Bloomberg Surveillance TV: August 12th, 2026

**Jonathan Ferro** (0:11)
This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferro, along with Lisa Abramowicz and Annmarie 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 9am 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.

**Lisa Abramowicz** (0:36)
We begin this hour with stocks climbing with upbeat tech, easing some of the AI jitters. Keith Lerner of Truist writing, earnings remain our North Star. We remain long term tech bulls, continuing to see AI as the dominant secular theme driving this market cycle. Keith joins us now for more. Keith, great to see you. How much did CoreWeave and Supermicro tip the needle to optimism from skepticism, about financing?

**Keith Lerner** (1:00)
Well, I guess for one day it has. But I really think the broader story is going back during this whole earnings season. What happened a few weeks ago is we saw this really strong rebound after tech had corrected double digits. And the big story to me was that we were seeing revenue growth of 20% plus from a lot of these hyperscalers, and especially in the cloud business. So that was, I think, eased as far as the question around, are we going to monetize all this spending? And a lot of the bigger companies were saying, yes, we are seeing that transformation. And then I think, as you said, overnight, this is another positive saying that there is some monetization. But I would also just be clear that I do think we're in this stage where there is going to be much more winners than losers. We have a gauge of correlations for the S&P, and that's the lowest we've seen in 30 years. So I think that's likely to continue.

**Lisa Abramowicz** (1:51)
When does cash flow matter? I mean, it sort of mattered vaguely for Alphabet. And then when you see what happened with CoreWeave, on one hand, they beat expectations on sales, but their cash flow was much more negative than people had expected given some of their borrowing and spending plans. I mean, it just sort of highlights how it depends on the day how much this actually matters.

**Keith Lerner** (2:11)
Yeah, we talk about the kind of love-hate relationship with tech, with investors in tech. And I think a lot of times it matters where you're at in the cycle. And back off the March lows until June, you know, the market or tech was up 47%, Semi's were up 90%.
So then you come out with earnings, there's negative cash flow that, you know, that puts some initial, you know, selling pressure. But I think, listen, zooming back out, I mean, we had this once in a generation build out and you would expect that there's going to be a lot of spending. And then, you know, there's almost a little bit of faith that these companies will figure it out and turn a profit. So that's why I think you're just going to see this kind of really high volatility back and forth over, not over the next couple of months this year, but probably over the next few years, because that cash flow for some companies that have other businesses likely come sooner than others. But we ultimately think, and again, given the AI bull market, the benefit of the doubt, that these big players will figure it out. They have a history of doing so.

**Tom Keene** (3:09)
Keith, when you say that the potential is going to be some of these cash flow concerns and questions swirling around cash flow, is that why you think the second half of the year is going to be bumpy? Or are there other risks on the horizon that could potentially be annoying for the bull market run?

**Keith Lerner** (3:23)
Yeah, I think there's a lot of the things that we've been talking about. I want to be focused that the primary trend is in place, supported by fundamentals. Valuations this year for the S&P are down about 10% because we've had these earnings overwhelm the PE contraction and these higher rates. But I think there's things we're talking about.
Oil prices bouncing around each and every day. We still have uncertainty around the new Fed chair, and we often talk about how the new Fed chair gets tested. There's uncertainty around inflation. At the midterm elections, historically, just seasonally, that tends to be a bumpy path overall. But again, even though we think it's going to be a bumpy path, we still think the destination is still higher based on the weight of the evidence as far as an economy that still is relatively resilient. Even in the face of all these things I just discussed, we have earning estimates continue to move higher. This earning season, every earning season beats estimates. We know that. But this one, we have 85% of companies beating estimates. We have revenue beats at 75%.