Bloomberg Surveillance TV: August 14th, 2026 (Podcast)

**Tom Keene** (0:02)
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**Jonathan Ferro** (0:11)
This is the Bloomberg Surveillance podcast. I'm Jonathan Ferro along with Lisa Abramowitz 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 9 AM Eastern.
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**Tom Keene** (0:36)
Julian Emanuel of Evercore writing, even as the long term trajectory of stocks remains higher, a bear market will happen. AI does not negate the cycle. It has intensified and potentially elongated the upside. Julian joins us now for more. Julian, great to see you.

**Lisa Abramowicz** (0:51)
Thank you for being here.

**Tom Keene** (0:52)
So let's start there. There is this feeling even among bulls that this is as good as it gets. That's what we heard from Nicolai Tangen of the Norwegian Sovereign Wealth Fund.
It sounds like you're kind of in that camp.

**Julian Emanuel** (1:05)
So I think this is one of these times where, given the rally that we've had, given the fact that the AI bull market is about to turn four years old, you have to just sort of step back and understand that these things have time frames, right?
We've talked about the comparisons with the late 1990s very often, and in the year 1999, prior to this hop in Y2K, you had 100 percent higher in the NASDAQ, but four separate 10 percent pullbacks at the same time. If you think about this year, we've had this constant push and pull between AI jitters. We just got through AI jitters in July, and then prior to that, concern about geopolitics, and from our point of view, we think that the market, you said it at the top of the show, that financial conditions are as the loosest that they've been this entire century. We're a little bit concerned about that bit of complacency.

**Tom Keene** (2:05)
There's a different tone to this market also. I was looking at this report from Bespoke Investment Group last night, talking about how the S&P 500 has gone the longest stretch of time without an all or nothing type of rally, sort of an everything going in one direction type of rally or sell off, which for the longest period of time in 25 years, it seems like the sort of pistons firing at different speeds have created a highly unusual market. Is that bound to break down to something more traditional or is this the new normal?

**Julian Emanuel** (2:35)
So incredibly unusual.
So unusual that you actually have this enormous cohort of stocks trading inversely to the S&P 500 on a day to day basis. We coined the phrase negative beta. It's the highest name count in the index. Now it's actually over 100 since 2001 But in our mind, when you look at how this type of bull market progresses, structural tech driven bull markets, what you do get is in the final stages, an all rise condition to your point. And if you look at these couple of weeks off of the situational awareness trough, you did have Mag 7 software and semis all rising together. That has stopped in the last few days, which is part of why we're a bit more cautious coming into September, which is always challenging. But we do think you will get all rise before this cycle is over.

**Lisa Abramowicz** (3:34)
So if you're concerned, what do you do with that? How do you hedge against this?

**Julian Emanuel** (3:37)
So there's sort of three choices here.
Essentially, you can let your cash position build. That dampens the portfolio. You can own optionality. The VIX, well, where are we now? 14 and change. It's unbelievably low.

**Lisa Abramowicz** (3:56)
But under the hood, it's not.

**Julian Emanuel** (3:58)
Under the hood, it's not because you have this negative beta effect. And you've had just like enormous moves in individual stocks, both up and down and up and down, essentially in the same couple of months.
And so for us, you know, index protection is very inexpensive here. You get the Fed, you get the midterms, you get Iran, and frankly, you get given the fact that a lot of people are viewing this earnings season as good as it gets. And we wouldn't argue with that. The thought might be that that would prompt a correction.
Studies show, the work that we've done shows, that it prompts more volatility. It doesn't prompt the end of the bull, but it does prompt this concern. And then the last thing is, I would say, this negative beta, it's just, it's remarkable and it's worked well and there's energy in it and there's utilities in it and health care, which has made new highs in recent weeks also in it. It really dampens portfolio volatility.