The 2028 Global Intelligence Crisis: Will AI Lead To A Market Crash?
Speakers
Avi Felman — Principal at GoldenTree Asset Management / Host
— 1000x Podcast co-host, Radhan Road partner
Jonah Van Bourg — Global Head of Trading at Cumberland / Host
— 1000x Podcast co-host, ex-Cumberland/Goldman trader
Summary
- The hosts discuss a viral "Catrini" research piece arguing AI will cause a deflationary crisis by 2028 by eliminating white-collar friction and wages.
- While acknowledging the deflationary pressure of AI, the hosts argue the policy response will be massive monetary stimulus ("helicopter money"), leading to debasement rather than a permanent depression.
- A key distinction is made between "AI Software" (deflationary/bearish) and "AI Physical Constraints" (inflationary/bullish).
- The timeline for AI adoption may be slower than predicted due to physical constraints (energy, chips, data centers), creating a window for specific trades.
- Volatility is expected to spike as hedge funds shorten their time horizons from years to months, creating opportunities for active traders.
Trade Ideas
The "Catrini" thesis argues AI removes friction. Companies like DoorDash and Salesforce exist largely to manage friction or act as a middleman. If AI agents can navigate the web and order food/manage data directly, the "app layer" and "middleman fees" (interchange fees, platform fees) get compressed to zero. Avoid companies whose primary value is acting as a user interface or friction-reducer, as AI agents will bypass them for the cheapest underlying service. These companies successfully integrating AI to lower their own costs and retaining pricing power.
The hosts agree that if AI causes a credit crisis or deflationary spiral, the government response is predictable. Unlike 2008, the response to a white-collar unemployment crisis will be immediate monetary expansion. The Fed and Treasury will "gang up and start blasting money into the economy." In a scenario of massive liquidity injection to combat deflation, hard assets and debasement hedges perform best. If the deflationary shock is severe enough to crush all asset prices before the printing begins (liquidity crunch).
The market is entering a period of extreme uncertainty and volatility where "hedge funds are moving money around like crazy." In high-volatility environments, you want to own "anti-fragile" assets that benefit from churn and volume, rather than directional bets on the economy. Long volatility-based platforms like Prediction Markets (Polymarket) and high-throughput exchanges (Hyperliquid) that earn fees from uncertainty. Regulatory crackdowns on prediction markets or crypto exchanges.
The "Catrini" article suggests computing will move to the "edge" (local devices) to reduce costs and latency. Apple owns the most valuable "edge" real estate (the iPhone). As AI models run locally on devices rather than in the cloud, the hardware provider becomes the gatekeeper and beneficiary of increased compute usage per person. Apple is the prime beneficiary of the shift to edge computing, yet sold off on the news, creating a buying opportunity. If AI models remain too large to run effectively on consumer hardware.
AI growth is currently bottlenecked by physical constraints: data centers, chips, and specifically energy. While software costs collapse, the demand for the physical inputs required to run AI (electricity) will skyrocket. Utilities and energy producers have pricing power. Long energy majors (Exxon, Chevron), Uranium (nuclear resurgence), and Utilities (Constellation Energy) as they provide the critical infrastructure for the AI buildout. A faster-than-expected efficiency in AI compute reducing energy needs.
If the AI-driven deflation thesis plays out, the cost of goods and wages will collapse. In a deflationary environment, the Federal Reserve will cut interest rates to zero immediately to stimulate the economy. Long duration Treasuries (TLT) rip higher when rates collapse to zero. If the response is inflationary printing (stagflation) rather than pure deflation, bonds could suffer.
The world is undergoing massive structural changes and geopolitical instability. Governments are forced to spend on security regardless of the economic cycle. European defense stocks specifically are highlighted as a "mega trend" with good entry points coming up. Geopolitical de-escalation or cuts in government spending.
Anthropic recently announced that cloud code can automate COBOL modernization (updating old banking/mainframe code). IBM's business model relies heavily on human consulting and legacy system maintenance (COBOL). If AI automates this "human friction," IBM's moat evaporates. Short "human output" businesses like IBM that charge for services AI can do for free. IBM successfully pivoting to become a dominant AI service provider (unlikely according to speaker).
Up Next
This 1000x Podcast video, published February 23, 2026, features Avi Felman, Jonah Van Bourg discussing CRM, DASH, UBER, GOLD, BTC, POLYMARKET, HYPE, AAPL, XLE, URA, XLU, CEG, XOM, CVX, TLT, ITA, IBM. 8 trade ideas extracted by AI with direction and confidence scoring.
Speakers: Avi Felman, Jonah Van Bourg · Tickers: CRM, DASH, UBER, GOLD, BTC, POLYMARKET, HYPE, AAPL, XLE, URA, XLU, CEG, XOM, CVX, TLT, ITA, IBM