Equities

An acute shortage of AI hardware will support tech stocks into year-end. However, AI companies may need to ultimately generate $10 trillion per year in revenue to justify their capex. Barring a massive increase in productivity growth, this will be very difficult to achieve. Despite today’s Treasury announcement of upsized buyback operations, bond yields are likely to remain elevated over the coming months. Rising crack spreads have reduced the demand for crude, which is not encouraging for global growth. On the FX front, recent intervention to support the yen will probably be insufficient, but there is significant long-term upside for the currency.

Four decades of robust stock market gains have positioned the equity wealth effect to play a larger role in the business cycle.

In this report, we explore opportunities in goldminer equities, AI infrastructure monetization, and Japan's tactical outperformance window.