Episode summary
Traders Brace for Economic Data Flood | Bloomberg Surveillance
Bloomberg Surveillance
· · 39 min · Hosts: Tom Keene, Paul Sweeney, Lisa Mateo, Michael Barr · Guests: Jean Boivin, Frances Donald, Thierry Wizman, Ian Bremmer
Summary
The discussion centered on how AI is reshaping markets, with a BlackRock strategist arguing that the recent software selloff reflects growing conviction that AI is a real disruptive force, not a fad. He said the market is starting to sort winners and losers, but that investors are likely to overreact before the picture becomes clearer. He also argued that AI remains a macro driver because growth, capex and innovation are increasingly tied to the buildout.
The RBC chief economist said the week’s data flow on retail sales, jobs and CPI will be hard to interpret because shutdown distortions and seasonal quirks are still clouding the picture. She expects growth around 3% in the fourth quarter, but said it is a narrow, capex-heavy expansion that favors markets more than households. She also argued inflation is likely to stay in the high twos or around 3% through year-end, while unemployment may stay near full employment even as job creation slows.
A Macquarie strategist said Japan’s new political backdrop could support growth reforms and ultimately lower yields, while a Eurasia Group founder described a world of rising instability and “de-risking” rather than full decoupling from the U.S. He argued America’s allies are hedging economically, and that China is benefiting from a more unreliable U.S. posture.
Key takeaways
- The BlackRock view is that AI is now a real megaforce, but markets are likely to overstate the near-term winners and losers.
- RBC expects fourth-quarter growth around 3%, but says the expansion is concentrated in AI-related capex and data centers rather than broad hiring.
- The RBC chief economist sees inflation staying in the high twos or around 3% through year-end, keeping the Fed on hold.
- The RBC view is that unemployment can stay near 4.3% to 4.4% even as nonfarm payroll growth slows toward 60,000 to 65,000 a month.
- The Macquarie strategist argues Japan’s political shift could support reform, higher growth and eventually stronger yen performance.
- The Eurasia Group founder says allies are de-risking from the U.S. economically, while China is gaining influence from Washington’s unreliability.
Notable quotes
“we see that as increasing the conviction on this AI mega force being real. It's happening”
“what's happening? Well, we are going to have far less job creation”
“our view is that actually American companies are not sure where tariffs will land”
“the balance of power is no longer aligned with the institutions the architecture the policies or the values”
How the episode opens
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Jean Bo uh joined us. absolutely definitive at Black Rockck here, global head of research for Black Rockck Investment Institute and with a real Canadian uh feel uh as well. Jean, I see the moment here. I was reading very carefully way Lee uh the other day. Synthesize the Black Rockck view of the software shock of four, five, six days ago.
Yeah, I think it's interesting uh maybe to to start by uh comparing this to last fall, right? So last fall we had markets selling off and that was all on the back of doubts about whether AI was a real thing and now we got this kind of as you say shock over the last few couple of weeks which is uh also a sell-off uh also a sell-off story but it's uh it's because of AI is a real thing this time and now market extrapolating to the disruption it's going to really cause. So I guess one takeaway is that uh you know we see that as increasing the conviction on this AI mega force being real.
It's happening. uh it's it's disrupting now uh and now uh markets are starting to think through uh what that means uh for winners and losers. I think it's early though on that question.
So we're going to see um markets start to run to conclusion and make big uh you know uh sweeping software type uh labels and stuff and and run with this. But I think it's going to be a story that's going to uh you know be uh much more nuanced and um yeah I think we're going to likely see overreaction along the way as we've seen.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- em strength
- ai role in macro
- economic data outlook
- sanaenomics japan productivity
- post-america hedge
Companies and tickers mentioned
- BLK
- RY
- MQ
- BlackRock Investment Institute
- RBC
- Macquarie Group
- Eurasia Group
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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