Bloomberg Surveillance · Sep 28, 2026
With Nimrit Kang, Chief Investment Officer at North Star Asset Management
The equal-weight S&P 500 is down almost 3.5% to 4% since August 11, Nimrit Kang said, while the headline index has held up.
The index most investors quote has been carried by semiconductor and technology stocks. Kang said stocks that depend on interest rates and consumer spending have been falling underneath it.
"What's hiding it all is the resilience of the AI trade."
Nimrit Kang, Chief Investment Officer at North Star Asset Management, on Bloomberg Surveillance, spoke as an allocator who now wants a higher yield before she will lock up money for longer. She said the market has moved into a new regime for rates.
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Key Takeaways
Bond yields have moved into a new regime, pushed by deficits, government debt and repeated supply shocks
The AI trade is hiding losses in consumer and rate-sensitive sectors
The equal-weight S&P 500 is down 3.5% to 4% since August 11
AI spending pays off only when the gains spread, and she expects leadership to pass from the builders to the companies using AI
The VIX may no longer be the right measure of how volatile the market is
Earnings outside AI have to keep accelerating after growth of 26% to 27% in Q2
1. A New Regime for Yields
The host said the 10-year Treasury yield had not just tested 5% but blown past it, and asked whether that worried her. Kang said bond yields are going through a normalization and the period of low rates is over.
The low-rate era has ended, she said
"We are in a different regime altogether." — Nimrit Kang
She pointed to high deficits at a time of a booming economy, and to high government debt. The government is going to keep coming back to the markets to borrow more.
Lenders want more yield to commit for longer
"And that's why investors, allocators like me want higher yield to lock up our money for longer periods of time." — Nimrit Kang
She said globalization no longer holds inflation down, and that a polarized world keeps producing supply shocks: COVID, the war in Ukraine and the Iran war. Even if the Iran war cools and oil prices and inflation expectations come down a little, she said "we still have to remember the bigger picture that we are just in a different era now."
