Market correction is 'overdue,' but not because of an AI bubble

Markets (^DJI, ^GSPC, ^IXIC) could extend recent losses, but worries about an artificial intelligence (AI) bubble may be overblown.

AlTi Tiedemann global chief investment officer, Nancy Curtin, joins on Morning Brief host Julie Hyman to outline her current read of the market.

To watch more expert insights and analysis on the latest market action, check out more Morning Brief.

Video Transcript

00:00 Speaker A

Well, it's been a choppy week for tech stocks and that often gives rise to the question, are we in or are we approaching an AI bubble? Our next guest says bubble talk is overdone, but indeed the market could be due for a correction.

00:10 Speaker A

Joining us now, Nancy Curtin, chief investment officer at Altan Tatum and Global, which manages more than $70 billion in assets. Nancy, it's great to see you.

00:18 Nancy Curtin

Lovely to see you as well.

00:18 Speaker A

It's been a really interesting week. We saw a pretty sharp sell off earlier in the week and then we've seen this choppiness and this sort of uneasiness come to the market particularly around tech stocks. What do you make of that? What does it reflect and could we see more of it?

00:35 Nancy Curtin

Well, look, we think the market is overdue a correction and and therefore, um, you know, this week, next week, we could easily see the market go down another two or 3% uh get to that 50-day moving average and perhaps even below. Our sense is that going into the end of the year, uh the market will continue to do well. Remember seasonally, uh November, December tends to be good for the markets and there's a lot of cash on the sideline, a lot of strategists that have missed this rally. So, uh but we do think a correction is overdue. You know, trees don't grow to the skies, etc.

01:04 Nancy Curtin

We should talk a little bit about the bubble talk uh on on

01:06 Speaker A

Yeah, let's do.

01:07 Nancy Curtin

on Gen AI. Um, you know, it's our view that um this is not a bubble in the classic sense. Sure, there's a lot of stocks that may be slightly in bubble territory, valuations that are extreme, but I think one thing investors need to keep in mind is that innovation bull markets and this is definitely one of them, tend to last longer and valuations go higher than people expect. Why is that the case? Because an innovation driven bull market unlike a cyclical or liquidity or recovery from recession type of bull market, uh fundamentally, you are adding earnings and productivity uh in infrastructure investment to the economy and that's very powerful. It doesn't mean it doesn't go through fits and starts and have volatility, but these innovation driven bull markets, as I said, uh tend to have further upside uh than investors expect. and that that's our sense here. Ultimately, all bull markets are killed by the Fed, but they seem to be in an easing mode at the moment.

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