Markets and Geopolitical Swings

Summary

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Bloomberg Surveillance – "Markets and Geopolitical Swings"

Date: July 8, 2026
Hosts: Tom Keene, Paul Radke, Nathan Hager, Francine Lacqua (Various contributors, including guest experts)

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Episode Overview

This episode dives deep into the current state of financial markets amid geopolitical and economic swings in the summer of 2026. The hosts discuss evolving market dynamics, shifting investor sentiment, the AI-driven tech rally and correction, infrastructure and environmental investment, and the global currency landscape. Guests from Alpine Saxon Woods, Citigroup, Brown Gibbons Lang, and BMO Capital Markets provide timely analysis and actionable insights on sectors, macro trends, and how instabilities are shaping investor strategies.

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Key Discussion Points & Insights

1. Midyear Market Outlook & the Impact of Oil Prices

• Guest: Sarah Hunt, Chief Market Strategist, Alpine Saxon Woods

• Segments: [01:56]–[10:58]

• Markets in Flux: The episode starts with a discussion on how the fast movement in oil prices has introduced new uncertainty to what was expected to be a steadier summer for markets.

  • “You add this to the story and all of a sudden I think you have a more stormy summer than we were looking at even a week and a half ago.”
    – Sarah Hunt [02:23]

• Federal Reserve Outlook: Market participants had expected the Fed would “wait and see,” but volatile commodity prices may force a policy shift.

  • “With this moving around that might change that math as well.”
    – Sarah Hunt [02:36]

2. The AI Trade & Rotation in Tech

• Application vs Infrastructure: Conversations highlight the bifurcation between the “AI winners” (primarily chipmakers and infrastructure software) and laggards (some large-cap, application software).

  • “There’s more work to be done.”
    – Sarah Hunt, on software company challenges [03:47]

• Restructuring and Right-sizing: Discussion of the ongoing restructuring in tech, including both job cuts and the sector’s need to adapt as AI “writes its own stuff.”

  • “With the ability for AI to solve all these problems, there’s a lot of questions…who’s checking to see what the redundancies are and how that works.”
    – Sarah Hunt [05:00]

• Mega Cap Tech Concentration: The S&P 500’s market cap weighting continues to pull portfolios toward mega tech but there’s evidence of diversification and investor education.

  • “It’s hard to see how you get around that...But that is definitely a change.”
    – Sarah Hunt [08:07]

3. Sector Rotations & Stock Screening

• What’s Attractive Now: Health care and financials screen well, as do select industrials—particularly companies left behind by previous rotations into tech.

  • “Healthcare is one of those areas...there is a lot of room there... Financials also look interesting.”
    – Sarah Hunt [09:45]

• Danaher as a Case Study: Once a “beauty stock,” Danaher fell off many investors’ radar after restructuring, but may present new opportunities.

  • “There’s some really interesting growth stories there on the instrument side.”
    – Sarah Hunt [10:31]

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4. AI in Software: Winners, Losers & Infrastructure Bets

• Guest: Fatima Bulani, Citigroup (Tech Analyst)

• Segments: [11:58]–[19:17]

• Software’s Place in Tech: Software has transitioned from being the “fat and happy” darling of tech to competing with the hype around AI-driven companies, with significant differentiation emerging.

  • “We’re continuing to see the bifurcation in software.”
    – Fatima Bulani [13:38]

• Where’s the Growth? Infrastructure software names (like Datadog and Cloudflare) are favored for their fundamental role in managing the increasingly complex world of AI and agentic Internet traffic.

  • “Datadog is that MRI scan where your innards are effectively becoming so complex that your points of failure are just becoming infinitely more diffuse.”
    – Fatima Bulani [15:43]

• Cybersecurity as a Constant: The evolving threat environment ensures cybersecurity remains an investable theme.

  • “Cybersecurity investments and budgets are going to follow what is going to end up being a much more nefarious cyber attack environment as it relates to AI technology.”
    – Fatima Bulani [18:38]

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5. Infrastructure & Environmental Services Investment

• Guest: Mark McCormick, Brown Gibbons Lang

• Segments: [20:35]–[27:56]

• Investors Seeking Stability: Sovereign wealth and institutional capital increasingly flow into US infrastructure as the sector offers downside protection and consistent returns compared to volatile tech investments.

  • “Infrastructure is a much more steady, downside-protected, limited-upside type growth investment opportunity.”
    – Mark McCormick [21:48]

• Environmental Services as an Essential: Despite regulatory hurdles in waste and recycling, the sector’s business models offer “incredible risk/reward” as essential services.

