Robert Shiller: Fear of robots is driving the market rally

Robert Shiller is well-known for his views on valuation, volatility, dividends and bubbles. But when asked what currently worries him most, the Yale professor of economics turned to another subject entirely.

"A theme that I have been coming back to is that the big worry that's on people's minds — I don't know how active it is in trading — but it's about where the world is going with automation and robotics," Shiller said in a Wednesday interview on CNBC's "Trading Nation."

Providing just one recent example of technological advancements pushing aside traditional human roles, the Nobel laureate cited the attempt by two Norwegian companies to develop a crewless container ship.

"We are going to see ships sailing across the ocean with nobody on it, just cargo — like driverless cars," Shiller said. "These things keep coming up and I think they make people worry about everything, including even stocks. You don't know how all this automation is going to play out for various kinds of companies. This is what, I imagine, is on people's minds all the time now."

In a Thursday interview on CNBC's "Halftime Report," Shiller added that these concerns may actually be spurring the stock market rally.

"It just seems like, it doesn't matter what job you have, there's always some robot out there about to take it," he said. "I think people are worried, and they want to buy tech, because they feel like they're taking part [in] the thing that's threatening them. So there is this deep emotional fear which is increasing, which is having the effect of pushing up prices for now."

This fear is "substantially driving the market," he said.

Indeed, the information technology sector is by far the top performer in the S&P 500 this year. And the best-performing large U.S. stocks include AI chipmaker Nvidia and self-driving pioneer Tesla; those shares have surged 49 percent and 55 percent year to date, respectively.

Meanwhile, the titans of technology are speaking openly about artificial intelligence concerns. Tesla CEO Elon Musk has memorably called AI "our biggest existential threat," and when Facebook CEO Mark Zuckerberg recently called his warnings "irresponsible," Musk retorted that Zuckerberg's "understanding of the subject is limited."

Facebook, like Tesla, has been a notable force in AI research — and a company whose shares have risen substantially this year.

For Shiller, the market move he sees as being partially driven by technological anxiety appears a bit irrational, but may not yet be over.

"I don't know that it's come to a culmination," he said Thursday. "It might go on for years like this."

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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

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