Episode summary
Markets Ahead of the Midterms | Bloomberg Surveillance
Bloomberg Surveillance
· · 33 min · Hosts: Tom Keene, Paul Sweeney, Lisa Mateo, Michael Barr · Guests: Jordan Jackson, Steve Englander, Paisley Nardini, Amy Wu Silverman
Summary
The discussion centered on whether the recent AI selloff is a durable warning or a buying opportunity, and the guests largely argued it is the latter. Jordan Jackson of JPMorgan Asset Management said valuations have reset, demand remains strong into 2028, and the market is punishing free cash flow pressure rather than weakening end demand. He acknowledged concerns about circular financing and higher borrowing costs for new AI infrastructure names, but said those risks are broadening, not breaking, the trade.
The panel also framed the midterms as a potential market clearing event. Steve Englander of Standard Chartered said markets prefer congressional gridlock because it limits policy surprises and reduces the odds of major shifts on regulation, taxes, or AI buildout. He said a big Democratic wave could weigh on the dollar and slower growth could pressure yields, while Amy Wu Silverman of RBC said volatility has been building beneath the surface and investors are increasingly demanding evidence of return on AI spending.
Across sectors, the guests pointed to healthcare as a defensive alternative, while cyclicals such as industrials and financials still look supported if recession is avoided. They also said inflation remains a concern for corporate America and lower-income consumers, even as wealthier households and bondholders continue to support spending.
Key takeaways
- Jordan Jackson said AI stocks are roughly 25% cheaper than they were at the start of the year and that the pullback looks like a buying opportunity.
- Steve Englander said markets prefer congressional gridlock because it lowers the odds of major policy shifts and keeps the AI and dollar themes intact.
- Paisley Nardini said ETF flows are rotating from hyperscalers into AI bottlenecks and infrastructure names, including data-center-related themes.
- Amy Wu Silverman said investors are now treating hyperscalers as different credit and volatility profiles because they are raising debt to fund AI spending.
- The guests said healthcare is acting as a defensive hedge against AI concentration, while cyclicals still have room if recession is avoided.
Notable quotes
“The AI selloff is overblown and it's a buying opportunity”
“you're getting these stocks at let's say a 25% discount relative to where we were at the start of the year”
“the markets actually prefer gridlock to any of the partisan alternatives”
“What the market is anticipating currently is of course gridlock”
“these aren't the hyperscalers we married”
How the episode opens
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Speaking of big tickets, Jordan Jackson joins us here. global market strategist for JP Morgan Asset Management joins us here in studio. Jordan, welcome. Um, let's go with your your your lead here. The AI selloff is overblown and it's a buying opportunity. Talk to us about that call from JP Morgan.
Well, if you just think about um you know where valuations, how they've g evolved over the year, um you're getting these stocks at let's say a 25% discount relative to where we were at the start of the year. So, I think a lot of the risks uh are are are largely uh being being priced in. Um, you're seeing this in some of the the corporate credit spreads and some of the CDS markets uh as well.
So, look, the markets are are pricing in some of the weaknesses, but they're punishing free cash flow, not demand, right? When we look at customer orders, when we look at backlogs, um, we've got vis demand visibility, I would say out to 2028. Um, cloud revenues up over 50% across the hyperscala search.
Yes, a lot of worries around search for sure. I think there's been worries around search. You know, uh, the big players have already highlighted this when when AI first hit the scene.
So there's nothing new here. Um uh and the fundamentals continue to look pretty robust. We're just getting a better price right now.
So is it just contagion? People the the fear sort of just, you know, starts to escalate.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- ai selloff
- duration and rates
- g10 fx
- etf flows
- hyperscaler shift
Companies and tickers mentioned
- JPM
- RY
- JPMorgan Asset Management
- Standard Chartered Bank
- Royal Bank of Canada
- Tema ETFs
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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