Markets Energy Shock

Summary

Bloomberg Surveillance – "Markets Energy Shock" (July 9, 2026)

Episode Overview

This episode of Bloomberg Surveillance digs into the global market landscape amid significant "energy shock" factors, focusing on the ripple effects across equities, fixed income, currencies, and energy sectors. Anchored by Paul Sweeney and joined by expert guests David Lebo (JP Morgan Asset Management), Stephen Englander (Standard Charter Bank), Leslie Balti Guzman (GasVista), and Sandy Peters (CFA Institute), the hosts analyze AI market leadership, the energy crisis in the Gulf, currency movements, and the debate over quarterly vs. semiannual financial reporting.

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Key Discussion Points & Insights

1. Equity Markets: AI, Rotation, & Valuation

Guest: David Lebo, JP Morgan Asset Management
Timestamps: 02:21–10:19

• Market Leadership:

  • The tech sector, especially hardware and semiconductors (“the chip side of things”), has led markets.
  • Anticipated rotation as AI productivity benefits seep into broader sectors.
    • Quote, David Lebo: “Every company is an AI company in this environment.” (03:09)

• AI CapEx & Stock Performance:

  • Shift: Market once rewarded more AI spending; now distinguishes between winners and losers.
  • Free cash flow at hyperscalers “gone to zero;” equity markets now play a bigger role in financing.
    • Quote, David Lebo: “We’re moving into... more balance [after one-way AI investing].” (04:15)

• International Allocation & Emerging Markets:

  • Diversifying globally, increasing allocation to a third of equity portfolios, much higher than historic 5–10%.
  • Value in Asia, especially China, as a “cheaper way of playing the AI story.” (05:11–06:21)
    • Quote, David Lebo: “Investors...are better if you trim winners and add to losers.” (04:52)
    • China remains risky but offers structural opportunity.

• Investment Styles:

  • Approach varies by region (e.g., semiconductors in Europe vs. U.S., cyclicals in EM).
    • Quote: “Emerging markets...much more cyclically and manufacturing oriented than the U.S.” (06:40)

• Fixed Income Outlook:

  • Favoring high yield (double or single B; less focus on triple C). Defaults will rise, but risk remains lower than previous eras.
    • Quote: “We feel like we’re getting paid for owning this lower quality debt that frankly is much higher quality than it was 20 years ago.” (08:01)
  • Diversifying into U.S. securitized products for “less volatility.”

• Global Real Estate:

  • Opportunities especially in Asia (multifamily) and European CBDs. U.S. market more nuanced.
    • “You don’t want to own the beta...it’s more about extracting alpha.” (09:10–09:19)

2. Currency Markets Amid Conflict and Policy Divergences

Guest: Stephen Englander, Standard Charter Bank
Timestamps: 11:31–19:42

• War and the U.S. Dollar:

  • Recent wars (Iran) fade as tradeable risk unless escalation occurs. Main driver: Fed and U.S. economic strength.
    • Quote: “All the stuff...on equity markets and AI...has been and will be the bigger driver of the dollar.” (12:36)

• Market Positioning:

  • Investors initially “hated the dollar,” now beginning to reconsider, comparing sentiment to the Trump administration era.
  • Real (inflation-adjusted) interest rates in the U.S. are meaningfully positive, helping to attract capital.
    • Quote: “When...real interest rates are higher but profits growth is matching that, so it’s perfectly fine.” (15:29)

• Yen and Japan's Dilemma:

  • Yen at historical lows (162). Bank of Japan remains dovish, with problems in the domestic economy and increased bankruptcies.
    • Quote: “They have to defeat that market mentality” around intervention. (17:11)
  • Interventions are risky and may be unsustainable without BOJ tightening.

• Asia FX Crosses (SGD/CNY):

  • Both currencies influenced by different factors: Singapore dollar as an Asia index, yuan by trade surplus and policy management.
    • “Right now it’s not a clear picture which will be the driver for that cross to change direction.” (19:20)

3. Global Energy Shock: Qatar, LNG, and the Strait of Hormuz

Guest: Leslie Balti Guzman, GasVista
Timestamps: 20:54–26:56

• LNG Exports and Security Risks:

  • Recent attacks and war have caused Qatar to pause LNG expansion; confidence of customers and investors is eroding.
    • Quote: “Repeated cycles of conflict are going to damage the confidence for customers and investors.” (21:30)

• No-War, No-Peace Scenario:

  • Ongoing uncertainty keeps LNG and gas prices volatile (e.g. JKM, TTF indices).
    • Quote: “It creates a lot of uncertainties...market restores its confidence pretty fast, but then new attacks bring volatility.” (22:33)

• Infrastructure Limitations:

  • Oil more easily rerouted than LNG; pipeline alternatives for LNG are limited.
  • Strategic chokepoint: Strait of Hormuz is no longer assumed secure, impacting insurance, shipping, and access for key Asian importers (e.g., India, Pakistan, Southeast Asia).
    • Quote: “The most impacted are...emerging markets in Southeast Asia...for them, [Qatar is] their only supplier.” (25:41)

• Geopolitics and IRGC (Iran Revolutionary Guard Corps) Financing:

  • U.S. targets to cut IRGC funding, as energy sales underpin regional conflict and cycle of violence.

