Beneath the market’s enthusiasm for AI and record-high stock prices, there is growing anxiety among investors and business leaders—especially outside the U.S., The New York Times reports.  Business leaders in London are increasingly questioning whether the AI-driven market rally is sustainable and wondering how it ultimately ends. Investors have largely ignored geopolitical tensions, including the fragile Middle East ceasefire and U.S.-Iran conflict, while continuing to push stocks higher. Economists expect the upcoming Consumer Price Index report to show inflation rising to 4.2%, largely because of higher energy prices. That would be the highest inflation reading in more than three years. Tech stocks in Asia and Europe are falling, Nasdaq futures are under pressure, bonds and cryptocurrencies are declining and investors are particularly selling AI-related mega-cap stocks. If inflation remains elevated, the Federal Reserve may need to raise interest rates. This could create conflict between Fed Chair Kevin Warsh and Donald Trump, who opposes rate hikes.The AI build-out has been fueled partly by debt and investor leverage. Higher interest rates would make financing more expensive and could weaken the investment boom. Rising prices and uncertainty surrounding the conflict with Iran are hurting consumer confidence. If inflation stays elevated, wage growth may stop keeping pace with rising costs, according to Marianne Lake of JPMorgan Chase. Financial markets appear highly optimistic about AI and economic growth, but that optimism is increasingly being challenged by inflation, geopolitical conflict and concerns that higher interest rates could expose how dependent the AI boom and stock market rally have become on cheap money. The New York Times has the full story. This story may require a subscription. ...read more read less