AI Bosses Urge Caution, Bonds Climb
Speakers
Michael Shepherd
— Tech/Defense Reporter
Derek Decloet
— Bloomberg Reporter
Stuart Simpson
— CEO, Vertical Aerospace
Michael McKee
— International Economics & Policy Correspondent, Bloomberg
Brian Moynihan
— CEO, Bank of America
Jess Menton
— Bloomberg senior equities reporter
Charlie Pellett
— Anchor/Reporter, Bloomberg
Summary
The episode covers AI slowdown concerns hitting chip stocks, U.S.-Canada trade tensions and Canada's investment summit, Vertical Aerospace's electric air-taxi commercialization plans, the 10-year Treasury yield breaching 5% ahead of the Fed meeting, and Bank of America's CEO discussing flat trading revenue and AI supercycle views.
- AI leaders and Microsoft call for caution on advanced AI development, pressuring semiconductor stocks.
- Canada's trade war with the U.S. weighs on auto and forestry sectors as Canada seeks foreign investment.
- Vertical Aerospace CEO outlines 2029 certification, 2030 route launches, American Airlines orders, and funding progress.
- The 10-year Treasury yield briefly tops 5%, with Mike McKee discussing Fed policy and rate risks.
- Japan and Bank of England policy meetings are watched for cross-border rate and currency effects.
- Bank of America CEO Brian Moynihan says flat trading revenue masks a full pipeline and strong consumer credit.
- Moynihan also sees AI as a long-term super cycle despite calls to slow frontier model development.
Ideas
AI slowdown worries pressure chipmakers.
AI leaders' calls to slow development of the most advanced models, including Microsoft's guardrails manifesto, are spooking Wall Street because investors fear the slowdown could reduce the hundreds of billions in planned AI infrastructure spending and pressure elevated valuations. Although OpenAI and Anthropic said they won't slow overall business or investment plans, that was not comforting. The Philadelphia Semiconductor Index, a benchmark for AI infrastructure investment, fell 5%, with losses in Micron, Nvidia and other chipmakers. This creates downside risk for semiconductors.
Canada trade war hurts autos, forestry.
The U.S.-Canada trade war is primarily a manufacturing and resources story. Sectors such as autos and forestry are huge employers in British Columbia, Quebec, and Ontario, and the inability to easily export to the U.S. threatens jobs, companies, and factories. The risk of the U.S. hitting Canada with a broader array of 50% tariffs targeted at small and medium-size companies adds further downside. Those Canadian sectors face the biggest fallout and should be avoided.
Vertical Aerospace undervalued as funding improves.
Vertical Aerospace designs electric vertical takeoff and landing aircraft, has hit all milestones, plans certification in 2029 and route launches in 2030 in New York, Miami, London, and Osaka, with costs per seat comparable to Uber Black. It has 350 orders from American Airlines, partnerships with Honeywell, and a lower-cost engineering base. The stock is down about 90% year-to-date because the company hasn't raised as much as competitors, but it now has backstop funding, is raising quarterly to keep over a year of cash, and spends a quarter of what U.S. competitors spend. The market may be underestimating its ability to survive and commercialize.
10-year yields may break above 5%.
The 10-year Treasury yield briefly breached 5% as the whole curve moved up on deficit and inflation concerns, with oil prices a factor. The market tested 5% and bounced, but it may be hard to get over until the Fed meeting. If the Fed does not raise rates, yields across the curve including the 10-year will definitely go over 5% as investors express disappointment. That implies further weakness in long-duration Treasuries and higher yields.
Japan hikes favor Japanese securities, weaker dollar.
Japan is the key central-bank meeting to watch because if Japan raises rates while the Fed does not, Japanese securities become much more inviting to global investors, pulling money out of the U.S. That would send the dollar lower and push U.S. interest rates higher to try to keep up. This is a relative view favoring Japanese securities and pressuring the U.S. dollar.
Japan hikes favor Japanese securities, weaker dollar.
Japan is the key central-bank meeting to watch because if Japan raises rates while the Fed does not, Japanese securities become much more inviting to global investors, pulling money out of the U.S. That would send the dollar lower and push U.S. interest rates higher to try to keep up. This is a relative view favoring Japanese securities and pressuring the U.S. dollar.
Bank of America fundamentals outweigh flat trading.
Bank of America's trading revenue will be relatively flat in the third quarter only because last year's third quarter was one of the best in company history and this year's second quarter was exceptionally strong. The pipeline is full, activity is strong, investment-banking conversations are up 10% to 15%, consumers are spending, and credit quality is strong. Once the rate structure stabilizes after the Fed meeting, a large pipeline of IPOs and secondary offerings should unlock. The stock drop on the flat trading headline overstates the fundamental strength.
AI remains a multi-year super cycle.
AI will be a super cycle because businesses like Bank of America already see value from earlier versions of AI models and are willing to pay for it, creating a revenue stream. The most advanced models are not even deployed yet, so the growth curve and data-center build-out have room to continue. Despite calls to slow frontier AI, the enterprise AI adoption and spending super cycle remains intact.
Up Next
This Bloomberg Markets video, published September 14, 2026, features Michael Shepherd, Derek Decloet, Stuart Simpson, Michael McKee, Brian Moynihan discussing SMH, CARZ, Canadian forestry sector, EVTL, TLT, EWJ, UUP, BAC, AI-SECTOR. 8 trade ideas extracted by AI with direction and confidence scoring.
Speakers: Michael Shepherd, Derek Decloet, Stuart Simpson, Michael McKee, Brian Moynihan · Tickers: SMH, CARZ, Canadian forestry sector, EVTL, TLT, EWJ, UUP, BAC, AI-SECTOR