Bloomberg Surveillance TV: November 3rd, 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.

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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 out with stocks wavering on fresh tech fears. Bob Michael of J.P. Morgan writing investor disappointment and hyperscaler earnings is less from AI endeavors and more from traditional business whose revenues are paying for AI capex but growing at low double digit rates.

Bob joins us now for more. Bob, good morning.

Good morning.

Good to see you. Talk me through the cracks emerging in your credit space right now. How isolated are they?

They're pretty isolated. We looked at yield changes quarter to date. And granted, it's a small sample. But when you look at the AI and related, the hyperscalers, you're seeing credit spreads out 25 to 30 basis points. When you look at the rest of the deals, they're out two to four basis points. Yesterday was a great example with that.

Oracle comes to market. It widens spreads a little bit. The deal ends up going fine, I think three and a half times over subscribe. I mean, we've been here, but I've been here before. I've heard a lot of moaning about the high yield market and narrow credit spreads. And really, you have to buy stuff that's 200 over, that's 7%. And there you have it. You have triple B rated Oracle, 10 years at 8%. So that went well.

But it was the non-tech AI related deals that went exceptionally well. They were six times oversubscribed. So the differentiation is there, but there's still money coming into the bond market looking for yield.

And there's still a lot of supply as well.

There is a lot of supply. It's not surprising. I think the issuers are becoming a lot more sensitive to that. Some of the deals were scaled back by $ 5 billion or so yesterday. That's a good sign. They're more thoughtful in telling us. This is our plan. We're going to issue today, and then it will be three to six months before the next issuance. That's easy for us to absorb.

This is the guidance that Lisa was talking about. By the way, Bram, you mentioned the same thing, that we need to see more guidance from these guys about what they're going to issue and when they're going to issue it.

Well, and that's ultimately what Oracle did, and part of the reason why they had better execution was because they were going that way. By the way, I'm not moaning about what's going on in the high-yield space.

Did I even.

Say your name once?

You didn't look at her. You didn't look at her.

Serious death stare.

There is a sense, though, that at a certain point, you're going to get so much pushback that certain companies are not going to come to market, or they're not going to be able to raise financing. Are you seeing any deals– not come to.

Market that you were expecting?

Or names decide to look for other creative ways of financing? Are you seeing the risk kind of shift away from public markets as a result of some of this pressure?

Well, the.

Chip financing, the GPU financing, that's all out there. And I think when you look at RD Mish and Beignet, those transactions serve as a blueprint. I think those are pretty smart transactions. At times, those older deals come to the market to make room for some of the newer deals. Those present value. There's a lot of conversation going on.

So far, there's not been a barrier to issuance. Everyone's happy now. to come up with some capital to place these deals. I'm with Anne Marie, though, on the election. I've been following the gubernatorial races because I think that's critical. And we were trying to put together our own spreadsheet of what happens where. Happily, overnight, Mike Sembliss came out with a cheat sheet for us. and the three to watch are kind of like SEC football weekend. It's Texas, Oklahoma, and Georgia, because there the expectation is if the Republicans manage to win those gubernatorial races, You may see conditions around data center build, so the things that you were talking about where you'll build bridges and schools and roads

and pay for power versus the Democrats who are saying that there would likely be a pause so you don't get the construction with conditions.

Does that make you more willing to lend or less willing to lend if you, for example, get some clarity on where data centers can be built, but they get a whole lot more expensive?

Yeah, and again, just looking at some of the work that Semblos did, there's 37 gigawatts of power production that are coming online next year. That's largely under construction. There's 97 that are planned for 2028. That's what's at risk with the elections. If there's enough populist pushback, we'll see.

I mean, 2028 is a long way away. You've got a year and a half till you get there. And there could be a lot of bartering back and forth right now. We know that these companies have a lot of profits, so they can share that with communities.

How are you viewing the election in terms of, do you think it's a clearing event for the bond market?

We've looked at it two ways. We looked back on this year, and there were two things yet to get right. One is the repricing of the Treasury market. Yields went up over 100 basis points from below 4% to above 5%. And the other is the amount of AI issuance. And I think we talked about watch the governor races. for AI.

For us, thinking about the potential for a blue wave here and sweeping Congress, I think it's mixed for the bond market. I think it's good for treasuries, and I think it puts credit at a bit of risk here because you're going to have a Congress that can be emboldened to antagonize the administration. There are all the things about the appointments to the Supreme Court, to the Federal Reserve.

