Bloomberg Surveillance 2/17/2026
Watch on YouTube ↗  |  February 17, 2026 at 17:21 UTC  |  2:24:18  |  Bloomberg Markets
Speakers
**Russ Koesterich** — Portfolio Manager, BlackRock
**Momei Qu** — Managing Director, PSP Growth
**Terry Haines** — Founder, Pangaea Policy
**Stephen Juneau** — US Economist, BofA Securities
**Dan Skelly** — Head of Market Research, Morgan Stanley Wealth Management
**Connie Maneaty** — Analyst, Jefferies
**Earl Davis** — Head of Fixed Income, BMO Global Asset Management
**Ed Yardeni** — President, Yardeni Research
**Ed Ludlow** — Technology Co-Host, Bloomberg
**Stephanie Roth** — Chief Economist, Wolfe Research
**Krishna Memani** — CIO, Lafayette College

Summary

  • The Great Rotation: A consensus is forming among strategists (BlackRock, Morgan Stanley, Yardeni) that the market is shifting from "Virtual" (AI/Tech) to "Physical" (Industrials, Energy, Staples). This is driven by AI fatigue and valuation concerns rather than recession fears.
  • International Divergence: Multiple guests (Koesterich, Skelly, Memani) identify Japan and Korea as superior value plays compared to the US, citing fiscal stimulus and semiconductor tailwinds without the extreme US valuations.
  • Bond Market Skepticism: Despite the rally in Treasuries (yields dropping toward 4%), experts like Earl Davis and Russ Koesterich are fading the move, arguing that inflation/supply dynamics do not support 10-year yields breaking significantly below 3.90% - 4.00%.
  • AI Disruption Paradox: There is a conflict between the "AI Bubble" narrative (sell tech) and the "AI Disruption" narrative (sell everything else because AI replaces jobs). The current market reaction is punishing both, creating a "confusing" environment for capital allocation.
Trade Ideas
Ticker Direction Speaker Thesis Time
MAT /HAS
LONG Connie Maneaty When asked about pricing power, Connie notes that "quite a bit of pricing did come through" and expects "higher for longer prices on these toys." Despite fears of consumer weakness, toy companies have successfully managed price elasticity. Sticky pricing protects margins even if volume growth is modest. LONG Toy manufacturers on pricing power resilience. Consumer spending cliff or tariff impacts on production costs. 82:11
LONG Russ Koesterich
Chief Investment Strategist, BlackRock
Koesterich notes BlackRock is "trimming tech exposure and adding to cyclicals like industrials." Yardeni observes investors moving from "virtual themes to physical themes." The market is experiencing "AI fatigue." Investors are seeking safety and value in the "analog world" (physical economy) which has been neglected during the tech boom. This rotation is not recessionary but a rebalancing of valuations. LONG physical economy sectors. A sharp economic downturn would hurt cyclicals (Industrials/Energy) regardless of the rotation. 4:15
LONG Russ Koesterich
Chief Investment Strategist, BlackRock
Koesterich points to "better value opportunities outside the US," specifically citing Japan (fiscal stimulus) and Korea/Taiwan (semiconductor rally). Skelly mentions the "global reflation trade" where the US has ceded leadership to these regions. While the US struggles with high valuations and AI doubts, Asian markets offer the same tech/semi exposure (AI hardware) at lower multiples, plus idiosyncratic catalysts like Japan's corporate governance/fiscal shifts. LONG Asian developed/emerging markets. Global trade wars or US dollar strength reversing. 8:42
SHORT Earl Davis Davis states, "As we approach 3.90 [on the 10-year], we go more and more underweight." Koesterich says, "I would be cautious about this rally in the 10-year, particularly as we get down to 4%." The market is pricing in aggressive cuts and a flight to safety that contradicts the reality of supply issuance and persistent inflation floors. Davis argues yields below 4% are not sustainable without a crash, making this a selling opportunity. SHORT duration at these levels. A geopolitical shock or rapid recession could force yields lower (flight to quality).
WMT
LONG Connie Maneaty Jefferies raised its price target. Connie notes Walmart is gaining market share with households earning over $100k and is monetizing data/ads like a tech company. Walmart is no longer just a retailer; it is evolving into a data/advertising platform (high margin) while using scale to keep prices low (gaining share). This justifies a higher multiple than historical norms. LONG WMT as a defensive growth compounder. Valuation is already stretched relative to historical retail multiples. 16:04
LONG Earl Davis Davis mentions Oracle bonds trade about 200 basis points over 30-year bonds and 100 basis points over Meta equivalent bonds. He is comfortable with the "revenue generated by the future of AI supporting the spend." The spread offers a significant cushion and reward for risk compared to tighter tech credits. LONG ORCL Credit. AI revenue fails to materialize to cover capex debts. 91:54
LONG Dan Skelly
Head of Digital Assets, Coinbase
Skelly states, "We have been recommending Gold for over two years and we like that trade." Yardeni notes Gold is a "very good diversifier." In a "global reflation" environment with geopolitical instability and doubts about US fiscal health/tech valuations, Gold acts as the ultimate non-correlated hedge. LONG GOLD. Real rates rising significantly or a strong dollar. 50:57
LONG News (Dani Burger) Elliott Management has built a stake of more than 10% in Norwegian Cruise Line. Activist involvement typically signals a push for operational improvements, cost-cutting, or strategic changes to close the valuation gap with peers like Royal Caribbean. LONG NCLH on activist catalyst. Elliott fails to effect change; consumer travel demand slows.
LONG News (Dani Burger) Starboard Value has taken a stake in TripAdvisor. Similar to NCLH, activist presence suggests a push for value unlocking, potentially through a breakup or sale of assets. LONG TRIP. Turnaround execution failure. 121:57
AVOID Momei Qu Qu notes that sectors with "structured data" like the legal space are "more prone to disruption with Large Language Models." Unlike construction (physical/vertical), legal work involves processing text/data—the exact capability where AI excels. This makes current legal tech incumbents highly vulnerable to displacement by cheaper AI agents. AVOID/SHORT Legal Tech. Regulatory moats protect incumbents longer than expected. 118:16