Richard Bernstein says AI stock sell-off could lower borrowing costs for small caps

Janus Henderson macro chief Richard Bernstein argues that the recent AI stock sell-off is repricing capital in a healthy way, potentially lowering borrowing costs for small caps and the wider economy. He notes that while speculative stocks have taken the first hit from Federal Reserve tightening, a broad valuation adjustment across the market could make capital cheaper. Bernstein points to small caps gaining as long-term rates fell, though they remain down for the week. He also cites credit default swap spreads as a sign of profit doubts, and notes chip stocks fell for eight straight sessions, a 16-year record.