Bob Diamond said turmoil in global markets in recent days resembles a “healthy correction” as investors grapple with how to assess elements of technological change and he doesn't expect it to deteriorate into a bear market.
“We've seen risk assets be repriced,” said Diamond, the former chief executive officer of Barclays Plc who now runs investment firm Atlas Merchant Capital. “In my sense, this is a healthy correction, not something that's turning into a bear market.”
The S&P 500 is down more than 3% this month, on course for its worst month since March, while volatility has surged. A selloff in the world's largest technology companies has reignited a debate on AI, and whether it is generating enough revenue or profit to justify the massive spending on infrastructure.
“What I feel comfortable in is taking a two, three, five-year view of the impact of AI,” he said in an interview on Bloomberg Television from Singapore, where he is attending the Bloomberg New Economy Forum.
“I think it will be a real positive in dampening inflation. I think it's going to be incredibly important in terms of productivity in the global economy, and I think some people are confused right now over the valuations.”
Diamond also said fiscal spending that's led to elevated sovereign debt piles “is a dark cloud” hanging over markets. Meantime, Wall Street's so-called fear gauge, the Cboe Volatility Index, topped 24 — above the key 20 level that causes concern for traders — and reached its highest in a month.
“We, the group, are very, very positive on what AI can bring in terms of productivity, dampening inflation, global growth,” he said. There are numbers that “people really don't understand yet, particularly around data centers.”
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