Episode summary
Geopolitical Risks and Market Uncertainty | Bloomberg Surveillance
Bloomberg Surveillance
· · 31 min · Hosts: Tom Keene, Paul Sweeney, Lisa Mateo, Michael Barr · Guests: Jim Caron, Stuart Kaiser, Peter Tchir, Oksana Aronov
Summary
The episode argued that strong nominal GDP growth is still the main support for equities, even as it pushes bond yields higher and makes duration less attractive. Jim Caron said the equity market is holding up because earnings and profit margins are tied to nominal growth, while higher yields are pressuring fixed income and pushing investors toward value and quality inside stocks. He framed the Fed meeting as more of a signaling event than a major policy shock, saying the market will care less about a small hike than about whether officials imply a one-off adjustment or the start of a broader cycle.
Stuart Kaiser said investors remain constructive but cautious because September brings a cluster of event risk: CPI, PPI, the Fed, and the election season. He said dips of 2% to 4% could get bought, and he pointed to broad earnings revisions driven by AI capex. He also noted that clients had recently begun buying upside on the VIX after a period of selling volatility.
Peter Tchir and Oksana Aronov were more skeptical on bonds. Tchir emphasized heavy issuance, global supply-demand pressure, and risks from oil and geopolitics, while Aronov said the front end of the curve still offers attractive carry and that hyperscaler debt issuance is crowding the market. Both argued that higher rates and huge AI spending are reshaping capital allocation across markets.
Key takeaways
- Jim Caron said nominal GDP-driven earnings growth is keeping equities resilient even as higher bond yields hurt fixed income.
- Stuart Kaiser said September event risk is high, but he expects dips of 2% to 4% in stocks to be bought quickly.
- Peter Tchir argued that global bond supply is pushing longer-dated yields higher regardless of the data.
- Oksana Aronov said the front end of the Treasury curve still looks attractive versus riskier credit, with 3-month bills near high-yield returns.
- Stuart Kaiser said AI capex is driving broad earnings revisions, with forward 12-month S&P earnings rising from 311 to 397 since the start of the year.
Notable quotes
“what's going to drive returns and what's driving returns right now is really factors that align very closely with nominal GDP growth”
“the markets have priced that there's a 60% probability that the Fed's going to hike rates um you know next week”
“I think any kind of reasonable dip, call it 2, 3, 4%, is going to get bought pretty quickly”
“I I think people are still relatively bullish, but the fact is there's a ton of event risk in September”
“I think people are, you know, this the story has been pretty well telegraphed, so people have money set aside”
How the episode opens
Bloomberg Audio Studios podcasts radio news. This is the Bloomberg Surveillance Podcast. Catch us live weekdays at 7 a.m. Eastern on Apple CarPlay or Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts or watch us live on YouTube.
We're back to school. Uh folks, it's Labor Day's over, the summer's over. Let's talk to some professionals here. And we started off strong with Jim Karen, CIO of Cross Asset Solutions. Boy, the people at Morgan Stanley that hand out the titles, they do a phenomenal job. They got just titles that you just can't imagine. He's a Morgan Stanley Investment Management. Jim, thanks so much for for joining us here. Um
Good morning. — As we kick off this final, you know, three months here, four months of the year, what's your top story here? what are you asking your teams to focus on or maybe what are your teams telling you they're focusing on?
So the top story for me in terms of how we look at multi-asset portfolios is what's going to drive returns and what's driving returns right now is really factors that align very closely with nominal GDP growth. Right? So effectively what we're getting is a lot of great topline growth in in the US economy.
Um, we've had some notable Wall Street analysts upgrade their uh 3Q GDP forecasts and even for all of uh all all of 2026. That is something that's going to drive earnings. That's something that's going to support earnings growth.
It's going to support profit margins. This is why the equity markets are holding up really, really well. But now, I've only told you half the story.
The other half of the story is what's going on in bonds.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- geopolitical risks
- market uncertainty
- duration and rates
- us equity trading strategy
- us bond issuance and labor market
Companies and tickers mentioned
- MS
- C
- JPM
- Morgan Stanley
- Citigroup
- JPMorgan Chase
- Bloomberg
- Academy Securities
Watch the episode
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Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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