- The markets are rallying into 2024 following huge gains in Nvidia's stock.
- But Larry Summers warns that markets may be underpricing political and social risks.
The markets are on fire, with a Big Tech rally extending into 2024 thanks to monster gains in Nvidia's stock.
However, the markets may not be fully pricing in political and social risks, former Treasury Secretary Larry Summers said at the FII Priority summit in Miami on Thursday.
"The world is potentially headed into a period where there is less of a sense of what the order is going to be and therefore more risk of disorder, chaos, and associated suffering," said Summers, who was speaking to former Google CEO Eric Schmidt.
"I'm not sure that kind of risk is fully priced into markets," he added. Summers did not specifically refer to the current market rally, and didn't say he was predicting unrest.
Summers cited concerns about populist policies globally that have spurred protectionism and restrictions on the movements of goods, capital, and people.
He called them "very real risks" that appear to be "insufficiently priced in right now to assessments of where markets are going to go."
Summers isn't the only high-profile name citing political risks as a concern for the markets amid ongoing wars in Ukraine and Gaza.
JPMorgan CEO Jamie Dimon, Bridgewater Associates founder Ray Dalio, BlackRock chief Larry Fink, hedge fund legend David Einhorn, and "Oracle of Boston" Seth Klarman have all expressed concerns about the economic and financial impact of the conflicts.
Dimon told the UK's Sunday Times in November that Russia's invasion of Ukraine and Israel's war with Hamas had made the world more "scary and unpredictable."
In November, Einhorn said that "current extreme levels of geopolitical tension will lead to lower stock prices over a timeframe that lasts more than a couple of hours."