Prepare for a growing backlash against artificial intelligence from politicians and white-collar workers – that’s the warning from Daleep Singh, chief global economist at PGIM Fixed Income.
We sat down with him at Abu Dhabi Finance Week, following a hectic weekend in the capital in which global music acts such as Metallica and Benson Boone drew huge crowds at their Formula One after-race concerts, while Wall Street heavyweights jockeyed with European banking leaders for pole position in the race for capital and deal flow.
We’re going to have a period of displacement from AI – and it’s white-collar jobs where the backlash will come. We'll enter a period of creative destruction, but we will be rewarded in the end with a productivity boom.
But before that arrives, he warned of a serious wave of what the Irish jokingly call “me fein” – all about me. No one does that better than politicians. It will be an amalgam from the Republican and the Democratic side fuelled by white-collar anger and job losses – to slow or tighten AI adoption.
Mr Singh suggested that politicians would be desperate to retain or win office in 2028.
Tail risks for 2026
On the macro outlook and global risks for 2026, he said the real problem was a “failure of imagination, not a failure of memory”. Investors, he said, should think beyond the headlines to understand tail risks.
Think Russian President Vladimir Putin invading a near-Nato country in a challenge to the alliance’s Article 5.
He also warned of the risk of a market collapse, pointing to the current scramble for assets.
"Financial stability episode in crypto complex ... reminiscent of 2006 subprime ... a lot good assets chasing after intrinsically weak securities that are getting leveraged put into systemically important banking sector," Mr Singh said.
The rush, he said, reminds him of 2006, when there was race for assets and securitisation. He sees parallels in parts of the crypto space: could we see another FTX-style collapse? More worrying, he added, is that some of these newer assets are “now filtering into the banking system”.
With it being Fed week, a report card on the US economy was key. Mr Singh argued that the risk is not recession but overheating – driven by a dovish Federal Reserve, easy monetary policy, loose fiscal policy, tariff risks, a tightening labour market and surging AI CapEx.
All of these levers will drive a solid growth of about 1.8 per cent – but with the danger of inflation pushing back above 3 per cent, Mr Singh said.
When I asked what might jolt the bond market and push yields from 4 per cent to 5 per cent, Mr Singh's answer was unequivocal: any threat – real or perceived – to the Fed's independence.
It is about reassuring global financial markets that the anchor to global stability remains, he said, adding that any threat to the perception of the independence of the Fed is perhaps your highest risk for 2026. If the next person appointed to lead the central bank is seen as too close to the White House, the risk premium will rise, according to Mr Singh. And perhaps that is non-material risk relative to everything else.
The graveyard of existential angst in 2025 – from DeepSeek to Liberation Day – was already crowded. And we should be prepared for more of the same.
