Bloomberg Surveillance TV: January 6th, 2026

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This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along with Lisa Bromwitz and Amerie Hordernt join us each day for insight from the best in markets, economics, and geopolitics from our global headquarters in New York City. We are live on Bloomberg Television weekday mornings from six to nine am Eastern. Subscribe to the podcast on Apple, Spotify or anywhere else you listen, and as always on the Bloomberg

So is here and again this concept of concentration risk. If you go back to the beginning of this century, when the top ten stocks were twenty five percent of the way in the s and P five hundred, there was a thought that could not be exceeded. We're now at forty percent, and frankly, again, if you think about concentration risk, you look at a market like Korea, we're in the COSTPI. You've got two stocks that account for forty five percent.

So the point is, the math.

Doesn't work for these stocks not to market perform or outperform. But the truth is is that the capital market cycle has yet to fully play out, and the beneficiary of a robust capital market cycle time and time again are the stocks that led you into this.

So funny when it comes on a program later on this morning, saying dive into what's hamdling gon Asia, what's developing its South Korea, you're saying, take a step back, resist.

No.

Basically, what we're saying is is that you know, there should be a discomfort around the fact that the market is really clustering in this theme. But that discomfort, as we saw earlier at the end of last last year with the discomfort around the one marquee name that has taken on a great deal of debt to finance capex.

Is the bet right now just to bet on the biggest tech companies in both regions, both the US and China, betting that they can consolidate their dominance going forward, regardless of whether the US or China wins.

It does come down to that to a great degree. And you know, we get asked all the time again, should we rotate to other sectors. There'll be plenty of opportunity to do it. Opportunistically. There's going to be a continued skirmish around healthcare towards the end of this month, obviously, in fact, with the one big beautiful bill tax benefits starting to kick in later this quarter. We think there's an opportunity for consumers beaten down consumer names to rally.

There might be some people who read what's going on in the news and then look at markets and say that everybody's just going la la la la, la la la. We're not going to listen to anything that could potentially be game changing. Is it just been on what you know and that you don't know so much you just ignore it.

Well, I think again, part of the rationale around AI is you're still betting on something that you don't fully know. Okay, And for us, what we think is going to have happened in twenty twenty six is you're going to go from the inflection year twenty twenty five for AI adoption to the year where it accelerates when corporate global corporates realize that if they don't find ways to drive revenues and cut costs through using AI, they will be at a competitive disadvantage.

When Lisa says things going on in the news, she means Venezuela, And you actually writen your note that you think, if anything, Venezuela increases the chances of an AI bubble.

Why is that so?

Think about a confluence of events. First of all, we found out a week and a half ago that the economy's last reading was actually stronger than expected. Thinking about the stimulus that's ahead, it sets up more economic upside in the US. In fact, our team just took its twenty twenty six forecast up to two point five percent. From a FED perspective, we actually think there won't be two cuts, they'll be three, possibly more.

They have both growing economy, fiscal stimulus p touch a higher inflation, and then you're saying three federal reserve.

Guts because you have a political backdrop where the impetus is to keep the consumer moving forward as we get to the midterm elections. Now on Venezuela, basically the issue here is long term. It's likely a moderating influence for oil prices, and if you think about oil prices staying flat for longer, that's bullish for long dated bonds.

Let's punk Venezuela just from moment. Your view on the federal reserve becoming increasingly politicized in the last twenty four and has had a series of guests come on the program and talked about the unintended consequence of pushing for law of interest rights at a federal reserve, galvanizing the other members of a committee to push back against the push for law of interest rights. Why are you taking the other side of that?

Essentially because a couple things is that for the most part, even though the economy is strung, there's still this dichotomy

Let's finish my pushing that through the equity market. Consumer discretion ry does it tend things around?

We do think so. And again our sector preferences consumer discretionary, communication services, infotech, the subtexts, all of them have large exposure to AI. But in this algorithmic trading world, what's good for the consumer is going to flow through and be good for AI names and you know, boost that sector.

Jenny, and you talked about the importance of sixty dollars crude. Just flash that out for us. Why is it so important to the stock market?

Well, it's the stability of the price. And look, you know, I think one of the things that Trump has been very happy that he's been able to deliver going back to this first year, is that visibly, in terms of the affordability crisis, there is not an affordability crisis at the pump anymore. Gas prices have continued to fall, and what we've seen is that that has a tendency to bleed through to other areas. It has not yet, and

Is it consistent to have low oil prices and an outperforming energy sector.

