Tracie McMillion closes the hour on Bloomberg Surveillance as the only guest of the morning still leaning into equities after Kevin Warsh's Jackson Hole speech. Tom Keene and Paul Sweeney ask her why the speech did not move the house view, how far past semiconductors the AI trade now reaches, and whether the two-year coupon is enough on its own.
👤 Guest: Tracie McMillion, global head of asset allocation strategy at Wells Fargo, who sets the firm's view across stocks, bonds and commodities
🎙️ Hosts: Tom Keene and Paul Sweeney, who present Bloomberg Surveillance on Bloomberg Radio and Television
📰 Published: 31 August 2026 on YouTube (Bloomberg Podcasts)
🔴 YouTube | 🟢 Spotify | 🟣 Apple Podcasts | 🔗 Episode page | ⏱️ 26 min
Key Takeaways
A more hawkish tone was not new information, and the allocation did not move
"We didn't feel like Chairman Warsh really said anything that was that new, although his tone was more hawkish and he was probably more informative than he's been in his previous communications."
"But that did not change our view that we like stocks over bonds.", with commodities also a favored position
She is the outlier of the morning, and the reason is earnings
"Well, we are still favoring stocks because even though we do anticipate a couple more rate increases, we don't think that that is going to be enough to overcome really the spectacular earnings and revenues that we've been seeing from companies, not just this past quarter, but the last quarter."
Keene said as much to her face: "That makes you a little bit unique among the people we've talked to this morning."
The AI trade has broadened past chips into the things the build-out consumes
"But we've also added communication services, especially on valuations."
"And we like materials that are part of that build out of the data centers."
The slowdown she forecasts is a consumer slowdown, not a capex one
Investment and capital spending continue at a rapid pace in her view, while GDP growth slows modestly
Chip demand still runs ahead of chip supply, which she said keeps those prices attractive for the next few quarters
Narrow spreads mean credit is not paying for the risk
"In terms of taking credit risk, the credit spreads are still very narrow."
"And we'd stay at the short end of the curve because we're not interested in taking that inflation risk at the longer end of the curve right now."
The Speech Changed Nothing: Stocks Over Bonds, and Commodities Too
Sweeney asked for her view on stocks, bonds and commodities in light of Warsh at Jackson Hole. McMillion started by saying the speech did not move anything.
"We didn't feel like Chairman Warsh really said anything that was that new, although his tone was more hawkish and he was probably more informative than he's been in his previous communications."
"But that did not change our view that we like stocks over bonds."
Commodities are the other favored position in the firm's allocations, she said
Why She Is the Only Guest of the Morning Still Buying Stocks
Keene told her the market was divided on the speech and that her position stood out — "That makes you a little bit unique among the people we've talked to this morning." — and asked what made it feel unsubstantial to her.
The rate path is priced against the earnings, and the earnings win. "Well, we are still favoring stocks because even though we do anticipate a couple more rate increases, we don't think that that is going to be enough to overcome really the spectacular earnings and revenues that we've been seeing from companies, not just this past quarter, but the last quarter."
Company guidance is the forward part of the case. She said a lot of the forward guidance has the firm excited about the potential for higher earnings next year, which she expects to drive prices higher
The AI Trade Has Broadened Past the Chips
Sweeney said the AI investment theme started with simply buying the chips, and has broadened out for a lot of people. How is Wells Fargo approaching it now?
It has broadened for them too, she said, while information technology remains one of their favorite sectors
Within technology she named semiconductors, hardware and storage
"But we've also added communication services, especially on valuations."
"And we like materials that are part of that build out of the data centers."
The Slowdown Is in the Consumer, and Chips Are Still Short
Keene asked whether she sees things slowing down, given data center objections and potentially expensive credit.
The slowdown she forecasts is modest and it is not about capital spending. Overall GDP growth slows modestly in the firm's view, and she said that has more to do with the consumer than with capex and investment spending, which she expects to continue at a rapid pace
The binding constraint is physical. Demand for chips still exceeds the supply of them, on her account
"So that's a constraint that is something that we think is going to continue to make those prices attractive for the next few quarters."
Bonds: A Nice Living at the Short End, and No Reason to Reach for Credit
Sweeney put the same question he had asked earlier in the hour — "I can clip a two-year government coupon. Treasury's 4.35% or so." Does an investor need to take credit risk beyond that?
She agreed on the income, and framed it as overdue. It is a nice living for a lot of income investors who have really suffered over the last couple of decades, she said, and they are finally starting to see yields that are relatively attractive by historical standards
Credit is not paying enough to bother. "In terms of taking credit risk, the credit spreads are still very narrow.", so she said there is not a lot of incremental gain available from taking it
Investment-grade credit is still fine for the income itself, in her view, as a perfectly good way to gain some additional yield
"And we'd stay at the short end of the curve because we're not interested in taking that inflation risk at the longer end of the curve right now."
McMillion's bottom line is that a couple more rate rises are not enough to overcome the earnings companies are producing, which is why Wells Fargo keeps stocks over bonds while refusing to be paid so little for lending long.
Products, Companies & Tools Mentioned
Wells Fargo (Her firm, and the source of the allocation she described: stocks over bonds, commodities favored, information technology and communication services within equities, and nothing past the short end in fixed income)
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