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

According to CNBC, Richard Bernstein, Global Macro Head at Janus Henderson, stated that the sell-off in AI stocks could benefit small-cap stocks. He believes capital previously flowed into the AI data center industry under loose conditions, while other companies faced tighter financing; if overall market valuations pull back, borrowing costs across the broader economy are expected 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 record not seen in 16 years. Bernstein said the Federal Reserve is in a tightening cycle and hiked rates by 25 basis points on September 16, the first increase since 2023. He disputes the market's expectation of "just one rate hike," pointing out that the rise in U.S. core import prices has outpaced core consumer prices, reversing a 30-year trend. "The U.S. is importing inflation." He also noted that the consumer staples sector has performed relatively well, reflecting market concerns about a recession.