Bloomberg Surveillance TV: November 2, 2026

Bloomberg Audio Studios. Podcasts Radio News. This is the Bloomberg Surveillance Podcast. I'm Jonathan Farrow, along with Lisa Abramowitz and Anne-Marie Hordern. 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 6 to 9 a.m. 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. We begin this hour with tech stocks bouncing back, heading into the next wave of earnings. Ed Yardeni of Yardeni Research writing, AI jitters are likely to continue beyond Halloween. Nevertheless, we're sticking to our 7,900 year end target for the S & P 500. Ed Yardeni says, Santa's coming. Ed joins us now for more. Ed, welcome. It's good to see you. Why do you believe this is not the beginning of the end for this trade?

Well, simply because AI is the real deal. I mean, clearly a lot of money has poured into the industry, but the result is AI does work. It's just it works for the customers. It's not clear that customers are generating enough revenues for the companies themselves. But I think what's going on is actually very positive. I thought we all believed that the AI was coming on too strong, too fast, and now that it's slowing down, we're worrying about that.

I think it's a good thing. I think it's a good thing that the bond market.

The bond vigilantes are basically regulating credit, allocating credit properly, and that's a good thing.

That's not the only story, though, Ed. It's also the earnings story. If you'd spent the last 12 months monitoring this program, the overwhelming majority of responses that we get from people when we ask them why they like the stock market, they'll tell you the earnings. Is the ultimate support factor becoming a bit of a vulnerability, given some of the reports we've had over the last week?

Well, we've had some reports that have been disappointing, other reports that have been better than expected. All in all, we looked at the weekly analyst consensus expectations for last week, and they were kind of flat.

They didn't really lower their numbers.

And as a matter of fact... They're still very bullish about 2027 and 2028. The 2028 number.

They're using is $ 500 a.

Share, which is what we've been projecting for 2029 as the expectations. So they're very bullish on earnings, and they haven't really pared back their expectations as a result of some of the haircuts in Google and Intel, for example.

Ed, are the bond vigilantes throwing a kink in some of those earnings plans? You said that bond vigilantes are monitoring the credit story. And I just wonder if they are doing that and they're jacking up the borrowing costs and we'll see just how much they are later today or tomorrow when we get the results of.

The Alphabet sale.

How much does that crimp some of their forward-looking ambitions?

Well, you know, we have a lot locked in already in terms of commitments to building data centers. We've got lots of backlogs that the hyperscalers can pretty much rely on, which is why they're scrambling to build these data centers so quickly. But it's been kind of the Wild West, and I think the sheriffs are coming in to cool things off. The neoclouds have been borrowing willy-nilly, and now that's going to be more expensive and more regulated. OpenAI, as you said, just tried to raise more money than the market was willing to give it.

This is all good.

I have no problems with the markets regulating the AI boom.

Is it better as an investor for the stock or for the bonds of some of these companies?

A very, very good question. I think it's better for the bonds. The stocks, I think we still have that uncertainty about when all this spending is going to generate earnings. But to have a slowdown in the issuance of bonds, the supply of bonds by the AI companies, I think takes the pressure off of what's already been issued.

Ed, the election is tomorrow. Lisa posed the question at the top of the show. Is it a clearing event or is this going to be a new source of volatility for the market?

Well, I got a sense from Lisa that she kind of views, and Lisa, you could tell me if this is the case, that this is not that simple. This is a much more complicated midterm, a lot more really at stake. I guess we always say that about elections, but truly we're talking about a radical change in the Democratic Party and if the Democrats do in fact gain the House and maybe even the Senate. I think the stock market has to consider the possibility that partisanship will be much worse than it's been so far, and it's been pretty ugly up to now. And if Parkinson's is much worse, it means that next time we get into a government debt crisis, next time we get into a government shutdown, these events could last a lot longer and

actually have a much more adverse impact on the government and the economy, I should say.

So that will be obviously market negative.

