Bloomberg Surveillance TV: October 14th, 2026

SPEAKER_1 (0:02)

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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 9 a.m. 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 out with stocks holding steady, heading into results from Bank of America and Morgan Stanley. Cam Dawson of NewEdge Wealth writing, seasonality and earnings season is likely to spark a rebound in breadth, but softness in market leaders, mainly semis, is a red flag for the outlook into 27 Cam joins us now for more. Cameron, good morning.

Cameron Dawson (0:53)

Good morning.

Jonathan Ferro (0:54)

Five days of weakness for semis. What is the signal?

Cameron Dawson (0:56)

Yeah, well, I think that it makes us have to question the outlook for 2027 earnings and maybe 28 earnings for semis. We always have seared into our brain price leads data. So the fact that you have semiconductors trading at 19 times forward earnings, this is the low end of their range. You are still seeing earnings estimates somewhat ratchet up. But what you see is a big expectation for further margin expansion for semis next year. I think it's important to sink in. Margins on the EBIT line for semiconductors have gone from 16% in 25 to 42% in 2026 They're expected to go to 49% next year. And I think the question given this weakness is how sustainable are those margins as we look into the out years.

Jonathan Ferro (1:40)

What do you believe is a threat to those margins, the outlook for capex or the competition?

Cameron Dawson (1:44)

I think it's competition. I think it's certainly competition because if you look at the weakness, it's concentrated within the memory names. Look at the COSPE, which is effectively a two-stock index, given the fact that it's mostly memory in that market. That's breaking down microns a lot weaker than in video. You look at ASML this morning, that's holding up well, but that's a monopoly business. That's a very different kind of market structure than what we're seeing within the memory side of things. But the margin expansion has all come from the memory names. And that's very important for the S&P 500 because the semiconductors are a 19 percent weight in that index. And this year, semiconductors have been 35 percent of overall earnings growth. So so go semi-margin, so go S&P 500 margins.

Jonathan Ferro (2:25)

One-fifth of the index. Where does the leadership come from outside of those names? Where can it come from?

Cameron Dawson (2:29)

Well, I think in the very near term, we can see a bounce in the everything else. Just because it got oversold, September seasonality wasn't bad for the market on the surface. But we saw stealth corrections under the surface. Thirty-eight percent of the names in the S&P 500 are still down 20 percent or more from their all-time highs. So, as we move through earnings season, potentially that's a catalyst to see a rebound in those names. I would say though, the bank's reaction yesterday to earnings results that were okay, they were fine. Yes, you had some misses within some of the trading. That's to be expected. But the core businesses were fine and you saw big, huge reversals during the day on a group of stocks that already was oversold down 12 percent from the mid-August highs. That's not necessarily encouraging for a rebound in the everything else.

Jonathan Ferro (3:15)

You're lapping some really tough comps, clearly. There are some questions, though, about that capital Marxist activity and whether it returns or not. How do you see things? How much visibility do you have on the so-called pipeline for the investment banking fees? All those kinds of things that we're looking to potentially bounce into next year.

Cameron Dawson (3:29)

Well, I think breaking investment banking into the credit side and certainly into the equity side of things. We saw a lot of debt issuance at the beginning of the year. The question is, at higher rates, will we see that degree of debt refinancing, debt issuance? That'll be a question for 27

Then on the equity market side, we've seen this bifurcation where, yes, the amount of capital raised within IPOs is at a new record, but the number of IPOs is actually down from 2025 because it's all been concentrated really just in SpaceX. So now we have to ask the question of, will we get Anthropic? Will we get OpenAI? When do those names come out and does that create the tough comps where you effectively won't be able to make up for that difference in 2027?