RBC now runs its earnings model with a 10% haircut to bottom-up consensus, double the 5% it was using earlier in the summer.
The extra five points were not added because anything broke. They were added to price in froth on the AI side before it shows up in reported numbers — and at the same time Lori Calvasina is telling clients that the interesting capital spending story is no longer in the names everyone is watching.
"We've been telling people, if you're concerned about the capex story going forward, take your attention off those top 10 market cap names. Look at the rest of the index."
Calvasina heads US equity strategy at RBC Capital Markets and publishes the weekly note that called for a 5% to 10% pullback days before this segment aired.
The full segment is covered here so you can skip it.
Here are the 7 calls that matter.
👤 Guest: Lori Calvasina, Managing Director and Head of US Equity Strategy at RBC Capital Markets
🎙️ Host: Jonathan Ferro, who anchors Bloomberg Surveillance on Bloomberg Television
👥 Also on: Jennifer Huddleston of the Cato Institute and US Energy Secretary Chris Wright, in separate segments of the same programme
📰 Published: 14 September 2026 on the Bloomberg Surveillance podcast feed
🟣 Apple Podcasts | 🔗 Episode page | ⏱️ length not available
Key Takeaways
RBC's earnings model now haircuts bottom-up consensus by 10%, up from 5% earlier in the summer
The extra five points are there for froth on the AI side, not for a forecast that it breaks
The capex story worth watching is in the 490 stocks nobody is watching
The top 10 by market cap are at peaks; the rest are in what she calls the third innings
One to four Fed hikes in a year has historically been fine for stocks; more than four is where they struggle
A 5% to 10% pullback is her short-term call, and it does not change the 12-month view
Consensus inflation forecasts for the middle of next year quietly assume gas prices normalize, and the war threatens that
1. A 10% Haircut to Earnings
The model starts from consensus and cuts it. "So look, one of the things we've been doing in our modeling is just taking the bottom-up consensus and haircutting it by 10%."
The haircut doubled over the summer. Earlier versions used 5%, to account for pressure on the non-AI stocks from the Iran war and inflation; the last couple of updates widened it to 10% to allow for froth on the AI side
She was careful to say this is not a forecast. In her words, RBC has not been pounding the table saying it was going to happen, but concern has been building for a few months and she wanted the numbers to reflect it — partly to calm investors' nerves
2. Capex Beyond the Top 10
Jonathan Ferro asked whether a slower build-out is coming. Calvasina's answer reframed the question by splitting the index.
S&P 500 capex growth hit new year-over-year highs in the second-quarter updates, on a set of charts she said has become one of the more popular in RBC's deck
The top 10 by market cap — the AI behemoths — are at peaks. The other 490 are somewhere else entirely. "So you're up maybe third innings." Growth is showing year over year and became much more apparent in the second quarter
Her instruction to clients is to look away from the crowd. "We've been telling people, if you're concerned about the capex story going forward, take your attention off those top 10 market cap names. Look at the rest of the index."
Her example was insurance companies, and she volunteered that it sounds unlikely. Reading the last reporting season she called up a healthcare analyst and an insurance analyst about it: one company said "we're not engaged in FOMO here" and then talked through IT upgrades it was making or considering, with AI prompting them
The derivative impacts are the part she finds most interesting — capex and IT upgrades outside the obvious names, where AI may not be the only cause but is a trigger
On whether that story survives the frontier models and the Anthropic and OpenAI listings, she declined to answer. She said she is not sure she has the answer, and returned to what she is sure of: there are a lot of jitters in the market
3. The 5-10% Pulldown List
The call was published before the segment. "And we made a comment last week in our weekly that we were expecting a 5% to 10% pulldown." RBC's view is that those risks have risen
Midterms are on the list. Over the last couple of cycles she has seen extreme volatility in both directions in the back half of the year
Interest rates are on it, and they amplify everything else. "When the bond market and macro investors are worried about interest rates rising, everything else hits harder."
