Bloomberg Surveillance TV: September 21st, 2026

Ulrike Hoffmann-Burchardi (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.

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 stocks rising as oil retreats for a fourth consecutive day. Ulrike Hoffmann-Burchardi of UBS writing, equities have more runway but less room for error. Earnings and broader leadership can drive the next leg higher. Ulrike joins us now for more. Ulrike, good morning.

Ulrike Hoffmann-Burchardi (0:51)

Good morning.

Jonathan Ferro (0:51)

Why positive and constructive on broader leadership here?

Ulrike Hoffmann-Burchardi (0:55)

We see strong economic growth ahead.

Governments are spending, corporates are spending and the consumer is spending.

These are three strong forces. We have the largest economies in the world on fiscal stimulus mode, US, China, Germany, and Japan. We have AI capex now at 2.5 percent of US GDP. We see it going higher globally to 1.2 trillion next year. Then we have the consumer resilient. We saw retail spending up again, once over months, and even higher when you take out or just focus on the control group. So very strong backdrop for growth, and that drives equity more so than rates.

Jonathan Ferro (1:33)

A rate hike, then, not a headwind?

Ulrike Hoffmann-Burchardi (1:35)

They are a headwind, but it's the rate of change that matters. We see one more hike ahead. It may be more, but certainly we haven't seen yet a cycle that is akin to 99, right? We saw 1.75 percent in less than a year. That would be a different game.

Jonathan Ferro (1:51)

This won't be painless. The message from the Chicago Fed president, Austin Gorsby, earlier on this morning. If there is any pain, when do you expect it to show up?

Ulrike Hoffmann-Burchardi (2:00)

So we think these rate hikes are not going to take off from the equity rally. We think that is the equity market and growth is going to be so resilient that 50 basis points or maybe even 75 are not going to derail.

Jonathan Ferro (2:14)

Don't say in small caps, don't say in discretionary at the sector level, size.

Ulrike Hoffmann-Burchardi (2:18)

We have to watch certainly the consumer, especially the lower income consumer now with the level of rates and also with the level of diesel prices that you just mentioned. But we don't think it's enough yet.

Again, corporate demand remains strong. The AI capex boom, we may still underestimate. I just spent last week in Silicon Valley. There we see also that one thing that was surprising for me is how quickly AI now is transcending into the physical world. We've been very focused on headlines around science breakthroughs these last few weeks. But now we also see massive progress in robotics. That is yet another source of demand for semi-cap and semi's more broadly.

Jonathan Ferro (2:58)

Can you build that out just a little bit more? You've come back from the West Coast. We spent the last week on the East Coast here on Wall Street discussing the potential end of humanity. I know that was a conversation in Silicon Valley. It started there.

Their willingness to spend, can you really lay that out for us? The prospect of a couple of hikes from the Federal Reserve. Most people who come on the programme have said that's not going to make a difference. The hundreds of billions of CAPEX that they're still driving and driven to do. We still underestimate that?

Ulrike Hoffmann-Burchardi (3:26)

I do think so. If we think about, again, starting with the science breakthroughs that we were able to solve problems that we haven't been able to solve for over 200 years in a matter of hours.

Number one, we have a lot more that we can be doing on math, on biochemistry. I think the breakthroughs that we are seeing and the ROI of those is so large that it's very difficult to still to spend. Then as we go to robotics, when we have now humanoids that are going to be able to do many more tasks, much more shipply, those are all very, very strong ROI propositions. So again, it's very difficult to think that demand is going to be the issue. The question is more, could there be bottlenecks, physical bottlenecks that are going to slow us down? Certainly could be capital, but unlikely at these levels of rates. Potentially it's power.