• Midwest Resurgence & Underappreciated Growth: Significant data center and manufacturing buildouts in the Midwest, especially Ohio, are under-discussed but materially important.

  • “The problem is right now...the only question that matters is LeBron coming back.” (lighter moment on regional branding)
    – Tom Keene & Mark McCormick [25:02–25:12]

• Utilities & The Boring Edge: Core infrastructure (utilities/utilitarian services) is becoming “sexy” given the AI-driven surge in power demand.

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6. Global Macro: The Strong US Dollar & Its Ripple Effect

• Guest: Mark McCormick, BMO Capital Markets (Chief FX Strategist)

• Segments: [29:11]–[34:35]

• Divergent Dollar: The US dollar’s strength is driven by a hawkish Fed, robust US growth, and global turbulence—contrary to earlier consensus for dollar weakness in 2026.

  • “The dollar wins on carry, it wins on economic performance...and it’s on the right side of the terms of trade shock.”
    – Mark McCormick [30:30]

• Fed Watch: Investors are pricing in a possible rate hike toward the end of the year, with global assets feeling the strain as US yields rise.

  • “US Yields going up...is kind of a very tightening shock for global growth.”
    – Mark McCormick [32:16]

• Japan & Asia’s Currency Challenge: The yen remains weak; currency moves are driven more by economic policy divergence (Fed vs. BOJ) and energy pricing than traditional risk-off flows.

  • “BOJ is absolutely behind the curve and they’re not going to get ahead of the curve.”
    – Mark McCormick [33:24]

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Notable Quotes & Memorable Moments

• “All of these things play into how portfolios are going to roll out.”
  – Sarah Hunt [02:22]

• “Do we really think that you’re going to disintermediate Microsoft? And I don’t think that we do.”
  – Sarah Hunt [04:08]

• “Software has sort of been deigned as this redheaded stepchild of tech...and now those bills are coming due.”
  – Fatima Bulani [13:38]

• “Datadog is that MRI scan for your entire IT architectural topology.”
  – Fatima Bulani [15:31]

• “Infrastructure is a much more steady...investment opportunity...capital is getting a little bit more conservative and looking for consistency.”
  – Mark McCormick [21:48]

• “The dollar wins on carry, it wins on economic performance, it wins on mostly on equities.”
  – Mark McCormick [30:30]

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Important Timestamps

| Topic | Speaker | Timestamp | |-----------------------------------------------|-------------------------|----------------| | Market summer outlook & oil price effect | Sarah Hunt | [02:12]–[02:47]| | AI trade, chips vs. software | Sarah Hunt / Paul Radke | [02:48]–[05:24]| | Earnings previews & Fed outlook | Sarah Hunt | [06:00]–[07:20]| | Sector screening (health, financials, industrials) | Sarah Hunt | [09:39]–[10:54]| | AI in enterprise software | Fatima Bulani | [11:58]–[15:20]| | Infrastructure software (Datadog, Cloudflare) | Fatima Bulani | [15:20]–[18:38]| | Infrastructure/investment shift | Mark McCormick (BGL) | [21:01]–[23:55]| | FX and strong US dollar context | Mark McCormick (BMO) | [29:11]–[34:35]|

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Podcast Tone & Language

The hosts maintain their signature conversational, slightly irreverent but insightful tone—balancing rapid-fire questioning, sharp macro analysis, and banter about sports and regional rivalries. Guests bring considered perspective, using direct industry examples (“Datadog is the MRI scan…”; “All this capital is going into infrastructure”) and challenge consensus narratives (“Software has sort of been deigned as this redheaded stepchild...”).

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Takeaways for Listeners

• Expect more market volatility due to shifting macro and geopolitical risks, with energy showing up as a key swing factor.
• Investors are wrestling with both sector concentration (tech megacaps) and a gradual return of interest in less-glamorous sectors like healthcare, financials, and infrastructure.
• In tech, value is rotating toward infrastructure software—critical for the AI era—while application-based software faces margin and growth headwinds.
• Infrastructure investment is now hot, driven by global volatility and the search for stable returns; environmental services are a niche with strong fundamentals.
• The strong US dollar reflects both domestic economic strength and global fragilities, impacting everything from bond yields to international corporate earnings, with Asian currencies (notably the yen) facing particular pressure.
• Cybersecurity is a structural winner amid the push toward AI.

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This summary delivers the full scope and flavor of the episode, with direct citations, timestamps, and clear structure for easy review.

Transcript

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[Tom Keene]

Right now we're going to slide in quick, quick, quick to Sarah Hunt, chief market strategist Alpine Saxon woods is as well. I guess we're distant from June 30, nine or 10 weeks. Do you rewrite your mid year review?