4. Quarterly vs. Semiannual Corporate Reporting

Guest: Sandy Peters, CFA Institute
Timestamps: 27:50–36:07

• US vs. Europe: The Reporting Debate:

  • CFA Institute and majority of surveyed investors support quarterly reporting; deemed essential for market transparency.
    • “Two-thirds believe that quarterly reporting is essential.” (28:39)

• Arguments Against Less Frequent Reporting:

  • While companies argue for cost savings with semiannual, SEC analysis shows only modest savings (~$200,000 per company).
  • Concerns over loss of transparency, investor protection, and weaker capital markets.

• Implications for Financial Statements:

  • Cash flow statements are critical but often omitted from earnings releases outside quarterly 10-Qs.
    • “Most earnings releases don’t include a statement of cash flow today.” (31:54)

• Market Structure Risk:

  • Reduced reporting could impair U.S. market depth and vibrancy.
    • “If you sacrifice some of that transparency, perhaps you sacrifice some of the vibrancy of the US Capital markets.” (33:13)

• Investor and Industry Feedback:

  • Over 70,000 comment letters on the SEC proposal (mixed support from accounting firms; Exxon supportive, most remain silent).

• Other SEC Disclosure Initiatives:

  • Ongoing revisions and reductions in required disclosure for new public companies and regulation.

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Notable Quotes & Memorable Moments

• On AI Market Leadership & Rotation:

  • “Every company is an AI company in this environment.” — David Lebo (03:09)

• On Real Yields and U.S. Dollar Strength:

  • “A positive return to capital attracts capital. So the US is like a hedge fund.” — Stephen Englander (14:58)

• On Energy Security in the Gulf:

  • “Repeated cycles of conflict are going to damage the confidence for customers and investors.” — Leslie Balti Guzman (21:30)
  • “We can’t make that assumption anymore...I don’t think we can ever [assume the Strait of Hormuz is safe].” — Paul Sweeney (24:05)

• On Frequency of Corporate Reporting:

  • “Two thirds of them believe that quarterly reporting is essential.” — Sandy Peters (28:39)
  • “We think this might be a very expensive experience or experiment.” — Sandy Peters (33:28)

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Notable Segment Timestamps

• Equity Market Analysis, AI, and Rotation:

  • 02:21 – 06:21: Market leadership, global rotation, and international allocation
  • 07:10 – 08:21: Fixed income positioning

• Global Real Estate and Investing Styles:

  • 08:21 – 09:19

• Currency Markets & U.S. Dollar Analysis:

  • 11:31 – 14:46: Dollar, war, rates, value
  • 16:03 – 17:28: Yen’s status and BOJ’s challenge

• Energy Shock and LNG Risks:

  • 20:54 – 26:56: Qatar LNG, Hormuz, and regional implications

• Quarterly vs. Semiannual Reporting Debate:

  • 27:50 – 36:07: CFA Institute’s position, SEC proposal, transparency implications

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Tone & Language

The tone is sharply analytical, informed by real-time market scrutiny, and colored by Bloomberg Surveillance’s signature conversational and occasionally irreverent style. Quotes reflect the directness of live financial reporting and expert interviews.

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Summary Takeaway

This episode offers a panoramic perspective on the shifting sands of global markets—from AI’s effect on investment strategies, to real consequences of energy instability in the Gulf, to the nuances of currency strategy under global stress, and the ongoing struggle for transparency in financial reporting. For portfolio managers, investors, and market watchers, the interviews provide both actionable insights and a vivid sense of uncertainty and dynamism defining 2026’s financial environment.

Transcript

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[Paul Sweeney]

David Lebo is with us right now. JP Morgan Asset Management Paul there's like 20 degrees in America that are pixie dust. One of them is leadership studies, Williams College. Like, it's like liberal arts, but it's like you have to actually work. You have to read everything. Fdr, fdr. You read everything on fdr. It's like the cottage industry there. Let's take leadership studies, David, over to the markets right now. Where's the leadership? Is there new leadership in the market?

