Stocks Fall at End of Bruising Week for AI

Summary

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Bloomberg Surveillance Podcast – Stocks Fall at End of Bruising Week for AI

Date: June 26, 2026
Hosts: Tom Keene, Paul Sweeney, Lisa Abramowicz, Annmarie Hordern
Notable Guests: Nancy Tangler (Laffer Tangler Investments), Diane Swonk (KPMG Chief Economist), Kristin Bitterly (Citi Global Markets), Robert Schiffman (Bloomberg Intelligence)

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Episode Overview

This episode of Bloomberg Surveillance examines the week’s downturn in stocks, especially those linked to artificial intelligence (AI), and explores broader trends across finance, technology, and corporate earnings. Through conversations with leading market voices, the team tackles AI’s impact on productivity and employment, credit and bond markets’ reactions to capital expenditure, shifting investment themes, and how professionals are adapting portfolios to new risk realities. Real-world anecdotes—like transformations in Lake Tahoe and law firm pyramids—tie macroeconomic shifts to everyday consequences.

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Key Discussion Points

1. AI’s Influence on Corporate Performance & Investing

Guest: Nancy Tangler, Laffer Tangler Investments
[02:10–08:21]

• Portfolio Adaptation & Earnings Outlook

  • Tangler explains her firm's strong year, attributing outperformance to an early rotation out of overextended tech into infrastructure, but still being overweight technology due to AI’s cross-sector productivity boost.
  • She describes the recent tech "summer swoon" as an opportunity, outlining plans to add select positions during weakness.

• Old Economy Firms & AI

  • Focus on “old economy” firms using AI to modernize (e.g., Walmart vs. Target).
    • “Our investing theme has been old economy companies that have pivoted to the new technologies. Our original poster child was Walmart... juxtapose Walmart against Target and you’ll see really dramatic price performance over the last five years because Target got behind and Walmart stayed ahead.” (Nancy Tangler, 03:48)

• AI Penetration Example

  • Uber: 95% of engineers use AI coding tools; over 10% of code is written by AI agents.

• Tech Giants & AI Monetization

  • Discussion on Microsoft’s lagging stock performance despite strong fundamentals.
    • “I think the company will ultimately monetize AI and grow Azure in a really disciplined and meaningful manner. But it is tied to OpenAI and I think today’s announcement is not a surprise... I personally think [OpenAI] need[s] a new leader... I think the company is fraught and it is impacting Microsoft.” (Nancy Tangler, 05:09)

• Shareholder Communication

  • The need for Microsoft to “be more Apple”—i.e., communicate profitability and capital allocation more clearly.
    • “They need to be better at communicating it because what shareholders are hearing is well, we’re supply constrained on infrastructure Azure and we can’t spend enough. And that’s not [what] investors want to hear.” (Nancy Tangler, 06:06)

• Lake Tahoe Wealth Shift

  • Reflection on the explosion of ultra-wealthy homeownership in Lake Tahoe, with anecdotes about local billionaires reshaping the locale.
    • “Lakefront homes are going from anywhere between $50 to $150 million. Just a few years ago, pre-Covid, let’s say it was $3 to $5 million. I’m one street off the lake, but worlds apart.” (Nancy Tangler, 06:45)

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2. Macro & Fed Policy: Inflation, Labor, and the AI Economy

Guest: Diane Swonk, KPMG Chief Economist
[11:05–15:53]

• Fed Chair and Forward Guidance

  • Swonk discusses the incoming Fed leadership and the risks of overly prescriptive forward guidance in volatile times.

• Persistent Inflation Risks

  • Despite declining energy prices, underlying inflation—especially in services—remains stubborn due to demographic drivers and a “K-shaped” economy that makes experiences (concerts, sports) more exclusive:
    • “The costs associated with AI are hitting ahead of the productivity being scaled. That’s important because that’s not ameliorating those costs... we’re going to see a lot more consumer electronic inflation going forward. And that’s something that had been deflating for decades. So this is a very different situation than what we saw during the dot com bubble.” (Diane Swonk, 12:21)

• GDP and Wealth Concentration

  • Nominal GDP growth is driven by wealth in the AI boom, with compounding inflation hitting lower earners the hardest:
    • “So much of GDP [is] going into the AI boom and derived from the wealth that it’s generated... wealth is compounded as well. Those who are the wealthiest... have a significant cushion... [whereas] inflation hits those who can afford it least the hardest.” (13:49)

• Labor Market Dynamics

  • Official unemployment remains low, but underemployment has risen, and fewer workers are job-switching, pointing to uncertainty and challenges beneath the headline strength.

