Market Reliance on AI Sparking Bubble Concerns
AI-generated image · Bay Street Wire
David Rosenberg warns that current valuations and investor positioning are reaching extremes unseen in four decades.
As first reported by the Financial Post, David Rosenberg, founder of Toronto-based Rosenberg Research & Associates Inc., has cautioned that the U.S. stock market is increasingly resembling a bubble. Speaking at the Grant’s Annual Fall Conference in New York, Rosenberg stated that he has not seen such significant imbalances, divergences, and extremes in the economy and market during his 40-year career.
According to the Financial Post, Rosenberg suggests the current bull market is more dependent on the trajectory of artificial intelligence advancements than the tech sector was leading up to the dot-com bubble. He identifies the United States as the center of a technology boom for which investors are currently overpaying. Due to these concerns, Rosenberg noted he has been shifting his portfolios toward overseas equities and Treasuries.
Beyond market valuations, Rosenberg warned of fragilities within the U.S. economy, specifically noting that consumers are becoming more reliant on stock market gains to fund their lifestyles. He expressed concern regarding the social impact of a potential bear market, questioning the future of early retirees and the possibility of robots displacing workers in entry-level roles, such as Walmart cashiers.