Episode summary
Bloomberg Surveillance TV: September 18th, 2026 | Bloomberg Surveillance
Bloomberg Surveillance
· · 21 min · Hosts: Tom Keene, Paul Sweeney, Lisa Mateo, Michael Barr · Guests: Nadia Lovell, Aditya Bhave, Roland Lescure
Summary
Stocks were mixed after their strongest day in more than a month, but the first guest argued the rally still has room to run because earnings, not the Fed, are driving the market. The guest said near-term volatility is likely as rate hikes begin, yet expects only a shallow pullback because fundamentals remain strong, with nearly 30% EPS growth in the latest earnings season and forecasts of 25% EPS growth this year and 14% next year. The guest also said the market has already repriced some of the tightening risk, with valuations compressing from 22 times to 19 times.
The second guest, from Bank of America, took a more hawkish line and said the Fed should keep hiking until policy is clearly restrictive. The guest expects 75 basis points of tightening across September, October, and December, arguing that a midcycle adjustment is appropriate and that a booming nominal economy creates room for more demand-driven inflation if the labor market keeps strengthening. The guest warned that if unemployment falls through 4%, wage inflation could reaccelerate and push rates as high as 5%.
The French finance minister focused on Europe’s bond selloff and France’s widening spread versus Germany, saying the market is reacting to global rate pressure as well as France’s budget problems. The minister defended the government’s plan for 54 billion in spending cuts next year, said a 5% deficit goal for 2027 is ambitious but realistic, and reaffirmed the 3% deficit anchor for 2029 while stressing that the ECB should remain independent.
Key takeaways
- The guest from UBS said earnings, not Fed policy, are the main driver of equities and expects only a shallow pullback.
- The guest from UBS sees 25% EPS growth this year and 14% next year, with broader earnings participation beyond AI names.
- The Bank of America guest expects 75 basis points of hikes in September, October, and December and says the Fed should keep going until policy is restrictive.
- The Bank of America guest warned that unemployment below 4% could reignite wage inflation and push rates toward 5%.
- The French finance minister said France will announce 54 billion in spending cuts next year and is still targeting a 3% deficit by 2029.
Notable quotes
“earnings, not the Fed, are driving this market. Another rate hike would be a speed bump, not a stop sign by the pullbacks”
“No, we're not expecting a pullback. Of course, you know, we've seen at historically at the start of a hike in cycle that equity markets tend to struggle a bit”
“We think 75 bips, but the sooner you do it, the more likely it is that you can stop at 75”
“If that goes through 4%, I think the risk rises significantly that then wages pick up and then you're talking about a full-blown demand boom”
“We announced yesterday 54 billion spending cuts for next year. It's a big announcement. It's a big effort”
How the episode opens
Bloomberg Audio Studios podcasts radio news. This is the Bloomberg Surveillance Podcast. I'm Jonathan Pharaoh along with Lisa Abramitz and Amarie Hordern.
Join us each day for insight from the best in markets, economics, and geopolitics. From our global headquarters in New York City, we are live on Bloomberg television weekday mornings from 6:00 to 9:00 a.m. Eastern.
Subscribe to the podcast on Apple, Spotify, or anywhere else you listen. And as always on the Bloomberg terminal and the Bloomberg Business app. We begin this hour with stocks mixed following their best day in more than a month.
Nadia level of UBS remaining bullish, writing, earnings, not the Fed, are driving this market. Another rate hike would be a speed bump, not a stop sign by the pullbacks. Nadia joins us now for more.
Nadia, good morning.
Good morning. — Some breaking news from you. Thank you for that. — My my Bloomberg is lighting up. I love that. You deserve the love. Of course you do. — A — Let's mark the birthday fireworks. Let's talk about this market. You expecting a pullback?
No, we're not expecting a pullback. Of course, you know, we've seen at historically at the start of a hike in cycle that equity markets tend to struggle a bit. And so we do expect some near-term volatility, but at the end of the day, as we noted, it's really the earning story that's going to drive this market.
And fundamentals remain really strong. look at the most recent earning season where we approach almost 30% um EPS growth and when we look out for the rest of the year we think that you this is easily a year of 25% EPS growth and next year 14% so above longer term trend and so we think that that's what the market is going to anchor to yes we have seen some pressure already on valuation year to date so I think as you noted earlier a lot of this is somewhat priced in in terms of the uh uh uh increase um rate um and bond yields you've seen the multiple come in from 22 times at the start of the year to now 19 times.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- global equity strategy
- us economics
- market outlook
- macro policy
- world markets
Companies and tickers mentioned
- UBS
- BAC
- UBS
- Bank of America Securities
Watch the episode
Watch “Bloomberg Surveillance TV: September 18th, 2026 | Bloomberg Surveillance” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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