Phil Rosen, co-founder of Opening Bell Daily and host of Full Signal, joins the program to break down the recent volatility shaking AI-driven markets. He explains how a provocative hypothetical report from Citrini Research rattled investors by imagining a future where artificial intelligence becomes so powerful it disrupts jobs, growth, and valuations triggering billions in market-cap losses before a swift rebound. Rosen says the reaction highlights just how sensitive markets are to shifts in the AI narrative, comparing the moment to last year’s shockwaves tied to DeepSeek. He argues that while AI could reduce hiring in some sectors through productivity gains, history suggests new industries and roles will emerge over time. Still, he cautions that valuations remain “on a knife’s edge,” noting that sentiment can swing dramatically even from a single post on Substack and that volatility is likely to persist, especially with major catalysts ahead such as earnings from Nvidia, which he says could set the tone for markets in the weeks to come.
Get the latest news and updates on FINTECH.TV
All right, well, joining me now with more, especially on this AI trade is Phil Rosen.
He's co-founder of Opening Bell Daily and host of Full Signal.
Phil, welcome to the program.
Thank you for having me.
Good to see you as always, a regular, of course, for our viewers watching.
Let's take a step back and tell me about this report that here has rocked markets the past few days.
So on Sunday afternoon, Citrini Research came out with an unbelievable, essentially fictional.
Report from the future.
It's probably the first time ever economic data from the future has moved markets today, and it laid out a bear case on AI, but really it's AI got so good in this hypothetical scenario that it became bearish for the economy, for markets, for the labor market, and this freaked people out so much that we saw billions and billions of dollars in market cap wiped out on Monday.
You saw software sell-off, financials, a bunch of other sectors, and today.
We've bounced back, right?
I think that knee-jerk reaction we've gotten accustomed to in the first couple of months of the year, but this report was so compelling and so well written that investors took it pretty seriously.
I, for one, I read it and I was like, wow, this is a great read.
It's certainly entertaining and very interesting as a thought experiment, but it tilted a bit bearish for me.
It's an amazing tail risk to think about.
The idea that if you're bullish on AI you have to be bearish on the macro.
I'm not sure if that's exactly um gonna be how it plays out, but I thought it was an amazing report that apparently, uh, Wall Street really paid attention to.
Has it tangibly shifted the AI narrative?
That is a good question.
Uh, we'll probably be able to look back on this report in a few months and say, remember the Citrini report.
It'll be like.
Like the deep seek moment of last year.
There's gonna be the deep seek, the Sarina report, and I don't know if that really changes the trajectory of either the technology or the investment thesis for the AI trade.
Right now, the risks in AI are the overspending that it becomes so proficient as a technology that industries start becoming obsolete.
I think we're gonna land somewhere in the middle.
I don't think we're in a bubble.
Been saying that for a year and suddenly the pendulum has gone way away from the bubble fears and now it really is fears that AI is so amazing that we have to turn bearish.
So let's talk about productivity and the impact here, right, because we have heard top executives say that they're going to use AI to be more productive, and there have been questions about what that means for the workforce.
Where do you stand on this productivity paradox?
It makes sense if you say, look, If I can manage 5 or 8 AI agents, maybe I don't need to hire as much if you're a business owner, but then on the other side, if you're looking for a job, you might see fewer job openings, and that means maybe a smaller labor market.
Over time we could see new jobs come up because every technological revolution creates new industries, new jobs, new opportunities, especially for young people and entrepreneurs.
So I'm optimistic about that.
Productivity.
I know in my own life I.
Certainly see, uh, things I can do that I couldn't do two years ago that I can do today with these new tools.
And one of the fake or hypothetical economic data points in the Citrini report, I think it opened with something like the unemployment rate has spiked to 10% or something like that.
And that was this hypothetical, OK, everyone has gotten so productive that we just need fewer people in the labor force.
So that's something to watch.
I don't think we're gonna get to.
That extreme of a level, but that's what moved the market.
Where do valuations stand today for this trade?
Valuations are probably on a knife's edge because hundreds of billions of dollars can swing on a sub-stack, right?
So maybe we're one sub-stack away from going back to AI bubble fears.
Who knows?
I, I think the, the, uh, knee-jerk reaction in markets right now shows how sensitive investors are to any fluctuations in the AI.
Narrative, so we can get super bullish, we can get super bearish, and evaluations will swing so dramatically that you have $1 trillion companies that are essentially making meme stock moves, and that's very unusual.
That's probably going to stick around for a while.
The volatility is going to persist probably all year, um, but I, I would say that's where we're at.
OK, we're watching those Nvidia results that we get tomorrow after the close as well.
Phil Rosen, he's co-founder of Opening Bell Daily, host of Full Signal.
Always good to see you.
Thank you for having me.
Thanks, Phil.