Episode summary
Wall Street Jolted by Trump-Fed Fight Before CPI
Bloomberg Surveillance
· · 7 min · Guests: Alicia Levine, Krishna Guha, Mark Hackett
Summary
The guest argues that the market’s political and Fed-related turmoil is mostly noise and that investors should stay focused on the longer-term setup. She says she still sees a strong year, with about 14% earnings growth, and believes equities can keep working even if the top growth stocks pause. In her view, the market is broadening beyond the megacap names, with financials and industrials likely to lead, and mid-cap and small-cap stocks benefiting if M&A and deregulation continue.
She also says fixed income investors should prepare for reinvestment risk as money market yields fall. Her preferred move is to shift cash out of T-bills and into the belly of the curve, where she sees the most value and the added benefit of Fed cuts if they arrive.
On valuation, she rejects the idea that strong recent returns mean stocks must now deliver only low single-digit gains. She points to a structurally different market, citing a 14% operating margin for the S&P 500 and 4.9% productivity last quarter as reasons earnings and returns can stay stronger than many asset allocators assume.
Key takeaways
- The guest says the Fed drama is mostly “noise” and does not change her view that 2026 can still be a strong equity year.
- She expects about 14% earnings growth and sees leadership shifting toward financials, industrials, and mid/small caps.
- She recommends moving cash out of T-bills and into the belly of the curve because of reinvestment risk and potential Fed cuts.
- She rejects low-single-digit S&P return forecasts, arguing that today’s market has structurally higher margins and productivity.
- She notes the S&P 500’s average annualized return since 2010 has been 12.5%, which she says investors have lost perspective on.
Notable quotes
“The noise is noise for 2026. I think the noise continues to be noisy and maybe we push the envelope”
“I still see a very strong year. I see 14% earnings”
“we've been telling clients to move out in duration into the belly of the curve, because that's where we see the most value here”
“The average annualized return in the S&P since 2010 has been 12 and a half percent”
“We think you're in a structurally different market. Productivity 4.9% last quarter”
How the episode opens
By wrapping of 2025 was the noise is noisy and stick to what you know moves markets really in the long term not on a daily basis not when you come in in the futures market. The noise is noise for 2026. I think the noise continues to be noisy and maybe we push the envelope.
But ultimately a lot of this is going to be seen as noise, right? There is some risk of long term degradation here as you get something of a bull market and populism on from both parties, that the policies themselves that have brought us here may not be here, but I don't see that. Like I still see a very strong year.
I see 14% earnings. What I see in markets this morning, which is fascinating, is, you know, we thought that tech would not be the leader this year. It would be the more cyclical sectors.
And you're actually seeing it this morning. What's getting hit the most? It's Nasdaq.
All right. And it's not the S&P, It's not the Dow. I get into the math in Kudlow in Elmo or Larry McDonald's.
Great comments on the wall of money out there being why Mellon is expert at this. The overwhelming yield to this market is billions of dollars. It's got to find a warm spot to go.
It has yet to find a warm spot. And by the way, it's been coming to the U.S. And so all this talk about sell America back in April turned out not to be true.
So when we're going to continue to see the shift, you say out of the Max seven, broaden out this rally, that would be nice, wouldn't it be in 2026? Where do you see the leadership coming from, though?
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- fed independence
- yield moves
- credit card rate caps
- equity performance
- cpi outlook
Companies and tickers mentioned
- COF
- AXP
- JPM
- EVR
- GOOGL
- GOOG
- AAPL
- TSLA
- BNY Wealth
- Capital One Financial Corp.
- American Express Co.
- JPMorgan Chase & Co.
- Evercore
- Alphabet Inc.
- Apple Inc.
- Tesla Inc.
- Nationwide
Watch the episode
Watch “Wall Street Jolted by Trump-Fed Fight Before CPI” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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