Omar Aguilar said a quarter-point move from the Federal Reserve next week will not change anything for markets.
Most of the desk commentary going into the meeting treats the decision itself as the event. Aguilar, who runs Schwab's fund business, said the size of the move is beside the point and that the justification the Fed gives for it is what markets will actually trade on.
"So we don't believe that 25 basis points is going to do anything to anything."
Aguilar is Chief Executive and Chief Investment Officer of Schwab Asset Management, which means he sets both the portfolios and the message the firm gives the retail and advisor clients who hold them.
I listened to the full segment so you can skip it.
Here are the 5 takeaways that matter.
👤 Guest: Omar Aguilar, CEO and Chief Investment Officer of Schwab Asset Management, who sets the asset-allocation view Schwab gives its advisors and clients
🎙️ Host: Paul Sweeney, who co-hosts Bloomberg Surveillance on Bloomberg Radio
📰 Published: 9 September 2026, on the Bloomberg Surveillance podcast feed
🟣 Apple Podcasts | 🔗 Episode page | ⏱️ 8 min
Key Takeaways
A 25 basis point move next week changes nothing; the reason the Fed gives for it changes everything
A hike justified by an inflation problem draws a different market reaction than a hike the data does not support
Almost every investor is in the momentum trade whether they chose it or not
Simply owning the S&P 500 is a technology and large-cap position, so Schwab is diversifying clients away from it
The AI trade has moved into a third phase: the companies using AI rather than the ones building it
Financials, healthcare and industrials are now spending on AI to cut costs, which extends the trade beyond the hyperscalers and the chipmakers
There is little reward left for taking extra credit or extra maturity risk in bonds
Schwab is telling clients to sit in intermediate, high-quality bonds rather than reaching out along the curve
Income is now available from three places, not one
Equities, bonds and selling options all produce it, which changes how a diversified portfolio can be built
1. Fundamentals Still Hold Up
Sweeney opened by asking whether an investor could simply focus on earnings and ignore the cross-currents, given how strong corporate results have been over the past several quarters.
Aguilar said the volatility of the last couple of weeks is a reminder that things are not entirely in the clear, but that the underlying picture is intact.
His summary of the setup was three flat statements: "Earnings are good. The economy is good. Labor market is good."
He acknowledged the open questions on interest rates and inflation, and said the whole picture still points the right way
The Schwab message to clients is that following fundamentals over the long run is what delivers their investment objectives
2. Stay Mid-Curve, High Quality
Sweeney asked how much competition the bond market is now giving equities, noting a 10-year at 4.80 and a 30-year at 5.25%, and asked whether going long is the way to play diversification. Those levels are the show's, not Aguilar's.
Aguilar separated diversification into two jobs — income diversification and overall risk diversification — and said bonds do both. He also said bonds have only recently started earning their place again.
He sees no payment for reaching further out on the curve or further down in credit right now
"So intermediate high-quality bonds seems to be the right spot where you can get nice yields, you can get nice coupons, and you don't necessarily need to extend yourself too much in the risk spectrum."
Income now comes from three separate places, not just bonds
Equities, bonds, and what he called volatility income — writing calls and using options
On bonds finally working again: "And it's been the last three years where finally we got some action from bonds."
His picture for how the two asset classes sit together was a household's cars: "We have the analogy to say it's like a family that has a van, an SUV, and it also has a sports car."
"You will not put all your family in the sports car, but you actually will use your minivan to basically bring the family to a nice trip."
The condition attached to all of it is that stocks and bonds behave the way they are supposed to, "unlike 2022"
3. AI's Third Phase
Sweeney noted Aguilar has been consistent over the years about staying fully invested in equities and using volatility to rebalance, and asked where in the equity market Schwab is focused now.
Aguilar described the AI trade as running through three distinct phases, and said it has now reached the third.
The first phase was the hyperscalers, the opening leg of the capital-expenditure cycle
The second was the infrastructure built to support them, which he described as the momentum trade in semiconductors
The third phase is the users of AI — companies deploying it rather than selling it
He named financials, healthcare and industrials as sectors now adopting and investing in AI to cut costs and become more efficient, productive and competitive
He said the spending is smaller than the hyperscaler headlines but broad enough to be a tailwind that keeps the AI trade going
His instruction to investors was to stay invested, stay disciplined, and rotate away from large-cap and mega-cap technology
4. 25bps Won't Move Markets
Sweeney asked directly whether what the Fed does next week matters for this market either way.
Aguilar's answer was that the move itself is immaterial and that it will simply ratify what has already been discussed for months. What matters is the reasoning attached to it.
The reaction depends on which of two justifications the Fed uses
"That being said, the reasons for the hike will probably be more important than the hike itself"
A hike because the Fed genuinely sees inflation as a big problem and is being proactive is one outcome — and he put a lower probability on it
A hike delivered because the Fed feels it has to, without data behind it, is a different market reaction entirely
He called that distinction the biggest difference in what a quarter-point move will do next week
5. Everyone Owns Momentum
Sweeney asked what is screening well on the equity side, and whether there are particular sectors or factors in focus.
Aguilar's answer started with a problem rather than a pick: most of Schwab's clients are already positioned in momentum without having decided to be.
Owning the index is owning the momentum trade
"Most clients, and I would probably say most investors, one way or another, they got into the momentum trade, even if they didn't want to."
"As long as they held the market, the S&P 500 is still being pretty heavy in technology."
The response is to diversify clients out of that exposure and toward what he described as the natural rotation into cyclicals
The factor he is leaning on is quality, measured by profitability
He expects return on equity and return on investment to matter more, particularly for the companies that have run extended capital-expenditure programs
The sectors he named again as beneficiaries of the next phase of the cycle were healthcare and financials, especially if interest rates stay higher for a while
Bonus Insights
Sweeney introduced him with a riff on Schwab and San Francisco being interchangeable, and said nobody sees the market better than the folks at Schwab because they are everywhere
Aguilar's first line was a joke back at an earlier price mentioned on the program: "And by the way, 450 a gallon, not in San Francisco."
He conceded his own bond team's view of his analogy: "Obviously, our Bond guys don't like me to compare them to the minivan, but that's who they are."
Aguilar's bottom line is that the Fed's move next week is not the risk — being unintentionally concentrated in the same large-cap technology momentum trade as everyone else is.
Products, Companies & Tools Mentioned
Schwab Asset Management (The firm he runs; its client message is to stay invested, stay disciplined, and diversify out of mega-cap technology)
S&P 500 (He says holding it is itself a momentum and technology bet, which is what Schwab is diversifying clients away from)
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: