Bloomberg：美股靠盈利消化加息，AI资本开支面临利率反噬风险

WE ARE STILL OVERWEIGHT EQUITIES FOR NOW.

THE AI TRADE HAS A TON OF BEARISH PUSHBACK.

THE EQUITY MARKET IS HAPPY ENOUGH WITH THE STORY OF AI.

AND EARNINGS MOMENTUM FREIGHT TRAIN THAT HAS NOT STOPPED.

THIS IS BLOOMBERG SURVEILLANCE WITH JONATHAN FERRO, LISA ABRAMOWICZ AND ANNMARIE HORDERN. JONATHAN: LIVE FROM NEW YORK CITY, GOOD MORNING GOOD MORNING. BLOOMBERG SURVEILLANCE STARTS RIGHT NOW. COMING INTO TUESDAY, EQUITIES COMING OFF A MONTH OF GAINS WITH MARKET JITTERS AS GLOBAL BOND YIELDS PUSHING HIGHER ONCE AGAIN ON MULTI-DECADE HIGHS AS CENTRAL BANKS IN THE U.S. AND JAPAN POSITION FOR POTENTIAL HIKES. DANI: BESSENT TURNING UP THE PRESSURE.

A CONFLUENCE OF THE THINGS THAT WILL PUSH THINGS HIGHER FROM ISSUANCE BOTH IN GOVERNMENT AND FOR CORPORATE RATE HIKES TO COME. YOU POINTED OUT THIS TREASURY SECRETARY DOES A GOOD JOB OF DIRECTING US EXACTLY WHAT WE SHOULD BE CONCENTRATING. PRESSURING NOT JUST THE FINANCE MINISTRY BUT THE BOJ'S GOVERNOR. JONATHAN: LOOK AT THESE GLOBAL BOND MOVES THIS MORNING. IN THE U.S., YEAR-TO-DATE HIGHS IN THE U.K. LEVELS WE HAVE NOT SEEN SINCE 2008. 15 YEAR HIGHS IN JAPAN, ON THE 10 YEAR BOND YIELD IN JAPAN.

A LEVEL WE HAVE NOT SEEN SINCE 1996.

HOW ARE BOND FLOWS THAT THE ISSUE HAD BEEN SQUARELY WITH THE U.S.. WHAT WE WERE SEEING IS NOT A REJECTION OF TREASURIES CLEARLY BECAUSE THIS IS THE PROBLEM. WE ARE SEEING IS A REPRICING EVERYWHERE. PEOPLE ARE DEMANDING HIGHER YIELDS CONSIDERING. IN THESE TREASURY MARKETS ARE MORE PRICE-SENSITIVE THERE MORE OFTEN PRIVATE INVESTORS AND GOVERNMENTS AT THIS POINT. WHAT YOU'RE SEEING IS A DEMAND.

THE PERFORMANCE OF RISK ASSETS OVER THE LAST MONTH. YES YIELDS HAVE RISEN. PLENTY OF REASONS FOR INCLUDING THIS MASSIVE COMPETITION FOR CAPITAL. RISK ASSETS OUTPERFORM, CREDIT SPREADS UNCHANGED FOR THE MONTH OF AUGUST IN THE WAKE OF RECORD SUPPLY. EQUITIES POSITIVE ON THE MONTH. RISK APPETITE INTO SEPTEMBER. DANI: THERE IS SOME IRONY IN WHAT THE TREASURY DID WITH BUYBACKS ON THE LONG END MAYBE EVEN ENCOURAGES MORE ISSUANCE BECAUSE IT ALLOWS MORE EASE FOR THAT HYPERSCALERS.

PEOPLE HAVE COME ON THE SHOW AND SAID WE PRICED IN THE GOOD EARNINGS SO WHAT'S THE CATALYST THAT WE'VE GONE THROUGH GOOD RESULTS. JONATHAN: CHECK OUT 30'S THIS UP ANOTHER THREE I THINK IT'S EASY TO SAY BESSENT'S EFFORT FAILED. WHAT'S THE COUNTERFACTUAL? WHERE YIELDS THIS MORNING? DANI: THAT'S WHAT HE SAID YESTERDAY, WHAT IS THE COUNTERFACTUAL THAT U.S. BONDS HAVE OUTPERFORMED THE GLOBAL COUNTERPARTS. WE WON'T KNOW AND CAN KNOW.