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3. Wealth Management, Legal Industry, and AI’s Structural Impact

Guest: Kristin Bitterly, Citi Global Markets
[19:38–27:19]

• Wealth at Work / Financial Planning

  • Bitterly’s team customizes end-to-end solutions, covering law, asset management, and professional services.

• Savings vs. Investing

  • Many high earners save but don’t invest, keeping large cash balances vulnerable to inflation:
    • “You’ll see people... making good salaries and they have saved but they have all of their money in a savings account. And then you think of like with inflationary pressures like, yeah, so you’re saving money, but you also have to have that money work for you as well.” (Kristin Bitterly, 20:25)

• Law Firms and AI

  • AI’s effect is restructuring entry-level legal jobs and the industry hierarchy:
    • “Instead of having that traditional pyramid structure, it’s now starting to look more like a cylinder... AI, like... a lot of junior talent was doing summarization and then a lot of corporates are pushing back and saying, wait, if you have the first year associate on this, and AI can do it, you’re not charging me the same amount.” (22:31)

• Investor Behavior and Alternatives

  • Many professionals miss equity rallies by being “too smart;” the importance of a long-term plan and a diversified approach (shifting from the classic 60/40 to “60/30/10” allocations with cash and alternatives—private equity, gold):
    • “Our CIO talks a lot about this. We have positions, gold positions in our portfolio simply because it’s a ballast. It’s almost like a substitute for the 10 year, given the volatility that we’ve seen in rates.” (Kristin Bitterly, 25:36)

• Minimal Crypto Exposure

  • Despite client inquiries, crypto exposure is marginal in managed portfolios.

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4. Market Credit Conditions: Tech Debt, SpaceX Bonds, and Capital Flows

Guest: Robert Schiffman, Bloomberg Intelligence
[31:05–38:42]

• CapEx Debate for “Mag 7”

  • Schiffman outlines concerns about how major tech firms’ capital expenditures (especially data centers for AI) and debt loads are being received by bond markets.

• SpaceX Bond Sell-off

  • SpaceX’s recent blockbuster bond deal saw sharp declines, with fast-money accounts flipping for profit and a notable lack of long-term holders:
    • “SpaceX’s blockbuster bond sale is weakening in price so quickly in the secondary market... traders say they can’t recall another recent deal that widened this sharply.” (Tom Keene, 32:20)

• Tech Credit Markets: Two Tiers

  • AAA/AA-rated tech bonds still see strong demand, but names like Oracle and SpaceX—with higher leverage and negative cash flow—trade wider than the index. Nonetheless, overall capital inflows remain robust.

• Investor FOMO & Potential Issuances

  • Suggests demand is so strong that it’s unlikely to ebb soon; predicts more large deals (potentially Meta or Microsoft) ahead, even as new supply should moderate in the second half of the year.

• No Crowding Out for Other Corporates

  • Non-tech borrowers should still find funding, as tech deals are priced attractively and don’t crowd out other sectors:
    • “Is there capital available for non tech corporates? Yes...The reality though is they just don’t need as much money.” (Robert Schiffman, 37:54)

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Notable Quotes & Moments

• On AI’s Ubiquity:

  • “AI productivity really is impacting margins and impacting cost savings and growth across the economic sectors.”
    (Nancy Tangler, 02:31)

• On Persistent Service Sector Inflation:

  • “It’s been a bit of whack a mole with what’s pushing service sector inflation... try to go to a live sporting event or concert—really is a luxury kind of ultra-wealthy kind of thing you can do now.”
    (Diane Swonk, 12:21)

• On Law Firm Restructuring:

  • “Instead of having that traditional pyramid structure, it’s now starting to look more like a cylinder... AI can do [work] you’re not charging me the same amount.”
    (Kristin Bitterly, 22:31)

• On SpaceX Bond Volatility:

  • “SpaceX’s blockbuster bond sale is weakening in price so quickly in the secondary market... traders can’t recall another recent deal that widened this sharply.”
    (Tom Keene, 32:20)

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Timestamps of Key Segments

• Nancy Tangler on AI and Portfolios: [02:10–08:21]
• Diane Swonk on Fed, Inflation & Labor: [11:05–15:53]
• Kristin Bitterly on Wealth Management & Law Firms: [19:38–27:19]
• Robert Schiffman on Tech Bonds & SpaceX: [31:05–38:42]

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Tone & Flow

The conversation is lively, blending expertise and market insight with accessible banter (frequent anecdotes about travel and geography, jabs at old institutions, and personal vignettes) while always returning to practical implications for investors, business leaders, and professionals navigating a shifting economic landscape. At each turn, the hosts push their guests for actionable insights and firsthand perspectives on how AI and macro trends ripple through investing, business, and daily life.

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For further detailed insights, listen to segments at the timestamps above or consult the Bloomberg Surveillance Podcast archives.

Transcript

[CBOE Representative]

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[IBM Representative]

So there's a lot of noise about AI, but time's too tight for more promises. So let's talk about results. At IBM, we work with our employees to integrate technology right into the systems they need. Now a global workforce of 300,000 can use AI to fill their HR questions, resolving 94% of common questions, not noise Proof of how we can help companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter Business IBM

[Bloomberg Host]

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[Tom Keene]

Some of our guests are smarter than we are. Yeah, 98 degrees high in Paris today, which is not quite like Phoenix, where it's 108 degrees. It's a dry high today. Lake Tahoe, which is where Nancy tangler hangs. Lake Tahoe's 55 degrees.

[Paul Sweeney]

She's got it all figured out like

[Tom Keene]

she's got the heat on. She's smarter than we are Hero Nancy Tangler, thank you so much for joining today with Laugher Tangler Investments. How do you approach your portfolios given the end June 30th and earnings and revenue season beginning July 14th?

[Paul Sweeney]

Yeah.

[Nancy Tangler]

Good morning, Tom. Good morning, Paul. Well, it's always tricky, isn't it? I mean, we have had a very good year, so you know we're well ahead of the benchmarks and that's because we rotated early out of some of trimming back some of the tech names that were still overweight technology in adding to some of the infrastructure names and then across sectors, what we're seeing is that AI productivity really is impacting margins and impacting cost savings and growth across the economic sectors. So we are selectively adding. And this weakness, what we call the summer swoon in technology, is likely a time when we'll be adding to some

[Paul Sweeney]

names in your notes, which are just great, Nancy, thank you. You've got some commentary from the CEO of Uber who says 95% of our engineers now use AI coding tools monthly and more than 10% of code is now written autonomously by AI coding agents. Boy, to try to figure out how to invest in AI, it's almost like everywhere you look, AI is impacting this economy. How do you think about trying to get full exposure, proper exposure to AI?

[Nancy Tangler]

Well, our investing theme, Paul, has been old economy companies that have pivoted to the new technologies. Our original poster child was Walmart. But you can see it in the notes that it's across sectors. A company like L3Harris saying our employees are producing 25% more revenue than they were a few years ago thanks to the impact of AI is important to understand as an investor. So we sit on all the calls. We do this for our clients. Not everyone has the luxury of listening and talking to management on a regular basis. But it's important to look at who the leaders are at these companies that are pivoting in the right direction. So juxtapose Walmart against Target and you'll see really dramatic price performance over the last five years because Target got behind and Walmart stayed ahead. So it's a bit of an art form. But effectively that is what we're looking for in our earnings call notes and we're using IT AI to identify the themes.

[Paul Sweeney]

Nancy, Tom and I, we talk a lot about Microsoft recently because we see the stock down, you know, 25% and you think about we all grew up with Microsoft as being obviously just one of the best in class companies globally with just tremendous financial results here. But they seem to be not participating in this AI story. How do you think about some of these big software companies like Microsoft?

[Nancy Tangler]

You know, I was looking at it this morning, and that is the right question to be asking. We may be adding to it here soon. We own it across all of our large cap strategies. It's one of our 12 best ideas. It hasn't been the best idea, which is why you have a portfolio. But I think the company will ultimately monetize AI and grow Azure in a really disciplined and meaningful manner. But it is tied to OpenAI and I think today's announcement is not a surprise to those of us who have been watching the company. I don't think the company's ready to go public. I personally think they need a new leader. No one's called me to ask that. You know what I think about Sam Altman, but I think the company is fraught and it is impacting Microsoft.

[Tom Keene]

Does Microsoft have to be more Apple? Like do they need to get out and be more aggressive about identifying profit and the allocation of profit to shareholders?

[Nancy Tangler]

Yeah, I do think that Tom. I think they need to be better at communicating it because what shareholders are hearing is well, we're supply constrained on, on infrastructure Azure and we can't spend enough. And that's not investors want to hear.

[Tom Keene]

Okay, I got to cut to the chase. I mean is there anybody in Lake Tahoe Nevada who's not a billionaire? Nancy, are you just like me? You're surrounded by. I mean is it out of control? Is it like if you go down to Heidi's Pancake House or Ernie's Coffee Shop, is it like a whole new Lake Tahoe after all because of the tax strategies of the western states?

[Nancy Tangler]

Yeah, I'm in Incline Village. It's a thousand. You're 1,000% right. Lakefront homes are going from anywhere between 50 to $150 million. Just a few years ago, pre Covid, let's say it was 3 to 5 million. I'm one street off the lake, but worlds apart. Elon Musk's cousin is building an underwater hockey pool and dorms because he has to fly in the players because nobody in the US plays it. So it is nuts. They're changing. Larry Ellison bought the Hyatt. He turned the Lone Eagle Grill into a Nobu. I think that's where we're going. And yeah, it's okay.

[Tom Keene]

So it's going to be. Is it going to be like Jackson Hole where the normal non billionaires like Nancy Tangler get pushed out and you're going to have to drive in from Las Vegas?

[Nancy Tangler]

Well, I own my home so I'm going to. I'm spite not remodeling it because it's a quaint old Tahoe home. So we'll see how that goes.

[Paul Sweeney]

I'm telling you Tom, it's that money leaving California. They go right across the state line to this Incline Village in Nevada.

[Tom Keene]

How do you get out of Lake Tao? Do you fly to Phoenix to come visit Reno at our world headquarters? You go, you know, are you like non state? I mean the billionaire bros. I'm telling you, she's all, she's on art laughers. Gulf Stream.

[Paul Sweeney]

Yeah. Okay.

[Tom Keene]

That's. How do you get here? How do you travel out of Lake Tahoe?

[Nancy Tangler]

Reno. You drive to Reno. Nothing's convenient. But that, that used to be part of the charm. Now, you know, they're, they're gussying up the place and I'm, I'm less comfortable than I used to be walking around in hiking clothes.

[Tom Keene]

Nancy, thank you so much. Nancy Tangler from Lake Tahoe today with Laffer Tangler. And I just can't say enough about, as you mentioned, the quality of a research note is just outstanding. Stay with us. More from Bloomberg Surveillance coming up after this.

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[IBM Representative]

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[Paul Sweeney]

IBM support for the show comes from public.com if you're actively involved in your portfolio, you probably catch yourself repeating the same actions. Buying the dip, manually, sweeping idle cash, putting on a hedge on public you can now create AI agents that handle all these tasks on your behalf. Just describe what you want to do in plain English, like if the Vix hits 25, buy a put option on the S&P 500 or if my cash balance goes above $20,000, move the excess into my direct index. You approve the workflow and your agent handles the risk, monitoring the market, watching for your conditions and executing your strategies exactly as defined. An investing platform driven by your intent, not just your clicks. You can also get full read and write access to your account via the public API. Go to public.com market and fund your account in five minutes or less. That's public.com market market paid for by

[Tom Keene]

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[Bloomberg Host]

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[Tom Keene]

Dam Swank has been more than patient. When you're from Chicago, yeah, and it's White Sox, Cubs, you know, you listen.

[Paul Sweeney]

She went to the booth school. That's a lot of math.

[Tom Keene]

Thank you so much for waiting as we discuss New York City sports as well. There's going to be a sport, Diane, that you're expert in and that's the next and the next after that. In the next after that Chairman Warsh press conference. When does he really become chairman? Is it Jackson Hole?

[Diane Swonk]

That's going to be. I think one of the most important things that we see is how he handles Jackson Hole and what he telegraphs. Obviously he doesn't want to do forward guidance which actually at this point in time I think forward guidance is not the best thing to be doing. So I have some sympathy for that. You know, forward guidance in a time when you have such high levels of uncertainty and we can have so many different kinds of pivots and what policy could be I think is a, it's a, it adds to uncertainty rather than clarity. And that's what, you know, we've been struggling with with the Fed all year.

[Paul Sweeney]

Inflation here, we've got oil continuing to come down here. Diane, what's seemingly some light at the end of the tunnel as it relates to Iran. What's your underlying inflation call these days, even with energy coming down?

[Diane Swonk]

So we are really worried about, I'm a little bit more on, you know, the Austan Goolsbee side of the equation of the Fed these days, although he won't use the word hockey, he talks about himself as a data dog. But it really is important, we think that underlying inflation in the service sectors rem too high. We know that, you know, it's been a bit of whack a mole with what's pushing service sector inflation. But the K shaped economy is not helping. I mean try to go to a live sporting event or a live concert these days and you know, it really is a luxury kind of ultra wealthy kind of thing you can do now because you can't afford to buy some of these tickets and I think that's important. The other issue is of course aging demographics, pushing up costs of health care. But we also have other issues in the pipeline and that's the sequencing of AI. The costs associated with AI are hitting ahead of the productivity being scaled. And that's important because that's not ameliorating those costs. In fact, we heard some announcements yesterday that we're going to see a lot more consumer electronic inflation going forward. And that's something that had been deflating for decades. So this is a very different situation than what we saw during the dot com bubble.

