We have reached the bad-news-is-good-news part of this cycle. Merryn Somerset Webb.
We have reached the bad-news-is-good-news part of this cycle.
Some may remember this from previous market debacles.
Think 2006. Any hint of a slowdown in the economy was greeted with great joy. It meant that, even with inflation consistently running above target, interest rates might not rise and stocks therefore not fall.
That bit may come around again. Maybe soon.
We have other bits of bad news we can make good. Here’s US strategist Ed Yardeni on artificial intelligence:
“We view investors’ growing concerns about the AI boom as good news... The AI rollercoaster may be hitting speed bumps, but that will help keep it on a steadier path.”
The availability of the capital required for the AI buildout plus the dawning realization that this is as much an earnings bubble as a valuation bubble could be a problem.
In past industrial revolutions, the job losses have crowded at the bottom of the income pile. This time around, not so much. AI isn’t going to put plumbers out of work.
In 2024, defined-contribution pension plans and IRAs funneled a combined $735 billion into equity markets.
We talk a lot about how the market is made up of stories, and how flows follow stories. This money isn’t that.
It doesn’t care about valuations, earnings or geopolitics: it comes in every month regardless of the stories (good or bad) the market is telling.
62% of contributions to IRAs in 2023 came from people earning more than $100,000 a year. So what happens when the highly paid stop getting paid, and stop paying in, because AI has made them obsolete?
Lamont says a 10% hit would remove roughly $20–$30 billion of annual equity buying; a 25% hit would remove $50–$75 billion;
Maybe bad news is bad, and good news is also bad?
Merryn Somerset Webb Bloomberg 24 October 2026
Merryn Somerset Webb is Bloomberg UK Money’s editor-at-large.
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