Those are going to be controversial. There are going to be debt ceilings and all kinds of stuff. And credit risk doesn't like that kind of animosity in Washington.

What would be the worst case scenario for the bond market?

It would actually be a Republican sweep. I imagine the equity guys would be rejoicing because they'd be thinking about some continued fiscal spend. Is it $ 5, 000 checks for everyone?

It's not happening, Bob.

Come on. I know it's not going to happen, but there will be a lot of talk of that. And the demons will set into the bond market again. And if you're at the Federal Reserve, you've got to think about, uh-oh, the floodgates are open on borrow and spend. We need to push back on that. But that looks like the smaller of the terrorists, frankly.

The Treasury is going to be in focus tomorrow as well. Right on brand, this program will be covering the quarterly refunding announcement while the rest of the country focuses on the election. What kind of changes are you expecting?

I'm going to help the Treasury out right now.

Go on.

Get rid of the 20-year. Nobody likes it. It's applying the long end. Why do you issue it? It made sense in another era. It doesn't make sense now. Just say it's done for. It was an orphan issue. We're going to just dump it into the front end where there's $ 8 trillion in money market fund assets, plus a lot of other liquidity sloshing around the system. we can finance ourselves there with ease.

Is that sufficient? You get rid of 20s, do you rebalance supply and demand at the long end sufficiently?

Well, don't forget, they're still coming into the market and buying about the $ 6 billion a month in the long end. You put the two together, you get some pretty nice support out there. It is the equivalent of what Yellen said, paint drying. It just happens. Nobody's really talking about it anymore. It will create a level of support that us holders of the long end will like.

This bond market has been nothing like watching paint dry for the year so far. How much support has come from the deceleration on the equity side? in the tech trade how much support is coming from that well.

It it first started when we went from below four to above five and i was on i said we had been buying that now looks uh like a good decision when we had a blow off top and then you just run out of adrenaline if if you've created a big short in the market. Where do you cover? You're at 530. Do you wait for 550? Do you think, like, it just started the covering, and I think that brought us down closer to five. I'd have liked to have stopped there. It would have given our clients a lot more time to buy, but now it's the anxiety about, what's going on in the AI build-off. I think the bond market went through its demons from March to September and to October. Now the equity market, which held up pretty nicely, is going to go through some of its demons,

and the bond market will benefit from that.

Do you think we've went through the worst of that then? It's over?

Yeah. For the bond market?

Yeah.

I think we're at a point now where we can easily see the Fed funds rate and the Treasury yield curve converging around 4.5%. We put that out there in September. We still believe it. Are there going to be fits and starts along the way? I think 480 is an interesting time. first level to reach because that's the 100-day moving average. It's a Fibonacci retracement level. There's all kinds of stuff there. But I think the days of pushing well above 5% are in the past for now.

Super flat curves, basically what you're looking for. That's what it sounds like.

Yeah, it feels like it because I think there is an expectation that higher rates do exact a cost on the economy. They do help to slow things down. I think everyone's parsing through the economy and we recognize the third quarter was a strong quarter. There will be some payback in the fourth quarter. And I think everyone's getting comfortable like, hey, you know, the Fed funds rate can get into the mid fours. I don't know. four and three-eighths, four and five-eighths. That's still a heck of a lot higher than zero where we were a few years ago.

And it's a lot higher than three and five-eighths where we were a few months ago. But it's not at five or six percent yet in this cycle.

Stay with us. More Bloomberg surveillance coming up after this. candidate quality is something that's come up continuously with regards to that race toby marcus of research has this to say we're confident that the polls are overstating democratic strength no matter how it turns out we see limited policy and market implications from a blue sweep toby joins us now for more toby let's get to that first line let's dig into that interrogate it if you will why do you think the polls are overstating their strength Thanks for having me.

So this is not just a view that the polls are always wrong, that they always overstay Democrats. We were making the opposite argument in 2022, pushing back on the sort of buzz about a red tsunami at that time. But in this case, we do see, I think, some patterns that give us pause about taking the results at face value. On the one hand, just in general, when you get out into the tails of the generic ballot polling, the bigger the advantage for one party, it tends to not fully translate into the actual result. And then I think more troublingly, we have this very clear pattern where the blue shifts from 2024 to 26 have been much bigger in redder places, which looks a lot like the pattern of past polling error. and 18 and 22, when

we had pretty good, accurate polling at the national level, we still had a pattern where Democrats were more overestimated in redder places. And that's exactly where they need to perform well in order to retake the Senate today, and where they have been performing kind of surprisingly well to date. So I think Fairly clear to me that the error is going to be in that direction. The question is magnitude, whether or not that error is big enough to overcome the margins that they currently have in the polling averages in key red states.

