Concerns about an AI bubble, rising public debt and trade tensions dominate the agenda.
Global financial leaders will meet next week amid growing concerns about a correction in the financial market. The warnings about a bubble of artificial intelligence companies, added to the increase in public debt and trade tensions, dominate the agenda of the meetings of the International Monetary Fund (IMF) and the World Bank.
The financial market fears there will be a bubble
Kristalina Georgievamanaging director of the IMF, warned about the risk of stock market valuations approaching the levels observed during the technology bubble of the late 1990s.
“If a drastic correction were to occur, tighter financial conditions could slow global growth and expose vulnerabilities, especially in developing countries,” he warned. The situation is reminiscent of the year 2000when the market crash led the Federal Reserve (Fed) to apply an emergency rate cut.
The warnings are repeated in other institutions: the Bank of England warned of a “strong market correction”, the European Central Bank pointed out “growing vulnerabilities” and the Reserve Bank of Australia mentioned similar risks. Jerome Powellpresident of the Fed, acknowledged in September that the markets are “highly valued.”
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Federal Reserve
The IMF will publish on Tuesday its Global Financial Stability Reportwhich could attract attention for its references to the risks derived from the rise of artificial intelligence and speculation in the markets. The new growth projections of the World Economic Outlook will also be known, amid the slowdown of the main economies.
Geopolitical instability is still present
Added to this climate of tension is the reactivation of the trade conflict between Washington and Beijing. President Donald Trump announced a new 100% tariff on Chinese imports and controls on technology exports, while China responded with tariffs and restrictions on strategic materials.
Wall Street analysts warn that, although the IMF is right to point out an overvaluation of the market, the warnings could fall on deaf ears given the “fear of being left out” that dominates investors.
Next week, in addition to the IMF discussions, The markets will continue to pay attention to the speeches of Powell, Lagarde and Baileyinflation data in China and India and the evolution of Latin American economies, where inflationary pressures and signs of fragility persist in Brazil and Argentina.
Source: Ambito
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