Market negative.

Do you think the market right now is pricing in what the polls are, which is a Democratic sweep?

Not entirely.

I think the market has a bit of a contrary bent, you know, sort of the rallying cry as Democrats pick up the phone and talk to pollsters and Republicans don't.

So we'll see the extent to which that's true or not.

But I think it could be a very cold shower for the market in terms of the gridlock.

Usually the market loves gridlock. But in this.

Situation, we're talking about much more partisanship. And we may actually need them to get along at some point and come up with a significant, serious, credible deficit reduction legislation in the event that the bond market acts up again.

Ed, I have to say, you're talking pretty gloomily for someone who's expecting the holidays around the corner.

Where's Santa in all of this?

Well, I think it's in earnings.

You know, I guess what I've learned over the years is it's amazing how well the U.S. stock market and the U.S. economy do, despite Washington.

So, sure, the headlines....

Coming out of Washington more often than not are not all that bullish. The government meddles a great deal with the economy and that can have adverse impacts on the stock market. And yet somehow or other, because of all the working stiffs that are out there trying to make things better for themselves, their families and the communities, the economy does well.

And that's what I'm counting on.

Stay with us. More Bloomberg surveillance coming up after this. Let's talk about the politics under Savannah's this morning, a democratic defection.

My name's Hayley Stevens.

I'm president.

A proud Democrat, and.

I am endorsing Mike Rogers for the United States Senate because we have to stand with country.

I actually don't think.

About Haley Stevens.

I think about the, like I said, the 9,999,998 people who are not those two.

I'm just less.

Interested in the politics of it all than I am in the policy of it all.

So here's the latest this morning. Michigan Congresswoman Haley Stevens crossing party lines, endorsing Republican Mike Rogers over Democrat senatorial candidate Abdul Asayed.

There's a lot going on here in this race. There's a huge divide on policy. There's also two massive egos. You have Haley Stevens, who's a congresswoman there. We've interviewed her on this show. Some people are saying this is really just sour grapes, but at the last minute, this is why a lot in her party.

Feel very betrayed.

The crux of the matter is, if you look at the New York Times polling, it hasn't changed anything. Immediately when you looked at the prediction markets, when I saw her video come out, and I actually had to check with someone in her camp, is this real, is this AI?

And they said, no, it's real.

Prediction markets, you saw them move slightly, but all that has been reversed. And not only has Abdul El-Sayed gone up in prediction markets, he's also brought in a lot more money after she defected.

Here's the take from Jessica Taylor this morning of the Cook Political Report. The views on Michigan are a toss-up. She writes, if enough Democrats skip the ballot or split their ticket for Rogers, there could be an outcome that goes against the national mood. But El-Sayed likely has a slight edge. in this final stretch. Jessica joins us now for more. Jessica, welcome. A surprise for many over the weekend.

Does it change things for you?

I'm sure that it fundamentally changes things, if nothing else, because a lot of people have already cast their votes in Michigan. If more Republicans were likely casting their votes on Election Day and waiting, and they were probably already going to vote for Rogers, I'll be looking at black turnout, particularly in Detroit. And if that switches at all, if that's soft for El-Sayed, then that's where we could see a movement. with Jewish voters in particular. But this is such a complicated race. It's been one of the most acrimonious races from the start. But it was still a surprise yesterday to me when Haley Stevens completely crossed his parties and, you know, sort of stabbed her primary opponent

in the back there.

Jessica, do you have an understanding of why she did this?

I think a lot of people are really.

I think she felt really slighted when she was disinvited to what was supposed to be a unity event at a black church with Jim Clyburn.

But.

To go and do something of this magnitude, it really, I think, speaks. There's questions about the influence of her fiancé, who is Jewish, having an impact on this because he's already said that he is voting for Mike Rogers. I've talked with a lot of her staff in the past few days. They are just befuddled and really upset at her.

