Episode summary
Bloomberg Surveillance TV: September 24th, 2026 | Bloomberg Surveillance
Bloomberg Surveillance
· · 18 min · Hosts: Tom Keene, Paul Sweeney, Lisa Mateo, Michael Barr · Guests: Ohsung Kwon, Scott Singer, Ed Al-Hussainy
Summary
Stocks were under pressure as yields hit multi-decade highs, and the opening discussion framed the market as increasingly constrained by a 5% interest-rate world. A guest from Wells Fargo argued that the S&P 500 faces a negative setup because equity allocations are stretched versus bonds, earnings are already elevated, and lower multiples are likely even if profits keep growing. The guest said the downside for stocks is still roughly 5% to 10%, with oil and geopolitics acting as key swing factors.
The conversation then shifted to the Trump-Xi summit and the risk of frontier AI. A guest from the Carnegie Endowment for International Peace argued that the US and China need practical guardrails and permanent communication channels rather than a grand bargain. The guest emphasized domestic AI safety infrastructure first, warning that cross-border crises involving autonomous systems would require fast, reliable information-sharing.
Later, a fixed-income guest from Columbia Threadneedle said the bond market is getting into a buy zone and expects the Fed to keep tightening, with consecutive hikes through December as the baseline. That guest said higher rates are beginning to work through rates markets, not risk assets yet, and that tighter financial conditions are the channel to watch.
Key takeaways
- The Wells Fargo strategist said the S&P 500 could still fall 5% to 10% because the market is not adjusted to a 5% interest-rate regime.
- The strategist argued the 72% equity allocation versus 28% bonds is the highest gap since 1969 and implies lower future equity multiples.
- The Carnegie Endowment guest said the US and China need permanent AI-risk communication channels before any broader coordination is possible.
- The Columbia Threadneedle manager said the bond market is “getting in the zone” and sees the Fed delivering consecutive hikes through December.
- The fixed-income guest said tighter financial conditions are showing up first in rates and the dollar, not yet in risk appetite.
Notable quotes
“the level of interest rates doesn't really matter. It's really the volatility of rates”
“the allocation right now is not reflecting the 5% interest rate world, and I think that's the risk really”
“I think it has to happen. You know, it's clear that this is a super strategic technology that's going to power both economies”
“Right now, there is no permanent channel to discuss these AI risks”
How the episode opens
Bloomberg Audio Studios. — Podcasts, radio, news. — This is the Bloomberg Surveillance podcast. I'm Jonathan Ferro, along with Lisa Abramowicz and Amry Houghton. 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 lower and yields at multi-decade highs. Crude resuming its advance. Austin Kwon of Wells Fargo trimming his year-end target to 7,700 from 7,950. Writing oil has also been in the driver's seat for both stocks and bonds. Austin joins us now for more. Austin, good morning.
Morning. — What's the downside here? Still 5 to 10%?
Yeah, that's what we're penciling in. Um and I'm using the camp that the level of interest rates doesn't really matter. It's really the volatility of rates.
But if you look at the equity allocation today versus bond allocation, it's 72% versus 28%. It's at the highest level since 1969. And if you try to estimate what the fair equity allocation should be based on the cost of equity and the 5% interest rate, that number should be around 60%.
So that 12 percentage point gap, that's the widest level uh since 1969 again. And that gap has usually explained uh how the S&P is going to do versus the risk-free rate. And if you assume like a 7% uh EPS growth over the next 5 years per year, that basically the 12% basically implies 0% excess return on top of that 5% uh risk-free rate for the S&P.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- equities strategy
- china ai
- fixed income
- economy outlook
- world markets
Companies and tickers mentioned
- WFC
- Wells Fargo
- Carnegie Endowment For International Peace
- Columbia Threadneedle
- Bloomberg
Watch the episode
Watch “Bloomberg Surveillance TV: September 24th, 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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