Bloomberg Surveillance TV: September 16th, 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 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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We begin this hour with stocks and bonds edging higher ahead of the Fed's latest decision. Gina Martin Adams of HB Wealth Management writing the 10 year is already extremely oversold, but the longer term drivers of high yields appear unlikely to fade anytime soon. Gina joins us now for more. Gina, welcome back.

Lisa Abramowicz (0:52)

Thank you.

Jonathan Ferro (0:52)

An old friend of ours and an old friend of this program.

Lisa Abramowicz (0:54)

It's good to see you in person.

Jonathan Ferro (0:55)

You too.

Lisa Abramowicz (0:56)

Great to see you.

Jonathan Ferro (0:56)

Let's talk about this decision later on this afternoon. What an appearance, what a time for it. 25 basis points. Does it influence your outlook?

Gina Martin Adams (1:03)

No, not necessarily. It's too small to really influence the outlook. And I also think that the market is priced for an emerging Fed tightening cycle. So it looks like what we have is more of the same. Rates are going higher, stocks are probably going higher longer term, but a little bit of volatility in the short run. And frankly, volatility this time of year is not unexpected. This September, that's the only month of the year in which you normally see stocks fall.

So we will likely see volatility this fall. But does it really change the longer term perspective? Not necessarily. We need to see a downtrend in earnings growth or some sort of change in economic fundamentals to get really different outcomes for portfolios.

Jonathan Ferro (1:41)

What is it about this backdrop at the moment that's leading to both higher rates and higher equities?

Gina Martin Adams (1:45)

Higher growth.

I mean, it just is simply growth. I think that we all talk about inflation and certainly there is some embedded inflation risk, a lot of supply side shocks that we have to contend with, but frankly the fact that we have extraordinary investment occurring and that is driving GDP growth is what's really driving overall conditions in both the stock and the bond market. If you look at the bond market, inflation expectations certainly have driven some of the movement in the long end of the curve, but most of this is just real rates going higher because growth prospects are improving along with enormous capital spending. We're in the midst of the largest capital spending boom in at least 150 years of US history and that's creating different outcomes. Core inflation is going higher not because prices at the pump are going higher, but because we're spending so much on capital investment.

Lisa Abramowicz (2:35)

There are two potential constraints to this. John was mentioning oil prices as they go higher could potentially start to constrain some of this economic activity, particularly among consumers that are more vulnerable. Then higher rates could constrain some of the ambitions of the capex. Just starting on the first side, have you started to see any signs that there really has been demand destruction or a slowdown tied to higher oil prices?

Gina Martin Adams (2:58)

Not yet, but it's early. I think that we probably will see demand destruction on the consumer side as a result of higher oil prices. We will see transportation struggle some degree to some degree because diesel prices are at new all-time highs. We're sitting at diesel prices that are higher than they were in 2022

So we will see some demand destruction, but that demand destruction is occurring in industries that are already struggling to some degree. The consumer industries have not been big components of growth. The consumer experienced a minor recovery in the first half of this year as a result of tax refunds and tax refunds alone. But what's really powering economic growth is capital spending from the technology companies that's filtering through the entire system. That's not likely to experience any sort of slowdown unless the Fed does start to tighten policy to force a slowdown in the capital investment to some degree. At the same time, you have the AI companies coming out and saying that they want to slow down. So we will see a little bit slower growth going forward. But the Fed in my mind is playing catch up.