The stock market fell last week because interest rates might go up and some people think AI will kill us all. These two things have nothing in common. The Fed doesn't care about your ChatGPT nightmares. Silicon Valley doesn't care about basis points. But investors decided to panic about both at the same time because that's what investors do.
Higher rates mean stocks are worth less in present value terms. This is first-semester finance. But retail traders heard "new rate-hiking cycle" and immediately checked their portfolios like they were expecting good news. They weren't expecting good news. They never are. They just can't help themselves.
Then there's the AI safety debate. A bunch of tech executives who've spent billions building AI suddenly want to slow down AI development. Convenient timing. It's like a guy who ate seventeen cheeseburgers asking everyone else to stop eating cheeseburgers for public health reasons.
The market doesn't care if AI becomes sentient. The market cares if AI companies make money. Those are different questions. But last week everyone pretended they were the same question because fear sells and rational analysis does not.
Here's what actually happened: some economic data came out, the Fed made some comments, tech stocks went down, and financial journalists wrote 40,000 words connecting it to the AI safety debate. The connection was that both things happened during the same week. That's journalism now.
Retail traders watched all this unfold and bought the dip. They always buy the dip. Could be a nuclear war. Could be an asteroid. Doesn't matter. They'll buy it.
The Fed will do whatever it does. AI companies will keep building whatever they're building. And the stock market will move based on earnings and liquidity like it always has. But sure, let's pretend it was about the headline crossover event of monetary policy and robot ethics. That 0.8% down week really tested everyone.
Photo by Nick Chong on Unsplash
Leave a Comment