Jeremy Grantham still has the view that we are in a bubble, says that he has been early calling every bubble in his career.
- On current market situation: “The draw down in early 2022 was the worst since 1929 – and then in November 2022 chat GPT comes out and the magnificent 7 sprang to life. The rally for the first 10 months was just the magnificent 7 making a claim on AI. and then in the fall of 2023 the rest of the market joined in but was nothing compared to the magnificent 7. Extreme concentration was in a few bull markets such as 2000. “
- On AI: Jeremy Grantham believes AI is serious technology, but says it’s a question whether people will make money. Says the question is whether AI will change corporate jobs that will impact profitably, and remains skeptical. At that point he worries companies will slow investment in chips.
- Grantham spoke a great deal on interest rates, saying that many people expected higher interest rates in 2022 to lead to a recession. He made the point that interest rates do not correlate with economic growth, and that stock market declines typically occur after the fed has started cutting rates.
- He believes the US is now headed into a recession, noting that one of the best indicators of recession is an upturn in unemployment. “When unemployment ticks up 0.6% it is always followed by a recession. Today is 0.7%.
- Agrees that there is a high level of corporate monopolies in the US, and noted the “the Magnificent 7 are really international monopolies.” It may go on, but us and European regulators may eventually say enough is enough.
- Additionally, Jeremy Grantham made the point that every bull market was accompanied by claims that the world was now different. Even with real technologies such as the internet, markets can decline significantly. He cited Amazon went down 92% in the 2000 .com crash.
