Markets were spooked last week as a viral Substack post put forward a dark, futuristic scenario where AI has replaced most of white-collar jobs and brought about a deep recession.
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How a Doom-and-Gloom AI Satire from a Substack Crashed the Market
Satire is an often-used tool to exaggerate reality and push forward a worst-case scenario that entertains but is a warning of what is happening. And a Substack publication called Citrini published an AI memo that it wrote in the future, in 2028, when AI has exceeded all expectations, and replaced white-collar jobs en masse.
I have read the whole thing, and of course, I do think it’s not probable. But it does evoke a sense of fear of AI technology potentially crashing the economy and stock market. There could be an AI world in the future that effectively replaces every kind of job function, and causes wide layoffs while tech billionaires get richer and richer, and build underground (or space like Elon Musk wants to) bunkers to shield themselves from the ‘peasants’.
That kind of fear gripped the market last week when the S&P 500 crashed by 1.0% on 23 February 2026. Investors were concerned that white-collar jobs could be seeing an end two or three years down the line. And that would bring about a collapse in consumption in the economy. Remember, consumption makes up close to 70% of the U.S. economy.
Takeaway: AI fears in the market are getting more real by the day as AI models are showing higher accuracy. Investors now have to pay attention to the news of layoffs by companies and pay attention to the U.S. job market data that are coming out for the year.
You don’t have to go far to realise company layoffs are still happening at a regular scale …
Block Cutting 40% of its Workforce due to AI
Looks like Ctirini did have a point. Block has announced that it is cutting about 4,000 of its employees, or 40% of its workforce, as in Jack Dorsey’s words, the CEO of the company
“Intelligence tools have changed what it means to build and run a company. We’re already seeing it internally. A significantly smaller team, using the tools we’re building, can do more and do it better. And intelligence tool capabilities are compounding faster every week.”
What he didn’t mention is the fact that Block overhired during the pandemic, just like any other technology company back then. Block’s staff tripled from 3,835 in 2019 to its peak of 12,985 in 2023. Now, it’s just undoing its misguided policy in the past in the name of AI replacing workers. Whether its AI investments are paying off, no one knows.
But we know for certain that this excuse is just half the story.
Takeaway: It’s not easy to tease the real intentions of why companies are laying off their workers. The case of Block is an example on why we need to look at its historical data of employees to get a better view. Based on this, I think Block is only telling half the story.
First Brands is Also Laying Off Workers But for a Different Reason
Ah, First Brands. The auto parts supplier that got into so much trouble for hiding its debts last year is laying off 1,267 workers now as it can’t find financing or a buyer to continue operations.
Worse, it made up invoices to boost its revenue and pledge as collateral to borrow more money. Talk about a lesson in financial fraud that still rings true today. If you told me that this happened in the 1990s or early 2000s, I would be like “Ah ok, classic trick to fake your accounts”. But this is 2026, the oldest trick in the book still works, no matter the era we are in.
First Brands’ collapse has been interesting. It showed us the first cracks of private credit in the market. Just recently, the private credit market has started to unravel as investors are cashing out en masse from the market due to concerns about software company’s debt.
After Citrini’s viral report came out, investors started to freak out about the potential impacts of AI on white-collar jobs and the economy. The S&P Software Index has declined by 16.6% since the beginning of the year.
Takeaway: First Brands is probably not going to make it. With lenders all withdrawing and demanding their money back, the company could go under, and cause more jobs to be lost. It also provided the first glimpse into the shady private debt market that is starting to unravel now.
Another Chinese AI IPO On the Cards
Yet another AI-related IPO in the Chinese market. SJ Semiconductor, a chip packaging company, is listing on Shanghai’s Star Market to raise US$700 million. The company provides packaging services to AI and hardware companies and has seen revenue from this segment grow by 56% in 1H 2025.
Interest in the stock is probably going to be high, similar to other AI companies that have listed. The reasoning is simple. AI investors in the West have rotated away into China’s AI sector to grab opportunities in the 2nd highest rated AI market in the world. The Chinese government is also providing explicit support for homegrown AI chip companies to counter the West.
Valuations for the company could go wild. But it probably doesn’t matter as investors are still frothing at the mouth for anything AI and Chinese.
Takeaway: SJ Semiconductors’ IPO is probably going to be hot like the previous Chinese AI companies. As much as valuations are going to be high, investors will probably still buy.
Other News Headlines
AMC Entertainment’s losses narrowed and is optimistic about 2026 prospects [Investing.com]
With many F&B chains reeling, Dominoes seems to be having no problem [Reuters]
Merck is splitting its business into two units – Cancer and Non-Cancer [CNBC]
Novo Nordisk’s new generation obesity drug failed to outperform Eli Lily [CNBC]
Zepbound’s new diabetes/obesity drug pen wins approval [CNBC]
Thank you for reading.
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