[Sarah Hunt]

Well, you refinelize or you can add a codicil to your 20 to your mid year review. I think that there was obviously a feeling and you can see where oil how fast it moved this morning versus yesterday because even yesterday it was up a little bit but not it wasn't, it wasn't moving as much. I think that this does. You add this to the story and all of a sudden I think you have a more stormy summer than we were looking at even a week and a half ago. So I think it does it makes a difference because all of these things play into how portfolios are going to roll out. And the expectation was the Fed now had some cover to say we can wait and See, and now with this moving around that might change that math as well.

[Paul Radke]

So how are we thinking about, I guess the AI trade in general here? I mean you own the chips. Okay, I get that. What else are you doing here with this, with your AI trade these days?

[Sarah Hunt]

Well, it's going to be interesting to see how this plays out. And this was part of a discussion the other day as well, which is now that you have some of these chip stocks and some of the questions about what's going on. Is there a rotation back to some of the lag 7 this year? Because you've seen some potential movement there. But you look at the bond sale yesterday and you think maybe not. I mean it's going to be a question about what happens with Capex. Meta may be a one off, it may not be, I don't know, we're going to have to see how that plays too.

[Paul Radke]

But software, I mean, you know, you, we saw that sell off in a lot of the software names, including such bellwethers is Microsoft down 25% year to date? I mean, how are you guys thinking about some of those big bellwether software names that have been so good and so beloved by the marketplace because of the recurring revenue, the high free cash flow and great margins? How do you think about some of those names these days?

[Sarah Hunt]

Well, you guys had an excellent guest on earlier this morning who was talking about that specifically and about how some of the larger software names are going to end up getting. There's more work to be done.

[Paul Radke]

So that was. You kind of think that's the way you got to kind of pick some winners and losers?

[Sarah Hunt]

Well, you know, it depends a lot on the model because I think part of the biggest issue with software that started was if you're growing your headcount and everyone and you're growing your user base and that starts to shrink, that's a problem for the cash flow. For the other things. Do we, do we really think that you're going to disintermediate Microsoft? And I don't think that we do. I think the question is going to be how does it all work together and you're going to still be using it. So it's really, it's on the margins. Is the growth going to slow down? In some places probably in some places maybe not. But now it's a wait and see and people were willing to shoot first

[Tom Keene]

and ask questions later outside your remit. But I'm going to go here. We saw the Xbox rationalization. The woman running Xbox I thought was A breath of fresh air. Just saying, like, this is where we are. I would assume, given, you know, there's. There's new words, organizational words for all this AI ballet. We're going to see a lot of. Right sizing. We're going to see a lot of, do we need this division or not, or spinning it off. I just think we're going to see a lot of restructuring, aren't we?

[Sarah Hunt]

I think we're going to see a lot of changes. I think we're going to see a lot of restructuring. You've already seen some companies go back on. We got rid of a bunch of people, and now actually we're going to have to bring some people back, because what we realized when they were gone was that we weren't in the space that we thought we were. With the ability for AI to solve all these problems, there's a lot of questions about how, when AI writes its own stuff, who's checking to see what the redundancies are and how that works. So I think it's going to be a lot of change.

[Tom Keene]

I love having you in Microsoft. 228,000 employees. Then I typed up Oracle. You can do this, folks. On the Bloomberg professional Service, Paul taught me the DESC screen. Oracle down 39% 12 months trailing. They have 141,000 employees. I never would have guessed that.

[Paul Radke]

Yeah, yeah. These monster companies, you know, you pop

[Tom Keene]

off 14,000 people, you're 10% down.

[Paul Radke]

Yeah, exactly right. Sarah, how are we thinking about just earnings we're coming into next week? We'll start another earnings cycle. And, boy, the first quarter was so, so strong in terms of earnings growth. How do you think about this second quarter coming here?

[Sarah Hunt]

I think you're going to see continued strength. I mean, I think that the issues. We were all hoping that the oil situation would start to back down, and it looked like it did for a while and went right back down to 70. The problem for that is going to be, for some people, it's going to be an issue higher energy prices. But I think you're going to see already in the second quarter, as people report everyone's going to be looking forward to the second half of the year. They're going to say, oh, great, we already knew the second quarter was good because everything was looking pretty good except for energy prices.

[Paul Radke]

So what are we thinking here? We've got. I'm going to switch over to the Fed here because we've got a new chair chairman. We've heard from him a couple of times now. What's your view of the Fed and kind of interest rates and is that going to be a friend or a foe for this market?

