, Trump by Netanyahu, and that equation has changed. That's one of the more surprising things that has come out of the last few months, that Donald Trump no longer seems to be playing along with that playbook, but now he has his own considerations and concerns.

[Tom Keene]

Ellen well, brief Leslie Venger, Murray and all of us here on a royal family that goes back to 1727. Those of us, Leslie, and you are too young to remember this, but I remember Faisal clearly hugely dominant in the minds of Americans coming out of World War II. Jurgen and the prize and all that. Brief us now on the royal family of Saudi Arabia. How stable is it? How dominant are they in the discussion?

[Ellen Wald]

I would say that the Saudi royal family is quite stable. I don't think we're concerned really about any destabilization in terms of the leadership there. But it is interesting to see, as the conflict has gone on, that they really have not been the most vocal, at least publicly, you know, in terms of the, you know, the Gulf states. I mean, I think we've seen the UAE maybe taking much more of a of a vocal stand on certain issues, particularly concerning the fact that the free passage through the Strait of Hormuz is not negotiable for them. And they've been the ones really taking this stand, though Saudi has also borne the brunt of a lot of the damage also. Obviously, Kuwait, Bahrain have too but they do seem to be pretty resolute in their opposition. And I don't think that we're really concerned about any kind of destabilizing measures taking place, at least in Saudi Arabia.

[Paul Sweeney]

Leslie, one of the, I think, objectives of the administration for the initial attack on Iran was regime change. And granted, there are different players now leading Iran, but they are still theocrats. Is there any reason to believe that with continued military action on the part of the US that the pressure would be so great that there may be an uprising of the people to change the government? How do we look at that these days?

[Leslie Venger Murray]

I mean, I see no evidence of that, and I don't my reading of those who have been following this for a very long time is that they see no evidence of that. It is not really in America's gift. I think, unfortunately, coming out of the removal of Maduro, Venezuela's leader, that President Trump perhaps was kind of leaning into America's unwielding power. And power is very contextual. And so we haven't seen that delivered in this case. But I think we're long past the moment where we believe that this is going to lead to regime change. At best, we're hoping for getting into a direction which can lead to some sort of stability over the strait. I even think the question of getting to a nuclear deal is very far away at this time.

[Tom Keene]

Leslie, help us with how we've shattered our relationships at Chatham House and now doing this wonderful work in Chicago like, like Britain. Can Britain, like, show up along the Persian Gulf like they did in 1809, 1810, or we just shattered the west in the Arab world?

[Leslie Venger Murray]

Well, first of all, the west was already dividing internally. First thing first, Tom, you know it better than anyone. The UK also the United States, but not nearly as much, has had its own domestic internal problems. And the new prime minister, Andy Burnham, has got to be very focused internally on, as Gillian Tett told me earlier this week, growth, growth and growth, top three priorities. So the west has a lot of internal economic problems, but that division has been a long time coming. Europe is leaning in not to the Gulf. It's leaning into what it perceives to to be its number one security threat, which is coming from Russia and from from Putin. And Donald Trump has been back and forth on that one.

[Tom Keene]

I want to do one final question to both of you. This has been so special, folks, Leslie, Benjamin Murray and Alan Wald with us. Alan, let me start with you. Same question then to Leslie. We seem to have a new diplomacy out of the state department running out of the Oval Office in the White House. Ellen, how is our diplomacy perceived in the world of your book Saudi Ink?

[Ellen Wald]

I would say there's probably a lot of confusion because it does seem like there's one kind of diplomacy maybe coming out of State Department and another kind coming out of the White House. And I think for for states in the Gulf who are looking at their for security, this is a really volatile thing and is probably a bit concerning.

[Tom Keene]

LESLIE along that line, can we repair our shattered diplomacy?

[Leslie Venger Murray]

See, not under this administration, I don't feel unfortunately, we're not seeing the strategy. We don't see the quite frankly, the interest in doing that. If anything, the current administration is is aiming to do exactly the opposite to disrupt America's most, you know, recent long standing alliances to really rethink how they do diplomacy right. That just simply not the goal. It's not the project. So I don't see it happening anytime.

[Tom Keene]

You two have made a Friday Morning in the Summer special. I mean that's a world class panel.

[Malika Sakeva]

PAUL Yep.

[Tom Keene]

Ellen Wall, senior fellow Atlantic Counsel, Leslie Vengea Murray, president of the Chicago Council on Global Affairs. Just really special to have the two of you together. Ellen Wald and Leslie venjimuri, thank you.

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