Episode summary
Stock Rally Wanes After S&P 500 Touches 7,000 Mark
Bloomberg Surveillance
· · Guests: Abby Joseph Cohen, Glen Smith, Jim Reid, Ulrike Hoffmann-Burchardi
Summary
The discussion centered on whether the market’s rally can keep going after stocks pushed to record territory, with the guest arguing that earnings remain supportive even as valuations look stretched in parts of the market. She said she does not see a U.S. recession this year and thinks investors are rationally rotating within equities and into markets outside the United States as a way to navigate the valuation backdrop.
The guest argued that the biggest risk is not near-term profits but the policy mix around the economy. She said trade policy is inflationary, fiscal policy will likely support growth in 2026, and a weaker dollar would add to price pressure as well. That combination, she suggested, matters more for the intermediate and longer-term outlook than whatever the Fed does with the short-term policy rate today.
She also flagged a growing policy tension around market interference, pointing to talk of bank credit-card rates and mortgage-market controls. In her view, those kinds of measures, together with a weaker dollar stance, suggest a more complicated environment for rates and financial assets even if traders remain focused on the next earnings report and the next Fed decision.
Key takeaways
- The guest said U.S. earnings remain strong enough to support the market even with high valuations in some sectors.
- The guest said she does not expect a U.S. recession in 2026.
- The guest argued that trade policy, fiscal stimulus, and a weaker dollar all point toward higher inflation over time.
- The guest said the Fed controls only the very short end of rates, while longer-term borrowing costs may rise for other reasons.
- The guest flagged government pressure on credit cards and mortgages as a sign of possible market interference.
Notable quotes
“The earnings clearly appear to be out there, which is great”
“I don't see a recession coming in the U.S. this year”
“the trade policy we have pushes inflation higher, not lower”
“The fiscal policy we have right now will stimulate economic growth in 2026”
“the Fed controls only the Fed funds rate, only the very short term rate”
How the episode opens
Well, let's back up a little bit, Tom, And good morning to you, Paul, as well. What we have, of course, is an American economy that was never gone. The American economy has been dominant truly since the end of the Second World War.
We have been very fortunate. We have been blessed, if you will, by decades of investment in education and science and other forms of research. And so we have a stock market that is reflecting that.
When I take a look at recent stock market performance, I see that investors are focused on basically corporate profits at this point, and companies have not been disappointing. Here's the question I think for investors, and that is with valuations at current levels, is there any room to hide if there are disappointments? And that to me is an issue not just for traders, but also for long term investors.
So, Abby, how do you think the value what's the valuation discussion we should be having about this market? Because a lot of folks are citing high valuations, but it seems like the earnings are out there, too, to support them. How do you think about it?
The earnings clearly appear to be out there, which is great. I'm very pleased about that. I don't see a recession coming in the U.S.
this year. Also, great news and what we need to recognize, of course, and so many people who have been on Bloomberg in recent weeks have talked about this is the ongoing rotation that we're seeing in the U.S. stock market that is reflecting this challenging valuation environment in some sectors.
And I think that's a healthy discussion to have. We do see that some sectors that have been laggards have been moving ahead. And we also see that some markets outside the United States have also been performing better.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- ai earnings season
- sp-500 market rally
- fed rate outlook
- big tech capex guidance
- usd and treasury yields
Companies and tickers mentioned
- ASML
- MSFT
- META
- DB
- UBS
- GOOGL
- GOOG
- AMZN
- NVDA
- AVGO
- MU
- ASML Holding NV
- Microsoft
- Meta Platforms
- Deutsche Bank AG
- UBS Global Wealth Management
- Alphabet Inc.
- Amazon.com Inc.
- Nvidia
- Broadcom
- Micron Technology
Watch the episode
Watch “Stock Rally Wanes After S&P 500 Touches 7,000 Mark” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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