Brende’s comments come at a time when Wall Street CEOs are warning of a potential drawdown in equities.
- Brende’s comments come at a time when Wall Street CEOs are warning of a potential drawdown in equities.
- However, he also emphasized the benefits it could bring to society at large, as well as helping to improve employee salaries.
- The WEF chief also stated that governments have not been as heavily indebted since 1945, at the end of the Second World War.
World Economic Forum President Borge Brende reportedly warned of a possible bubble in the artificial intelligence (AI) sector on Wednesday, amid growing concerns about overvaluation.
According to a report by Reuters, Brende made the comments during a visit to São Paulo, Brazil, while speaking to journalists.
“We could possibly see bubbles moving forward. One is a crypto bubble, second an AI bubble, and the third would be a debt bubble.”
— Borge Brende, President and CEO, World Economic Forum
The WEF chief also stated that governments have not been as heavily indebted since 1945, at the end of the Second World War. According to data from the U.S. Treasury, adjusted for inflation, the federal debt of the United States stood at $4.64 trillion in 1945, whereas it currently stands at $38 trillion.
Wall Street Is Concerned
Brende’s comments come at a time when Wall Street CEOs are warning of a potential drawdown in equities.
Speaking at an investment summit in Hong Kong on Tuesday, Goldman Sachs CEO David Solomon said there could be a 10% to 20% drawdown in equity markets over the next 12 to 24 months. Morgan Stanley CEO Ted Pick also warned of a similar drawdown.
Not everyone is as concerned, though. Wedbush Managing Director Dan Ives said on Wednesday that Wall Street bears have “never understood this tech AI driven bull market.”
Double-Edged Sword
While expressing concerns about an AI bubble, Brende underscored the benefits it could bring to society at large, as well as its potential to improve employee salaries.
“We also know from history that technological changes over time lead to increased productivity, and productivity is the only way over time to increase prosperity. Then you can pay people better salaries, and you have more prosperity in society,” Brende said, according to the report.
However, he cautioned that AI and increased productivity could threaten many white collar jobs.
Meanwhile, U.S. equities edged up in Wednesday’s opening trade. At the time of writing, the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 index, was up 0.22%, the Invesco QQQ Trust ETF (QQQ) gained 0.29%, while the SPDR Dow Jones Industrial Average ETF Trust (DIA) rose 0.18%. Retail sentiment around the S&P 500 ETF on Stocktwits was in the ‘extremely bearish’ territory.
The iShares U.S. Technology ETF (IYW) was up 0.29% at the time of writing.
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