Bloomberg Surveillance TV: November 2, 2026

0:00Jessica Taylor: If you invest or lead a business, one-sided views aren't enough. Join me, Brad Rogoff, and my team at Barclays Research as we debate what's driving markets on the Flipside podcast. Find the Flipside wherever you get your podcasts. Wise is the smart way to manage the currencies you need around the globe. When you send money abroad using your bank, you could get hit with hidden fees and exchange rate markups. There's a better way. Try Wise. Wise uses the exchange rate you'd usually find on Google with no unwelcome surprises. Plus, most transfers happen in under 20 seconds, which means your money arrives in less time than you've been listening to me.

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1:17Jessica Taylor: Bloomberg Audio Studios. Podcasts. Radio. News.

1:26Jessica Taylor: 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.

1:59Jessica Taylor: 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?

2:14Robert Doll: 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 it was 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.

2:56Robert Doll: And that's a good thing.

2:57Jessica Taylor: 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?

3:16Robert Doll: 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.

4:01Jessica Taylor: 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?

4:20Robert Doll: 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. Neoclouds have been borrowing willy-nilly, and now that's going to be more expensive and more regulated. Open AI, 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.

5:07Jessica Taylor: Is it better as an investor for the stock or for the bonds of some of these companies?

5:12Robert Doll: 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.

5:36Dr. Edward Yardeni: 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?

5:44Robert Doll: 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 partisanship 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.

6:37Robert Doll: And the economy, I should say.

6:40Dr. Edward Yardeni: 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?

6:51Robert Doll: Not entirely. I think the market has a bit of a contrary bent. So the rallying cry is 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.

7:35Jessica Taylor: 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?

7:42Robert Doll: 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.

8:23Robert Doll: More Bloomberg Surveillance coming up after this.

8:30Jessica Taylor: If you invest or lead a business, one-sided views aren't enough. Join me, Brad Rogoff, and my team at Barclays Research as we debate what's driving markets on the Flipside podcast. Find the Flipside wherever you get your podcasts. With ChatGPT, you can do more than get answers. You can get things done. When you're running a business and looking to expand, you need a clear view of the landscape before making any decisions. ChatGPT can help you prepare. Connect your Google Drive, point to relevant files and reports, and ask Chat to research competitors, industry forecasts, and market signals. It can turn the findings into a strategic deck in your team's template that you can review before presenting to your leadership team.

9:15Jessica Taylor: Growing a business is ambitious, and ChatGPT can help you do it with confidence. Get started at ChatGPT.com.

9:27Jessica Taylor: Let's talk about the politics. I'm The Savannah's this morning, a Democratic defection.

9:32Dr. Edward Yardeni: My name's Haley Stevens. I'm a proud Democrat. And I am endorsing Mike Rogers for the United States Senate because we have to stand with country.

9:44Jessica Taylor: I actually don't think about Haley Stevens. I think about the, like I said, the 9 ,999 ,999 ,000. 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 Al-Sayed.

10:09Dr. Edward Yardeni: There's a lot of 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.

10:38Dr. Edward Yardeni: 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.

10:50Jessica Taylor: 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?

11:12Dr. Edward Yardeni: I'm sure that it fundamentally changes things, if nothing else, because a lot of people have already cast their votes in Michigan. A few 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 Syed, 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.

11:51Dr. Edward Yardeni: 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 a 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 fiance, who is Jewish, having 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.

12:31Dr. Edward Yardeni: 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.

13:03Dr. Edward Yardeni: 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?

13:40Dr. Edward Yardeni: I think the sum 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 we're also watching those states in the lean Republican column, Nebraska, South Carolina, and our likely column, Mississippi, Florida.

14:21Dr. Edward Yardeni: 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.

14:36Jessica Taylor: 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

14:50Dr. Edward Yardeni: on Tuesday? I think both parties have some soul searching to do. I've been calling this election, it's a pox on both parties, but Republicans are the ones in power. So voters want change. And for that, 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.

15:21Dr. Edward Yardeni: 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.

15:43Jessica Taylor: What do you think we're going to see with respect to deficit reduction? I realize this is a bit self-serving.

15:50Dr. Edward Yardeni: 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.

16:24Jessica Taylor: Imagine Brammer waking up in the middle of the night. It sweats. Right?

16:28Dr. Edward Yardeni: It's happened. The deficit. Well, I mean, I'm worried by the children. It should.

16:34Jessica Taylor: Stay with us. More Bloomberg surveillance coming up after this.

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18:17Jessica Taylor: 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, do you see so many double-digit percentage declines in industries, in 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.

18:52Jessica Taylor: 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?

19:24Jessica Taylor: 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, 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.

20:09Jessica Taylor: 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 have a whole lot of downside. As we point out, P.E. ratios have come down a bunch from 23 years ago to 19 today.

20:48Jessica Taylor: 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 got to own stocks.

21:24Jessica Taylor: 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. Long term, 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, you know, the risk-reward, the earnings yield versus the bond yield. So you better own a couple of bonds in your portfolio.

21:56Dr. Edward Yardeni: 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?

22:11Jessica Taylor: 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 gotta own some energy in your portfolio. I can't predict what's gonna 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.

22:48Dr. Edward Yardeni: When you say you have to own some energy, do you mean the actual commodity itself or the Chevrons and Exxons of the world?

22:54Jessica Taylor: 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 Out.

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