Janus Henderson Head of Macro: AI Stock Sell-Off Could Lower Small-Cap Financing Costs

On October 19, according to CNBC, Richard Bernstein, Head of Global Macro at Janus Henderson, stated that the sell-off in AI stocks could benefit small-cap stocks. He argued that capital had previously flowed into the AI data center industry under loose financing conditions, while other companies faced tighter funding; if overall market valuations correct, borrowing costs for the broader economy are likely to decline. Last Thursday, a major chip ETF closed nearly 14% below its October high, with chip stocks falling for eight consecutive trading days, marking a 16-year record streak.

Bernstein noted that the Federal Reserve is in a tightening cycle, having raised rates by 25 basis points on September 16 for the first time since 2023. He disputes the market's expectation of "only one rate hike," pointing out that the rise in U.S. core import prices has exceeded that of core consumer prices, reversing a trend observed over the past three decades, and stated, "the U.S. is importing inflation." He also mentioned that the consumer staples sector has performed relatively well, reflecting growing market concerns about a recession.