Bloomberg Surveillance TV: July 27th, 2026

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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 9am Eastern.
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We begin this hour, which starts kicking off the week higher ahead of a massive slate of tech earnings. Savita Subramanian with Bank of America has a streetlap. 7,100 year-end price tiger on the S&P and writes the following, underlying earnings growth remains strong, but good results are no longer enough to move the needle in tech. Savita joins us now for more. Savita, welcome to the program. I'll start with a large question and I imagine it involves a complex long answer and you'll have space for that. But why is the outlook for the index right now in your mind so compromised?

**Savita Subramanian** (1:06)
Yeah, lots of different reasons, but one is what we've been talking about and what I've been listening to on the show so far. The good news for tech seems to be priced in. The companies are no longer rallying and outperforming on beats on earnings and revenues. In fact, they've sold off on earnings and revenues. We've had an environment where the rest of the market is actually pretty healthy, but I think it's all been obscured by the elephant in the room, which is mega cap tech. And the idea that these stocks are going to continue to lead us to new highs, I think is no longer the case.
Look, I like tech. I think tech is the future. But I think right now we're in an air pocket. And we've been talking about this all year. You know, the idea that we're in an environment where we know that chat, you know, we know AI, we are bullish on AI. We know that companies are spending a ton of money. ISM is above 50, well above 50 You know, capex is strong. The economy is strong. Inflation is pretty healthy, maybe even overheating a little bit.
But the idea that we're going to see that same leadership from the ballast of the market, I just think is very hard to paint. On top of that, you've got an environment where the consumer has been chugging along, defying all expectations and maybe that continues. But this year, I think what we've seen so far is a little bit less bullish. So for example, if you look at layoffs in January, they were primarily in high paying jobs, in tech jobs. It's been an environment where the highest, the higher income cohort of the SMP, or sorry, of the US economy is not necessarily feeling as healthy as they were a couple of years ago, whereas lower income is now getting a boost. So I think that's healthy in terms of broadening, but it's not necessarily kind of the same story we've seen for the last three years.

**Lisa Abramowitz** (3:07)
Savita, I'm just curious, is your 7,100 expectation just that tech has further to sell off and the rest of the market can keep up performing or chugging along here, but it won't be enough.

**Savita Subramanian** (3:23)
I think we're going to have to watch the I think we're going to have a little bit of a market holdup as well. Ideally, we get to the end of the year, and we're at a point where the concentration risk in tech is lesser, and you can kind of set yourself up for a healthy 2027 in terms of broadening, in terms of cyclicals just outperforming.
But I think this year, we're still in an environment where tech is contributing the lion's share of earnings. They're no longer rallying on good news. We're seeing CapEx penalized, and we talked about this earlier in the year as well. You're still in an environment where you're getting positive returns on your CapEx if you're a big tech company. But those returns are thinning, and the idea that we're going to pay such a high multiple for mega cap tech today is hard to sell if your returns on invested capital are actually starting to get depressed.

**Lisa Abramowitz** (4:26)
Savita, I just wonder the sort of counterargument to this is what happened with Metta and Alphabet late last year when they announced a lot of CapEx and they were punished severely for it, and then they deliver these incredible earnings on an ongoing basis.
Once again, their stock's outperformed. Why are we not set up in the same way? If people are just getting nervous, and you still see companies delivering well beyond any expectations.