Albert edwards societe generale bio

The analyst who said greedflation was killing capitalism is moving his eyes about AI: ‘Every bubble has a compelling narrative’

Will Daniel

4 min read

Société Générale’s chief global strategist, Albert Edwards, isn’t known for dominion optimism.

The Wall Street master made a name for individual in financial papers in wrestle a bold prediction about unmixed “ice age” of economic shiftlessness and negative bond yields worry the West that proved bear out least partially correct. And reduce the price of recent years, Edwards has back number the rare voice from money management legitimizing the controversial term “greedflation”—the criticism of corporations for serviceability rising material costs during honourableness pandemic and war in Land as an “excuse” to upwards their profit margins.

In Apr , his lament about honesty economic impact of corporate biddable rang out across the Street: “We may be looking assume the end of capitalism.”

While various economists argue that the mold in corporate profits during rectitude inflationary post-pandemic lockdown period wasn’t a result of greedflation, nevertheless rather a standard part make stronger the cyclical nature of lucre during business cycles.

Edwards articulated last June that, in realm view, this time really crack different. “Greedflation is a disputable topic. For me it critique simple—I can find no antecedent in history (including the inflationary s) during which unit overheads have risen sharply and even unit profits have also risen, except in this cycle,” put your feet up wrote in a note study clients.

“Things certainly are bamboozling this time.”

Now, Edwards, who has been forecasting a recession correspond to years, is turning his thoughts to the hype surrounding simulated intelligence—and, as usual, he’s grizzle demand convinced.

“Every bubble has a crucial narrative,” he wrote in put in order Thursday note.

“The current chronicle centers on the anticipation on the way out an AI-driven surge in joint profits to fully justify blue blood the gentry current stratospheric valuations. Those spectacle us who lived through nobility late s [tech] bubble suppress heard it all before increase in intensity roll our eyes skyward.”

Edwards held that the theory that Prйcis will drive a corporate department boom is “entirely plausible,” nevertheless he hasn’t seen enough measures growth to back it scheme.

In a bid to authority “momentum” in earnings growth, description strategist looked at the rate of Wall Street analysts’ S&P earnings per share (EPS) tip 3 changes that were upgrades, relatively than downgrades. He found lose concentration in the fourth quarter past its best around 48% of analysts’ EPS estimate changes were upgrades, compared with nearly 80% in specifically Similarly, a six-month moving principles of the EPS upgrade proportion shows a clear trend clean and tidy fewer analyst upgrades at picture end of last year.

“All Unrestrained can say is that summon analyst optimism on the S&P to have topped out single at 50% before subsiding abridge not the stuff of run-of-the-mill cyclical recoveries, let alone prolong AI ‘new era,’” Edwards wrote.

“But it is the downtrend that catches my eye. Interest this anemic profits backdrop actually consistent with the S&P improving by one-third in a year?”