[Sarah Hunt]

Well, in the last two weeks it's been both. Right, so you saw the original coming, the original speeches on the 2% target and the market started to think that that was very hawkish. Oil prices back down. Came out and said that oil prices are down. That's somewhat helpful. I think the question is going to be the cadence of commun and how much time or how much information we're going to get and what information they're going to be using. And I think that there's some room in there for that to see what happens over the summer even with the elevated oil prices. But I think that the market is knee jerked back into putting rate hikes on the table, rate hikes on the table towards the end of the year, whereas even yesterday that wasn't necessarily looking to be such a strong percentage. I think that's going to continue to move around.

[Paul Radke]

Well, in the bond market, I can sit there in a two year piece of US Government paper, which I think is pretty safe. I think they're going to pay me back in two years and clip a 4.2% coupon. Is that my fixed income strategy?

[Sarah Hunt]

Well, I think that people have been looking at and we have continued to look at the short end of the curve for that reason because you've had some very good opportunities to get in at good short term rates and you think that those are in pretty good shape. You start talking about raising rates again, that gets a little dicier, but not on the very short end. So I think that there is a cluster towards that because it makes sense. And it's also easy to have some visibility.

[Tom Keene]

Are we away from where the top 10 holdings of funds are 30 or 40 or Darius, say 55% of their portfolio? Are we diversifying away from that 20, 23, 24 reality?

[Sarah Hunt]

Well, it's, it's been tough, right, because the S and P is market cap weighted and most people are benching against the S and P. And even if they're using a different benchmark, people look at the S and P and think of that as the market. So it becomes something where it's hard to see how you get around that. On the other hand, you've had some big laggards in the S and P this year too. So I think that people had branched out. I think that people continue to branch out and it's really a question of talking to people about what a good portfolio really looks like. And saying this is what the index looks like, would you really want your portfolio to look that? And people need to. People are getting better educated about that. But that is definitely a change.

[Tom Keene]

This is again, I don't want to catch you unawares but this was in the zeitgeist yesterday. Bank of America, I believe hit a record high, probably because they're sponsoring the World cup, you know, whatever. You should see where Savita sits.

[Paul Radke]

Is that right?

[Tom Keene]

It's just. Okay, very good. Killing it. I look at bank of America, which means I look at Warren Buffet and the following on from Berkshire Hathaway as well. Berkshire Hathaway, is that an opportunity as a diversified like old school conglomerate?

[Sarah Hunt]

I think that there's also. There's a transition there. Right. So people are looking to see how that is going to go because that's a lot of history and a lot of shoes to fill. And so I think that there is, it's certainly possibly and, and the holdings that they have are starting to look in those areas where people are looking at what's going on here. The insurance areas, the financial areas and some of those places. I think that there is a desire for investors to have a broader portfolio than just technology because you can see when there is wobbles in technology, you need them both.

[Paul Radke]

What screens well for you guys these days, whether it's a sector or a factor, what's screening off you?

[Sarah Hunt]

So there are several things that screen well, I mean health care is one of those areas where people have talked a long time like it should be health care's time. We think that there is a lot of room there looking at, looking at some of the areas where you have, excuse me, Instruments, something like a Danaher. Some of the companies that have been sort of left behind as money has moved into other sectors. We think that to your point on bank of America, financials also look interesting. You start to see the IPO market open up. Now we'll see whether or not that continues because these are massive IPOs. But you've had that window close. That's a leg of earnings for that group that they haven't seen in quite some time. So there are places that we like, there are places in industrials that we like too. It's just a question of trying to find things at the right valuation because this market is moving around and it's moving pretty quickly.

[Tom Keene]

Danaher was a beauty stock X number of quarters ago. What in God's name happened?

[Sarah Hunt]

Well, there was a lot of moving around of parts because they spun off some pieces too. There was a lot of things that happened to Danaher that historically they'd been more of a conglomerator and not an agglomerator, as it were. But if you look at what's left in Danaher now, there's some really interesting growth stories there on the instrument side. So I think that there's places again where you had these glamorous stocks previously and they sort of fell off the radar screen. And I think that there's opportunity.

[Tom Keene]

Okay, symbol DHR in your value line.

[Paul Radke]

Sure. Yeah.

[Tom Keene]

Sarah's too young to remember value line. Sarah, thank you so much. Alpine Saxon woods, stay with us. More from Bloomberg Surveillance coming up after this.

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[Tom Keene]

This is our tech conversation of the day and you just really can't convey the eclectic nature of a research. It's on software and I really don't even know what it's on, but it's sort of on software, but away from all the hyperscaler. We're going to do 25 gajillion in bonds with Citigroup. Fatima Bulani darkens the door today. What was it like your first day at the iconic time Thomas was sell in San Francisco. You walk in the door, you're 17 years old. What was it like to be in that tech juggernaut?