Tobin, in these key red states, which ones do you think that the Democrats have the best favorability?

You know, I think Ohio looks pretty good. Texas, I think, is where they have the clearest candidate quality advantage, but it is a somewhat redder state. So I have generally felt better for Democrats about Ohio and Alaska across that set of red reach states. But honestly, I think they're all fairly flat. Like Iowa, I think, is a bigger reach.

Kansas has kind of recently made its way into that set of reach states for Democrats. but with quite good polling recently. But across Ohio, Texas, Alaska, I think it's fairly flat, and I wouldn't be that surprised about any particular permutation of those.

Forget the polls.

Polymarket this morning has Telerico 75% in Texas. And I mean, it was also the betting markets that were pricing in a Trump win in the presidential.

What do you say to that?

This is people putting money on these races, not pollsters making cold calls.

Yeah, so I don't really think that it's possible this cycle to look at the betting markets and say, put the polling aside, because they have just so strongly followed polling all cycle long, both at the national level in terms of things like Senate control, and then also when you dig down into some of these particular races.

So in situations where.

The polling has been very wrong, the betting markets have been very wrong in the exact same way. The particular example that always comes to mind for me is the Wisconsin Democratic Gubernatorial Or you had Francesca Hong, who I think everyone would acknowledge was a very weak candidate and yet quite ahead in the polling. She was 95-plus percent to win on the eve of that election before having a 15-point polling miss and losing out. And if ever there were a situation where sophisticated betting market participants ought to be able to sniff out a weak candidate, sniff out the possibility of a polling miss, you'd think that would be one of them.

So they've not exactly.

Covered themselves in glory this cycle. And, of course, internationally, we have situations like Brazil where there also were huge, huge misses recently.

Tobin, how much are investors already pricing in increased regulation on data center build and the idea that some governors will win on the mandate of reducing or completely prohibiting any new data centers from being built?

It's been a very active talking point for investors. I don't get the sense that there has been that much change. active portfolio positioning around it. Texas clearly is the biggest question. If Governor Abbott loses in Texas, I think that's a thing that pretty much everyone involved in this trade has circled as a potentially really material setback that could spook markets.

The rest of the shifts, you know, you have states like Ohio that are kind of deterministically moving in a more restrictive direction. because both the Democrat and the Republican are running on more data center skeptical platforms than the current Republican incumbent. But in general, you know, we think that in most states, like we're going to be able to absorb a little bit of a shift in that direction.

Even the most strident anti-data center critics are essentially saying we want to build it right. We want to build it under certain conditions rather than saying we don't want to build it at all. And as I think you were talking about in the previous segment, you know, the impacts largely are falling farther in the future. Anything with shovels in the ground is not going to be effective right now. We've also, I think, nicely had a little bit of, you know, the kind of rotation out of that trade over the course of the past week or so does put us a little bit better positioned into the midterm. I feel a little more worried about the data center trade getting spooked if everyone were like really overextended in a bullish direction. And that swung back a

little bit in.

The other direction.

Significant repricing heading into this vote, that's for sure. Stay with us. More Bloomberg surveillance coming up after this. Let's get to Anthropic. The Wall Street Journal reporting institutional investors are pushing for a lower valuation ahead of the company's planned mega IPO. A growing list of concerns putting the target at 1.5 to 1.6 trillion. Dan Ives of Yorkville Ives writing, the deal still gets done in our view, but valuation will be the question. Dan joins us now for more. Dan, good morning. It's a $ 500 billion swing.

That's something. That's not nothing. What's underpinning that?

I mean, I think it's the amount that they're going to need to spend. I mean, if you look in the S1, I think that's something where, especially in this broader market, what we're seeing in terms of just credit and bond yields and ultimately for Anthropic, the growth is not the question.

But I think it's just getting there.

And from a monetization perspective, the amount of capital they're going to need to raise. And you could call it 1.5, you know, is maybe baseline to what probably could even go lower as you get into mid-November.

So they're looking to spend what, close to 500 billion through 2030? If they don't get an investment-grade credit rating, how compromised is their ability to meet those commitments?

