{"text":[[{"start":5.34,"text":"The writer is a faculty member at Yale, formerly chair of Morgan Stanley Asia, and is the author of ‘Accidental Conflict: America, China, and the Clash of False Narratives’"}],[{"start":15.94,"text":"Ronald Reagan’s re-election campaign motto of 1984 rings true today in one critical sense. Back then, it painted a picture of hope and renewal. In the aftermath of Tuesday’s stunning midterm election results, a so-called Blue Wave, offers a sense of relief bordering on hope for the majority of Americans worried about a future led by Donald Trump and his cult-like Maga loyalists."}],[{"start":40.5,"text":"The cathartic repudiation of Trump for them need not, however, translate into sustained gratification in the economy or financial markets. To the contrary, many of the distortions and imbalances that America’s politicians have condoned, if not enabled, over the past 10 years could finally be unmasked."}],[{"start":58.5,"text":"In part, that’s because the US business cycle is ageing. Other than the brief Covid shock of 2020, the economy has not experienced a recession since the financial crisis of 2007-09. Lengthy upturns tempt politicians, policymakers, as well as businesses and consumers, to believe expansions can go on indefinitely. Yet since the end of the second world war, the US has experienced 12 recessions, one roughly every seven years."}],[{"start":86.7,"text":"Politicians and investors often ignore the risks of betting against the business cycle clock. Economists are also susceptible to such denial. Even Federal Reserve chair Alan Greenspan spoke of a “new economy” in the late 1990s during the dotcom bubble. I remember reading a book in graduate school, Is the Business Cycle Obsolete? Edited by the eminent economist Martin Bronfenbrenner and published in 1969, it was followed by three recessions in 13 years."}],[{"start":null,"text":"
"}],[{"start":114.88,"text":"Tales of new eras are seductive. And that’s what points to more of a twilight than a morning following the midterms. At work are the excesses of today’s brave new era of AI. The US is making a massive bet on that. A tabulation of data centre project announcements points to a cumulative investment surge of about $10tn over the seven years ending in 2032, according to recent Brookings research. That works out to 3.6 per cent of GDP over that period, more than three times the 1.1 per cent median average of five earlier technological breakthroughs — from the canals and railroads of the 19th century to electrification, highways and telecoms development in the 20th century."}],[{"start":159.22,"text":"The scale of the AI build-out is already having a significant impact on supporting otherwise sluggish US economic growth — support that midterm results may draw into question. But it is also having profound implications for corporate finance. This year, the major hyperscalers are going from positive to negative cash flow positions. And with interest rates on the rise, a financial squeeze is more likely than not."}],[{"start":184.3,"text":"Alphabet could be the canary in this coal mine. Its latest earnings report underscored a sharp reduction in growth of its core search business, apparently cannibalised by the very breakthrough that is being so widely celebrated — AI-enabled queries. With Alphabet’s net debt issuance in excess of $75bn in the first nine months of 2026 versus a little more than $11bn over the comparable period of 2025, there can be no mistaking an ominous turn in the AI leverage cycle."}],[{"start":null,"text":""}],[{"start":213.78,"text":"As asset prices surge, initial bouts of investor suspicion eventually are overtaken by the speculative fear of missing out. Every bubble has its final FOMO phase. While a long frothy US equity market has been choppy for the past five months, it remains about 2 per cent below its all-time high. The so-called Magnificent-7 stocks still account for about a third of the market capitalisation of the S&P 500 index. The broad market’s vulnerability to extreme concentration risk is worrisome, for sure."}],[{"start":245.22,"text":"Political uncertainty is likely to intensify in the weeks and months ahead as Trump continues to pursue extreme policies through executive actions while Democrats attempt to unwind some of his signature efforts such as tariffs, tax cuts to the wealthy, reductions in food stamp and Medicaid benefits, and a hands-off approach to AI regulation. When the political dust settles and Congressional actions are stymied by likely presidential vetoes, the music will stop just as it has before. And that may spell twilight for overbought markets."}],[{"start":279.18,"text":"You don’t have to be a Luddite to worry about an AI bubble. All bubbles eventually burst and this one is unlikely to be any different. It’s not the AI revolution that is at risk. The problem lies in its distortions of the real economy and asset prices. The astonishing US midterm elections will not foreclose the turn of the business and financial cycles."}],[{"start":300.34,"text":"However painful the bursting of the AI bubble may turn out, that may be a price well worth paying though for a new morning of American values and global leadership."}],[{"start":310.98,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1793870529_5541.mp3"}