The report that rattled Wall Street

Katie Martin (0:06)

Pushkin. Stock markets have got a case of the Collie Wobbles, and it all starts, of course, with big tech. A few months ago, the received wisdom was, yay, AI, it's all going to make people and businesses so efficient, and so stocks went up. And now the vibe is, oh no, AI, it's all going to make people and businesses so efficient that maybe we don't need them all. And so certain stocks at least are heading down. It's all a bit of a mess, to be honest. And we're in the zone where pretty random reports on it are enough to whack the market around. We're here to try, at least, and guide you through this zone of uncertainty. So today on the show, AI doom or AI boom. This is Unhedged, the Markets and Finance podcast from the Financial Times and Pushkin. I'm Katie Martin, a markets columnist here at FT Towers in London, where there is an unidentified glowing orb in the sky, and it's not rained for at least an hour. I'm joined down the line all the way from over there in snowy New York City by the big fella, Robert Armstrong, off of the Unhedged newsletter. Rob, are you wearing, like, seal skin and, like...

Rob Armstrong (1:21)

It's funny you should mention that. I am just back from harpooning a seal. Yes, you're wearing it. I'm wearing it as a scarf. It's true.

Katie Martin (1:29)

You lot need to stay warm.

Rob Armstrong (1:30)

Yeah.

Katie Martin (1:31)

Now, listeners, before we get into the meat of today's podcast, I must inform you there has been subterfuge and misdirection on this very podcast.

Rob Armstrong (1:41)

No.

Katie Martin (1:42)

I had a birthday with a big hole in it, and Mr. Martin took a break from making dishwasher tablets to arrange a surprise weekend away for me. Didn't know where I was going until I got to Heathrow Airport, and my mum and my sister and her husband turned up in stars and stripes hats, and we all went away to New York. So this was all very exciting, and I thought, should I drop Rob a line, see if he's around? And then I thought, yeah. And then there he was in a bar waiting for me. He'd been in cahoots with Mr. Martin, and we had many, many surprise birthday drinks, many drinks.

Rob Armstrong (2:20)

I mean, this was further proof of the reason they make us work on opposite sides of an ocean, Katie. Because when we're in physical proximity, a terrible hangover generally results. So it's best we keep our distance. Let's talk about serious things. Enough of your birthday hijinks.

Katie Martin (2:40)

Shuffle my paper and talk about serious things. So there's a lot of flip-flopping going on. Tech was good and now it's bad. This is apparently how the world works now. We've seen some spasms in like software stocks and other things over the past few weeks. There's this idea that AI will eat us all and will take away a lot of functions in other businesses that don't need to exist anymore. But it took a kind of a lurch this week, didn't it? Like the market is quite unhappy.

Rob Armstrong (3:11)

Yeah, it did seem like things picked up. I don't want to undersell how weird the previous two weeks have been. There was the day when trucking stocks all sold off because somebody decided that trucking would be taken over by AI, which for all I know, it might be. But the market sort of skitters from sector to sector, trying to decide which businesses will be AI robust and which will be AI fragile. But we had a particularly big one yesterday that weirdly was triggered by a speculative blog post, which is a new high or possibly a new low, depending on your perspective on the whole situation.

Katie Martin (3:53)

So we've had a bunch of reports that have spooked the market over the past few months. There was that one, you remember the one from MIT, saying loads of companies have tried out AI, almost all of them think that it's useless. And so this has to be a chill through AI stocks. I'm going to say last summer.

Rob Armstrong (4:12)

Big tech stocks, yeah, it was, it was, correct.

Katie Martin (4:14)

Can't remember exactly when it was. But then the latest thing to give the market a bit of a bolt, if you like, was from a company called Citrini Research. Now, Rob, I've been hanging around markets a long time. Who the hell is Citrini Research? Why, what's this?

Rob Armstrong (4:29)

Yeah, I don't know what they are. They are a macro shop that I think, a macro research shop that some people follow. And they released this longish blog post yesterday, which was written from the point of view of the future, 2028 or nine or something like that.