Bloomberg Surveillance TV: October 14th, 2026

Alphabet

Across the shows: 12 speakers in other episodes, 9 bullish and 4 bearish calls, past 30 days

• Cameron Dawson · NewEdge WealthBullish

  Alphabet can keep spending despite higher rates, with negative net interest expense and more cash than debt.

  Higher rates do not really hurt Google. Its interest costs have risen, but its net interest expense is still negative. It holds more cash than debt, so it can keep spending on AI capacity even in a higher-rate environment. Dawson contrasts this with frontier labs, which depend on outside capital raises.

  “we can look at a name like Google and say, hey, higher interest rates really doesn't impact Google. Their net interest expense is still... negative. They have more cash than they have debt. So they can continue to spend”at 5:47

Middle East & Iran

• Karen Gibson · Academy Securities

  US is likely reluctant to strike Houthis; another front strains resources and airstrikes may not suffice.

  Opening another front would draw on resources, though a third carrier strike group is heading to the region. Airstrikes alone may not be enough to make the Houthis change their attacks or methods against Saudi Arabia. Because the Houthis are only targeting Saudi-related vessels in the Bab el-Mandeb, there is also reluctance to get involved, since US involvement could expand their targeting to vessels linked to the US.

  “there are some reasons that I would understand that the administration might be reluctant to do that. One, opening another front on this theater would be a draw on resources... Two... whether airstrikes alone would be enough to compel the Houthis to change their attacks”at 11:47

• Karen Gibson · Academy Securities

  Diplomatic talks with Iran haven't moved the needle on major concessions; hard to gauge.

  Diplomacy happens in backrooms and lacks the observable signals of ships transiting or missiles being launched, so she has little insight into it. She is not sure the talks have changed Iran's willingness to make the significant concessions the US seeks. The market's apparent numbness to the talks may reflect that.

  “But the diplomatic talks, you know, I'm not sure that we've budged the needle on Iran's willingness to make significant concessions or certainly the ones that we seek.”at 15:28

• Karen Gibson · Academy Securities

  Iran's leverage over the Strait of Hormuz has lessened; shipping is near prewar volumes.

  Iran's leverage over the strait has eased because oil can still get out through dark transits, military escorts, overland routes and alternate paths. Shipping out of the area is, as she understands it, close to prewar volumes. That is part of why the market has responded to the strait less, even as the diplomatic picture is unclear.

  “I do think that the strait itself, its leverage has lessened somewhat on the Iranian side because of the ability to get oil out, whether that's, you know, dark transits, military escorts, overland, or through these alternate routes... we are, in fact, as I understand, shipping close to prewar volumes out of the area.”at 15:40

US stock market outlook

• Cameron Dawson · NewEdge Wealth

  Oversold non-leaders may bounce near term; 38% of S&P 500 names are 20%+ below highs.

  September seasonality looked fine on the surface, but there were stealth corrections underneath. 38% of S&P 500 names are still at least 20% below their all-time highs. Since those names are oversold, Dawson expects a bounce in the 'everything else' group as earnings season unfolds, which could be a catalyst for a broadening rebound. She tempers this: banks' reaction to results that were okay showed big intraday reversals in a group already down about 12% from mid-August highs, which she says is not necessarily encouraging.

  “Well, I think in the very near term, we can see a bounce in the everything else. Just because it got oversold... 38% of the names in the S and P 500 are still down 20% or more from their all time highs.”at 3:32

• Cameron Dawson · NewEdge Wealth

  S&P 500 can reach 8,000 by year-end at 19x 2027 earnings, but the path is more complicated.

  At 19 times the roughly $420 consensus for 2027 earnings, 8,000 is about today's valuation, so holding everything constant gets the index there. But consensus 2027 earnings have already been revised up about 16% this year, and she thinks most of that upside is behind us. She says forward returns for 2027 could be lower. Higher rates are a headwind to valuation, and widening high-yield spreads and a broadening of CCC spreads make it hard to argue equity valuations should rise. She counters that hedge fund positioning is light while households are all in, so a rally blow-off top is possible. Oil prices remain elevated and a further hike by year-end is possible.