[Tom Keene]

Dan Swank, your fabric of all you do out of Michigan is the way we do business away from three zip codes in Manhattan. I've been asking about our addiction to sprightly stimulus led nominal GDP across America. Are we addicted to 5% plus nominal GDP?

[Diane Swonk]

You know, I mean with a, with a nominal GDP with inflation accelerating, that's not as great. What we have seen, what I'm worried about is not exactly that just the nominal pace of gdp, but that it's so concentrated that we have so much of GDP going into the AI boom and derived from the wealth that it's generated and that is something that's not even gained. And in fact inflation itself, it compounds over time. And so the fact that we've had five years of it, you now have price levels that are too high and out of reach for too many. At the same time, that wealth is compounded as well. And so those who are the wealthiest with large stock portfolios, they have a significant cushion to be able to absorb the shock of inflation where inflation hits those who can afford it least the hardest.

[Paul Sweeney]

How about on the other side of the Fed mandate, the labor market? We got a print yesterday that seemed to suggest the labor market remains pretty darn resilient out there.

[Diane Swonk]

Labor market has remained resilient and at the end of the day the Fed, the only thing they can do is manage to those aggregate figures. And I think that's really important because what we're seeing now is even as the labor market is relatively resilient and we've been running at a 4.3% unemployment rate which the Fed considers pretty much full employment under the hood. Underemployment has, is much higher than it was pre pandemic and the duration of unemployment has risen while quit rates have fallen, which sort of reflects an uncertainty that workers have out there. They're not job hopping to a better and more productive firm. And that's important as well. But at this point in time the Fed, you can see their pivot and their focus has gone from worrying about the labor market side of the equation to worrying about inflation, which is I think what they have to worry about right now because over time increased costs affect the labor market as well.

[Tom Keene]

Diane, thank you so much. Thank you, thank you, thank you. Diane Swonk with us this morning here. Just huge news. I thought this was like a sleeper snooze fest Friday, no? What happened to that?

[Paul Sweeney]

Yeah, exactly.

[Tom Keene]

We'll have to see on that as well. Diane Swankers with kpmg, her chief economist. Stay with us. More from Bloomberg Surveillance coming up after this.

[Paul Sweeney]

Support for this show comes from public.com if you're actively involved in your portfolio, you probably catch yourself repeating the same actions. Buying the dip, manually sweeping idle cash, putting on a hedge on public. You can now create AI agents that handle all these tasks on your behalf. Just describe what you want to do in plain English, like if the Vix hits 25, buy a put option on the S&P 500 or if my cash balance goes above $20,000, move the excess into my direct index. You approve the workflow and your agent handles the risk, monitoring the market, watching for your conditions and executing your strategies exactly as defined. An investing platform driven by your intent, not just your clicks. You can also get full read and write access to your account via the public API. Go to public.com market and fund your account in five minutes or less. That's public.com market paid for by Public

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[Tom Keene]

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[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]

It's a good time to see Speak to Kristin Bitterly I love this wealth at work City Global Markets what is wealth at work?

[Kristin Bitterly]

So what it is is we actually design end to end customized solutions for firms and their employees. So it was born out of the law firm group. So we work with lawyers, entry level associates through to the most senior partners. We also cover the firms themselves. We cover asset managers, professional services, pre ipo, post IPO companies and actually our own employees at Citi. And so the idea, you know the industry really deep, you serve the entirety of their employee base and then you're able to anticipate their needs before they even know they have are they saving

[Tom Keene]

and they learn from idiots like me to save sooner, quicker and bigger.

[Kristin Bitterly]

That's our goal. So we lead with planning and we want to make sure that people invest and they invest early on and that they save. But Tom, I would say one of the things that we see most commonly is that a lot of people they may save but they don't invest. So one of the very common fact patterns and this is across when you think of all of those industries, the legal industry, the asset management industry, you know, even at Citi you'll see people who are making good salaries and they have saved but they have all of their money in a savings account. And then you think of like with inflationary pressures like yeah, so you're saving money, but you also have to have that money work for you as well. So we lead with planning, we help people help themselves and we really try to make sure to free up their headspace so that way they can focus on their families. It's true, it's true.

[Tom Keene]

I'm going to use that line

[Kristin Bitterly]

free of your headspace so you're focusing on your family.