We saw her chief of staff leave. I talked to some of her former campaign staffers. The fact that she would cross over and vote for a man that she said repeatedly in the primary was unqualified and would just be a rubber stamp for Trump is just really hitting them the wrong way right now.

I'm curious on where this leaves her in the lame duck session. Do we see her if there's any votes to be taken, vote with Democrats, or does she cross party lines?

I think she's going to be very unwelcome by her Democratic colleagues, maybe, except for I am watching the other member of the Michigan delegation that has not endorsed El-Sayed that is close with Stevens is Hillary Scholten, who represents Western Michigan. But I think she's not going to be very welcome, especially if El-Sayed loses.

Narrowly and if this could hinge on Senate control.

I doubt that for this very short time she changes parties, but her future in Democratic politics, at least, I think she has imploded that for right now.

All right.

We'll leave that story in Michigan for the moment. The New York Times-Siena polling last night, their last iteration of polls before the election day. Democrats are currently up in Michigan, Texas, Kansas, Maine, Ohio. They also have an edge in Alaska. And basically, Iowa, we are seeing a tie. When you look at your channel checks, is this also showing the same case for you?

I think that some of the polling, if this has moved in the last few weeks, in the last week or so in Democrats' direction, I've seen closer internal polling from.

Both parties in some of these races.

But it largely tracks with the toss-ups that we see there. Iowa, of our toss-ups, of our seven toss-ups, that is, I think, the toughest for Democrats right now.

And so that mirrors that.

I've heard some increasing Republican pessimism, particularly on Kansas and the state of the race.

That Roger Marshall is running there. But, you know, we're also.

Watching those states in the lean Republican column, Nebraska, South Carolina, and our likely column, Mississippi.

Florida.

We should get some early results, particularly in South Carolina and Florida, that should tell us if the margins are closer for expected.

If Democrats are.

Doing better in those redder states, that could be a harbinger of better things to come for Democrats across the map as the election moves west.

On Wednesday, the 2028 presidential elections will kick off. And I'm just wondering, what will the message be to both parties coming from this election? And sort of how predicated is the tone of this particular election cycle on what happens on Tuesday?

I think both parties have some soul-searching to do. I've been calling this election a pox on both parties, but Republicans are the ones in power. So voters want change, and in the two-party system, change means Democrats. Democrats should not overread a win on Tuesday night as an endorsement of everything that they stand for. I think that if they can put forward affordability— issues and make some meaningful changes with having control of the House and possibly the Senate.

That could go a long way with voters. But remember, they still have a Republican White House, so what they can do is limited. And I think for Republicans, if they are shellacked, let's put it as the word that Barack Obama used after his 2010 midterm when they lost 63 House seats, It should prompt some soul-searching, I think, within the MAGA movement, but I'm doubtful that you're going to see that from the Trump White House.

But it could have major.

Implications for those looking to succeed Trump, primarily Vice President J.D. Vance.

What do you think we're going to see with respect to deficit reduction? I realize this is a bit self-serving. Does anyone care about the deficit?

I think voters do because they view it as just driving up rates and different things. But this was something that we saw in the Tea Party movement in the 2010s. But the Trump White House has not worked to reduce the deficit.

They've increased spending, in fact.

So does this— does Republicans go back to being the party of smaller government and wanting to cut waste and— waste government spending, we'll see. They tend to do that more when Democrats are in power than when they are in power.

Imagine grandma waking up in the middle of the night in sweats, right?

It's happened.

The deficit.

Well, I mean, I'm worried about children.

It should. Stay with us. More Bloomberg surveillance coming up after this. Bob Dole of Crossmark writing, the AI bubble is deflating and the risks of a bust have increased. Mounting woes and wider credit spreads warrant a more constructive view of bonds and a more cautious view on equities. Bob joins us now for more. Bob, bubble, powerful word.

What tells you that this is exactly that?

