Bloomberg Surveillance TV: October 20th, 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 tech stocks inching lower following Monday's bounce back. Angelo Kourkafas of Edward Jones writing, we continue to believe the AI investment cycle has further to run. Concentration may be a feature, not a bug of this cycle. Angelo joins us now for more. Angelo, good morning.

Angelo Kourkafas (0:51)

Good morning.

Jonathan Ferro (0:52)

Let's start with the runway and welcome to the program. How long is that runway? And does a compromised capital market process, these IPOs, the pushback we've seen, shorten the runway?

Angelo Kourkafas (1:01)

There are no signs yet that demand is slowing. So the demand story is still solid and there. What has changed is financing costs are becoming higher and that is pushing some of the marginal players. I think there is some healthy skepticism I mean, potentially some maturation in the theme from going up from everyone, everything AI goes up, now moving up in quality to the players with the deepest pockets that now have to probably finance a lot of this to meet the demand that exists.

Jonathan Ferro (1:31)

How does that influence your outlook?

Angelo Kourkafas (1:34)

I think now at this point in the cycle, investors will be prudent to manage some of the risks and concentrations. AI will remain a key theme, but sticking to quality and potentially betting on some of that broadening that may happen because in our view, we'll still have the economic benefits of AI show up. Now, not all of that is going to accrue to the tech space or the space that leads this innovation. Historically, we've seen when the theme matures, the benefits spread out, and that may be the case as we think about 2027

Lisa Abramowicz (2:07)

As financing costs get more expensive in the debt market, how much do you expect some of these AI players to increasingly turn to equity?

Angelo Kourkafas (2:13)

I think that's a likelihood we're going to hear more in the coming weeks. But I think as the cost of debt has moved higher, potentially more equity issuance is going to be in play.

Lisa Abramowicz (2:24)

If that's the case, why do you remain more bullish on equities than bonds, Thank you. You're not able to finance yourself as cheaply in the debt market to finance the equity markets, and there's more skepticism around valuations.

Angelo Kourkafas (2:40)

The fact is that companies continue to generate very strong profits, and it's very hard to be overly negative when this is happening. Now, the question is, is this 30% earnings growth rate for the S&P gonna be sustained? Probably not, but the market doesn't have to have the same growth rate persist as long as economic conditions remain solid.

We still have a broadening that we see in the earnings front as well. And at the same time, the labor market remains solid. So in this backdrop, I think managing exposures is more important than trying to time some of these pullbacks. We spend more than a year now without a 10% correction. So, having realistic expectations for returns and volatility is going to be key for investors thinking about the next 12 months.

Jonathan Ferro (3:25)

The equity channel is under pressure too. We start the program with that. And obviously, access to capital is becoming increasingly uneven. And we can see that in some of the more leveraged players. For the bigger players, what kind of signal would you take if an anthropic, a large player like an anthropic, The IPO for them was delayed and leaked into next year.

Angelo Kourkafas (3:43)

Yeah, I think this is a test now to the appetite that exists about AI.

But at the same time, we are not in a risk-off environment. Yes, there is some pockets of pressure, but it remains a highly rotational market. Money is not moving out of equity, it's not abandoning equity, it's just rotating within it. And I think it can go a long way if we see bond yields stabilize, and partly that is tied to energy markets.

Jonathan Ferro (4:11)

That might have been true up until the last week. What do you think the last week was? Did you start to see a rotation out of equities and into bonds? Do you think any of that?