{"text":[[{"start":10.24,"text":"Carson Block, one of the world’s best-known short sellers, has said that AI could trigger a stock market upheaval on a scale bigger than the 2008-09 global financial crisis, reopening opportunities for investors who bet against US stocks after years of slim pickings."}],[{"start":29.020000000000003,"text":"The founder of investment firm Muddy Waters told the FT that the rapid adoption of artificial intelligence would cause far-reaching economic and market disruption over the next few years, as job market dislocation feeds through to government finances and financial stability."}],[{"start":47.25,"text":"“Over the medium term, there’s going to be severe economic consequences, market consequences, government financial issues that I think make the GFC pale in comparison,” Block said."}],[{"start":60.78,"text":"“It’s [going to be] one of these shots as a short seller when the wind is at your back,” he added, comparing it to the profits made by those betting against the market in 2008."}],[{"start":74.68,"text":"Block’s prediction marks a shift after years of struggles for US short sellers and comes as gains in the blue-chip S&P 500 index have faded, with enthusiasm for AI splintering into a hunt for winners and losers from the technology."}],[{"start":92.36000000000001,"text":"Prominent short sellers such as Jim Chanos, known for betting against energy group Enron before its collapse in 2001, and Hindenburg Research’s Nathan Anderson have wound down their firms in recent years. A multiyear equity market rally has squeezed bearish bets, fuelled by excitement over AI, passive investment funds that track indices and an army of retail investors committed to “buying the dip” whenever stock prices fall."}],[{"start":122.69000000000001,"text":"Block made his name with activist short campaigns against Chinese companies Sino-Forest Corporation in 2011 and Luckin Coffee in 2020, before pivoting to net long strategies in late 2024."}],[{"start":137.84,"text":"But the S&P 500’s gains have petered out this year, even before the Iran war, as fears of AI upending business models sent whole sectors tumbling, causing huge churn in the stock market and reigniting opportunities for short sellers and stockpickers after years in the wilderness."}],[{"start":160.07,"text":"Sharp sell-offs this year in software and other sectors deemed to be AI losers were “rumblings of the impending AI disruption” that would revive short selling, Block said."}],[{"start":172.26999999999998,"text":"Short interest in S&P 500 stocks was near its highest in a decade in February, according to hedge fund positioning data published quarterly by Goldman Sachs."}],[{"start":183.39999999999998,"text":"Software has become a popular hedge fund target. Short exposure to the sector rose in February to the highest level since records started in 2016, Goldman Sachs data shows."}],[{"start":197.73999999999998,"text":"Block argued that AI disruption would hit the broader market through job losses, as smaller contributions into 401k retirement plans — which allow US savers to make pre-tax investments in financial markets — further undermined stock prices."}],[{"start":216.73,"text":"He also pointed to weaknesses in private credit, where he said “too much money has gone into an asset class that just couldn’t make enough high-quality loans”."}],[{"start":227.01999999999998,"text":"He warned of “probably a lot of pure garbage in terms of financing” in the sector. “If I start thinking about private credit and how weak a lot of the credit pillars in the economy already are, potentially, then things can really get bad quickly,” he said."}],[{"start":244.42,"text":"Investors in distressed debt have argued recently that private credit concerns offer the greatest opportunity for making money since 2008."}],[{"start":254.35,"text":"Block said he personally had missed out on the gains offered to short sellers by the global financial crisis. “I wasn’t able to capitalise on ’08 even though I saw a bubble coming. I was in China trying to build a self-storage business.”"}],[{"start":270.55,"text":"Additional reporting by Costas Mourselas in London"}],[{"start":285.38,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1776080969_4113.mp3"}