BNN Bloomberg Sep 17, 2026 6 min
With Jed Ellerbroek, portfolio manager at Argent Capital Management
Rising rates are supposed to be bad news for anything that gets built. Jed Ellerbroek said that holds for houses and not for much else right now.
Lennar's results the same morning made the first half of his case: orders falling, incentives high, revenue and earnings down. The second half is that data centers, semiconductor plants, reshored factories and pharmaceutical manufacturing are being built for reasons that have nothing to do with the cost of borrowing.
"Amazon is not going to pare back its capex intentions because interest rates are 50 basis points higher."
Ellerbroek manages money at Argent Capital Management, and United Rentals, the equipment rental company that supplies those non-residential job sites, is one of his fund's ten largest positions. He also laid out his cases on Sunbelt Rentals, Nvidia and Charles Schwab.
The full segment is covered here so you can skip it.
Here are the 6 calls that matter.
Key Takeaways
The hawkish press conference and the unanimous vote both surprised the market, in his reading, which is why rates rose and stocks fell before the rally
His core claim is that an economy driven mostly by AI data center investment can absorb higher rates the way it absorbed higher oil and memory prices
Residential and non-residential construction have split: Lennar is shrinking while data centers, chip plants, reshoring and pharmaceutical factories keep going up
United Rentals is a top 10 holding, with double-digit revenue growth, bolt-on acquisitions, buybacks and dividends
The test for Nvidia's demand is six customers — Amazon, Google, Meta, Microsoft, Anthropic and OpenAI
Schwab's agreement with Anthropic puts a language-model layer on its existing software, which he expects to make the platform harder to leave
1. Powering Through Rates
Asked why stocks rallied the morning after selling off on the decision, Ellerbroek pointed at two surprises in the room rather than at the quarter-point itself. Then he widened the frame to the thing he thinks is actually carrying the economy.
"Yeah, it was a hawkish press conference yesterday for sure from Chair Warsh. I think that surprised the market a little bit, and I think the unanimous decision probably surprised the market a little bit." — Jed Ellerbroek
"I think the broader conclusion I draw, though, is that this economy, driven mostly by AI data center investment, is strong enough to power through higher interest rates, just like it's been strong enough to power through higher oil prices and higher memory prices and things like that." — Jed Ellerbroek
"It sounds from the Fed's comments like we didn't just get a 25 basis point increase yesterday, but there will be more to come here in the next 6 months." — Jed Ellerbroek
2. Houses and Everything Else
The anchor put the standard objection to him: higher rates are bad for construction stocks. Ellerbroek conceded the point for housing and cited that morning's Lennar report as evidence. He then argued the rest of the sector is being driven by demand that does not respond to rates.
"Yeah, there's no doubt that higher interest rates are bad for residential housing." — Jed Ellerbroek
"I think Lennar reported new orders are declining. The incentive levels required to get people to buy houses are high, and high interest rates are really taking a bite on demand for their business." — Jed Ellerbroek
"The story is different, though, for non-residential housing, and the reason why goes back to AI — the building of data centers, semiconductor manufacturing, reshoring in general, even pharma manufacturing." — Jed Ellerbroek
"There are kind of other exogenous factors driving demand for those types of structures, and they're going to continue to be built." — Jed Ellerbroek
3. United Rentals
That thesis leads straight to the company that rents the equipment those projects run on. Ellerbroek described a long-standing Argent position with four sources of return, only one of which is organic growth.
"So a company like United Rentals, which is a big and long-standing holding of Argent, will continue to see strong demand." — Jed Ellerbroek
"We think that they can grow their revenue double digits. They'll look to acquire ancillary businesses as they go along, and they'll continue to buy back stock and pay nice dividends to shareholders." — Jed Ellerbroek
"So, it's one of the top 10 holdings in our fund." — Jed Ellerbroek
4. Sunbelt Rentals
Asked about the peer, Ellerbroek used its results from two weeks earlier as confirmation rather than as a separate argument. Rental rates are rising, the company is buying more fleet to rent out, and the branch network gets more profitable as revenue grows through it.
"They are buying more equipment from manufacturers so they can rent it. They have enough demand to confidently make that investment, and they're seeing operating leverage in their business as revenue grows — those branches they operate become more profitable." — Jed Ellerbroek
"So times are good for this entire equipment rental industry, and really all of non-residential construction more broadly." — Jed Ellerbroek
5. The Nvidia Checklist
BNN Bloomberg raised the doubts about how long the AI buildout lasts. Ellerbroek's answer was about pricing power and about what to monitor. Nvidia is raising both the capability of its accelerators and their price, which means unit growth and price growth at the same time.
"There's overwhelming demand for Nvidia's products today. Their accelerator chips are the best in the industry; they continue to improve them 30 or 40% every year." — Jed Ellerbroek
"They're growing both units and the price per unit." — Jed Ellerbroek
"They're ahead of Broadcom. They're ahead of AMD. They're ahead of Intel." — Jed Ellerbroek
He then named the specific thing he watches, which is not Nvidia's own numbers but its customers' growth rates.
"So Amazon, Google, Meta, Microsoft, Anthropic and OpenAI. As long as those six companies are doing well, demand for Nvidia's products is going to remain strong." — Jed Ellerbroek
6. Schwab's Growth Levers
On financials, Ellerbroek made the case for Charles Schwab as a custodian that is finding more to sell to the assets it already holds: private markets access, crypto, and tax-advantaged products aimed at wealthy clients and their advisers. He singled out one recent deal.
"They're finding new ways to monetize all the assets on their platform." — Jed Ellerbroek
"I think that their recent agreement with Anthropic to offer, you know, kind of an LLM layer on top of their existing software is going to make their product even stickier with clients and financial advisers." — Jed Ellerbroek
Asked what drives growth from here, he listed three, and gave a number for the second.
"Second, they're growing organically — they're attracting new users to the platform; growth in the most recent month, I believe, was 6%." — Jed Ellerbroek
"And they're also offering better and higher service levels to clients, which allows for additional fee generation opportunities." — Jed Ellerbroek
Bonus Insights
Ellerbroek's framework has a single point of failure and he named it himself. The non-residential construction case, the equipment rental case and the Nvidia case all rest on continued AI data center investment, and he tied that to one condition.
"And we think that AI data center investment is going to continue to grow, so long as the returns from operating those data centers remain strong as they are — we think investment will continue." — Jed Ellerbroek
He also named Fidelity alongside Schwab as the two leading custodians in North America, and put equity market appreciation first among Schwab's growth drivers, which makes that position a leveraged bet on the same market he expects rates to leave alone.
Ellerbroek's bottom line is that the split between residential and non-residential construction is the trade, and that the way to check it is to watch whether the six largest buyers of AI compute keep growing.
Products, Companies & Tools Mentioned
United Rentals (A top 10 position in his fund, on double-digit revenue growth, bolt-on acquisitions, buybacks and dividends)
Sunbelt Rentals (The peer whose results two weeks ago showed rising rental rates, fleet investment and branch-level operating leverage)
Lennar (That morning's evidence for the residential side: falling orders, heavy incentives, lower revenue and earnings)
Nvidia (Accelerators improving 30 to 40% a year with prices rising alongside, and ahead of Broadcom, AMD and Intel on innovation in his view)
Charles Schwab and Fidelity (The two leading North American custodians; Schwab is the one he owns)
Amazon, Google, Meta, Microsoft, Anthropic and OpenAI (The six companies whose growth he treats as the verification of Nvidia's demand; Anthropic also supplies the model layer in Schwab's new agreement)
Argent Capital Management (Ellerbroek's firm, and the holder of the positions he described)
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