It's A New World Order For Markets | Cameron Dawson

Alphabet

Across the shows: 5 speakers in other episodes, 3 bullish and 2 bearish calls, past 30 days

• Cameron Dawson · NewEdge WealthBullish

  Google's net-cash position and 30-40% cloud growth mean higher rates are unlikely to deter its AI spending.

  Google has a net-cash position, so it is not dependent on debt markets. Its cloud business is growing 30-40%, which gives it strong earnings capacity. Dawson argues that even a 100-300 basis point rise in rates is unlikely to deter it from spending, which makes it a relatively resilient AI spender. She also notes that the cloud revenue growth in the sector largely comes from frontier labs, which adds some uncertainty about the revenue side.

  “Does it really deter them from spending when their cloud business is growing 30, 40%? Maybe not.”at 7:35

Meta Platforms

Across the shows: 10 speakers in other episodes, 13 bullish and 4 bearish calls, past 30 days

• Cameron Dawson · NewEdge WealthBearish

  Meta's large off-balance-sheet leases make its AI spending sensitive to the higher cost of capital.

  Meta has moved a lot of its financing off balance sheet through leases, a practice Dawson says it has used heavily. Those leases fund its AI build-out and are tied to rates. Because they sit outside the balance sheet, rising interest rates feed through to its cost of spending. Dawson raises this as a reason Meta is more rate-sensitive than its cash-rich peers, so the cost of capital matters more for its AI capex.

  “With all of these leases that they've kept off the balance sheet. It does make them sensitive to the higher cost of capital.”at 7:35

Oracle

Across the shows: 7 speakers in other episodes, 0 bullish and 6 bearish calls, past 30 days

• Cameron Dawson · NewEdge WealthBearish

  Oracle is among the weakest hyperscale balance sheets, so rising capital costs will weigh on its AI spending.

  Dawson contrasts the weakest hyperscalers, citing Oracle, with strong balance sheets such as Google's net-cash position. The AI build-out is being funded with more debt, so higher interest rates and a rising cost of capital matter most for the weaker players. Oracle is placed at the fragile end of that spectrum, so its ability to keep funding AI capex is more exposed to the financing environment.

  “And there's a big gap between the weakest players like an Oracle of the world and a strong player like a Google who has a net cash position.”at 7:35

Micron Technology

Across the shows: 1 speaker in other episodes, past 30 days

• Cameron Dawson · NewEdge WealthBearish

  Micron's gross margin is the key line, and capacity additions and Chinese competition will pressure memory prices.

  Micron is adding capacity, and Chinese competition is already causing wobbles in the stock. Dawson says adding capacity to a relatively commoditised business typically pushes prices down, which lowers gross and operating margins. Micron guided to stable gross margin through 2027, but Dawson argues the memory cycle is moving toward balanced supply and demand. Micron's gross margin is the single line that will show whether that shift is happening, and the adjustment is likely to be painful.

  “They themselves Micron is adding capacity. Anytime you add capacity into any kind of relatively commoditized business, you typically do see downward pressure on prices”at 17:47

Microsoft

Across the shows: 2 speakers in other episodes, 2 bullish and 0 bearish calls, past 30 days

• Cameron Dawson · NewEdge WealthUncertain

  Microsoft's backlog is concentrated, with 40% from OpenAI, so it depends on OpenAI's growth.

  Microsoft's backlog is swelling but about 40% of it comes from OpenAI. Whether that backlog converts to revenue depends on OpenAI's ability to keep growing revenue at a very fast pace. That makes Microsoft's large spending exposed to one counterparty, which Dawson says matters. Her view is that the concentration risk is significant, but she does not state a direction for the stock.

  “where 40% of their backlog comes from OpenAI, OpenAI's ability to be able to continue to grow their revenue at a parabolic pace is effectively the determinant as to whether or not that backlog comes to fruition.”at 22:33

US Treasuries & yields

• Cameron Dawson · NewEdge Wealth

  The 40-year downtrend in yields is over; a distinct uptrend means higher cost of capital will persist.

  Yields fell for about forty years from 1982 to 2022, and that downtrend is now over. The market has moved into a distinct uptrend that has persisted. Dawson uses the technical view that the 10-year could reach 6%, citing a strategist who has made that call for months on technicals alone. Short term, yields are overbought after a rapid move, so some consolidation would not be surprising. Record Treasury inflows last week, larger than 2022, and heavy call buying in TLT suggest people are buying the dip. The yield rise is not driven by inflation breakevens, which remain subdued, so the move reflects real rates and the uptrend, not inflation fears. Her conclusion is that the higher cost of capital regime persists even if yields pause.