[David Lebo]

So up until this point, the leadership obviously has been concentrated in the tech trade and more specifically the hardware side of things, the chip side of things. When we zoom out and we take a 12 to 18 month view, we do think that this rotation is going to begin to materialize in a more durable way. I think part of what you're seeing in the market today is investors differentiate between the different parts of the AI supply chain and so they think about the chips one way and the hyperscalers another way. But you know, every company is an AI company in this environment. And so as you see these productivity benefits begin to accrue more broadly, that's when I really think you're going to see this rotation materialize in a more durable way.

[Paul Sweeney]

Are we at the point now where it used to be the more you spend on capex vis a vis AI, the better it is for your stock? Now it feels like that's not the case anymore and the market maybe is discerning winners and losers. How do you think about that?

[David Lebo]

So I think it all comes back to the idea that if you look at what's happened to free cash flow for the hyperscalers, it's effectively gone to zero. And you know, Magic Lean Miller tells you that the capital structure doesn't really matter, but it's how you use that capital structure. And so we're going from a world where all of this AI spend was internally financed to one where the capital markets need to play a role. You've seen debt markets obviously play a significant role up until this point. You're seeing equity markets begin to play more of a role as well. As we've seen increasing issuance, I do think you will continue to see that equity story going forward. It's not just going to be about debt. The good news here is that's going to allow some of the free cash flow to come back. And so I think what we're moving into is arguably a world of more balance. After being in a world for the past couple of years where it just felt like one big one way trade.

[Paul Sweeney]

You have a single sentence that you like, you're thinking for and you're looking at Japan, etc. What do you do with a Korea given this IPO today? Forget about the IPO. I don't say your remit, but what do you do with the semiconductor juggernauts of the Pacific Rim? Just observe it or do you actually own it?

[David Lebo]

So I think that again, we see value in that trade, we've seen value in that trade, but we're also not ignorant to the fact that you are a better investor if you trim your Winners and maybe add to some of your losers. And so as we've seen that outperformance in the hardware space, we've brought some of that exposure down and we're leaning into other markets that frankly are cheaper. You know, one part of em that is still kind of unloved is China. We see opportunity there because of the tech exposure. It's a cheaper way of playing the AI story because it just hasn't run as hard as say, the Koreas of the world or the hyperscalers, so on and so forth.

[Paul Sweeney]

As it relates to China. There is that China risk that's been there for my entire investing career. And we saw it most recently when they cracked down on the technology names five, six, seven years ago. How do you get comfortable with that? China risk, broadly defined.

[David Lebo]

So you have to think about it. But I would argue that geopolitical risk is a feature and not a bug of the current environment. And so whether you're taking geopolitical risk in China, whether you're taking geopolitical risk in the U.S. right. It's about getting the right balance. And so, you know, are we massively overweight China in portfolios? No. But where we see opportunity, where we think that there's a structural story, we're comfortable leaning in because we do think that over time global equity markets rise together.

[Paul Sweeney]

We're just talking about the 1967 Red Sox. You don't remember that, David. But what I remember is back then Internet national allocation was 5 or 10%. Don't give me every accounts different is a general idea today, what is the percentage of international allocation?

[David Lebo]

We stand as we tend to start with about a third of an equity portfolio.

[Paul Sweeney]

Way bigger than the past.

[David Lebo]

Exactly.

[Paul Sweeney]

You're not, you're not buying a concrete company, you're not buying the telephone company. Then when you look at a given country, how do you do that?

[David Lebo]

So the way we think about it is, you know, as globalization has played out, particularly over the past 25 years, you've seen these themes, you've seen these stories really kind of gain a global presence. And so, you know, if we're playing the semis, we're thinking about how do you play the semis in Europe versus EM versus the US if we're playing the tech software side of things, how do you play that in different markets? I would also argue that, you know, when you look at these, particularly the emerging markets, when you look at some of these economies, right, they're much more cyclically and manufacturing oriented than the U.S. and so you can play Some of those more durable old school businesses. You don't have to play the software, the services story like you do in the us.

[Paul Sweeney]

What are you doing in the fixed income market these days?

[David Lebo]

High yield. We love high Yield. I think 7% all in, particularly as this AI debt comes to market with the backing of the hyperscalers. Looks pretty attractive, but we're not completely just focused on the corporate space. We're also diversifying into the securitized space. We think the US consumer's in pretty good shape and that's a way of getting a more diversified carry in portfolios with arguably less volatility than I think we're going to see in equities going forward.