It's a rough go to think about that in the long term. But again, and I think we've seen this over the entirety of this rally, there's a massive dispersion. The lowest correlations of really in many years amongst stocks, and I think when you look at the energy sector, you're going to see winners and losers based on where this is all going.

Do you see a reason to invest more in Latin America as a result of the don Roe doctrine that we keep hearing about?

Interesting question. Frankly, The reason that we think that you know, the rest of the world, Latin America included, is more interesting is because we think you saw a very significant top in the dollar a year ago and all lse sequel again over the long haul, what we started to see was portfolio rebalancing away from the US dribs and drabs slowly, and frankly, that's not going to accelerate, given the fact that our view that the AI theme has

The oil majors are jumping on this news, not so much crude energy before the weekend as opposed to after the weekend. Would you have a different view on potentially wanting to invest in the US majors.

Again, you look at twenty twenty five, one of the themes has been the Trump administration sort of influencing the selection of winners and losers on various themes. Obviously steal rare earths, et cetera. Clearly there's an element of this happening. Now we don't know what it looks like, but we do know that Donald Trump is a businessman, and the endorsement of Rodriguez, given her experience in the oil patch, really tells you that that's where the emphasis.

Does potentially help put a lid on oil prices. But when you think about AI, there's one issue of affordability that Americans are dealing with, and that's electricity prices. How are you thinking about that this year, given it is a mitern election year.

Well, there's no question that that is the push pull. It's been the push pull the entire year. But again, all else equal, the president has shown an ability to influence events that moderate oil prices, and at some point that's likely to flow through to the.

Rest of it.

But again, the intent is because of the recognition of the importance is AI of AI as a theme both for the US and on the US corporate life.

And we finished with a sentiment check year end price targets seventy seven, fifty and busy speaking to clients. When you talk to them, are they more excited about what can go right this year or more worried about what can go wrong?

I would say it's in balance, to be perfectly frank What bothers us is that this is the first time in my memory, going back to when I was on the buy side, that there was no strategists on the street that had a price target below where the index level is. Thank you Bloomberg for compiling that information and what we found that over the course of last year, when sentiment got tipped too far in one direction, you

Stay with us. More Bloomberg surveillance coming up after this. Investors look into a fresh lighte of economic data to kick off the new year. So I'll desigre Franklin temput and fixed income writing. I maintain a constructive outlook for US growth. There is a lot of uncertainty. However, I see the balance skewed towards inflation risk, especially in the first part of twenty six. And now John, just now for Mores and good morning. It's going to see you.

Nice to see you.

It's very nice to see you. Happy New Year. Let's talk about that source of inflation risk. What's the most prominent source of inflation risk for you in the team.

The fiscal impulse.

So you were just talking about the what we hope to see, but the reality is this week we already know the big beautiful Bill is going to hand out a lot of goodies across the board.

We're talking about.

The consumer, whether we're talking about industry, All of these factors lead to inflation, and we haven't actually something which comes on and then moves off the front page is the two thousand dollars rebate check. Remember that in the first three months of the Biden administration, we helicopter dropped fourteen hundred dollar checks. And I've always maintained that was one of the principal sources of the inflation burst. We saw that massive fiscal splurge. If we get that splurge

Do you see companies potentially passing on more of these higher costs if the consumer is able to do it because they have more money in their pocket.

Yeah, I do.

I do actually passing on the higher costs, but also genuine higher demand. The one thing which continues to flow through is the American American consumers desire to consume. And I'm very interested to know what the end of this Christmas season will look like. But looking at what we're hearing in real time, it looks like it's going to be a strong one.

Putting these two stories together in Washington, DC right now, the President is clearly putting a lid on oil prices going up when it looks what's happening in Venezuela. But at the same time, they're going to potentially get more fiscal impulse ahead of the midterm election. Does the oil depression of a price help the potential statflationary fears you have.

So it's not a it's not statulation. I'm expecting growth to two point seventy five to three percent, driven by that consumer demand, driven by the fact that we're getting private sector investment in this country. Between last year and this year. It's around one trillion dollars. That's more than what it's about as much Germany is going to do over ten years. So when you stop and put that into perspective, you've got a lot of tailwinds coming in

Now.

Can oil be the game changer? I don't think so. I don't think in the near term.

I think Venezuelan oil that's a two three year out story because yeah, there's a sentiment driven Yes there's going to be a lot more supply, but how much actual supply are you going to see in the new term.

