No one seems to care about the tariffs anymore. AI disruption and the Iran conflict dominated the discourse this week. This week’s list dives into both, plus a residential real estate forecast, strategies to take advantage of the new 2026 tax rules, and top investing ideas for the year ahead. My latest book recommendation and a Boston Corner with a Greater Boston area real estate forecast of an “unthawing” and things to do this weekend.
This Week’s Takeaways:
- The Citrini Research memo on AI-driven economic disruption is a tail risk thought exercise, not a forecast, and feels overly pessimistic. I share the report below, a podcast with the author for a shorter overview, and Professor Siegel’s rebuttal arguing the report misunderstands basic economic history.
- That said, the Fed isn’t ignoring the risk (although they put it 5-10 years out and haven’t noticed AI driven productivity gains yet) and has concerns that the central bank may not be able to counter rising AI-driven unemployment without causing inflation.
- Take national residential real estate forecasts with caution as location dictates and it’s not the same story everywhere, but tighter supply and mortgage rates at this level plus the inability to increase supply quickly make for a real estate market that won’t boom or bust but experience slow growth.
- Some tax changes from the One Big Beautiful Bill Act take effect this year, so take a quick look at the six strategies shared in the Franklin Templeton piece below.
- The Morningstar article synthesizes investing views from multiple managers and strategists worth considering: diversify globally beyond U.S. mega-cap stocks, broaden your AI exposure rather than concentrating it, tread carefully in private markets, and stay committed to your long-term strategy.
- After several years of gridlock caused by high mortgage rates and homeowners reluctant to give up ultra-low loans, the Boston housing market may finally see more buying and selling activity in 2026 as people accept higher rates and move forward with life decisions, even though affordability will remain challenging.
THE 2028 GLOBAL INTELLIGENCE CRISIS by Citrini Research
This memo outlines a speculative scenario of a tail risk that could happen from AI. In the scenario, white collar jobs are displaced by technology, spending craters, and the economy and market tank over the next few years. It’s not their base-case forecast, seems to overstate the inability of professionals to interact with and benefit from AI versus being displaced, and a potential 38% drop in the markets isn’t noteworthy. We have bear market drops of this size frequently enough already.
See also:
Bloomberg Odd Lots Podcast – James van Geelen on His Viral AI Doom Scenario
Something very unusual happened in the market in the last week of February. It sold off, in part, thanks to an article on Substack. James van Geelen is the founder of Citrini Research, which published a piece a week ago titled, “The 2028 Global Intelligence Crisis.” It was not written as a forecast of an imminent disaster, but rather as a scenario analysis in which AI capabilities lead to widespread white collar job losses, triggering a deep downturn, and a financial crisis. Nonetheless, the piece went extraordinary viral, gathering all kinds of responses from economists and research shops and even Citadel Securities. On this episode, we speak with James, the piece’s co-author, about what Citrini Research actually is, why he wrote the piece, and why this is a scenario worth paying attention to, even if it’s not the most likely outcome.
Special Edition Commentary – There is No AI Apocalypse by Professor Siegel
Professor Jeremy Siegel’s response to the Citrini AI-collapse scenario argues that the report misunderstands basic economic history: productivity breakthroughs historically raise wages, incomes, and demand rather than destroy the economy. In his view, AI would likely increase productivity and real incomes, creating new industries and spending that offset job losses, so the “AI apocalypse” thesis has little economic basis.
Cook Says Fed May Not Be Able to Counter AI-Driven Job Loss by Bloomberg
Federal Reserve Governor Lisa Cook warned that artificial intelligence could cause job displacement to rise faster than new jobs are created, potentially increasing unemployment even while productivity and economic growth remain strong. In that situation, traditional monetary policy—such as lowering interest rates—may not be able to reduce unemployment because doing so could instead fuel inflation. As a result, policymakers may face difficult trade-offs between inflation and employment, with workforce training and other non-monetary policies likely playing a larger role in addressing AI-driven labor disruptions.
See also: Fed presidents: AI not driving surge in U.S. productivity – yet by Federal Reserve Bank of Boston
Artificial intelligence is not the driving force behind the recent surge in U.S. productivity, according to Boston Fed President Susan M. Collins and Richmond Fed President Tom Barkin.
The Residential Outlook Housing Forecast Update by Wells Fargo
The housing market appears to be moving into a slow-recovery phase versus a boom or bust given that mortgage rates are likely to remain at this level and tight inventory will prevent large national price declines. Increasing supply is a governmental goal but progress will be slow.
Planning strategies to optimize tax savings in 2026 by Franklin Templeton
2026 tax planning should factor in changes from the OBBA. Consider Roth conversions, growing the Roth bucket in other ways, maximizing deductions in years you itemize, understand the expanded use of 529 accounts, consider the charitable rollover option if you’re a retiree and the 20% QBI deduction if you’re a business owner.
4 Investing Ideas for 2026 From Great Money Minds by Morningstar
There are four broad themes investors should consider for 2026 based on views from prominent portfolio managers and strategists. First, diversification beyond U.S. mega-cap stocks—including international equities and emerging markets—may become more important as valuations remain stretched in the U.S. Second, investors may find opportunities in income-producing assets such as credit and high-yield bonds, while also preparing for more volatility and dispersion across markets, which could reward active management and selective positioning.
Book Recommendation
Peace to End All Peace, 20th Anniversary Edition by David Fromkin
Another re-read, this book is the classic, bestselling account of how the modern Middle East was created coming out of World War I. Reveals how and why the Allies drew lines on an empty map that remade the geography and politics of the Middle East. Focusing on the formative years of 1914 to 1922, when all seemed possible, he delivers the definitive account of this defining time, showing how the choices narrowed and the Middle East began along a road that led to the conflicts and confusion that continue to this day. A new afterword from Fromkin, written for this edition of the book, includes his invaluable, updated assessment of this region of the world today, and on what this history has to teach us.
Boston Corner
The Great Thaw: Why 2026 is the year Massachusetts real estate finally accepts the new normal by Boston.com
After several years of gridlock—buyers waiting for lower mortgage rates and sellers locked into sub-3% mortgages—the Boston housing market may finally start moving again in 2026 as people accept that higher rates are the new normal. Life events and gradual acceptance of ~6% mortgage rates are expected to push more buyers and sellers back into the market, ending the wait-and-see stalemate. Even as activity improves, inventory will remain limited and affordability strained, especially for first-time buyers, keeping prices relatively supported.