THIS IS FUNDAMENTALS THAT ARE PRESSURING ENTIRE NEW FIELDS BUT MAY BE SLOWING THE MOVEMENT. THAT WAS HIS ASSERTION THAT HE SLOWED THINGS DOWN NOT TO CHANGE THE DIRECTION. IN HIS BOOK HE DID NOT FAIL IN ANY SORT OF ACTION. JONATHAN: SEPTEMBER RATE DECISION FOR THE FEDERAL RESERVE WE HAVE A PAYROLLS REPORT AND PRINT COMING FRIDAY. THE WEEK AFTER CPI IS THAT FED DECISION. COMING UP CAM DAWSON OF NEW AGE WEALTH. GENERAL KAREN GIBSON OF ACADEMY SECURITIES IS PRESENT FROM DOWNPLAYS THE IRAN CONFLICT IS A LITTLE WAR.

BEATING DOVISH INFLATION DATA STILL AHEAD. STOCKS LOWER AS GLOBAL BOND YIELDS CLIMB. CAMERON DAWSON WRITING WE SEE POTENTIAL FOR HIGHER EQUITY AND BOND VOLATILITY WIDER CREDIT SPREADS AND CONTINUED CLIMBING RATES. GOOD MORNING. RISK ASSETS ARE STILL MOVING WELL IN THE FACE OF THIS REPRICING. A SENSE FROM THE WAY YOU'RE THINKING THAT'S CHANGED. CAMERON: THE REASON EQUITIES HAVE BEEN ABLE TO TOLERATE THE RISING RATES IS BECAUSE EARNINGS HAVE BEEN SO STRONG.

THE EQUITY MARKET THE S&P 500 WAS UP ABOUT 12% ON A YEAR-TO-DATE BASIS AS OF YESTERDAY. YOU LOOKED AT VALUATIONS THEY ARE DOWN ABOUT 12% AND THE GAP BETWEEN THE TWO IS EARNINGS HAVE BEEN SO POWERFUL. EARNINGS REVISIONS HAVE BEEN REALLY POWERFUL. 26 AND 27 ESTIMATES ARE UP YEAR-TO-DATE. SO YOU CAN TOLERATE A LOT OF RISING YIELDS. YOU LOOK AT THE 10 YEAR YIELD IT'S UP ABOUT 80 BASIS POINTS. THAT CAN BE DIGESTED. IF YOU STOP BEING ABLE TO INCREASE EARNINGS ESTIMATES THEN IT CREATES CHALLENGE WE HAVE LESS TO BE ABLE TO TOLERATE RISING YIELDS.

JONATHAN: DO YOU THINK THAT'S WHERE WE ARE? CAMERON: TWO Q IS LIKELY TO PEAK AND EARNINGS GREAT. EVEN IF WE REMOVE SOME OF THOSE ONE-TIME GAINS AT 30% THAT LOOKS TO BE THE PEAK IN THE EARNINGS GROWTH. IT'S ALSO INTERESTING IN THE CONTEXT OF ISM DATA WE GET TODAY. WE ARE IN AN ENVIRONMENT WHERE YOU'VE HAD THIS BIG ACCELERATION OF DATA AND IT'S IMPORTANT TO REMEMBER YOU TYPICALLY SELL GOOD NEWS IN THINGS LIKE THAT. YOU DON'T BUY GOOD NEWS SO WE CAN DRIVE WITH THE REAR VIEW MIRROR.

SO IT SUGGESTS THE BIG QUESTION IS HOW DOES IT GET MUCH BETTER FROM HERE AND THAT ALSO BRINGS US BACK TO THIS IDEA OF FINANCIAL CONDITIONS. THEY ARE AT THEIR EASIEST LEVEL SINCE 2021. WE STRUGGLE TO THINK HOW IT GETS MORE LOOSE FROM THIS POINT.

IS THIS JUST A MOMENT TO GIVE LOOSE TO THE GROUND? CAMERON: WAITING FOR VOLATILITY SUGGESTS AS WE MOVE THROUGH SEPTEMBER NORMALCY WE MIGHT GET BETTER BUYING OPPORTUNITIES. WE ARE ABOUT 3% ABOVE OUR AVERAGE 7% ABOVE OUR 200 A MOVING AVERAGE. WE THINK THAT THAT WEAKNESS IS ULTIMATELY VIABLE. WE DON'T THINK WE ARE ON THE PRECIPICE OF SOME BIG EARNINGS RECESSION. MEANING THAT WOULD BE SOMETHING YOU HAVE A MUCH DEEPER AND PROTRACTED TYPE OF CORRECTION.

