Bloomberg Surveillance TV: September 18th, 2026

Roland Lescure (0:02)

Bloomberg Audio Studios.

Lisa Abramowitz (0:04)

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.

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We begin this out with stocks mixed following their best day in more than a month. Nadia Lovell of UBS remaining bullish writing earnings not the Fed driving this market. Another rate hike would be a speed bump, not a stop sign by the pullbacks. Nadia joins us now for more. Nadia, good morning. Some breaking news from you. Thank you for that.

Lisa Abramowitz (0:54)

Bloomberg is lighting up.

Roland Lescure (0:55)

Thank you. I really appreciate it.

Jonathan Ferro (0:57)

You deserve the love. Of course, you do. Oh, fireworks. Let's talk about this market. Are you expecting a pullback?

Nadia Lovell (1:04)

No, we're not expecting a pullback. Of course, we've seen that historically at the start of a hike in cycle that equity markets tend to struggle a bit. And so we do expect some near term volatility. But at the end of the day, as we noted, it's really the earnings story that's going to drive this market. And fundamentals remain really strong. If you look at the most recent earning season where we approach almost 30% EPS growth, and when we look out for the rest of the year, we think that this is easily the year of 25% EPS growth and next year 14%.

So above longer term trend. And so we think that that's what the market is going to anchor to. Yes, we have seen some pressure already on valuation year to date. So think, as you noted earlier, a lot of this is somewhat priced in in terms of the increased rates and body yields. You've seen the multiple come in from 22 times at start of the year to now 19 times. And yes, you could see some pressure on those longer duration assets and those housing sensitive sort of stocks are areas of the market. But ultimately, we think that this is a market, even if you get a pullback, it will likely to be a shallow pullback. And we think that the earnings story is still robust to drive it higher.

Jonathan Ferro (2:13)

You described the glide path for earnings growth out to next year. Does the second derivative matter? Does the deceleration matter at all?

Nadia Lovell (2:21)

It does, to the extent of that, that you might not see 20% upside to the market from here, but we're still looking for a healthy 10% or so. We think that what's going to drive this market is earnings, it's not valuation expansion. And I think also the fact that you're seeing a broaden out of the earnings growth is quite encouraging and proves to be a healthier state for the bull market. So it's no longer just sort of the AI story, although that is still a key driver of earnings. You're seeing financials, you're seeing energy, you're seeing industrials. I mean, in fact, that you had industry industrials confidence this week that was quite bullish on industrials. And the recovery that you're seeing in the manufacturing cycle also gives us increased confidence in the earnings outlook and that broaden out that we're continuing to expect.

Lisa Abramowitz (3:12)

Are rate hikes helpful or hurtful to this equity rally if they are done in a predictable manner?

Nadia Lovell (3:17)

I think if they're done predict, the market, as we know, this market likes a level of certainty. And if it's predictable that you're seeing sort of a 25 basis points increase from the Fed in a very methodical way, that's more easy to digest for markets. We know that the market doesn't like spikes in bond yields, particularly in the long end of the curve, which tends to have a larger impact on the equity market just given how debt is termed out. But if it's gradual, the market is able to absorb that, particularly also the Y's rising. You even saw from the Fed a slightly increase in their growth expectations over the next couple of years. And so some of this is not only inflation driven, but also the fact that you have the resilience growth. And in combination with that, we think that that's why the equity market is able to absorb these rate increase and continues to move higher.