Bloomberg Surveillance TV: August 5th, 2026

**SPEAKER_1** (0:02)
Bloomberg Audio Studios, podcasts, radio, news.

**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. 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 stocks adding to the record breaking rally. Alicia Levine of BNY Wealth recently raising her year-end target for the S&P to 8K.
Earnings took over from macro in driving markets. The capex cycle continues to support the economy and industrial sectors as hyperscaler spending is powering earnings of 20% of the S&P. Alicia, join us now for more. Alicia, good morning.

**Alicia Levine** (0:57)
Good morning.

**Jonathan Ferro** (0:57)
What a massive run we've seen in just a few days on tech. It's phenomenal. What are you telling clients?

**Alicia Levine** (1:01)
It's phenomenal. Look, we think the market ends higher at the end of the year. We're in print at 8,000. I think it's probably moving higher. The forward earnings growth rate right here of the S&P is actually 30%.
So the multiples come down even now.
The markets sort of tread water around the 7,500 range since mid-May. Kind of stuck there as the market rotated. And we've, as you talked about, we had these clearing events. There are major questions hanging over this market. The first of which is the war restarted, oil prices are higher, yields are higher. Can the market rally if the tenure is over 4.5%, which was really the bogey in this entire cycle? The answer is yes, it can. The second thing was, is there ROI on hyperscaler spending? They're just spending into oblivion, funding the balance sheets of every other company, but not themselves as they go free cash flow negative. Turns out, actually, there's a business case for it, and their cycle reaccelerated through the growth rate. So that was answered as well. And so you've gotten the two major questions out of the way. And then the third is, is this an earnings bubble? And the answer is no, it is not, because you've got accelerated growth rates for the spenders. And once you've answered that question, it's pretty much clear out there.

**Jonathan Ferro** (2:24)
If there is a clearing event and you've identified several, it seems to be benefiting everybody at the moment. And we're trying to figure out when do we start to discriminate again? Because much of this year, you saw chips do well, but software react poorly. You saw an inverse correlation between the hyperscalers and the chip players at times as well. That's what ultimately blew up the likes of Situation of Awareness, who were very long hardware and very short software, and things flipped pretty quickly in the last month or so.
Where do you see things going from here? Where does the leadership come from? Surely you don't believe that everything in tech just keeps on rallying the way it has been.

**Alicia Levine** (2:55)
No, there's definitely going to be more selection here. I mean, this was sort of clearing charts. You went through 50 and 200 days in the last two weeks, which you really needed to do to clear the charts of the deteriorating software company. So we cleared it. I think for the most part, it's likely to be from the hyperscalers and less on the chips, in part because the chips have come so far, and there is that lingering question, you know, what you quoted here, which I said, which is they're funding the balance sheets and the P&Ls of 20% of the S&P very clearly. And we know that markets trade on the rate of change. At some point, there's going to be a question, can you grow earnings 1000%?
Are you growing earnings 20% instead, which is so excellent, but it's not growing 1000%.
And there's a reason some of these chip companies are trading in the single digits, because the street just doesn't see this going forever. And I think that's where you're gonna start to see the differentiation. You still haven't cleared the parabolas, that's an issue. So I think you're probably getting it to the unloved companies. Since November 1st of last year, that whole panoply of large cap tech has been terrible. It's underperformed the S&P, it's underperformed the Russell, it's underperformed international, it's underperformed emerging markets. I think that gets reverted to here. I think the chips, while benefiting, and the investment cycle can go for a long time, 18 months more, three years maybe, who knows actually. Eventually, the growth rate is going to slow on the earnings for those companies.