When you look over your shoulder, you see so many double-digit percentage declines in industries and individual stocks. How can you not say a bit of a bubble has burst? That doesn't mean the fundamentals are over. It just means we've got to pause here, and technically we're struggling. We have to figure out, are earnings estimates too high? Look at Google, Amazon last week. Number two, how are we going to finance the CapEx?

That's all over the place.

And most importantly, long-term, number three, How are we going to convert all this spending into free cash flow?

I think that's what the market's wrestling with.

Yeah, Bob, I'm right there with you. I think a source of comfort for some bulls, at least, they've always pointed to the multiple through much of this year. They'll say the multiple is low. This isn't a market that's overextended or too expensive. Are earnings estimates too high? Bob, I think that's a really important question.

It is, and only time will find out.

But I come back to a couple of the Mag7 last week, disappointing on earnings, not around CapEx and all that, but on actual last 90-day earnings.

So we've got to watch that very carefully.

Earnings estimates, as you know, have just gone through the roof and so far have been justified until recently within tech.

I mean, I.

You already hinted at this in the rotation. Friday was a capitulation sort of day.

It was awful.

But six of the 11 sectors were up on the day. People aren't leaving stocks. They're just leaving a tech stock and going into a lily or something like that.

So where are we?

If you think of this as a bubble that's getting punctured, how far have we gotten in this sort of reckoning that you think is sort of warranted, given the fact that we did see all of that negative free cash flow?

I think it's just going to take time. I don't know that we see a whole lot of downside.

Those of you that are technically oriented, you know we've broken a lot of resistance lines and floors have been violated. So I think it's going to take time to repair. So we might not have a whole lot of downside. As we point out, P.E. ratios have come down a bunch from 23 a year ago to 19 today. And 19 is not cheap, but it's nothing like we saw in the dot-com bubble, of course.

There has been a question that we've been asking a lot of people, which is, does the recent kind of reset in earnings and earnings expectations mean that bonds are starting to look better than stocks, not only on a sovereign level, but also from the credit perspective? If you want to own, for example, Alphabet, would you rather own credit with spreads that are a little bit wider rather than the equity?

Where do you weigh in on this debate?

I think it's much more of a debate than it was when it was uniformly you've got to own stocks. Now we have question marks. You pointed to credit spreads, and they're widening. Not a lot, but enough to pay attention for the overall macro environment and to your question about do I own the company's stocks or bonds. The stock story is still a good one, but in the meantime, not so much. And when you have the 10-year Treasury getting to 535, where it was just a few weeks ago, the risk-reward, the earnings yield versus the bond yield.

So you better own a couple of bonds in your portfolio.

Bob, you also talk about how one risk factor that investors believe to be receding but is proving more resilient, of course, is what's going on in oil. How are you thinking about the oil trade now, given the fact that it's been whipsawed once again because of an Axios report?

Yeah, it's a wild one.

I think it's become a background issue, but it is still a front burner issue with oil comfortably over $ 100 a barrel. You got to own some energy in your portfolio. I can't predict what's going to happen over there, but the two sides seem... so far apart, and that obviously bleeds into the inflation rate. I mean, the Fed's favorite PCE number last week, the inflation deflator was over 3%, 3.6 on the headline, nowhere close to 2.

Inflation is still a problem, and that haunts the market.

When you say you have to own some energy, do you mean the actual commodity itself or the Chevrons and Exxons of the world?

The latter, I have no clue on the former.

A lot of days I feel like I have no clue on the latter, but I want some equity stocks in my portfolio, correct?

This is the Bloomberg Surveillance Podcast, bringing you the best in markets, economics, and geopolitics. You can watch the show live on Bloomberg TV, weekday mornings from 6 a.m. to 9 a.m.

Eastern.

Subscribe to the podcast on Apple, Spotify, or anywhere else you listen. And as always, on the Bloomberg Terminal and the Bloomberg Business Hour.

Bloomberg Surveillance TV: November 2, 2026

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