With both OpenAI and Anthropic now calling for a slowdown in the development of AI amid dire warnings of its threat to humanity, markets may have to price the chance that a push to "go slow" will also mean a slowdown in the gigantic buildout of AI infrastructure, such as data centers, chips and computing equipment.
AI-related stock indexes have risen more than twice as quickly as global stock benchmarks, with MSCI's AI basket up more than 120% since the launch of OpenAI's ChatGPT model in 2022.
Today's events to watch
Canada August CPI (8:30 a.m. EDT)
AI slowdown calls unsettle related stocks
Otherwise, the weekend's headlines revolved around calls to "go slow" on the breakneck speed of AI development after several apocalyptic warnings from industry employees last week on potential threats to humanity.
Most immediately, OpenAI boss Sam Altman said the firm would likely delay its long-awaited IPO to 2027, describing the prospect of going public this year as "ill-advised".
However, U.S. President Donald Trump dismissed the warnings as outlandish, while state-backed Chinese media described an essay by Anthropic's Dario Amodei, calling for an AI slowdown, as a "Cold War playbook" targeting China.
In equities, AI-linked stocks fell on Monday amid the safety warnings, with Nasdaq futures in the red before the bell and Asian shares closing lower, led by falls in big chipmakers.
Middle East tensions push Brent above $108
Brent crude oil, meantime, surged again to more than $108 per barrel on Monday after a weekend of fighting in the Middle East. As well as more ships being targeted in the Gulf, the weekend saw the temporary closure of Saudi Arabia's East-West pipeline, potentially threatening up to 4% of global crude supply.
What's more, Monday's scheduled talks between Tehran and other Gulf governments on managing the Strait of Hormuz have been postponed.
Fed rate outlook and oil prices dominate markets
Markets now assume that the Federal Reserve will lift interest rates on Wednesday, as another surge in oil prices kicks off the week after more attacks and disruption in the Middle East.
For futures markets at least, there was little in last week's inflation report to assure the increasingly hawkish central bank that its 2% target will be met any time soon.
Rising energy prices are important, but underlying pressures in service sector prices and elsewhere are just as concerning. For markets, the question is not so much whether the Fed will raise rates this week, but how much more it will tighten after that.
The Fed's quarterly economic and rates projections will inform that significantly. As it stands, up to four hikes are now priced into the futures strip.
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