I think it will be tougher.

Look, no doubt, the investment-grade, I mean, that's something where a bit of a gut punch. And I think if you go back to the market, you know, selling off even last week when that news came out. You look at the updated S1 when it came out yesterday. I think that definitely put pressure on the tech.

Trade because they're anthropic.

It's foundational to the AI revolution, no matter which way you cut it, from NVIDIA to Microsoft to Amazon to everything. So the tech trade needs this to go public, not just for what they're going to raise from a capital perspective, but then the valuation.

What's the mark? Is it $ 1.

5 trillion?

Is it $ 1. 4? What's the appetite going to be?

When I think of Dan Ives, I think of the biggest tech bull out there. I think of someone who says it's always 10 p.m. at this all-night rager party. And sometimes it gets to 11 a.m.

The clock stopped 10 years ago, didn't it?

You know, what's the sweat factor for you right now when suddenly these valuations seem to be in free fall, regardless of what they post in earnings, regardless of what they can finance in debt markets?

Yeah, I mean, I'd say right now the nervousness is, from an investor perspective, in my conversations, SaaS apocalypse type feel, going back to like March, April, and maybe even worse, just because the capital raises.

That we're seeing kind of flooding the market.

Now, in terms of like my, you know, fear, the words in terms of the tech trade, look, I think it's a tale of two cities, because the hyperscaler numbers, the CapEx, check, check. You look at Palantir, the use cases, that's accelerating. But I think then the level of disruption that we've seen, memory, Intel, advertising when it comes to Google, software when it comes to ServiceNow and even Fortinet and some others, I think that's what's really caused this to be not just a white-knuckle moment, but this is a gut-check period. This will be the start of winners and losers and who ultimately sort of gets through.

Can I jump in, Dan?

That sounds like quite a diplomatic way of saying the bubble's burst.

No, I don't.

I mean, to me, I view it different. I view it as like we're just.

No, we're entering, in my view, the next phase where it's not just because you say AI 30 times in your conference call, you could raise capital. I think it's more discriminant in terms of who the winners will be in, not just in terms of raising capital, but just in terms of executing. And I think patience, John, to my view...

Patience is much more wearing thin. So maybe if these companies had 12 to 18 months to monetize, now it's maybe six to nine months.

To me, the concept that Anthropic may not have an investment grade rating is actually a watershed moment because it highlights these companies that used to be asset-light and revenue-heavy. are completely flipped on their heads. And in order for them to keep expanding, they're going to have to pay so much money to give us all new roads if they want to build a data center, and frankly, to investors, debt investors, to raise money. At what point do you think that fundamentally the equity valuations are going to be compromised going forward as a result of all of these extra costs?

I think there's a line in the sand. I think Oracle would probably be more the poster child. I mean, some could say Cori, but I think Oracle where there's a line in the sand where you're like, okay, this is the amount that we're going to raise. We're not going to raise more. We're going to build out these data centers. call it 800 to 1,000. We've talked about data centers in the US next 12 to 18 months.

If that gets cut by 10, 15%, and then it comes down to who are the winners?

Is it Microsoft? Where's Alphabet?

Can they build and their advertising business still be strong?

I think they can get through it.

But it comes down, it's going to be a gut check.

Moment, not just for investors, but for these companies.

And I think It's ultimately healthy, in my opinion, to get to the other side of this. But we're going through one of those periods where not everyone is going to come out of this party in good shape.

So what time of the party is it?

Your neighbors are calling the cops and complaining about the noise level?

We've said it's about 11.30 p.m. in the party.

But in the— But in the party, you could have glass in the dance floor, DJ stops playing music, cops come to break it up.

For a noise violation. I think we're going through one of those periods.

It's more than I thought we were at the party.

I thought it was just the neighbors, the cops have arrived.

This is a problem.

So I think we're going through a gut check moment in the thesis, but I believe the fundamentals will prove it out. Just like we saw at Palantir, Apple, and the hyperscale.

Let's lock it in. 30% of the highs on chips. How much lower before I take you suit shopping?

So I think another 10% to 12%.

Down, I think then we have to maybe... Another 10% down.

Another 10% to 12% down, and I think on the socks. Another 10% to 12% down, then maybe we start to look at towers and we start going suit shopping to potentially see where this could.

Yeah, it's expensive.

I'm not paying for the record.

I know what John wears, so buckle up.

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.

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Bloomberg Surveillance TV: November 3rd, 2026

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