Yep.

We also started to see a lot of the sort of nervousness around Fed coming into the market.

We're now getting the additional nervousness about the Treasury, uh, because of the Fed's recent actions.

We've got movements in the longer end of the curve, which we need to be concerned about.

But in my mind, we've already priced some of this-

Right.

This is nothing compared to some of the big investment booms of the past, even the telecom companies.

We're sitting on two turns of leverage.

this weekend which is crazy when you think about it right you know um and then we got that employment report which you know of course you want to see a strong employment report but it makes things difficult wouldn't you say

yeah it's going to be really tricky for the fed in particular because this is a midterm election season and generally the market is very volatile in september september is the only month of the year in which your percentage probabilities of a decline are higher than your percentage probabilities of a rise in stocks.

So that in and of itself creates some volatility.

But for the Fed, when we're looking forward, there are a number of challenges.

Growth is stable, but stable in the wrong way.

in that it's not because consumers are strong it's because business investment is very rapid and very robust and so the challenge for the fed is do we hike rates thereby potentially squeezing off consumption even more in an environment where business investment is accelerating as much as it is but at the same time the bond market is starting to throw a little bit of a fit And clearly wants to see the Fed act.

So they are in a little bit of a rock and a hard, between a rock and a hard place.

What keeps you or what would keep you constructive through the balance of this year?

And you tell me if you agree with this thinking, they don't seem to care as much about government debt yields being on the move because it's kind of a spending at all costs and the growth is worth it.

Yeah, well, they do and they don't.

So they have to care a little bit more than they used to.

Okay.

Given that they have debt now, the net debt to assets are generally rising, albeit very slowly, for some of the big hyperscalers as their issuance has accelerated.

As a result, when debt costs rise, their general funding cost is also going to rise now, which was not the case four or five years ago when they were basically entirely equity and cash funded enterprises.

So that makes a difference for them.

What do you think is different now that it seems like value is where there's opportunity?

Um, but are you anticipating more?

Well, so the Fed funds futures market is pricing in a hike this year, but I would argue that the equity market is not.

And there are these periods of time where there's some nuance that emerges where Fed funds futures tend to price, uh, Fed movements much more frequently than they occur.

They tend to get a little bit overexcited on either the upside or downside directionality of, of rates potential.

Equities instead are sitting on what we've seen, what we see as, uh, a view of neutral.

Uh, the equity market does appear to be priced for no Fed change to emerge, for also the 10-year Treasury yield to stay around 4.5% or below.

The, that's where the risk starts to, um, hit the equity market, is if we do see rates rise, if we see especially the long end of the curve rise and the short end of the curve rise, then the equity market may be caught in a slightly mispriced position, of course, depending on where earnings go, uh, into the second half of the year in 2027.

Uh, do you expect memories to still be kind of front and center i- in terms of demand and appetite and interest in the AI trade?

Can you take us behind the scenes? What was the philosophy behind building those tools for the most demanding institutional investor in the world? And which tool are you most proud of creating?

Sure.

The behind the scenes, Bloomberg is a very innovative company.

That's what Bloomberg does.

They build products for analyzing the equity markets.

I was in the research division inside Bloomberg called Bloomberg Intelligence.

At the time that I joined, we were compiling data, providing aggregated information, unique custom data series, as well as providing market intelligence through research.

And I use it.

That surprised me.

Yeah, I do think that underneath all of these AI fireworks, if you will, you do have evidence of accumulating economic growth and broadening economic growth so far this year.

For the first time in three years, the ISM Manufacturing Survey is expanding and has been doing so since January.

We see a broadening of economic improvement to other sectors beyond just tech.

It's light so far, but nonetheless I think that broadening of improvement combined with yield curve steepening, combined with still tight spreads, all suggest generally economic conditions are fairly sound and may even be improving over the course of 2026.

The job market is a really good representative example of this.

2025 was a rough year for jobs.

What would need to happen for this A.I. trade to keep working?

Uh, what were your main learnings from, from your periods in those two places?

Oh my gosh, it's-- There's so many things, and I have just tremendous gratitude for the experiences that I had at those two very large institutions.

They're two very different institutions.

One obviously a, a public bank that was growing by leaps and bounds early in my career, uh, that had three different name changes through transitions of different stripes, and then the giant that is Bloomberg, um, which was also an extraordinary experience.

I'd say some of the top things I learned, maybe we start with Wells Fargo.

Um, really extraordinary teams and managers.

Uh, w- I was just extremely lucky to work with a lot of people who recognized my passion for the industry and helped cultivate that passion.

... how do you decide which signals matter and which ones don't?

That-

So even a balance sheet contraction, if rates stay steady, would not be great likely for small caps unless you've got an even greater manufacturing recovery emerging.

Now, all of this assumes something really interesting I think that we haven't talked about yet, and that is the mix inside the economy is very different today than it was, say, 10, 15, 20 years ago.

