00:00I am curious about the difference between what we're seeing in the short term and some of the chasing of this rally and some of the more long term concerns that would seem to suggest that maybe we are getting a little bit far ahead of ourselves with regards to at least with regards to U.S. equities.
00:14No, I do worry that we're seeing signs of what looks like a bit of a speculative melt up.
00:19I mean, maybe that's an overstatement of what we see so far, but it does.
00:23When I look across asset classes, it's very hard to find any asset class that looks cheap right now.
00:29And when you step back and think about policy unpredictability, questions around the size of fiscal deficits, not just the United States, but across developed economies, look at questions around sustainability of growth rates.
00:43It does seem that asset prices might be getting ahead of the fundamentals.
00:46I mean, underpinning that, and at least this would be the argument by the bulls, is that when you look at the AI trade, which has more or less been the trade in equity markets for the last couple of years, that there is sort of a promise of something big on the horizon, whether that translates into actual profitability, who knows.
01:02But certainly on a top line revenue basis, there is potential there.
01:05Do you not see it?
01:06No, I do think AI is likely to be one of the biggest economic transformations or disruptions of our lifetime.
01:12And I think there is a lot of promise, but I do worry that we keep seeing these bigger and bigger capital investment announcements, and yet we don't really have any sense of when the return on capital will arrive and what that return might look like.
01:26And so, you know, we've literally gone from, I believe, in 2022, $20 billion going into AI to 2026, the estimates closer to $500 billion.
01:35And when I think about the economy, by the way, I do worry that in the first half of this year, a majority of the GDP growth in the United States was directly attributable to, say, AI and the build out of infrastructure around it.
01:47And I also worry, by the way, for that growth to be extended, you need that hockey stick to keep going higher.
01:54I mean, it's not good enough to level off at $500 billion a year.
Be the first to comment