This feels less like 2000 than 1998, and even then …

We doubt the AI-fuelled rally in global equities has burst, despite a rout in the stock market in the US after some disappointing data there last week and a plunge in Asian indices today. It feels less like 2000 – when the dotcom bubble popped – than 1998 – when a temporary pullback in share prices coincided, like now, with a resurgent yen. Even then, there is a big difference between the present and 1998: the absence of a major problem in, and risk to, the US financial system. Our best guess is that the stock market will recover, as the economy holds up better than feared and investors rediscover their enthusiasm for AI.