So we talk about inflation as though or a monolith, and inflation can be expressed through the market in many different ways. It can be a higher long end of the yield curve, you could see, for example, the dollar weeke, and substantially you could see metals prices go up significantly. Which node do you think will transmit through markets most directly, I.

Think a little bit of all.

So you're going to see a further steepening of the yield curve in my book, because I think the Fed should not have got up to three fifty, and if they actually go further than three fifty, I think it

And in terms of the dollar, I'd say the dollar is a little bit mixed.

In terms of the G three, I think we're pretty close to fair value against the euro actually, and I think we're massively overvalued.

Jump in because you acknowledged the bulk of that move was in twenty four, not twenty five.

Absolutely.

In twenty five, the cut interest rates and bond yards on a ten year maturity actually fell, they didn't rise. What's changed for twenty five in the cutting cycle of last year compared to what we saw in twenty four because.

I think this is the year you actually get if you get the fiscal impulse that I'm talking about, those tax rebate checks, those so the consumption demands, the tailwinds are stronger. I think in addition, on the non AI hyper scaling front, we actually haven't seen that much investment last year, and I think we probably will this year.

One half of the year.

So I think when Tariff's liberation Day was first announced, everyone was sure that meant a recession in the US.

I didn't.

I'm just eratulated, but it was, so I think we just start from a different spot.

So a super Yeld curve in and of itself isn't necessarily negative for the market. It can be actually really positive.

When it comes to financials.

The absolute level of yields does matter? Yes, what's the stopping out point for ten year yields? Were suddenly risk assets lose their luster?

So I think, you know, I'm not. I think that.

Fixed in markets have shown an ability to absorb all the way to four seventy five and above. Equity markets, it's a different question, and I'm not an equity person, so I'll talk to that'd just say that, do I see ten year yields going back to those substantially above four fifty for close to four seventy five levels? I actually I do if you don't have the wild card, which is something which knocks the economy into a recession.

Pretty guys love to talk about bonds, but people can talk about equacies. The spread in the last thirty minutes is three three cuts. You're basically at zero for this year, and during the man you want I've had the core equity guy is a three for this year.

No, And I think that's the difference because I think equity people do get concerned. Certainly within my own film, my equity colleagues get very concerned when I say that, you know, honestly, they should have got last time. And I'm not sure they're going to cut at all this year this year.

Really honest.

How pretty guys talk about bonds and bond guys talk about equities all the time.

They designed by saying we don't cover that.

But let me tell you that's what happens every single I agree.

What can I say? Starts a dropping by and I'm design the a Franklin sampleton stay with us. More Bloomberg surveillance coming up after this, Andrew Homholst, The city's got things to say on the data and on that too, and on base case. The unemployment rate rises to four point seven percent. Indie December jobs report continue itis trend higher and keeping the FED reducing policy interest rates. Andrew john Is now for more. Andre Camrnic Yeah, happy to

We think so, and I think that, you know, we're in the business of forecasting these things on a monthly basis, there's a lot of volatility, we have some residual seasonality in the data. All those things kind of obscure what's going on. But if you just step back and look at what this labor market has done over the last two years, we've been trending higher in the unemployment rate. We've just been consistently trending higher in the unemployment rate.

I talked about the hawkish two. As the FMC rotates and you get the regional voters, the new ones coming on board for a year, what is the credible case to stay on hold? What is that case of the moment?

So I think it's all about how comfortable are you with the labor market, and then how much discomfort you have about inflation, and then, to some extent, financial conditions. Also, because financial conditions are easy, they've been easy for some time. And then on inflation, and this is where I think

One thing that Richmond President Tom Barkin talked about was that this is going to be clean data and that there he's looking forward to getting some clean data how much do you actually think this data will be the first clean read since the government shutdown?

So I think on the jobs reported on the unemployment rate, this is really important in terms of the interpretation. A lot of people looked at that November unemployment rate and said, yeah, four point six percent, but maybe it got boosted because of the government shutdown. So even if we hold steady at four point six percent on the unemployment rate in the data for December, I think people will look at that and say, well, that was a clean four point

So yes, I do think.

I think that especially on the inflation data. I think there are big questions about the inflation data during the shutdown period, But on the jobs data also there are some lingering questions. This job's report will help to resolve those, and you think that.

It's going to resolve it in terms of possibly even getting a feder rate cut by the end of this month.