[Tom Keene]

And here's the career works this weekend. Let's hear it afterthought. Free up your headspace, empty the dishwasher,

[Kristin Bitterly]

watch the World cup, maybe two.

[Paul Sweeney]

Exactly.

[Kristin Bitterly]

A little bit of that.

[Paul Sweeney]

How are lawyers? It seems like the law business is a good business.

[Kristin Bitterly]

It's a great business. Yeah.

[Paul Sweeney]

How have the trends been recently when you go into a Paul Weiss or one of these other big, big firms, everybody's I think, doing pretty well.

[Kristin Bitterly]

They're doing really well. So like when you look at the legal industry and we have a business called advisory services. And so if you think about there's no sell side research on private partnerships. And so we have a team that basically goes out, interviews all of the execs and managing partners. The kind of C suite at law firms understands top line revenue trends, billing trends, they understand their expense base, how they're investing in talent. So what I would say is like, when you look at the overall kind of like top line revenue growth, definitely they're very strong. When you look at expenses, if you're a partnership, you have the same type of expenses that we're dealing with now as like Citigroup. Like you're thinking, how am I deploying AI, how am I investing in talent? So you're starting to see like that start to tick up. And so I would say that's like a major trend to watch is AI

[Paul Sweeney]

helping the, you know, kind of the junior associate kind of thing get stuff done. Because I would think that would be

[Kristin Bitterly]

huge for them, it would help them. But then it's also a risk in terms of if you're in law school right now. So like one of the things that is very commonly said is instead of having that traditional pyramid structure, it's now starting to look more like a cylinder in terms of like attracting associate talent and junior talent. Because the AI, like if a lot of junior talent was doing summarization and then a lot of corporates are pushing back and saying, wait, if you have the first year associate on this, right, And AI can do it, you're not charging me the same amount.

[Tom Keene]

I had a heavyweight bond person say to me the other day, when I hold court up in the food court at 10:15 on the couch. Everybody knows I'm going to plant myself there. And I talked to this heavyweight Bond person and they said they were the victim of their own work and that their work was to be cautious and they missed the equity move. There's a whole cadre of professionals who are too smart for their own good.

[Kristin Bitterly]

They are. And if kind of going back to when you think of and I hate to bring everything back to planning but one of the major mistakes people have is that that they have a long term plan but then they're trading headlines or that they're kind of reacting to daily movements about what is the Fed going to do, what is the inflation print. And Tom, I couldn't agree more. I think sometimes like your day to day you're so in the weeds in markets that sometimes like you read all these headlines and you're like why would I put capital to work given all of the potential risks out there?

[Tom Keene]

So I think it's a huge deal within global Wall Street. People know too much. I'm dumb as wood.

[Kristin Bitterly]

So that's why you need a good financial advisor.

[Tom Keene]

Kristen bitterly with this as we enjoy ripping up the script. We can do that with someone from Notre Dame. I mean you know, they're, they're flexible and all that. 58,898 on Bitcoin. I asked Gary Gensler the other day with immense respect.

[Paul Sweeney]

Sure.

[Tom Keene]

I said Gary, what do you say to the person that bought bit dog at 110,000? How are you handling crypto loss given wealth at work? It's Citigroup.

[Kristin Bitterly]

So what I would say is like when you actually look at like our clients exposure overall it's pretty minimal. It's pretty, it's pretty minimal. It's not something that we have on an allocation basis within our portfolios. I know some, some other firms do. So we absolutely facilitate transactions within like the ETF space and brokerage space. But I would say you know that from a like asset allocation standpoint, I mean we don't have a significant amount of exposure so it tends not to be like daily dialog when you're seeing this volatility in the market pocket interrupt

[Tom Keene]

space x can't find a bid one 4878 there was a quick 146ish a couple of days ago. I'm going to say quickly folks, not looking at the Bloomberg 145 handle is not good. We're not there yet.

[Paul Sweeney]

No. And this is free trade. The underwriters are out of this game right now. And your clients are pretty substantial. They've got that. They're pretty. They're qualified earners.

[Robert Schiffman]

Yep.

[Kristin Bitterly]

Savers. Absolutely.

[Paul Sweeney]

So what's the alternative allocation for these folks? I'm sure they're probably asking you about alts and that kind of stuff because they're pretty savvy.