Very different, frankly, than it has been at any point in US history since the ni- late 1990s, and that is it's all business investment and manufacturing.

It is not a strong economy in the way that we and our mothers and grandparents thought a strong economy would look-

Right

... and manufacturing specific to tech industries, and that's playing out in the markets really profoundly.

If that changes, if you see the consumer start to recover a little bit, if you see manufacturing industries outside of technology start to actually participate to a greater degree, that can also create a big tailwind for small caps and non sort of narrow AI-focused tech industries and in adjacent industries that are supporting that build right now.

Do you expect to see tech continue to outperform?

Well, it depends on whether or not they can continue to post extraordinary earnings growth.

I mean, what we did see in the second quarter so far is the market really rotating to growth as a factor away from quality, away from value.

Certainly growth is the driving sort of component behind the market rise.

So that's why it's been quite narrow is the earnings recovery has been very focused in just a few names inside technology.

We are seeing generally pretty strong earnings growth across the board, but tech specifically is posting 50% earnings growth.

And so the market really pushed into that.

Okay, so it can continue with as Jay Woods over at Freedom Capital calls it the leadership of the generals, right? But as you wisely point out, when you think about inflation and the potential pressure on valuations, where are you worried about getting stretched from here?

How are you processing what's happening in the Middle East and the reaction here with equities?

Yeah, so really clearly we had a panic low put in for global stocks at least.

U.S. stocks have carried through on that panic low.

We did not have a whole lot of panic emerge in the U.S. equity market, but at least the technicals have improved with prices moving higher, momentum confirming the advance, breadth improving as well.

think broadly fundamentals are now what the market needs to contend with and traditionally what we don't see what we see is fundamental start to deteriorate after well after the peak in oil prices.

We probably will see analyst expectations for the second half of this year trimmed a little bit later in this earnings season and into the summer months.

But where those expectations are trimmed is going to be very critical for performance.

Do you think the consumer can continue to hold up even with these elevated oil prices? I know there is a view that the one big, beautiful bill helps, but how much can it help?

you know the price people are feeling it uh in their pocketbooks uh let's talk about the overall supply shock you say every supply shock has different consequences for markets but there could also be similarities and i know you've been you know i remember 2022 when uh the pain markets went through there what are you watching in terms of the similarities between the supply shock then and now

Well, if you look at broad commodity prices as represented by the Bloomberg Commodity Index, we're actually experiencing bigger commodity price acceleration this time than we did in 2022.

That's in part because metals costs accelerated so much over the last six months.

We've seen a little bit of a reprieve there.

But because of this experience of war and the embedded inflation that was in the system, we're seeing broad cost accelerations for food potential inputs as well as across the chain with respect to chemicals.

Broadly, we're seeing input costs rise.

And I think that that's important to consider for companies As they're working through the process of producing earnings results this year, they could have certainly some constraints emerge on margins.

So, you know, I wonder if there is some credence to balance sheets being able to hold up.

Mm-hmm.

... of pricing, of power? So far, and we've certainly seen this after the tariff pause, it's all Mag 7, right? If you look at the divergence that has existed so far in the post-tariff pause world, it is companies outside of the Mag 7 are experiencing the greatest deceleration in earnings growth prospects.

Inside the Mag 7, you still have that big moat.

As a result, the market has gone back to sort of pre-2025 trends and started to excessively price the stability of the Mag 7 earnings stream.

Uh, so, where you, w- this is a very consistent s- theme over the last two to three years, is any time we enter a period of strain on earnings, investors believe they'll just rush right back into Mag 7, because they do have some degree of stability.

They do have an incredible amount of cash.

They generate a lot of cash flow.

Mm-hmm.

Here, Gina Martin Adams on this moment of a trade war.

This president is very committed to amending the order.

How much he amends it is up to que- uh, up for grabs, it's a big question.

But we will have an amendment to the global world trade order, and that's important to understand, is there's no going back to where we were on January 1st.

(laughs).

(laughs) And I'm not sure that's gonna be the case.

I, I think you have to sort of respect the commitment level to changing things, while it'll be in fits and starts and certainly a volatile path.

We will be a changed universe going forward.

Given the, the turmoil it, uh, in, in the Oval Office, Gina Martin Adams, given a tweet on Ukraine, what does the long-term investor do? How do you take part in Bloomberg Surveillance but not let it affect wisdom out three years?

I think that's a very great, that's a great point.

And because right now we are caught in a lot of short-termism.

But there is one big trend that has emerged so far this year that I think will only be exacerbated by the Trump policies, and that is performance of non-domestic stocks, where we have seen over the course of the last several years US stocks outperform materially.

In an environment of, quote-unquote, "US exceptionalism", US stocks outperform materially.

Tech stocks in particular in the US really drove that outperformance.

But we're starting to see so far this year a rotation to non-domestic equities.

And, uh, and those days you're suggesting may be waning?