Market Factors: ‘Trump Trades’ revisited and the false hope of AI

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Welcome to the inaugural edition of the Market Factors newsletter, a re-imagined version of the previous Globe Investor newsletter. I’ll be your host, Scott Barlow, and today we’ll obey Charlie Munger’s command to “always invert” by looking at how the AI investment boom could fail. Also, I’ll detail how asset markets are handicapping the U.S. presidential race.A recent in-depth report from Goldman Sachs - featuring its head of global equity research Jim Covello as well as M.I.T.

Despite his skepticism, he does not believe that a major market correction is imminent. An AI arms race throughout the technology sector will support outsized profit growth for chip makers, utilities and related companies involved with the buildout of AI infrastructure. Mr. Covello’s mid-term prediction is ominous, however, as he states “Over-building things the world doesn’t have use for, or is not ready for, typically ends badly.

Mr. Acemoglu is not concerned about AI applications developing superintelligence but does urge caution: “The risk that our children or grandchildren in 2074 accuse us of moving too slowly in 2024 at the expense of growth seems far lower than the risk that we end up moving too quickly and destroy institutions, democracy, and beyond.”

 

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