  “I think it's really, really, really vital to appreciate that the downtrend in yields that persisted for forty years from 1982 to 2022 is over. It is dead. It is over.”at 1:00

• Cameron Dawson · NewEdge Wealth

  Bonds will only get a safety bid if equities stumble, because strong stocks reduce demand for bonds.

  Quantitative easing was meant to push investors out the risk curve and support markets and consumption, but Dawson says there is little evidence of investors shifting capital from equities to credit now. Equity resilience means there is no flight to safety, so investors see no need for bonds. If a meaningful equity stumble occurred, perhaps idiosyncratic to AI, investors would lower their return expectations from equities and move into fixed income. Higher yields could then draw in capital through a safety bid, but only after equities weaken.

  “you probably do get a bid for bonds in that time because people would say, you know what, I don't have the same kind of return expectations from my equities.”at 34:39

• Cameron Dawson · NewEdge Wealth

  Rising yields reflect heavier bond supply plus weaker demand; Fed balance sheet could absorb issuance in recession.

  Higher yields have come from supply rising while demand has fallen. Heavier issuance is adding downward pressure on bond prices. Demand has weakened because inflation concerns have grown, and growth and equity markets have held up, so investors feel less need for safety. Bonds now pay far better than when yields were under 1% in 2020, so they are a better diversifier against growth risk. The risk is that a weaker economy would blow out deficits and raise supply, weakening bonds' diversification role. Cameron argues that the Fed likely uses its balance sheet in a recession to absorb much of that issuance, as it has in past recessions. Today it cannot do so because liquidity is abundant, growth is above trend, employment is at trend and inflation is above target. The overall answer is a combination of rising supply and falling demand.

  “Higher supply has certainly added more downward pressure on prices, higher yields. But we're also in a world where demand has arguably fallen because of inflation concerns”at 41:49

US stock market outlook

• Cameron Dawson · NewEdge Wealth

  Breadth may return during earnings season as laggards snap back and seasonality turns into a tailwind.

  The S&P 500 has been resilient because the top cohort, including the Magnificent Seven at about 34% of the index, has been strong, masking weakness beneath the surface. In September, anything outside tech, AI capex and Mag Seven lagged badly, including industrials, banks and consumer stocks. In early October those areas began to snap back from oversold levels, and seasonality has moved from a headwind in September to a tailwind in October. She says breadth could return over the course of this earnings season, but she frames it as a possibility and raises the question of where the market goes from here.

  “So it's possible that at least over the course, as we move through this earnings season, we could see some of the breadth return to this market.”at 2:32

• Cameron Dawson · NewEdge Wealth

  Consensus 2027 earnings growth of about 15% looks too high, with 2026 one-time gains unlikely to repeat.

  S&P 500 earnings are growing about 35% in 2026, and consensus has growth falling by more than half to about 15% in 2027. Dawson expects slowing growth as strong numbers meet tough comparisons, which leaves less room to absorb macro headwinds reflected in valuations. The S&P 500 multiple has already fallen from 23x to 19x as the 10-year yield rose from under 4% to above 5%. Parts of the 2027 estimate look too high: 1Q and 2Q 2026 contained large one-time gains at Google and Amazon that likely do not repeat, so the street is building growth off inflated bases. Earnings also reflect capitalised AI investment costs, which flatter current profits. She says the market will be driven by earnings revisions, and whether the $420 per-share 2027 figure is right will determine the market's direction.

  “There are parts of that estimate that look way too high to me.”at 13:10

• Cameron Dawson · NewEdge Wealth

  Quality equities stay the focus; recent junk, beta and momentum rallies are not durable compared with steady quality.

  Cameron says her firm keeps focusing on quality investing, mostly in equity markets, through cycles. She points to a year of junk rallies, beta rallies and high-momentum rallies in US equities. She describes the environment as a slow-and-steady race, where steady quality wins. The support for this is observational, with little quantitative evidence.

  “We think that that sticking to our knitting on quality investing, mostly within the equity markets, continues to be our key focus through cycles.”at 43:39

Credit markets

• Cameron Dawson · NewEdge Wealth

  Credit is cracking among lower-quality borrowers, though high-yield spreads show no acute stress yet.

  Higher cost of capital is showing up as cracks in credit, mostly among lower-quality borrowers. CCC spreads are over 10%, the junkiest part of the bond market, though that is the spread rather than the all-in yield. High-yield spreads have widened to about 346 basis points, which is not a sign of acute stress like Liberation Day, COVID or the SVB episode, but they are off their lows. Small caps are showing weakness because they carry more floating-rate debt, higher leverage and rely on funding markets. Dawson sees the pressure concentrated in weaker borrowers rather than systemic, while the strongest balance sheets are less immediately rate-sensitive.

  “And so we're certainly seeing it in things like CCC credit spreads that are now over 10%.”at 7:35

• Cameron Dawson · NewEdge Wealth

  New York municipal bonds offer above-10% tax-equivalent yields for top-bracket taxpayers, so her firm favours them.

  Cameron says her firm is talking to high-tax-state clients about municipal bonds. For a top-bracket New York taxpayer, the tax-equivalent yield on New York munis is above 10%. She acknowledges the credit and duration risks. Even so, the yield makes munis attractive for hitting portfolio total-return targets. Her firm is making sure cash allocations capture higher yields, and may extend duration slightly to lock in these yields.

  “You can't ignore the fact that if you're a New York top bracket taxpayer, tax equivalent yield on New York munis are above 10%.”at 42:56

Market sentiment, positioning & volatility

• Cameron Dawson · NewEdge Wealth

  Financial conditions remain as easy as 2021 because equity volatility is suppressed, so tightening is not yet happening.

  Despite higher rates, the Bloomberg Financial Conditions Index is as easy as in 2021. Its components are equity volatility, equity valuations, credit spreads, short-term funding liquidity, the dollar and interest rate levels. Equity volatility is very low, which Nomura attributes to investors selling call options for income, suppressing volatility across equity and options markets. Short-term funding liquidity remains well contained. The mix is still stimulative because higher rates have not yet reduced demand for or supply of capital. Capital markets are open and functioning; the cost of capital is higher but liquidity is not scarce. She says it has not been the right call to expect tighter conditions because they keep getting easier, but tightening would bring higher volatility, lower returns, wider spreads and an IPO window that sputters.

  “financial conditions in aggregate, the Bloomberg Financial Conditions Index is as easy as it was in 2021.”at 7:35

AI infrastructure & data centers

• Cameron Dawson · NewEdge Wealth

  Hyperscalers are taking on more debt to fund AI capex, so free cash flow will go deeper negative in 2027.

  Hyperscaler balance sheets are becoming more indebted, mostly to fund AI capex. They will have to issue even more debt in 2027 and their free cash flow will turn more deeply negative. The mechanism is a rising cost of capital, which weighs on these firms through debt issuance and leases. The strongest players are less immediately sensitive to rates, and Google's cloud business growing 30-40% suggests it can keep spending through a 100-300 basis point rise. But Meta uses off-balance-sheet leases that make it sensitive, and weaker players such as Oracle face the most pressure. Dawson concludes that rate sensitivity varies across the group rather than being absent.

  “We know that these balance sheets are becoming more indebted mostly on, of course, to fund AI CapEx spending. They're going to have to issue even more debt in 2027.”at 7:35

Frontier AI labs & model race

• Cameron Dawson · NewEdge Wealth

  Frontier labs burn cash and will need more fundraising, leaving their growth sensitive to capital markets.

  Much of cloud revenue growth comes from the frontier labs, which are burning cash. Their costs are growing as fast as their revenues, so they need incremental fundraising to keep growing at their current pace. That makes them sensitive to the financing environment. If OpenAI and Anthropic must raise capital, the IPO market has to absorb what they are selling. If they cannot raise capital or fill their own backlogs, the stress would cascade through the AI supply chain.

  “we know the frontier labs are burning cash, which means that they will require incremental fundraising in order to keep growing at the pace that they are growing. Their costs are growing as fast as their revenues.”at 7:35

AI chips & semiconductors

• Cameron Dawson · NewEdge Wealth

  Record semiconductor margins from memory operating leverage are unsustainable and need close watch in 2027.

  Semiconductor earnings are expected to grow over 100% in 2026, with margin expanding from about 30% to 46%, mostly from memory. Dawson says this is not a sign of AI productivity but operating leverage at cyclical, fixed-cost businesses, where demand exceeding supply lets them raise prices. Memory remains cyclical even if it is somewhat less so than before. Once supply catches up or demand slows, the same leverage works in reverse and produces operating deleverage. A slight revenue decline could then bring a large earnings drop. The cycle could still be strong for years, but the sustainability of record margins is the main risk to watch.

  “the unsustainability of some of these record margins is something that I think we have to pay very, very close attention to in 2027.”at 17:47

Open-source AI models

• Cameron Dawson · NewEdge Wealth

  Users may not need costly frontier models for most tasks, threatening frontier revenue growth.

  Dawson agrees with the idea that many AI tasks do not need the most expensive frontier models, comparing it to buying a Ferrari to drive for Uber. Model selection is a black box for most users, and token consumption is set by the user, which makes it hard to choose the right model. Headlines about people burning tokens on frontier models help the companies in the short run. The longer-term question is whether these business models can scale revenue faster than costs, and substitution by cheaper models is one of the big uncertainties.

  “Why would you buy a Ferrari to go be an Uber driver? You don't necessarily need that.”at 22:33

International equities

• Cameron Dawson · NewEdge Wealth

  South Korea's KOSPI, the beta trade on AI infrastructure, may be an early canary for peak AI growth.

  KOSPI in South Korea has been the beta trade on the AI infrastructure trade. Despite good Micron results and consumer-facing agents that should lift compute demand, the Korean market has broken down further. Dawson sees this as potentially the canary in the coal mine, a first signal that markets think growth is nearing a peak. That would not mean the cycle is over, but growth could be peaking, so it is a key indicator to watch.

  “is that potentially the canary [in] the coal [mine], the first shot across the bow of potentially markets saying, okay, we think we're closer to a peak.”at 27:10

AI bubble & tech valuations

• Cameron Dawson · NewEdge Wealth

  AI overbuilding and over-earning will be acknowledged, but AI stocks will peak before the fundamentals do.

  Dawson says the market will eventually look back and see that AI companies overbuilt and over-earned. The hard question is timing, since backlogs and orders can be cancelled and the 2000s showed how orders can evaporate. She expects a period of cognitive dissonance in which fundamentals keep improving while cracks appear beneath the surface, and stocks peak first. The point is that a price that does not follow fundamentals is a signal to re-underwrite the fundamentals. She is not yet willing to bet against the trend but is watching for evidence that capacity additions and backlogs are shrinking.

  “the hardest part about all of this is that the stocks are going to peak before the fundamentals.”at 27:10

US deficit & government debt

• Cameron Dawson · NewEdge Wealth

  A mild recession could push the US deficit from 6.5% of GDP back toward GFC-era 10% levels.

  The deficit already runs at about 6.5% of GDP. A mild recession would cut tax revenue and force countercyclical spending such as unemployment benefits, so the deficit could blow out. Cameron says it could return close to the 10% of GDP seen during the Global Financial Crisis. That would raise bond supply and weaken the case for Treasuries as a diversifier. She also notes that the Fed's balance-sheet capacity in a recession could absorb much of that extra issuance.

  “you're already running at a six and a half percent deficit to GDP. So you could have a very mild recession and see deficit to GDP potentially get back close to the GFC levels, which was a 10% deficit to GDP.”at 39:11

US rates & the Fed

• Cameron Dawson · NewEdge Wealth

  The two-year yield sits about 70bp above fed funds, signalling the market expects Fed hikes.

  Cameron explains that the shorter the maturity on the yield curve, the more it reflects expectations for Fed policy rates. The two-year yield reflects what the Fed will do over the next two years. Today it sits about 70 basis points above fed funds, which she reads as the market telling the Fed it is going to hike. Longer maturities are more determined by supply and demand.

  “So today's message from the two year is two years is about 70 basis points above Fed funds. And so it's saying, hey, Fed, you're going to hike.”at 41:20

Private equity

• Cameron Dawson · NewEdge Wealth

  Smaller PE funds selling into mega-fund bids and secondaries offer opportunity amid high valuations and low capital velocity.

  Cameron expects the cost of capital to stay high and velocity of capital to stay very low. Investors have plenty of dry powder but nowhere to put it because valuations remain high. Disruption in private equity opens opportunities in smaller funds that sell into large mega-fund upmarket bids. It also opens opportunities in secondaries and the lower middle market. The asset class as a whole has underperformed, but that has created attractive entry points for investors who look closely at individual opportunities.

  “the opportunity within private equity, we think, is to focus on smaller funds that are effectively selling into these big mega fund upmarket bids.”at 44:20