[Fatima Bulani]

Bright eye, bushy tailed?

[Tom Keene]

I mean, I just can't imagine what describe the fervor that was going on then.

[Fatima Bulani]

It was a different era. I mean, software was simple. We didn't have the juggernaut that is a generational computing shift called AI taking over our organization. So it was a simpler time and really a formative experience for me. But yeah, in the halls of sort of gallowed halls of very remarkable dealmakers. It was an interesting time. And my claim to fame is I was the last incoming analyst class at Thomas Wise Little.

[Tom Keene]

Okay. Before it all blew up. But the basic idea is, Paul, help me here, then less profit or no profit. And now everybody's making a ton of money.

[Paul Radke]

The software companies are making a ton of money. What's the call here? Just on your coverage of the software space that you guys cover as it relates to AI, because we have gone through a period where it seems like the market was just kind of selling software in general here and asking questions later. Where are we now?

[Fatima Bulani]

We're continuing to see the bifurcation in software. So you have the two neighborhoods, the application software names. So the bellwethers there would be the salesforce.com and the adobes. And then you've got the infrastructure neighborhood, which by and large would include the hyperscalers. But I'll keep those separate because they're kind of a beast of their own in terms of how we think about them in the AI life cycle, in the value chain. But the infrastructure names continue to get bit up. And that's functionally because it's the most immediate and we think the most correct way to express the, you know, veritable AI winners in the software stack. I think you sort of were dancing around this, but software has sort of been deigned as this redheaded stepchild of tech, if you will, as the Frontier Labs, you know, absolutely. You know, you know, express their might in terms of the type of innovation that they're, you know, putting, putting out there and, you know, disrupting existing business models. You know, software companies, you know, arguably, in retrospect, we're looking fat and happy and now those bills are coming due and we're, excuse me, seeing a sort of different cadence of both innovation, operational improvement, and so infrastructure is the place to be, because infrastructure software generally.

[Paul Radke]

What's an example of infrastructure software, it

[Fatima Bulani]

would be a company like a Datadog or a cloudflare. Right. So it's not terribly household names in the sense that we're used to, like we are in the application realm. So it's essentially companies that are enabling or providing scaffolding or visibility around the types of AI systems that you're an average organization.

[Tom Keene]

The New York Yankees blue light for Anne Marie Horden, the Datadog, which I know nothing about. Do they provide services to, say, Microsoft?

[Fatima Bulani]

No. What they provide is effectively the equivalent of an MRI scan for your entire IT architectural topology. Right. And that's important when I feel like

[Tom Keene]

I'm at Weill Cornell right now. It's just, it hurts here.

[Fatima Bulani]

Dr. Balani, just a Renaissance woman with all my analogies. And so what the value they provide in the context they provide for AI is AI systems in the way they're constructed, in the novel capabilities that they're providing, you know, brick to brick. These are just very sophisticated systems and pieces of technology. Right. And they're ever changing. And we were offline talking about how the frontier is changing so dramatically that six months from now we could be in yet another brave new world as it relates to, you know, technological proficiency with relate with respect to models and what the labs are doing. And so what Datadog provides is, hey, you're gonna build out these systems of agents that are gonna run workflows for you. Well, guess what, there's a million things that could go wrong. Agents could hallucinate, the agents could spin up a wrong answer. They could outright fail. And so Datadog is that MRI scan where your innards are effectively becoming so complex that your points of failure are just becoming infinitely more diffuse. And that sort of value they provide ultimate.

[Paul Radke]

So Datadog infrastructure software. I get that. And the stocks up 88% year to date. Wow. What else is. Is a datadog comp, would you say?

[Fatima Bulani]

You know, we're very positively aligned on Cloudflare.

[Bloomberg Host]

Right?

[Fatima Bulani]

Cloudflare, that's also in a similar echelon of outperformance. Call here is Cloudflare is basically the backbone of the Internet. Right. It's the easy pass equivalent for organizations to run their business on the Internet. Right.

[Nathan Hager]

Okay.

[Fatima Bulani]

And the way they play in the AI theme is, right, you've got these agents, they've got to run somewhere.

[Tom Keene]

I've got a nod in acquaintance with Matthew Prince going way back to some fun days in Davos. What is Matthew Prince doing differently at Cloudflare? Flair versus everyone else?