[Paul Sweeney]

Should we get him in trouble with Mary? Oh, yeah, let's do that right now. Okay, so space X is enjoying all of a sudden a 30 year piece, 6.65%, price down, yield up. Are you kidding me? 7.1% and it's breaking down to a new low. We're not quite there yet. This morning is, well, when you say high yield, that's what, like triple B?

[David Lebo]

So triple B is technically investment grade. We're more comfortable in the double B in the single B space. The stress in triple C is really idiosyncratic. So we're evaluating that on a one off basis. But we feel like we're getting paid for owning this lower quality debt that frankly is much higher quality than it was 20 years ago. And so we think, yes, default rates will rise over time, but we think structurally they will be lower than they have been historically.

[Paul Sweeney]

I sit at home with that bill in a, in a beverage of my choice and I watch YouTube like everybody else and it seems like there's a condo glut in the world. Can you play real estate internationally? Did you see what Simon Property Group has done that I don't own?

What's that?

It's been like a moochot.

[Stephen Englander]

Oh, okay.

[Paul Sweeney]

Real estate in the U.S. yeah. Do you buy international real estate?

[David Lebo]

We do see opportunities in real estate markets outside of the U.S. i think it's a more nuanced story than here in the U.S. so, you know, in places like Southeast Asia or Asia broadly, we think the multifamily story is one that really has legs. When we look at Europe, I mean, return to office in Europe has been completely different than return to office in the US and when you look at some of those prime properties in central business districts, we do see opportunity there. And so, I mean, the short answer is yes, we do see opportunity in real estate. Globally. But when you look at those non US markets, you have to have a bit of a sharper tip of the spear. You don't want to own the beta. It's really more about trying to extract the alpha.

[Paul Sweeney]

J.P. morgan Asset Management. You guys are back at work, right?

Sure are.

[David Lebo]

Five days a week.

[Paul Sweeney]

Five days. Well, they got the new offices.

It's gorgeous. I went by Madison Avenue on the backside. It's even more gorgeous in the. The front side. You know, we have somebody in from the Ohio State.

Is that right?

And like there's like 40 bars down the juggernaut to get to Ohio State at Williams College. It's like the Water Street Grill. And that's it?

That's it.

[David Lebo]

There was. There was one other bar when I was there. It was called the Red Herring. The Purple Pub burned down my freshman year. The Purple Pub has since been rebuilt and so now I think we're at like net three, but a little different than the Ohio State for sure.

[Paul Sweeney]

What is the beer of choice in Williamstown?

[David Lebo]

I'd say Berkshire Brewing Company. Steel. Steel Rail Ale.

[Paul Sweeney]

Yeah, exactly. You and I are a cannabis. My beer of Choice was Coors 32 beer, which is like water. You're a can of Budweiser. Yep. What is it called?

[David Lebo]

It's a. It's a local brewery called BBC and they make a Steel Rail Pale Ale. And that was. It was available. It was cheap.

[Paul Sweeney]

William, go away. David. David Lee, thank you so much. He's global market strategist JP Morgan and he'll be buying us around. They probably serve that beer, Paul, at the new J.P. morgan building. Some. I'll look it up. Some Berkshire beer. We'll give him a shout out here in a moment. Stay with us. More from Bloomberg Surveillance coming up after this.

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[Paul Sweeney]

Earlier this year, the consensus was coming in was a weaker US dollar that, of course the war in Iran breaks out and then people start flooding back to the US dollar. We've got somebody in our studio, Tom, that does this stuff for a living. He's been doing it for a long time. People actually take his phone calls. Steve Engelberg global head of G10FX research of North America Strategies for Standard Charter Bank. Steve, talk to us about what's the view in the currency markets this year? Coming in right now with a world that is at war in two places, how does that infact the view of the US Dollar?

[Stephen Englander]

I think unless something more dramatic happens, the war has faded into the background. Episodes like what we're seeing this week are viewed as a distraction. And I think most investors think it's going to fade. So it's not really a very tradable type of issue. Obviously, if things escalate a lot that they have to reconsider. I think what they're looking at is what the Fed is going to do, what the US economy is going to do. All the stuff that you guys talk about on equity markets and AI and the technology developments that has been and will be the bigger driver of the dollar.

[Paul Sweeney]

So where is value out there in the currency world? Where are the smart people looking these days?

[Stephen Englander]

Well, I think that they're looking at the dollar, but again, it's a question of getting the timing right. The issue or the problem with things like the Iran war is that it can set you back, it can stop you out. So you might say, yes, I have a dollar positive view in three months, but I don't want to be stopped out in three days because things escalate. Managing that I think is the big problem that many investors are facing.