[Kristin Bitterly]

Absolutely. So I think, like, one of the major themes kind of moving away from, from crypto is just what is the right asset allocation to be able to withstand some of this volatility? So the headlines will always say, you know, is the 6040 the appropriate portfolio? Am I getting the diversity diversification and. And the breakdown in correlation? And so what we tend to see is more probably like a 60, 30, 10 with a lot of investors where cash is still an important part of that portfolio. I think the conversation on the cash piece is understanding, are you intentionally having this as an investment? Is it operating cash or strategic cash? But we see that much more commonly. And then I would say, like, looking to whether it's alternatives, private equity, for example, or even something like gold. Our CIO talks a lot about this. We have positions, gold positions in our portfolio simply because it's a ballast. It's almost like a substitute for the 10 year, given the volatility that we've seen in rates, that you want that type of correlation within your asset allocation.

[Tom Keene]

Can you come back more often? Which office do you work?

[Kristin Bitterly]

I'm happy to come back. I'm at 388. I'm in Tribeca.

[Tom Keene]

You're in Tribeca.

[Kristin Bitterly]

I'm in Tribeca.

[Paul Sweeney]

Worst elevators on Global Wall street at 388.

[Kristin Bitterly]

That is not true. You know what, you guys, I'm fighting you down to 380. You guys can come down to Tribeca. Would you do that?

[Tom Keene]

I haven't been below 57th Street, I think. Do you know the last time I was in Brooklyn?

[Kristin Bitterly]

Oh, no.

[Tom Keene]

I live in Brooklyn, too.

[IBM Representative]

Oh, no.

[Tom Keene]

Are you in North Brooklyn with. Do you have coffee at Cafe Grumpy?

[Kristin Bitterly]

I don't know what Cafe Grumpy is.

[Tom Keene]

It's a Green Point.

[Kristin Bitterly]

I'm going to say Park Slope, not Park Slope. I'm a Cobble Hill girl.

[Paul Sweeney]

Oh, okay.

[Tom Keene]

That's good.

[Robert Schiffman]

All right.

[Kristin Bitterly]

Are you visiting Brooklyn? Can we get you.

[Diane Swonk]

There's.

[Tom Keene]

There's a reason bitterly, of Citigroup. We'll have her on more often. Really informative. Stay with us. More from Bloomberg Surveillance coming up after this.

[Paul Sweeney]

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[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]

Our Rolodex is Robert Schiffman and Credit and debt there's no one close with Kidder Peabody, with Ernst and Young, with Donaldson Lufkin generate just a few years. It shows his age, his maturity as they say around he is definitive on the credit the debt of Mag7 Robert Schiffman they're going to have earnings and revenues. There's going to be second quarter report. How will the second quarter report adapt and adjust all this CapEx debate?

[Robert Schiffman]

Well, good morning Chance. I I don't know what it says about me that just about every worked for in the past has gone business. So let's hope we break that streak of Listen, there's a lot of concern this morning. We go through these sort of every couple of months that capital is going to about ecosystem.

[Tom Keene]

We've got some audio difficulties here with Mr. Shiffman. We're going to get that fixed out. I mean the guy is good at like you know, scoping out the capex cash flows of of a data center but we can't hook them up. Audio? No, we're working on it.

[Paul Sweeney]

Right.

[Tom Keene]

We'll get this hooked up in a moment here as well. Published moments ago. This is really important.

[Robert Schiffman]

Important.

[Tom Keene]

Caleb Mudua and Ying Luther Wow. This is really a wow story. Bond traders stunned as losses on SpaceX's new debt keep growing.

[Paul Sweeney]

Is that right?

[Tom Keene]

The lead is jaw dropping. SpaceX's blockbuster bond sale is weakening in price so quickly in the secondary market. The traders say they can't recall another recent deal that widened this sharply. And you know I think this is a huge developing story for this Friday and into the weekend. Mudo and Lutheran go out to the paper out 30 years and they come in as much as 0.28 percentage points wider. This I don't think is in the zeitgeist right now.

[Paul Sweeney]

No, I'm just looking at this reporting here. Traders say moves suggest fast money accounts to rather than traditional buy and hold investors piled into the deal looking to flip it for a quick profit.

[Tom Keene]

We'll have to see. Robert Schiffman we believe continues with us right now with Bloomberg Intelligence. Robert, I look at the state of your research on credit. What are you going to be writing about into next week?

[Robert Schiffman]

Yeah, listen, I think the theme is the same for me. I'm not necessarily seeing or feeling what's being reported out there. Obviously within every deal is not necessarily priced to perfect valuations and every equity is not trading to all time highs still but the amount of capital that still is flowing into this ecosystem is enormous. I think it's only going to get bigger and all the data points that we're seeing continue to suggest that demand is far outstripping supply and you're going to see capital chase that. We can debate about exactly where SpaceX should trade or what the multiples on a hyperscaler should be. But are we going to see sort of this flood of capital disappear anytime soon? I don't think so and in fact I think you're going to see much more capital raised over the next 12 months than you did over the last 12.