And I just wonder how far that will go to.

Bolstering a labor market that's being affected by other issues outside of any kind of monetary policy.

Yeah, not very far right. So cutting interest rates twenty five basis points and doing it in this month versus doing it later this year, that's just not going to have a huge effect on the macroeconomy. But I think you're still watching the labor market because you're looking at three things. If the labor market is loosening, it's telling you maybe you're not really a neutral, Maybe you need

Andrew, when it comes to inflation, what about healthcare inflation given the fact that subidies are rising.

Yeah, so we have this really complex technical issue now with the way that these healthcare subsidies are going to change as we go into twenty twenty six, that could have some direct effect on the CPI data. We don't think it's going to have much of an effect on the PCEE inflation data. But in terms of just consumer costs, right, this is a higher cost that consumers will be facing, but I don't think we'll have a big effect on the reported numbers.

So when it comes to inflation, what is the biggest concern?

Then?

Terms of policy, because everyone will talk about tariffs, but this year's also healthcare. Do you think any of these will have an impact?

I think what I would be watching in the inflation data or two things. One is do we see this continued gradual softening of services inflation. We're seeing it most clearly in shelter. We're not seeing it as clearly in non shelter services. That's one question. The other question is I was mentioning earlier Powell talking about this fifty basis points due to tariffs.

Well, is.

That strength that you have in goods prices? Is it really terrif related or are there other factors that are playing in to hire goods prices? Is that going to continue or is that going to dissipate? I don't know if policy can do a lot to address those things. And when people talk about affordability, honestly, I think a lot of what they're talking about is the expense of buying a house, which has to do with mortgage rates and that well, the FED cutting interest rates will will bring that down.

So anjie, thanks, just body expensive? Everything's a jimpn Coast is sell English then, didn't it?

Jim?

I did a great job of this suff for research. The FED talks about one offs and one time changes because they're focused on the change the public is dealing with the price level that's right, and where prices are, it's just ridiculous. Anyone trying to buy food or pay the energy bill, it is absolutely ridiculous. Do you think the FED needs to reconcile the differences with a between how they look at inflation and how a public experience is it.

I think certainly, and how they talk about that. It's very important to kind of get the rhetoric right around that, because it is true. I experienced that you go to the store and you're just shocked at how much everything costs. And that's I'm an economist. I understand inflation, I understand price level, but I still have that emotional experience of

Quick one to finish the new feed chair is his name Kevin.

I think there's a high probability that his name will be Kevin, and I think that's.

About all we can say right now, Andrew, thank you, stay with us. More Bloomberg Surveillance coming up after this. Let's talk about this market, Troy Geersky, our future standard writing in an environment where public equity valuations are stretched and it's very difficult to find growth outside of megacab tech middle market, private equity stands out as an oasis. Troy joins us now from what Troy, good morning and happy new year. Good morning, get us see in the studio.

Well.

As we discussing before, Open Ai has been at the cutting edge of obviously infrastructure for the complex, right, and that has driven competitive pressure for the hyperscalers, who are historically petrified of losing market share in various areas to spend money at prodigious rates.

Right.

The fact that thirty forty fifty, maybe even sixty basis points of contribution an omenal GDP will come this year. So they've been critically important in waking up the giants, so to speak. On a go forward basis, though, the hyperscalers are.

Going to drive more and more of the outcomes.

We believe what I'm getting at ready is the fights of the public market. How tight is it to what is happening in private markets and vice versa.

Yeah, so there private markets tend to have an advantage for funding. Early, as you know, if you look back, you know fifteen twenty years it was all about small scale funding and then eventually going.

Public, and that allowed you to grow.

As private equity and private credit has grown up, they've been the preferred sources of financing. And then prior to that, of course, in growth areas you have venture capital.

Credit.

Infrastructure has led the way in terms of financing these projects. And then now of course you have a little more circular funding coming again from the largest five companies.

In the world.

There is this question though, and I think that just to build on what John is saying, Open AI and their investment has really fueled a lot of other investment in infrastructure in data centers has popped up the valuations of it at a time when suddenly people are looking for more efficiency. At what point does that pose a significant risk on a credit perspective to private credit and infrastructure investment.

Is here well, So I think big picture right, if you're looking at the roics that at least are modeled out in data centers, and to be fair, remember the demand for compute, not just an AI, but obviously almost more importantly in old school SAS or other applications continues to outstrip demand. So you have tremendous demand for the computational powerless storage and you don't have enough supply yet.