[Paul Sweeney]

Is there a trade? Is there a wait right now? Is there a bet on global Wall street on dollar direction?

[Stephen Englander]

The market has shifted. As you know, at the beginning of the year, everybody hated the dollar. Now you're seeing indications that people have shifted. I don't think the market's as long dollars as say the futures exchange data suggests because I think there's still a reluctance to buy it. But I think the market's beginning to think about the dollar in a way it hasn't thought about the dollar since the beginning of the Trump administration.

[Paul Sweeney]

Greg Gibb had a beautiful treatment on Alan Greenspan and he was talking about how Alan Greenspan lectured him on Newt Vixel, an iconic Swedish economist, just definitive in framing out foreign exchange before Mundell and Doorn Bush. And I'm given all the people that went to Harvard, okay, we're not talking Yale here, Stephen. And the answer is the real rate matters. What does the inflation adjusted interest rate right now say about our dollar's future?

[Stephen Englander]

That it could be positive.

[Paul Sweeney]

And they said, I agree, I agree.

[Stephen Englander]

What you've seen is that real interest rates have moved up to like the highest levels, you know, in recent years.

[Paul Sweeney]

Up against resistance. Fine. Yeah.

[Stephen Englander]

And it could go higher. And the key is going higher for good reasons. Coming back to Wixel, the idea being that the equilibrium real interest rates reflects the return to capital.

[Paul Sweeney]

Right.

[Stephen Englander]

And a positive return to capital attracts capital. So the US is like a hedge fund. We borrow from places that save and we, we invest it.

[Paul Sweeney]

I'm going to suggest this is nowhere in the zeitgeist. This is John riding 101, Bear Stearns now at Breen. Stephen Englander, with all your work at Citigroup and now holding court at the Standard Charter Bank. Higher interest rates, higher real rates is a vote of confidence for the right

[Stephen Englander]

reasons because it reflects a positive productivity shock, a positive supply shock. It would be if you had higher real interest rates because the deficit was getting even worse and there was no prospect of it going down. It could be exactly the opposite. And we've seen that in Japan, we've seen that in the UK from time to time. But when it's being driven and it's like your equity guys having smiles on their face because yes, real interest rates are higher but profits growth is matching that, so it's perfectly fine. But it brings capital in.

[Paul Sweeney]

Yen at 162. What's the bank of Japan thinking?

[Stephen Englander]

Praying for rain. Look, I think they have a problem. I mean, the BOJ looks dovish. The economy doesn't look great, it doesn't look terrible. There's nothing exciting there. And you can see in the market that this is kind of technical, but the sort of market is pricing the probability that the yen goes down at very low levels. Right now the volume, the downside for dollar yen is really low. So they don't think it's got anywhere to go to.

[Paul Sweeney]

The downside, I think our audience intuitively understands weak currency, not good domestically. I saw a blurb of bankruptcies in Japan are terrible. You just mentioned the economy's all that good. Can they come in and intervene for the third time? And as Doorn Bush lectured us, do they have to do it with courage in a sterilized intervention where they adjust the intervention through the domestic economy?

[Stephen Englander]

You know, I think it's getting harder and harder and half the market is waiting for them to Come in so that they can sell the yen when it goes from 162 and change to 158 and change. So they have to defeat that market mentality.

[Paul Sweeney]

How do they do that? They can only do it sterilizes the way I was lectured.

[Stephen Englander]

Well, if they do it in a way that allows Japanese interest rates to go up, maybe that's going to help. But it's clear that the BOJ that's, that's not where they are right now. And 162 looks cheap for the yen. But we've been here for a while and the question you have to ask is what brought us here and what's keeping us here? And is anything changing? And there's massive capital outflows.

[Paul Sweeney]

What is your market? What is the currency market? How has it responded to this new Fed chairman? We've now heard him speak twice. We've seen the minutes. What's your market saying about this new Fed chairman?

[Stephen Englander]

I think they're giving him the benefit of that. As the fixed income market, I'm a little bit more cautious on how hawkish he's going to be. But I think that the FX market is saying, okay, he said all the right things. Let's see what the follow up is going to be.

[Paul Sweeney]

Can I do one like an audible Steve Englander kind of wacko thing? So if I'm in Singapore dollar Chinese renminbi. I made a huge move strong Sing dollar and I got Chinese finally has come back around and I got the yuan, I guess doing better right now. Do you just assume it migrates back to this center tendency? Do you assume, I mean, which way does that cut now? Renminbi or something like Sing$.