[Fatima Bulani]

Oh, he's tinkering with a lot of interesting ideas as it relates to what the agentic Internet is going to look like. You know, one of the founding sort of principles around his view, and we tend to agree because a lot of the data points are supportive of this is, you know, there's human generated Internet traffic, but hold the phone. There's going to be an absolute parabolic exposure explosion in agentic Internet traffic. So, you know, six months from now, 12 months from now, if I'm booking a family vacation. Agentic commerce.

[Tom Keene]

I do not want you to answer this question, but in your head, I don't want to get you in compliance issues. Are you sorting out winners and losers of the big people, the hyperscalers like in your head? Don't, Heath. Terry will put me in the timeout chair. But in the Fatima Mindspace. Do you sort out winners and losers of the big people?

[Fatima Bulani]

Absolutely. There is a gradient, but in the infrastructure realm I directionally say there are. When we kind of cross over the Rubicon, the infrastructure software names are generally going to be beneficiaries of the computing shift. Right. So that's why I bring up Datadog. That's why I bring up Cloudflare. We didn't really touch on the beast of a complex that is a cybersecurity universe. But as sure as death and taxes are, cybersecurity investments and budgets are going to follow what is going to end up being a much more nefarious cyber attack environment as it relates to AI technology. So we tend to also be bullish there.

[Tom Keene]

I love AI. I go, can you swim the Rubicon out at Lake Tahoe? You can. There's a Rubicon, Sure. This has been great. Thank you so much, Fatima. And thank you to everybody at Citigroup. Just publishing like crazy. We didn't ask about Microsoft. That's Mr. Radke. He's got like a huge target in Microsoft. Be careful now. Stay with us. More from Bloomberg Surveillance coming up after this.

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[Tom Keene]

This is a joy because it's not happening in three zip codes in Manhattan. It's happening across Ohio. You go out I90, okay, and you turn left like in case Western Reserve in Cleveland. There's this wicked turn in the pike and you turn left there and all of a sudden it's the Midwest. Efren Kaplan knows is cold. Absolutely cold with brown gibbons laying. Is the Midwest build out for real?

[Mark McCormick]

Yeah.

[Tom Keene]

All the infrastructure, manufacturing. The Eastern crew doesn't know this. I mean they just don't know it.

[Mark McCormick]

They totally don't know it. It's funny you say this because I have this theory. The Midwest starts in downtown Cleveland. So you have the, you have sort of like the foothills of the Appalachians. You're going into Cleveland and then right at Dead Man's Curve. As you mentioned that's where Cleveland starts going west. But yes, there's tons of data centers being built in Ohio.

[Tom Keene]

You're driving along and you're like, should we stop at the Rock and Roll hall of Fame? And the road turns left.

[Mark McCormick]

Very true, very true.

[Paul Radke]

Talk to us about just how you guys are viewing this infrastructure build. How you, when you talk to your clients, how are they trying to play it here?

[Mark McCormick]

It's fascinating. So after a morning of drama or an evening of drama into today with volatility in the markets, infrastructure is a little bit more, less volatile. And you've seen this massive amount of capital, primarily from nations and sovereign wealth, nations that understand how to invest in infrastructure, whether it be Australia or frankly Europe, throwing a lot of capital into the US over the past five years. I think $200 billion was raised in 2025. Why is that? Well, infrastructure is a much more steady, downside, protected, limited, upside type growth investment opportunity. And in a market of volatility, where frankly a lot of capital has gone into tech and you've seen this volatility, capital is getting a little bit more conservative and looking for consistency. And so when we think about power and we think about waste and we think about water, all these natural resources, capital is going that way and it's much more consistent and it's got a much, in my view, a better risk reward calculus than some of these AI trades that we're talking about.

[Paul Radke]

What is the environment for environmental services these days? I'm thinking waste, recycling, remediation. We have an administration. Is this administration supportive of that? Are your clients feeling like this is a place they want to allocate capital?

[Mark McCormick]

You know, it's interesting if we think from a regulatory perspective, the waste and environmental services businesses, there's been some restrictions in the ability to extend permits for landfills to put up more facilities to process waste. So frankly, it's been a little bit challenging for the waste businesses. On the contrary, the, the infrastructure money, which again looks for really nice risk, reward, mathematics or calculus. These are incredible business models that it's an essential service. And so as you've seen, whether again the AI trade, environmental services can benefit from the trade.

[Tom Keene]

I'm a little biased on this folks, because the fam goes back to McDonald Co. And KeyBank of a million years ago. The stereotype of Ohio, and particularly northern Ohio, is, is, is just comical how people miss the durability of it. They have no idea of John Hay and the standard oil of 1890 and 1900, arguably the richest land on the Planet, the richest society on the planet. What is the state of Cleveland right now?