SO HE WOULD BE LOOKING TO BE ABLE TO TAKE ADVANTAGE OF THE VOLATILITY AS WE SEE THINGS LIKE POSITIONING AND VALUATION RESET. DANI: ARE THERE POTENTIAL RISKS FOR THE ENTIRETY OF THE AI ECOSYSTEM? A LOT OF THESE HYPERSCALERS ARE SPENDING HAS BEEN AIDED BY THE ABILITY OF ONE ISSUING STOCK AND BEING ABLE TO ISSUE BONDS TO A MARKET THAT WIDELY ACCEPTED. WHAT HAPPENS IF THERE'S MORE PUSHBACK. CAMERON: MOST PEOPLE WILL SAY HYPERSCALERS SPENDING DOESN'T REALLY CARE ABOUT WHERE RATES ARE.

BUT IF RATES TIGHTEN FINANCIAL CONDITIONS WHICH IMPLIES A COMPRESSION VALUATIONS HIGHER EQUITY VOLATILITY LOWER EQUITY PRICES. DOES THAT CHALLENGE THESE COMPANIES AND THEIR ABILITY TO CONTINUE TO SPEND BECAUSE WE KNOW IN 2027 THAT THEIR FREE CASH FLOW GENERATION WILL GO EVEN MORE NEGATIVE. WHICH IMPLIES MORE RELIANCE ON CAPITAL MARKETS TO FILL THAT GAP. SO YOU NEED STRONG EQUITY MARKETS. YOU NEED STRONG CREDIT MARKETS TO CONTINUE TO FUND THE SPENDING AND A FINANCIAL CONDITIONS TIGHTEN IT SUGGESTS MAY BE THAT SPENDING GETS MORE CHALLENGE.

AND THEN YOU HAVE A NEGATIVE FEEDBACK LOOP. THE WEAKER SPENDING SUGGESTS WEAKER EARNINGS AND STOCK PRICES. THAT WOULD BE THE RISK INTO 27. JONATHAN: IS IT BECOMING MORE RATE SENSITIVE AT A TIME WHEN PEOPLE ARE SAYING IT'S RIGHT IN SENSITIVE?

THEY ARE HAVING TO RAISE DEBT IN ORDER TO FUND THE SPENDING. IF THEY WERE ABLE TO FUND IT COMPLETELY WITH THEIR OWN CASH FLOW WHICH WAS THE FIRST FEW YEARS OF THIS BUILDOUT WAS IT WOULD BE ONE THING. YOU WOULD SEE VERY RATE IN SENSITIVE. NOW THEY'RE HAVING TO TAP INTO CREDIT MARKETS. OFF-BALANCE-SHEET FINANCING. A LOT MORE ACCOUNTING GAMES GET PLAYED WHICH IS VERY LATE CYCLE AND VERY CONCERNING TO SEE THINGS, YOU SEE OFF-BALANCE-SHEET FINANCING.

ALL THINGS THAT SHOULD FALL INTO THE CAMP OF POTENTIAL FINANCIAL SHENANIGANS.

ONE HEADLINE I SEE IS A NEW STORY ABOUT THE CENTRAL BANK NVIDIA AND THE LIKES. ATTEMPTING TO KEEP FINANCIAL CONDITIONS EASY FOR THE ECOSYSTEM. DANI: IF RATES GO HIGHER PEOPLE CAN STILL BORROW. IT'S NOT EVEN JUST NVIDIA IT'S COMPANIES LIKE ANTHROPIC. THEY HAD A GREAT STORY THERE WAS A WINDFALL JUST FROM THE TECH GIANTS OWNING SHARES OF ANTHROPIC. JONATHAN: TIGHTER ON HIGH YIELD BUT ON INDIVIDUAL NAMES YOU REASSESSMENT OF CREDIT WORTHINESS TO PUSH THIS FORWARD.

CAMERON: IT IS SUCH A QUESTION OF HOW WE COULD SEE HIGH YIELD SPREADS DOWN TO NOW 300 BASIS POINTS LOOK AT TRIPLE B SPREADS VERSUS THE BEST OF HIGH YIELDS. THOSE ARE MULTI-DECADE HIGHS. USING ORACLE CDS, NVIDIA CDS ALL WIDENING OUT. IT COULD BE BECAUSE MAYBE THOSE ARE LOWER WEIGHT WITHIN THE INVESTMENT GRADE INDEX SO THEY ARE NOT MOVING THINGS AS MUCH. WE KNOW THERE'S A LOT OF DEMAND FOR CREDIT BECAUSE PEOPLE SEE THAT AS A BUFFER FOR THE HIGHER RATES WITHIN BASE YIELDS IN THINGS LIKE TREASURIES.