  “So it really comes down to if we just don't change a thing, we get to 8,000, but that might be actually more complicated than it looks on the surface.”at 6:43

AI chips & semiconductors

• Cameron Dawson · NewEdge Wealth

  Semiconductor margins have expanded sharply and may not be sustainable as competition hits memory names.

  Semiconductor EBIT margins were 16% in 2025, about 42% in 2026, and are expected to reach 49% next year. Dawson questions how sustainable that is given the recent weakness. Semis trade at 19 times forward earnings, the low end of their range, and earnings estimates are still rising. She attributes the weakness to competition rather than capex outlook, because it is concentrated in memory names. ASML is holding up as a monopoly with a different market structure. Semis are about 19% of the S&P 500 and drove 35% of this year's earnings growth, so the margin question matters for the index. She says the outlook for 2027 and maybe 2028 earnings for semis is now in question.

  “Margins on the EBIT line for semiconductors have gone from 16% in '25 to 42% in 2026. They're expected to go to 49% next year, and I think the question given this weakness is how sustainable are those margins as we look into the out years.”at 2:26

IPOs, M&A & deal activity

• Cameron Dawson · NewEdge Wealth

  IPO count is down with proceeds concentrated in SpaceX; 2027 comps hinge on Anthropic and OpenAI listings.

  IPO capital raised is at a record, but the number of IPOs is down from 2025 because it has been concentrated in SpaceX. The question is whether Anthropic and OpenAI list and when. If they don't come out, that creates tough comps and may leave a gap that can't be made up in 2027. That is a risk for the broader market, given the S&P price target depends on continued activity.

  “the amount of capital raised within IPOs is at a new record, but the number of IPOs is actually down from twenty twenty five because it's all been concentrated really just in SpaceX. So now we have to ask the question of will we get Anthropic? Will we get OpenAI?”at 4:55

AI infrastructure & data centers

• Cameron Dawson · NewEdge Wealth

  Hyperscaler capex at risk: Microsoft's backlog is 40% OpenAI, and labs need capital to keep spending.

  Frontier labs drive hyperscaler demand. Microsoft's backlog is about 40% OpenAI. How much OpenAI can keep spending and growing cloud demand depends on its ability to raise incremental capital. So the hyperscaler capex forecast depends on whether frontier labs can keep raising money, which in turn depends on the IPO window for names like Anthropic and OpenAI.

  “you look at a name like Microsoft, 40% of their backlog is OpenAI. How much of OpenAI's ability to continue to spend and grow their cloud demand is dependent on their ability to raise incremental capital?”at 5:20

Market sentiment, positioning & volatility

• Cameron Dawson · NewEdge Wealth

  Hedge fund positioning is light while households are all in, so a blow-off rally is possible.

  Institutional positioning is still relatively light, with households very much all in on the market and hedge fund positioning light. That combination means the market could see a rally blow-off top as people chase into stocks. This is a counterweight to her view that forward 2027 returns may be lower.

  “if you look at institutional positioning, it still is relatively light. Households are very much all in on this market, but hedge fund positioning is light. So we could see some kind of rally blow off top certainly as people chase into the market.”at 7:40

US Treasuries & yields

• Cameron Dawson · NewEdge Wealth

  Bills already 23% of debt outstanding, leaving little room for Treasury to shift issuance toward bills.

  Bill issuance is 23% of debt outstanding. That is slightly below the COVID peak but well above where it used to be. If Treasury wants to cut back on 30-, 20- and 10-year issuance, it is unclear it has room to cut those and increase bills much further. That is the question she raises for next year's financing.

  “I would note that Bill's issuance is twenty three percent of debt outstanding. That's slightly below the COVID peaks, but that's certainly well above where it used to be.”at 8:24

US deficit & government debt

• Cameron Dawson · NewEdge Wealth

  Deficits will keep rising; midterms won't bring austerity, keeping bond market worried about supply.

  No candidate in the midterms is running on austerity or a balanced budget, so Dawson does not expect the election to rein in budgets. Deficits are high and will keep rising. Because the midterms are likely to reinforce this, the bond market will remain concerned about the supply of bonds coming to market. A debt ceiling fight could also mean a lot of spending, which adds to that supply concern.

