Oct 14, 2026 · 24 min
AI leadership meets rising-rate risk
101426_TT_Justin Bergner and Michael Reinking_WEB
The panel weighs whether earnings and technology investment can offset Treasury yields, fiscal deficits, oil prices, and narrow market breadth.
- 1Dividend-growth stocks offer value-oriented exposure as expensive AI leaders dominate market attention.
- 2Higher Treasury yields, fiscal deficits, and oil prices could pressure equities and expose weakness beneath the major indexes.
- 3The panel expects earnings, technology investment, and political catalysts to keep year-end equity levels near current prices.
Don't miss
The panel explains how contained index volatility can conceal elevated single-stock volatility when offsetting moves keep the broader market calm.
The brief
Kenny Polcari hosts Justin Bergner of Gabelli Funds and Michael Reinking of the New York Stock Exchange for a market discussion spanning retail investors, dividend growth, AI, and rates.
Bergner presents dividend-growth investing as a value-oriented alternative to expensive AI leaders, favoring diversified exposure to companies that grow earnings and return cash to shareholders.
The panel argues that AI investment is supporting earnings across sectors, but rising Treasury yields, fiscal deficits, oil prices, and narrow breadth are masking weakness beneath the headline indexes.
Institutional flows favor agentic AI, semiconductors, and healthcare, while the guests debate whether higher-quality energy dividends can withstand geopolitical and oil-market uncertainty.
The standout tension is a calm S&P 500 masking elevated single-stock volatility: the panel remains modestly defensive but sees earnings and technology investment supporting equities near current levels.
Midterm elections and earnings season emerge as the main catalysts, with the guests expecting political volatility but warning that investors who retreat may miss sharp rebounds.
What was said on this episode
31 statements · 16 positive · 13 negative · 2 neutral
Retail investor activity has remained elevated since the pandemic.
“coming out of the pandemic, right? We are seeing a much more active retail investor that has stuck at something that I don't think a lot of people had really expected.”
Listen at 1:01
Retail investors may increasingly become market price setters.
“you almost can start to make a case that kind of retail becomes kind of that price setter”
Listen at 1:32
Dividend-growth strategies provide exposure to earnings-growing companies returning cash to shareholders.
“dividend growth... provides exposure to companies that consistently grow, generate earnings growth, return cash flow to shareholders”
Listen at 2:41
Dividend-growth stocks avoid some risks associated with high-yield stocks.
“without the risk of really high yielding stocks, where there's a risk of either cutting the dividend or committing to the dividend at the expense of being able to reinvest in the business.”
Listen at 2:49
Dividend aristocrats may offer less outperformance than less-publicized dividend-growth names.
“might be as hard to generate as much outperformance with that group versus looking at some names that aren't as well.”
Listen at 4:26
Bergner's fund is diversified with above-market exposure to financials and industrials.
“we're broadly diversified because we're value oriented. We tend to have a higher exposure and financial industrials in the market.”
Listen at 4:52
Ferguson Enterprises is the largest U.S. building-products distributor and outgrows its markets.
“they're the largest building product distributor in the country, and they're outgrowing their end markets. by about 400 basis points.”
Listen at 5:29
AI is inflationary in the near term.
“in the near term, it is an inflationary factor.”
Listen at 7:44
Hyperscaler capital spending competes for capital and raises yields.
“hyperscaler CapEx is competing for capital and pushing up yields.”
Listen at 7:52
Consistent-growth companies can perform relatively well as rates rise.
“companies that are consistent growers can also hold up well.”
Listen at 8:37
Pure yield-oriented companies will struggle when interest rates rise.
“companies that are just yield plays are going to struggle in a rising interest rate.”
Listen at 8:43
Oil prices will remain elevated for longer.
“I do think we are in a higher. for longer oil price environment.”
Listen at 10:06
Oil prices are unlikely to return soon to pre-conflict levels.
“it's probably never, or not going to go back anytime soon to where it was before the conflict.”
Listen at 10:13
Interest rates have entered the early stages of a long rising cycle.
“we are in the early years maybe early decades of a rising interest rate cycle”
Listen at 11:07
Interest rates are unlikely to fall substantially over the next few years.
“I do think it's hard to see interest rates much lower than where they are over the next few years”
Listen at 11:31
Ten-year Treasury yields between 5% and 5.5% represent a danger zone.
“somewhere between 5% and 5.5% is probably the danger zone.”
Listen at 11:59
Rising market correlations after a negative catalyst could worsen market conditions.
“if you kind of get some sort of negative catalyst where you start to see kind of correlations pick up that's where things could get a little more dicey from a from a market perspective”
Listen at 13:53
Recent institutional flows favored agentic AI, semiconductor-related companies, and healthcare.
“in the last few weeks, I think it's been attracted to, you know, the AI, agentic AI names, clearly meta, clearly the CPU companies that would support agentic AI and then healthcare.”
Listen at 14:17
AI may accelerate drug development and improve healthcare.
“you also have optimism around AI and what it can do to the pace of drug development and health care improvements.”
Listen at 14:52
The market is currently in a fragile position.
“I think the market is in a very fragile position now.”
Listen at 17:19
Market volatility tends to increase before midterm elections.
“you do tend to see more volatility kind of in that September, October time frame heading into midterm elections.”
Listen at 18:17
The strongest three quarters of presidential-cycle returns follow midterm elections.
“The best three quarters of returns come right following midterm elections.”
Listen at 18:26
Markets have historically been higher one year after midterm elections.
“markets have always been higher one year later.”
Listen at 18:52
Higher stock correlations would increase index-level volatility.
“if you start to see correlations pick up, that's when you're going to start to see kind of the index volatility move higher.”
Listen at 20:34
Bergner expects to maintain a modestly defensive portfolio stance.
“I've been modestly defensive for a few quarters and I expect to continue to be.”
Listen at 21:11
S&P 500 earnings growth is expected near 30% this year and double digits next year.
“you're looking at kind of 30 this year for the s p 500 mid double digits next year”
Listen at 21:56
The overall earnings backdrop is positive.
“in general, I think that kind of earnings backdrop is pretty positive.”
Listen at 22:37
The S&P 500 will end the year near its current level.
“More or less right here.”
Listen at 23:02
The S&P 500 will end the year around 7,800–7,900.
“I'd say like 7,800, 7,900.”
Listen at 23:05
Upcoming earnings are unlikely to look bad.
“it's hard to argue that earnings are going to necessarily look bad.”
Listen at 23:31
Hyperscalers' cloud businesses are benefiting from their investment spending.
“you saw last quarter, you know, with kind of the cloud businesses that they have, that they really are actually benefiting, you know, from that perspective.”
Listen at 23:48
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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