Oct 20, 2026 · 31 min
AI financing risks collide with election uncertainty
Bloomberg Surveillance TV: October 20th, 2026
The episode connects the AI investment cycle, shifting monetary conditions, and U.S. political risks to decisions about capital, regulation, and defense spending.
- 1AI demand remains strong, but higher financing costs are raising questions about the buildout’s durability.
- 2A Democratic congressional sweep could accelerate regulation of AI and data centers while reshaping defense-spending decisions.
- 3RBC sees opportunity in AI infrastructure financing but faces growing challenges around privacy, fraud, liability, and cybersecurity.
Don't miss
Dave McKay explains why deploying AI agents in banking requires costly safeguards for privacy, fraud, liability, monitoring, and software security.
The brief
Angelo Kukovas weighs whether AI demand can endure as financing costs rise, equity issuance expands, and investors rotate toward higher-quality companies and bonds.
Oil prices and bond yields become signals of a possible growth slowdown, while Kukovas expects more Fed hikes followed by a mid-cycle adjustment rather than a severe shock.
Edward Mills assesses the difficult path to Democratic control of Congress, including possible AI and data-center regulation and uncertainty over defense spending after the election.
RBC CEO Dave McKay links North American growth and Canada’s trade relationship with the United States to slowing investment and stronger demand for AI infrastructure.
McKay’s sharpest challenge is operational: AI agents could improve banking, but privacy, fraud, liability, transaction monitoring, and cybersecurity make customer protection expensive.
What was said on this episode
37 statements · 22 positive · 10 negative · 5 neutral
AI demand is not currently slowing
“There are no signs yet that demand is slowing.”
Listen at 2:44
AI will remain a key investment theme
“AI will remain a key theme”
Listen at 3:24
AI will continue producing economic benefits
“we'll still have the economic benefits of AI”
Listen at 3:33
AI benefits may broaden beyond leading technology companies by 2027
“the benefits spread out. And that may be the case as we think about 2027.”
Listen at 3:45
Higher debt costs may increase AI-related equity issuance
“potentially more equity issuance is going to be in play”
Listen at 4:04
“Probably not.”
Listen at 4:35
The labor market remains solid
“the labor market remains solid”
Listen at 4:49
Investors should manage exposures rather than time market pullbacks
“managing exposures is more important than trying to... time some of these pullbacks”
Listen at 4:53
Markets are not currently in a risk-off environment
“we are not in a risk-off environment”
Listen at 5:33
The Fed will raise rates two more times
“Our base case calls for the Fed to... basically hike two more times from here”
Listen at 7:52
Markets can absorb slower growth if growth remains solid
“that can still be something that markets can absorb if growth... slows but stays at solid levels”
Listen at 8:17
Current labor and housing conditions are unlikely to trigger major inflation
“we don't see... the conditions, whether we look at the labor market, the housing market, that would trigger a major wave of inflation”
Listen at 8:55
Democrats likely need two or three deeply Republican Senate seat flips
“Democrats likely need to flip two or three seats that Donald Trump won in 2024 by 10 percent or more.”
Listen at 11:48
Gina Hinojosa’s victory could produce a data-center moratorium
“If Gina Hinojosa wins, you actually have a real moratorium that could be coming on data centers.”
Listen at 13:07
Candidates may adopt anti-AI and anti-data-center positions if electorally rewarded
“If the takeaway from this election is being against AI, being against data centers, get you votes, every person who's running on both the Democratic and Republican side are going to be adopting those issues.”
Listen at 15:11
Democrats will quickly prioritize AI-related proposals
“those I think are going to be something that Democrats prioritize very quickly”
Listen at 15:33
AI regulation remains at an early stage
“We're probably in the first inning of all of this AI regulation.”
Listen at 16:33
AI regulation will become more adverse for investors
“it gets worse, not better.”
Listen at 16:44
Poor Republican election results increase efforts to raise defense funding
“the worse Republicans do on November 3rd, the more likely Republicans try to use this lame duck session to do a reconciliation to increase defense funding.”
Listen at 16:59
Republicans may seek to increase defense funding to $200–300 billion
“there is going to be a push to maybe make that from 70-ish billion up to 200, 300 billion”
Listen at 17:17
Democrats will perform well if current polls are accurate
“if the polls are right, Democrats will do well”
Listen at 18:36
RBC is a top-ten global bank with U.S. growth ambitions
“So we're a scaled bank, top 10 in the world and with great growth ambitions here in the United States.”
Listen at 21:05
Canada should diversify its economy
“Canada needs to diversify its economy.”
Listen at 21:35
Canada will build Prairie Link and Pacific Link Resources export projects
“We're going to build Prairie Link, which is the Keystone remodel, and we're going to build... Pacific Link Resources, another million barrels to Asia.”
Listen at 22:05
Canada will grow its economy through additional international partners
“Canada will grow its economy with other partners as well.”
Listen at 22:32
The Canadian economy is growing at roughly one percent
“We're still growing at roughly 1%.”
Listen at 23:02
Demand for AI infrastructure remains strong
“We're seeing strong demand.”
Listen at 23:28
RBC has optimized its internal AI demand
“we found a way to optimize our demand”
Listen at 24:23
Markets struggle to forecast long-term AI infrastructure demand
“the market, I think, is struggling to predict exactly what will demand be at the same time as we're creating all this capacity and demand capacity uncertainty.”
Listen at 24:27
RBC has helped construct multiple U.S. and Canadian data centers
“we've helped construct a number of data centers in the United States and in Canada”
Listen at 24:52
Banks must manage AI-related lending limits and exposures
“you have to manage your limits. You have to manage your exposures.”
Listen at 25:09
Financial markets have limited capacity to fund AI infrastructure
“there's a limit to how much capacity there is”
Listen at 25:50
AI financing is displacing other investment-grade funding
“You're squeezing out other investment-grade funding capabilities”
Listen at 25:52
Canada has addressed data-center approval and electricity-pricing challenges
“we got ahead of some of the challenges the U.S. is facing around how do you approve these and how do you construct a fair deal with consumers so electricity prices don't go up at the residential and commercial level.”
Listen at 26:40
RBC has not decided whether to use or build Muse capabilities
“we haven't made a decision yet”
Listen at 27:25
RBC considers its software estate highly secure after testing
“we feel it's super secure”
Listen at 28:44
RBC’s AI-related cybersecurity costs have risen substantially
“the cost to our organization has gone up substantially in playing that defense and protecting our consumers.”
Listen at 29:20
Statements are attributed to the speaker as said on the episode and reflect their view at the time, not PodLume's. They are not advice.
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