[Mark McCormick]

You know, you're talking to a loyalist, Tom.

[Tom Keene]

I understand.

[Mark McCormick]

You know, I'm, I'm, I don't know how objective or how I probably would be subjective, but I'm a big fan. We talk, we talk about blue collar labor, we talk about people that grind, we talk about people that work really hard. That is Cleveland, that is Ohio. We, we are driven people.

[Tom Keene]

We got huge fans in Cleveland and they're driven, I mean, down to Youngstown and all that. And you know, it researches, it ebbs and it flows. But the problem is right now, I mean, you know, I mean, the Indians are the Indians, but the only question that matters is LeBron coming back.

[Mark McCormick]

Are they the Indians or are they the Guardians?

[Tom Keene]

Guardians.

[Mark McCormick]

Excuse me, I'll go with the Indians.

[Tom Keene]

What do you think on LeBron here? I mean, does LeBron come back?

[Mark McCormick]

You know, frankly, that's a tough question because, you know, does Donovan really want to win this on his own or does he want LeBron to help him win it? So if you're, if you're a team player and you want to win the championship, LeBron can help.

[Tom Keene]

I mean, Mitchell, you know, it works. Yeah, I mean, LeBron.

[Mark McCormick]

And I know I'm bringing up a sore subject with Donovan here in New

[Tom Keene]

York, and you're aware we did okay.

[Mark McCormick]

Yeah, no, I, I put my foot in my mouth right there.

[Tom Keene]

Yes, Mike Jalen and all that, but

[Mark McCormick]

I mean, look, Ohio is the center of AI right now with data center build out. There's a lot.

[Tom Keene]

Can you people look west and invest in the rebuild of o'? Hare?

[Mark McCormick]

Can we look west and invest in the re.

[Tom Keene]

The rebuild of o'? Hare? Just the.

[Mark McCormick]

We are rebuilding Cleveland Hopkins right now, so I guess we can take some.

[Tom Keene]

How do you use the LaGuardia template to do that?

[Mark McCormick]

Oh, well, if you ever walked inside Cleveland Hopkins airport, you just have to look inside LaGuardia and realize that the only way to go is up when you walk inside Hopkins because it is back in the 60s and so you don't really have much more. It's hard not to improve.

[Paul Radke]

So what's the next part of growth for you guys in your practice? You focus on infrastructure, environment. I mean, utility business has become sexy now because of all the AI. Where do you guys see the opportunity?

[Mark McCormick]

Well, frankly. So we're, we're a Cleveland based firm. Yes, we've got offices here. Yes, we've got offices in Chicago. But just because we're Cleveland based, we're Industrials we are. You hear a lot about picks and shovels and investments going into those types of businesses. That's, that's a lot of where we see opportunity. And so when we talk about infrastructure. Yes, listen, I know we talk about a lot this AI trade, but that's the sexy stuff. The boring stuff is the infrastructure world. The boring stuff is essential services. We have not reinvested into our wastewater treatment facilities or our sewer systems for 50 or 60 years. We have this incessant need for data and communication not only here in the US but the globe and an increasing population to use that. And so we're really excited about not only the core infrastructure, all this capital is going, but the essential services which provide more alpha in these integrated business models. So if you look at deal counts, the services deal count has, I think it's tenfold since ten years ago in terms of how many deals are happening in the services world. And that's really one of our strongest practices at the firm. So when we think about services, essential services, utility, power, there's a very long Runway for that.

[Tom Keene]

Mark, it's been wonderful. Thank you. Don't be a stranger. This has been great effort capital. We love doing this, folks. Co chief executive officer, head of all infrastructure at Brown, Gibbons and Lang. We love, love, love hearing from informed individuals outside the three zip codes were addicted to. Stay with us. More from Bloomberg Surveillance coming up after this.

[Francine Lacqua]

This week on Leaders with me, Francine Lacqua, I speak to tennis legend Rafa Nadal about how he stayed competitive despite injury.

[Paul Radke]

I was able to enjoy the victories probably more than if I will not have this issue.

[Sarah Hunt]

One iconic match in my mind was

[Paul Radke]

I am almost dead and whether he misses playing, I don't miss Denis because who has nothing else to offer.

[Francine Lacqua]

Listen and watch Leaders with me, Francine Lacqua on Bloomberg Television or wherever you get your podcasts.

[Bloomberg Host]

You're listening to the Bloomberg Surveillance podcast. Catch us live weekday afternoons from 7 to 10am Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg business app or watch us live on YouTube.

[Tom Keene]

Mark McCormick is a wonderful student of the markets of synthesis is chief effect strategy for BMO Capital Markets but he does so much more as well. When you come in in the morning, Mark McCormick on your four Bloomberg's what's the first thing you look at?

