Episode summary
Rate and Market Uncertainty | Bloomberg Surveillance
Bloomberg Surveillance
· · 38 min · Hosts: Tom Keene, Paul Sweeney, Lisa Mateo, Michael Barr · Guests: Seema Shah, Jay Hatfield, Omar Aguilar, Bill Cohan
Summary
Equities are still being driven by earnings, but the guests argued that the pace of gains may moderate as 2026 progresses. One guest said Q2 earnings were exceptionally strong, yet with stocks near all-time highs and Treasury yields around 4.80% on the 10-year and 5.25% on the 30-year, the market is starting to face more “digestion” and volatility rather than a clear bullish breakout. A separate guest said midterm elections should mostly add noise, not change the underlying trend, unless they alter inflation, rates or the data-center buildout.
The biggest macro debate was whether the Fed should hike next week. One guest argued the committee could be forced into a move if inflation comes in hotter than expected, especially if it wants to preserve credibility. Another guest pushed harder, saying CPI is a better guide than PCE, and that rounding effects, shelter lag and software revisions make the official inflation picture look worse than his preferred measures.
On positioning, the conversation tilted toward staying invested but diversifying beyond the largest technology names. The market still has an AI tailwind, but one guest said the trade is entering a third phase that spreads spending into financials, healthcare and industrials. Later, the discussion shifted to Leon Black, Apollo and private credit, with the author arguing that Apollo’s transformation under new leadership helped institutionalize the firm and broaden its business model.
Key takeaways
- One guest said earnings remain the main driver of the market, but expected only “slightly more modest gains” for the rest of 2026 as growth slows from very high levels.
- A guest said 10-year Treasury yields near 4.80% are not yet a real problem for equities, unless the move becomes a sharp selloff or is driven by inflation fears.
- The Fed debate centered on whether a hotter-than-expected CPI print would force a hike next week, even though one guest argued the committee should wait.
- A guest argued that CPI is superior to PCE because of delayed shelter data and imputed components, and said his own inflation measure is about 1.3%.
- Another guest said the AI trade is broadening from hyperscalers and chipmakers into users of AI across financials, healthcare and industrials.
- The author said Apollo under new leadership has become more institutionalized while still being driven by private credit and insurance-based financing.
Notable quotes
“we think it's still strong growth ahead, but the pace, you know, that second derivative starts to to show through and you get a slight slowdown”
“Treasury yields, they cross like the five the 475 mark and everyone starts to really worry”
“we we don't believe that 25 basis points is going to do anything to anything”
How the episode opens
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Seema Shah joins us here, chief global strategist at Principal Asset Management. Seema, I'm looking at you know, US equity markets kind of hitting, you know, all-time highs, kind of John Tucker in his reporting says it almost every day it seems like. Earnings. It's been an earnings-driven market. What is your view of of corporate earnings going forward? Because boy, the first half of 2026 was just extraordinary.
Yeah, good morning. I I think you're absolutely right in that the the the major theme which has been driving markets this year, you know, there's been geopolitics, there's been tariffs, there's been so much going on. And yet, actually, what's driving markets continues to be earnings growth, which makes sense given the tremendous performance to this point with Q2 being incredibly strong.
Now, from here, you know, the math starts to come in and that is very unlikely that you're going to see this continued pick up in pace when you're already at these 50% or so levels. Um so, we think it's still strong growth ahead, but the pace, you know, that second derivative starts to to show through and you get a slight slowdown. Now, remember for equities, um that doesn't necessarily need to be a hiccup.
You know, it doesn't imply a pullback by any means. This is still a strong backdrop. But it to our minds, I think for the rest of the year, there's a number of challenges and you've got earnings growth starting to to slow a bit and to us that means slightly more modest gains ahead for the remainder of 26.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- s&p market headwinds
- 2h market outlook
- inflation data
- fed rates
- macro outlook
Companies and tickers mentioned
- SCHW
- APO
- Principal Asset Management
- Charles Schwab Asset Management
- Infrastructure Capital Management
- Apollo Global Management
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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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