[Stephen Englander]

You know, both have been driven by different things. Like the Sing dollar is sort of like an index of Asia currencies, a broad index. It moves kind of. It's very typical for an Asian currency and it's moved up and down with oil prices and with optimism and so on. Renminbi has been driven by more specific things. Huge trade surplus. The Chinese determined to show a steady hand in fx. Right now, we don't think both of them are going to go anywhere very fast, but depending on, you know, if things change, that can change. But the right, right now it's not a clear picture what's going to be the driver for that cross to, to change direction.

[Paul Sweeney]

I just want to give a window into his day job with Stephen Englander. Actually it does. It's great. I mean on the cross rates, there's no one close on Sing dollar you won or any of the rest of it as well. Stephen Englander definitive at the Standard Charter Bank. Thank you so much. Stay with us. More from Bloomberg Surveillance coming up after this.

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[Paul Sweeney]

As you say, Leslie Balti Guzman only show up when there's a red headline out of the Bloomberg. There's like headlines there in amber and if it's like an important headline, it's in red. This is 20 minutes ago. Cutter pauses push for quick LNG ramp up after tanker attack we get luckily lucky. The expert how behind is Qatar in a rebuild?

[Leslie Balti Guzman]

Thanks for having me, Paul. Tom so it's, you know, a setback because a few weeks ago Qatar was already warning its customers that it could leave the force measure by August, September, and some of Qatar's priorities are going to be delayed. And what we're seeing is that there is still a sword of Democrats hanging over the economies of the Gulf states and those kind of repeated cycles of conflict are going to damage the confidence for the customers and investors.

[Paul Sweeney]

Mrs. Keene just emailed in surveillance correction. Okay, I said Qatar and it is Qatar. Like it's Qatar. I don't know qatar. Leslie's correct. Mrs. Keene's correct. I'm wrong. What a shock.

So Leslie, I know in a recent research note you kind of lay out three scenarios for the war with Iran. And I'll summarize them. You know, comprehensive peace, back to war. And your scenario number one, which is no war, no peace, which is kind of where we seem to be, if that's in fact the case where we have ongoing discussions, ongoing skirmishes, what's that do to the global energy market?

[Leslie Balti Guzman]

So it creates a lot of uncertainties. You know, when you look at demand supply, demand balances and prices are going to remain volatile. We've seen already for lng, gas prices, jkm, TTF going back up yesterday and the day before with the series of attacks. So it's a lot of uncertainties however, we've seen that following the short MOU that we've had so far, prices have come down, market has relaxed and so it's kind of the market restores its confidence pretty fast.

[Paul Sweeney]

Yeah.

When you look at your world of natural gas and lng, do you say that over time they can solve Hormuz? Just with pipelines, infrastructure doing it the old way.

[Leslie Balti Guzman]

So I think it's easier to do for the oil side. And last time I was here I mentioned, you know, peak Hormuz, maybe, you know, Iran has less, has used its stronger card, you know, one once and for all. On the LNG side, it's more complicated for the UAE and Qatar can't do a pipeline. There are not that many alternative. There is a small pipeline from Qatar to the uae, but it's never wanted to be expanded. And however those companies, those countries are going to look for diversification of their portfolio, buying equity stakes and having supply elsewhere out of this trade. But for now, for their molecules inside the Strait, things are very complicated.

[Paul Sweeney]

Before the war, the Strait of Hormuz was open for all traffic. And I think we all just assumed that was the way. We can't make that assumption anymore, can we? I mean, going forward, I don't think we can ever. If I'm an insurer, I'm never going to consider the Strait of Hormuz completely safe like I did before the war. How does that impact A, is that true? And B, how does that impact kind of getting molecules out of there?

[Leslie Balti Guzman]

Yeah. So I think unless, you know, we have this scenario of resuming the war and have very targeted objectives and you know, this idea of finishing the job that some Gulf states, you know, really wanted at one point during the war because they knew that as long as you have this bully or your GC in control, it's going to be really hard to restore the confidence of investors. And you know, even if some Gulf countries are going solo right now and are trying to placate Iran and having some kind of non pact aggression, bilateral agreements, you never know what's coming next tomorrow. You know, we know from history that those non aggression pact never last.

[Paul Sweeney]

Where was one final question. Where does the LNG from the Persian Gulf go? I think our audience perceives the oil goes around, goes around. India goes through the Straits of Malacca to Asia. Same thing with their LNG.

[Leslie Balti Guzman]

So about 70% of Qatari LNG is heading to Asia, about 25% to China. So those are, you know, the critical

[Paul Sweeney]

message is there's no other way to get it. It's got to get out.

[Leslie Balti Guzman]

So the most impacted are the emerging markets in Southeast Asia because they are the closest and Qatar was, you know, for them they're, they're right only supplier for some of them, Bangladesh, Pakistan, India, like the main supplier.