  “I think we have to accept the fact that deficits are high and they'll continue to go higher, which just means that the midterms likely cement this idea that the bond market will continue to be concerned about supply of bonds entering the market.”at 8:24

Defense

• Karen Gibson · Academy Securities

  High-end air defense like Patriot and THAAD isn't enough; layered systems with cheaper counter-drone tech are needed.

  Saudi Arabia faces threats from three directions across a large territory with scattered critical infrastructure. The Houthis are using the Russia-Ukraine playbook of overwhelming defenses with cruise missiles and drones together. Spending on Patriot, THAAD and fighter aircraft is important but has not proved sufficient. The region needs a more layered air defense that includes cheaper counter-drone technologies, since high-end materiel alone is not holding.

  “The money that's spent on Patriot missiles or theater high altitude air defense, the THAAD systems, and the joint strike fighters, that's important, but it's not proved enough... They really need, as does the entire Middle East, a more layered air defense system that also can... Comprised of some cheaper counter drone technologies”at 14:41

US rates & the Fed

• James Bullard · Purdue University

  Fed's center expects one more hike by year-end, then a flat 2027; market reaction was overdone.

  The September dot plot shows a raise in September and one more by year-end, and it has the most forward guidance because it covers only the next two meetings. Speakers such as Waller and Williams are signaling the same. The committee's center wants to wait and see for 2027, which is why it has a flat outlook for that year. Rates are already up a lot, including longer-term rates, which helps the committee. Policy has changed sharply from earlier this year, when the market expected cuts. The committee feels comfortable waiting because it still believes much of the inflation will dissipate in the first half of 2027. Bullard thinks the market's reaction to a possible series of aggressive hikes was overdone.

  “the dot plot came out with, okay, we'll raise in September and we'll do one more by the end of the year... I think that's where the center of the committee is, and I think they want to wait and see for 2027, and so they've got a flat outlook for 2027.”at 19:03

US inflation

• James Bullard · Purdue University

  Fed can cut inflation aggressively without damaging the economy, as 2022–23 showed.

  The Fed is committed to its 2% target, but there is a question about how much inertia there is in inflation and how much action is needed. Bullard points to the 2022 and 2023 experience: acting aggressively and with purpose cut a lot of inflation without damaging the economy. He hopes the Fed can get that again, though it does not need to cause a recession every time, as long as it is aggressive enough to bring inflation back to target.

  “the lesson from 2022 and 2023 is that if you act, aggressively and with purpose, you can get a lot of reduction in inflation without damaging the economy, and and so, you know, hopefully they can get that again here.”at 23:01

AI bubble & tech valuations

• James Bullard · Purdue University

  AI is a bubble that will burst; capex exceeds past buildouts with little revenue justifying it.

  Bullard says there is not really a product or revenue stream on the table to justify the physical investment, except the hope that AI will bring radical change. Much more physical investment is planned, and the buildout is bigger than any capital buildout the US has seen, including railroads and canals. He describes it as a feeding frenzy that will come to an end, though the timing is uncertain and the air could come out slowly. He also notes open-weight models sitting on the sidelines, the fact that about 80% of answers come from 20% of the computation, and chips depreciating once stuffed into physical capital. He compares it to the internet boom, when rates were high toward the end and people said it had no effect until it did.

  “I think it's a bubble. I think it will burst at some point. Sometimes the air can come out slowly, so we'll see if that's what happens. But you shouldn't kid yourself. This is a feeding frenzy, and this is bigger than any capital build out that The US has ever seen, ever.”at 24:10

AI & jobs

• James Bullard · Purdue University

  AI will be a great technology that diffuses through the economy and lifts productivity, even as a bubble.

  Bullard expects AI to be a good bubble in the end and a great technology. He believes it will diffuse all the way through the economy and improve productivity. He ties this to the internet boom, which he also considers a good bubble, even though it was accompanied by high rates and a sharp reckoning at the end.

  “I think AI will be a good bubble in the end, a great technology, it will diffuse all the way through the economy, it will improve productivity, all of that will happen,”at 25:59