[Nathan Hager]

I'm still a WCRS guy so that's still my my top go to I like the bond curve function as well but say it's been 15 years of WCRS and look at what's kind of driving effects because I think it tells us a story about what's going on in the whole world.

[Tom Keene]

Is it dollar strength or everybody else weakness?

[Nathan Hager]

I think this is dollar strength. I think there was a. There's a piece of this story that it was partly a multifaceted dollar where it's weak asia, it's weak G10 and it's strong. Latam. I think now that the Fed has turned hawkish and we're really focused on a rates factor rather than some of these other drivers. Latam starting to crack as well. So it's becoming a strong dollar move Mark here.

[Paul Radke]

We kind of came into the year, I think the consensus was for a weaker US dollar and then of course the war in Iran started and that changed the dynamic quite a bit. And now we've got the DXY well over 100 once again at 101 spot 1. How do you think this plays out over the next six months here in the currency world? Where's the value perhaps?

[Nathan Hager]

Yeah, I think what's interesting is, right is we're finally catching up to I think a storyline that reinforces the things that we've been push for months, which is the Fed didn't need to cut. Now it's very arguable that the Fed does need to hike at least once or at least pull some of the cuts out from last year and move towards tighter financial conditions. The second thing is the US economy has been quite strong coming into 2026 and it's picking up further strength into 2020, into the second quarter of 2026. So our growth signals that we track, which are very high frequency leading indicators, tell us the U.S. economy is doing better than every other major economy we track. The other thing, US equities outperforming most major markets maybe besides the Nikkei and a couple of emerging markets. So you add all these things together, the dollar wins on carry, it wins on economic performance, it wins on mostly on equities and it's on the right side of the terms of trade shock. So you pull all these together and I feel like the market's finally catching up to this story. And the thing that I think actually moves the needle a little bit further because we've been looking for DXY at 103 for this quarter for a while. Is the trend following models, the cta, they're the ones that are flipping long the dollar now. They're the ones that take us there.

[Tom Keene]

Okay, so if we get a Mark McCormick 101 or 100 to 103, that's a bull Paul and I said at the same time, wow, that means the other currencies go down on a domestic, domestic basis. Bart McCormick, what does it mean to businesses in Japan, businesses in the Philippines, businesses in Malaysia, businesses in Egypt? If we see this 103d x y

[Nathan Hager]

I don't know if it's going to have a massive impact on the local businesses. I think, you know, part of what's so complicated about effects and what's so interesting about how the world works is it's, it's an integrated global supply chain. So there's no longer like my currency goes up and I don't export as much. But I think what's very clear is that when the dollar goes up it's basically signed. The global economy is weak, rates are higher, liquidity is tighter. So I think what these other countries are going to be dealing with are higher interest rates even though they wouldn't want to deal with higher interest rates. So that's what the, you know, the Fed curve is basically imposes onto the rest of the world. So US Yields going up, I just think is, is kind of a very tightening shock for global growth which in an environment where global growth has already kind of turned negative which reflects the stronger dollar are some of the things they're going to hurt Japan, it's going to hurt Korea, it's going to hurt these countries around the world. It's just going to tighten their financial conditions and make the economy a little bit weaker.

[Paul Radke]

Mark, you mentioned Japan. Tom and I keep a keen eye on the yen here. 162 spot 5 3. What's going on there?

[Nathan Hager]

I think it's the last time we spoke we were, we were talking about the red lines in the sand at 160. Again we kind of of like came to the point that 163 is not a line in the sand. Again I would highlight some of the things that are driving $YEN here is even before we had that conversation the Fed is now turning hawkish. The rates factor is the most dominant factor in currencies and you could argue in markets this isn't just Goldilocks. This isn't risk on, risk off. It's something that's new. This is a new policy driven environment where we're going to have more macro volatility. The BOJ is absolutely behind the curve and they're not going to get ahead of the curve. So now you have rate differentials along with, you know, this is also for Japan, not crude oil story, it's natural gas. So if you look at the contract that's traded in Asia and liquefied natural gas, it hasn't come down. So you're still dealing with a terms of trade shock. You're dealing with higher rates and you're dealing with an environment where dollar yen should be between 160 and 165. I think the new red line in the sand for intervention maybe is 165 because I think they'd like to keep it from going to 170. But again, my view here is Asian currencies remain weak Mark, thank you so much.

[Tom Keene]

Just a terrific brief with the bank of Montreal, BMO Capital Markets. Mark McCormick, the chief affects Strategist this

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[Francine Lacqua]

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