Do you think that data centers are a good place to keep investing in or do you think that there needs to be a catch up trade with some of the energy sector as well From a private investment perspective, So look.

Everything all analysis our team does, and we're a much smaller player roughly two billion in assets, is that Ford demand, particularly in situations that are funded by hyperscalers where you have that recurring revenue, that free cash flow look very attractive. The comparison I always use is if you look at senior security commercial real estate lending versus the senior part of the capital structure in data centers, you get an extra fifty to seventy basis points to pick up in

But to Lisa's point, is there a mismatch potentially for the energy that is needed to run these data centers that could potentially.

Hold the story back?

Well, it's a great point. So I think, big picture, this is back to demand that stripling supply. Right, So when we look at one of the risks to GDP growth this year, it's less about on the demand side and more about can you actually construct enough right, do you have enough copper?

Do you have the political will?

I mean the other day Bernie Sanders and Ron DeSantis agreeing on like constraining.

Like how often do you see that?

Right?

So there are more.

Challenges on the supply side, less challenges than the near term on the demand side, and so that tends to bode well for investments at least over the short intermedia term.

Do you think that's going to be fullest disciplined on these plants and stealing them from spending lives. I think Michael Semblists of JP molk and I said, management talked about this recently. I've got compa through thirteen K. The electricity needs that. Lisa talked about the social she'll put back us pushback as wow, that's sub called gating. How much of a disciplinary thanked will that have on they spend us well?

As of now, you know, given the size of the budgets, it looks like the spending side is set again. It's more on the supply side. So I wouldn't expect until twenty seven to twenty eight. Remember the key factor here is when will the ROI C for AI really show up in the real economy, Not in search, not in Gemini et cetera, But in the real economy everyone for the time being is wanting to spend.

When you said the rate economy, which you may just explain it.

So one of our kind of small trades in our multi strategy fund for instances trying to find players in broader industries medicine, you know, chemicals, energy, infrastructure, et cetera, where you can actually use these tools to meaningfully produce or boost productivity growth. That's starting the show evidence, but it's unclear if it's enough to drive the continued growth

That will be fine for broader markets.

We'll have a multiple correction, multiple compression, hyperscaler multiples to come down, but it will be very very.

Challenging, if not catastrophe for hardware. So you know when you step.

Back, whether it's public markets or private markets, I think the key in your portfolio is to have enough exposure to the AI trend that it can move the needle, but not so much that it causes significant damage.

If it peters out, we can.

Send to the detmalk is just saying this headline crossing a blimpack terminal broad come full pot defile for ink coming from that company. Lisa, just a crossing a terminal moment, Sagg.

Yeah, and I wonder how much of it's going to be a fifty year tranch considering what we.

Saw from some previous ones.

It is interesting to see all the debt that is coming to market and the fact that it has been received so well. It has been in the public markets. Now following onto the private market financing, they do have a thirty year tranch. I don't see a fifty year tranche.

But you know who's next, right, This isn't over.

So new story, isn't it a new shift? There's a different character to all of this. Get started coming out of summer. We moved away from using cash flow and we started to move to the death story. I'm not talking about Broadcom and talked about what wassanta, but the oarraticles that it sworled towards the end of last year.

Yeah, and it is a different proposition for the Oracles of the world, which doesn't have profit, but when you have at Google or Amazon, it's a very different story. I think that it was Torsion Slack who said that in twenty twenty four, seven percent of total investment grade issuance came from the tech sector. It was fourteen percent last year, and it came just for a couple of months all at.

Once, Maison Trenty, you miss talking about bitcoin and public equities? Do you miss any of that?

Not? Really?

Just ask it and on that topic if I may, it's just a quickly out to ravate equity, So of course yeah, why so if you think of the AI, one of the nice things you can find are other sectors with tremendous growth in healthcare and it's not because of my engineering background. We're very excited about robotic surgery infusion care. Not maybe as juicy as AI has been the last two three years, but very good upside in limited downside.

We're done for squeezing in that extra trait. Thank you guessing the feature standing. This is the Bloomberg Surveillance Podcast, bringing you the best in markets, economics, an gient politics. You can watch the show live on Bloomberg TV weekday mornings from six am to nine am Eastern. Subscribe to the podcast on Apple, Spotify or anywhere else you listen, and as always on the Bloomberg Terminal and the Bloomberg Business app.