Merryn Talks Money Yes It’s an AI Bubble. Here’s Why (with Albert Edwards)
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Nov 10, 2025 Albert Edwards, a veteran global strategist at Société Générale, dives deep into the AI bubble, likening today's excessive optimism to the TMT mania of the late '90s. He warns that both earnings and valuations are more fragile than they appear. The discussion covers the potential impact of Fed policies on prolonging this bubble, China's deflationary pressures, and the risks to consumption from a market crash. Edwards also explores gold's role as a safe haven and the necessity of cautious trading strategies amidst this market frenzy.
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Y2K Baked Beans As Market Insurance
- Edwards recalls the Y2K scare when markets expected computers to fail and investors bought cash and tins of food as insurance.
- He uses that episode to show how liquidity withdrawal popped the late‑1990s Nasdaq bubble.
China's Economy Is Suffering Economy‑Wide Deflation
- China faces broad deflation: 12 consecutive quarters of GDP deflator declines, not just CPI weakness.
- Edwards warns that China’s deflationary surplus capacity could export disinflation globally.
Underlying Costs Signal Lower Inflation Risk
- Unit labour costs and corporate price deflators are running well below core CPI, implying inflation may undershoot expectations.
- Edwards sees a potential bond rally from continued disinflation that could surprise markets.