A new Fed chair is on it as a matter of pattern. "You typically see volatility in markets when you're ushering in new leadership at the Fed." She said RBC has seen it with Warsh's three predecessors
The war is on it, and the market has stopped talking about it. Companies barely raised it last reporting season; two seasons ago many were saying they expected it wrapped up by the summer, and it was not
Her own summary of the list was blunt. "So you've got a lot weighing on this market right now. That's a pretty big laundry list."
4. Four Hikes Is the Line
Ferro pushed back directly: with the war unresolved, diesel he put above $6 a gallon, existential questions around the frontier models and rates challenging multiples, why buy a 5% to 10% pullback.
Her first answer was that no single factor runs the market. RBC's position is that many things drive markets at once
Growth is the offset she points to. Consensus and RBC's own economists moved up over the summer to a low 2% GDP number, which she called traditionally a very favorable environment for stocks
She was explicit about the condition on that. Get through this period, then look again at whether the underlying economy is still strong. Right now, she said, the numbers suggest yes
The history of hiking cycles gives her a threshold. "If it's a 12-month time frame and you're doing like one to four hikes, traditionally the market's actually been pretty strong." Six, seven or eight in twelve months is where the stock market tends to struggle
RBC's rate strategist has changed his call and stayed below that line. She named Blake Gwynn as having moved from no hikes to three, and described them as adjustment hikes — a world she reads as short-term volatility the market can recover from
What would change her mind is a different story entirely. "But if we start talking about a different story, our modeling suggests we'll have bigger problems."
5. Why Price Targets Fail
RBC has moved to a rolling 12-month forward target rather than adjusting a December 31 number in the short term, using the forward figure as a longer-term bogey
Short-term moves are handled by a separate framework. She called it the four tiers of fear, and it is where the 5% to 10% drawdown figure comes from
Last year's tariff episode is her evidence that targets mislead. The market took what she put at an 18% or 19% drawdown and still had a pretty healthy year
What astounded her was the investor reaction at the time. Out on the road in June she found people already writing off the year — looking ahead to 2026 on the view that whatever tariff damage happened in 2025 had already been paid for
That is the reason she distrusts a single number. "So that's one thing that I think makes price targets very tricky when you're trying to sort through short-term issues."
6. Gas Prices and the CPI
Ferro pointed out that tariffs are a different kind of shock from $4.30 a gallon gasoline nationally and more than $6 a gallon on diesel, and asked about the hit to small companies.
Her focus is the consumer rather than the small-cap earnings line. She put consumers in the crosshairs of the oil price forecasts
The bigger issue for her is what next year's inflation forecasts assume. Consensus is for roughly 2% and change year over year on a headline basis for the middle of next year
Talking to economists around the street, she found that number rests on gas prices normalizing. "The war threatens that, right?"
Nobody has moved yet, which is why she is watching. She said the economics community's numbers are not shifting, and that it is something to pay attention to
7. A 12-Month Forward View
Asked whether she is thinking about 2028, she said the job now forces it. RBC has not published a 2027 year-ahead forecast yet, which she acknowledged sounds wild
The forward target has changed how the team works. It forces a separation of short-term issues from longer-term ones, which she said has been very useful this year
Her longer-term view is unchanged by the drawdown call. "I'm still seeing a case for bounce back right now after we work through a period of angst." The models are updated once a month and constantly reevaluated
Her closing line was the test she is applying. "But right now, we're not seeing the longer-term story derailed."
Calvasina's bottom line is that the risks worth modeling are concentrated in the AI complex and the next twelve months, while the parts of the index nobody is watching are only starting their own capital spending cycle.
Bonus Insights
The segment opened on stocks falling as a potential AI pullback rattled investors, with Ferro citing Anthropic's chief executive Dario Amodei presenting a three-step plan aimed at pacing the frontier
Calvasina's capex charts do not come with a recommendation attached. She said the deck section has no big do-this, do-that conclusions and is simply interesting, which is an unusual thing for a sell-side strategist to say out loud
Ferro's framing of the bull case was a challenge to her peers — that plenty of strategists come on the programme excited to buy the dip — and she answered it with the GDP number rather than with sentiment
If this was worth your time, send it to someone who has to have a view on this.
Get the latest market chatter as it happens: