The founder of Muddy Waters is establishing options "short positions" for corporate bond ETFs to hedge against the risk of AI causing an economic downturn

Carson Block, the founder of the short-selling firm Muddy Waters, stated in an interview with Bloomberg that he is establishing "short positions" in options for BlackRock (BLK.US) high-yield and investment-grade corporate bond ETFs to hedge against the economic downturn risks posed by artificial intelligence (AI), and pointed out that unemployment caused by AI could widen credit spreads.

He indicated that AI will change everything, noting that in many leading companies and technology sectors, those who utilize AI the most can replace the work of seven colleagues. He believes that the market will reflect these risks ahead of the actual large-scale layoffs related to AI and stated that AI will ultimately have a market impact similar to that of the global financial crisis