[Paul Sweeney]

So Rob Thomas is reporting some of the Bloomberg reporting about SpaceX bonds trading a little bit weak here. How the other big AI tech bond offerings over the last several weeks, how have they been trading in the aftermarket?

[Robert Schiffman]

Yeah, well there's two distinct markets when you think about AI debt or maybe three if you want to start talking about private debt. But the vast majority of debt that's coming is super high quality AA and AAA bonds and they've come at wider levels than historical but basically have been trading in line with new issue spreads. Investment grade tech bonds are about 5, 7 basis points wider than the investment grade index which is close to historical. At least 20 year tights, names like SpaceX or Oracle that have different balance sheets that have massive negative free cash flow that some can't see ever turning around and see balance sheets just building, building, building debt and don't see the end are trading weaker and that's probably. Listen, that's not going to go away. This is a shame story. You've got to see results, results and those results are probably not going to come for another 36 months if there's

[Tom Keene]

two shift in buckets, the ones that are going to get it done on profit etc. And ones like Oracle maybe not. Which bucket is Facebook matter in?

[Robert Schiffman]

Well I actually think all of these guys are going to get it done. I think there's enough Demand across the high quality and lower quality curve to fund all these guys to get them up and running to where you're going to see considerable growth for almost everybody. Not everyone, for almost everybody but particularly these, these investment grade names and I put Oracle and Space X into that bucket. The alphabets and metas of the world. Listen, it's almost like splitting hairs. Obviously the core business for a name like Alphabet and perhaps the LLM is a lot stronger and that'll make people feel a little bit better. But from a credit trading perspective they're honestly not going to be differentiated that much. I think it's going to be more of an equity story than it is a credit story.

[Paul Sweeney]

Rob, in terms of new issuance here, we're getting approaching July here. Are we going to see anything else hit the market this summer? Are we going to wait till the fall before you see some more new issuance?

[Robert Schiffman]

Well, I do think second half is going to slow down. Like even though we can't look at what historically has happened because we're in a historically different environment. The vast majority I think of 2026 funding is complete. That doesn't mean there's still not going to be big deals nor you know there's also some surprises out there. A lot of people didn't see an 85 billion dol Alphabet equity deal coming. I think that sort of shows how much demand there is because how much more money that they want to spend. So you'll still see deals pop up. I wouldn't be surprised to see a metadill. I wouldn't surprise be surprised to see a Microsoft deal. Still seeing some private Data center specific SPVs out there. But I do think like this enormous supply that we saw in the first half is going to slow down. I think that's actually positive from, for, for bond technicals and spreads. I think we can actually mildly outperform. When I say we I mean the investment grade tech space versus the rest of the corporate index through the year end.

[Paul Sweeney]

Is he, is there a crowd out phenomenon out there, Rob? I mean there's so much tech or so much money has gone into some of these tech bond issuance. Is that crowding out some other issuers?

[Robert Schiffman]

I don't think so. I mean listen, this is the shiny new pet out there and it's actually being offered and at better levels than anyone else you'd ever be able to buy. So it's attracting a tremendous amount of capital and there's definitely a little bit of FOMO out there. I think that's certainly played into the Space X Bond deal. But is there capital available for non tech corporates? Yes. The reality though is they just don't need as much money. But I think if you just look at, if you talk to Noel Hebert, he will tell you how tight spreads are both in high yield and in ignite. So if companies want to come, they're cash on the sidelines to fund our corporate America.

[Tom Keene]

This has been wonderful. Robert Schiffman, thank you so much. And we hugely appreciate the daily grind where we get the Schiffman love note. You know like 7:15.

[IBM Representative]

Sure.

[Tom Keene]

Everybody else is waking up, sliding in at 10. Schiffman's given us the note at 7:15.

[Paul Sweeney]

He grew up on the train.

[Tom Keene]

He's a machine.

[Paul Sweeney]

Yeah.

[Bloomberg Host]

This is the Bloomberg Surveillance Podcast available on Apple, Apple, Spotify and anywhere else you get. Your podcasts listen live each weekday 7 to 10am Eastern on Bloomberg.com, the iHeartRadio app, TuneIn, and the Bloomberg Business app. You can also watch us live Every weekday on YouTube and always on the Bloomberg terminal.

[Paul Sweeney]

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