Episode summary
Market Risks and Equity Melt Up | Bloomberg Surveillance
Bloomberg Surveillance
· · Hosts: Tom Keene, Paul Sweeney, Lisa Mateo, Michael Barr · Guests: Michael Darda, Scott Chronert, Loren Moran, David Bahnsen
Summary
The discussion centered on a resilient U.S. economy, with one guest arguing that private final sales and nominal GDP are running hot enough to leave the Fed behind the curve if the momentum continues. He pointed to Q2 private final sales above a 9% pace and said the key test will come in the fourth quarter, while also noting that market-based inflation expectations remain anchored near 2% and do not yet signal a 2022-style policy mistake.
On equities, another guest said the path of least resistance still looks higher into year-end, helped by strong earnings and an improving setup despite looming questions about 2027 growth. He said consensus S&P earnings this year have already moved from about 312 to 363, but warned that a lot of the upside came from non-operating items that are hard to repeat. He framed the market as increasingly focused on 2026 and 2027 earnings, especially for AI-related stocks, while cautioning that 28 and beyond becomes more uncertain.
The fixed-income segment focused on elevated sovereign borrowing, AI-related capital spending, and tight credit spreads. A guest from Wellington argued that developed-market sovereign debt is pressuring rates and that corporate credit looks less attractive than headline yields suggest. The final interview made the case that dividend growth remains a live strategy, especially among companies with strong cash generation, and argued that AI should eventually boost productivity at non-AI companies such as consumer and retail names.
Key takeaways
- Michael Darda said private final sales ran at just above a 9% pace in Q2 and could remain strong enough to force the Fed to tighten faster.
- Michael Darda argued that five- and 10-year inflation expectations near 2% mean the Fed is not obviously as far behind the curve as in 2022.
- Scott Chronert said year-end equity upside still looks likely, but he warned that the market is leaning heavily on 2026 and 2027 earnings estimates.
- Scott Chronert said S&P earnings expectations rose from about 312 to 363 this year, though much of that gain came from non-operating items.
- Lauren Moran said rising sovereign debt and potential 2027 dollar issuance above 4 trillion make corporate credit a more challenging setup.
- David Bahnsen said dividend growth is still attractive, especially for high-quality companies with strong payout ratios and durable free cash flow.
Notable quotes
“we actually ran at just above a 9% pace in Q2. Um, and the tracking estimates for the third quarter are very high”
“the path of least resistance is up into the right into the end of the year”
“There's a big asterisk we got to put on this though and that's the write up of assets”
“this is a challenging setup for corporate credit”
“dividend growth is as alive as ever, but it is more uh selective”
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. Dart a Roth joins us right now.
I want you to walk through, Michael, the impact of back-to-back quarters of boom economy, nominal GDP. I talked to everybody at Jackson Hole about the world of Michael Darta. What does it mean to have a boom nominal GDP?
Thanks for having me on, Tom. Yeah, these numbers are are quite something. So if we look at the private final sales, so it's, you know, nominal GDP for the private sector focusing on consumption and investment, we actually ran at just above a 9% pace in Q2.
Um, and the tracking estimates for the third quarter are very high. So inflation's expected to come down uh into the mid twos. Uh, but you know, it looks like we could print another huge quarter for real final sales.
uh perhaps you know even above 4%. So that would get you to about seven. And so if that's truly the underlying pace, you know, then the Fed is way behind the curve and needs to tighten monetary policy.
But there's a crucial caveat here. We're not really seeing that momentum uh in the nominal or money income proxies. they've been much steadier and we've seen a decline in, you know, in in real income growth because of the energy shock.
Bond market inflation expectations that are forwardlooking are not priced for a 7 to 9% nominal economy. So, I think the fourth quarter of this year is going to be the tell and you know, we'll see you know whether the Fed raises rates before that.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- nominal gdp
- jobs report
- s&p 500 outlook
- equity rally
- bonds pricing risk
Companies and tickers mentioned
- C
- Roth Capital Partners
- Citi
- Wellington
- Bahnsen Group
Watch the episode
Watch “Market Risks and Equity Melt Up | Bloomberg Surveillance” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
More from Bloomberg Surveillance
-
Stocks Rise as Inflation Data Ease Fed-Hike Worry | Bloomberg Surveillance -
Bloomberg Surveillance TV: November 13th, 2026 | Bloomberg Surveillance -
Bloomberg Surveillance TV: November 12th, 2026 | Bloomberg Surveillance -
Jensen Huang Ousted by Nvidia Board as CEO | Bloomberg Surveillance -
Bloomberg Surveillance TV: November 11th, 2026 | Bloomberg Surveillance -
AI Stocks Rebound as Fed Hike Bets Return | Bloomberg Surveillance
Bloomberg Surveillance, this episode and its artwork belong to Bloomberg. Octagon is not affiliated with the show; this page is an independent summary.