[Paul Sweeney]

Have you been to Qatar?

[Leslie Balti Guzman]

I've never been to Qatar.

[Paul Sweeney]

Okay. Like they ran and they're not Dubai, like Dubai's been really quiet the last couple of days. Yeah, this is up the Persian but

I think Qatar suffered from what all the reporting I've seen some, some serious damage.

So when the president United States says we're going to get rid of Khaj island, we're going to take over cars island this island off Iran up by Kuwait and Iraq. How do you respond to that as an expert?

[Leslie Balti Guzman]

So you know, at one point when we were thinking about, you know, this idea of finishing the job and the different targets that the US Military could go after, you know, critically was to remove excess of money revenues to the IRGC because they are the one benefiting from the oil revenues. You know, that's their pocket money. Then they buy more weapons and they continue the cycle of violence. So you know, this is one of the targets to really put an end to the money generation Cash machine for the irgc.

[Paul Sweeney]

Thank you. Can you come back when we have other red headlines.

[Leslie Balti Guzman]

Thank you.

[Paul Sweeney]

Thanks for well timed enough about it. Leslie Paul to Guzman. Just wonderfully encyclopedic liquefied natural gas and of course all of that within the Persian Gulf. 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 podcastoffer to learn more.

[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.

[Paul Sweeney]

This is an incredibly important discussion for global Wall Street. She's the only one I know who's ever read cover to cover White Sandy in of Fried. Joining us from the CFA Institute, Sandy Peters with stunning prodigious chops from those chartered financial analysts. Full disclosure, I'm a CFA over to what I'm not which is a CPA as well. Can American companies hide behind twice a year accounting versus every 90 days?

[Sandy Peters]

Well, we say no. We CFA Institute has supported quarterly reporting since the 1950s when Benjamin Graham was on our corporate reporting committee and we have, we recently did a survey to look at what our investor members think about quarterly reporting.

[Paul Sweeney]

What do they think?

[Sandy Peters]

They think that two thirds of them believe that quarterly reporting is essential, that we need to remain in remain doing quarterly reporting.

[Paul Sweeney]

Where are you on this, Paul?

I grew up on quarterly's, but I know our friends in Europe have semiannual and they swear by that over there. What are the folks in Europe? Why did they do it in Europe? Semiannual, I guess. What's the advantage?

[Sandy Peters]

Well, you know, our survey was global and we wanted it to be global because investors invest globally, invest in the US and we wanted to check whether our members supported quarterly reporting even in semiannual jurisdictions. And they did. Okay, Right. So I think there is a lot of notion of it works in those markets, but those markets are actually much smaller. We included in our report sort of a summary of that. They have different continuous reporting requirements than the voluntary quarterly reporting we might have here in the US and you know, just generally investors want more timely information.

[Paul Sweeney]

Okay, what does corporate America say here? What do they want to do? Presumably it would be reduce my cost if I didn't have to report so often.

[Sandy Peters]

Well, yes, I mean that's been the narrative that it will decrease costs, increase the number of public companies and result in capital formation. But the SEC's economic analysis really doesn't strongly illustrate that. They illustrate that the economic analysis will save about $200,000 per company, but they don't actually quantify any of the cost to investors of not having that information.

[Paul Sweeney]

You're talking to somebody saying you flunked equipment leasing three times on the exam. I went down. Thank God there wasn't a CFA level 4. Which accounting statement is most fungible from 90 days to 180 days? The balance sheet, the income statement or the cash flow statement?

[Sandy Peters]

Well, we, we always say that the cash flow statement is the most important statement. Then the income statement and the, and then the balance.

[Paul Sweeney]

So what happened? Let's go to that. Let's go to free cad. There was an example where everybody did it and we all flipped. Our answer at the end level 2 exam and was direct indirect cash flow. And the clouds parted and I actually passed on the cash flow statement. How would you hide behind 180 days versus 90 days?

[Sandy Peters]

Well, the challenge will be that the SEC proposal allows you to voluntarily elect semiannual reporting or retain quarterly reporting. So the issue is if you elect semiannual reporting and you don't do quarterly reporting, maybe you'll do a press release to keep the insider trading.

[Paul Sweeney]

That's what European companies do.

[Chase Sapphire Reserve Business Advertiser]

Right.

[Sandy Peters]

And so the issue is what will the disclosure be at that quarterly? Because many companies, investors are asking companies, would you go, would you retain quarterly reporting? And they're saying yes, but investors aren't asking another report. Second, very important question, which is when you say you're still going to do quarterly, what does that mean? Are you going to still file a 10q or are you going to do an earnings release and what is it going to include? Because most earnings releases don't include a statement of cash flow today.

[Paul Sweeney]

Yeah, I guess that's right. You know, you don't get that till

[Sandy Peters]

you get the 10Q in many cases. Yeah. Some companies do it simultaneously.

[Paul Sweeney]

Major shout out. Apple kills with their clarity. Yeah, they're at 4:15pm Wow.

I don't know. What are the, what's the counting this, you know, the CPAs, the KPMGs of the world, what are they saying about this?

[Sandy Peters]

Well, you know, they're the comment letters were just due and there's been about 70,000 comment letters because there have been several campaigns, keepit quarterly.org, as well as Wall street bets that have that have caused a lot of individual investors to say they don't want to move to semiannual reporting. So it's actually so many letters have been coming in just they're very delayed in posting them and it's hard to find what some of the organizations have said. The accounting firms have been somewhat supportive in their commentary and not many companies are actually commenting. Exxon commented and supports semiannual reporting, but many others.

[Paul Sweeney]

Exxon wants semiannual reporting.

[Sandy Peters]

Well, they didn't say what they would do exactly, but they, they have, they are supportive of the proposal.

[Paul Sweeney]

You I just don't get how American companies can be like French.

I mean, the pitch simply is for quarterly is where the US Market is the deepest capital markets in the world in part because of the transparency. And if you sacrifice some of that transparency, perhaps you sacrifice some of the vibrancy of the US Capital markets. Is that kind of the argument?

[Sandy Peters]

Exactly. And we think this might be a very expensive experience or experiment.

[Paul Sweeney]

We give precious time left. I got eight ways to go here. I'm going to stay on this theme. Sandra Peters with the CFA Institute. My assumption of this, and you're too young to remember this, but I remember when earnings were revenues, earnings move on in the back page of the Wall Street Journal.

Yeah.

Warren Buffett taught us along with Mr. Graham to read the damn notes. And the answer is this whole concept is for people rush, rush, rush in the financial media where adults who actually read the 10 whatever and read the notes enjoy the 90 day scrutiny. There's like two subsets out there, isn't there?

[Sandy Peters]

Yeah. I think that that scrutiny is particularly important to your comment on the deepest and most liquid capital markets. Right. We won't have. In a quarterly reporting regime or a voluntary quarterly reporting regime. We won't have those notes.

[Paul Sweeney]

Right.

[Sandy Peters]

Most likely we won't have those notes. We don't know what companies will actually produce. So, you know, back in 1950, we drove, we dove into our archives and looked at what we said. And the things that they were saying are the things that investors would still say today about the need for more timely information. And it's actually really remarkable. And I wrote an article about this months ago about how the SEC would propose moving to having less information in a world where developing the information reporting it is, has never been more or less costly.

[Paul Sweeney]

We gotta go. But would you tell Bob Arnott and Cam Harvey their essay and the New Financial Analyst Journal probably is my essay of the year. I mean, I'm up here.

[Sandy Peters]

Yes.

[Paul Sweeney]

But folks, the research they're doing is jaw dropping and it's a growth in this thing. I'll cover it this fall a lot. We'll have Cam Harvey back.

Sure.

A good friend of Paul's. And we'll get Mr. Anat in here as we Cam. But I just can't say enough about the thinking of value versus growth. Just the grunt work of Wall street that doesn't get enough coverage. Can you come back? Are you in Charlottesville?

[Sandy Peters]

No, I'm in New York. But you know, it's. There's also the SEC is doing a whole series of other reductions in disclosures that we need to zoom out and talk about that.

[Paul Sweeney]

What is it?

[Sandy Peters]

They're doing a whole series of reduction of disclosures for newly public companies as well as revising disclosures related to regulation.

[Paul Sweeney]

SK, it's your fault SpaceX has gone down.

[Sandy Peters]

Thank you.

[Paul Sweeney]

Thank you so much for the CFA Institute.

[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 Bloom Bloomberg terminal. The Bloomberg this Weekend podcast. News, politics and the lighter side of Bloomberg. The most coveted cosmetic enhancement in Asia

[Paul Sweeney]

right now are elf ears.

[David Lebo]

Elf ears?

[Leslie Balti Guzman]

Yes.

[Bloomberg Host]

People are getting injections to enhance their ears. I really don't need anything else to

[Sandy Peters]

learn to be self conscious about that.

[Paul Sweeney]

This is not something I needed to

[Bloomberg Host]

have on my radar. The Bloomberg this Weekend Podcast. Subscribe today on Apple, Spotify or wherever you listen.