The risk of real-world constraints on compute capacity and growing scrutiny over circular financing and historic demands for capital may force investors to curtail their exposure to one of the most crowded trades in modern financial market history.
Globally, markets continue to assign a near-zero probability that China emerges as a meaningful winner in the AI race, despite its strategic advantages in open-source AI, critical minerals, and political support. In our view, this represents a historic mispricing given physical supply constraints and the growing political backlash to datacenters in the US.
Meanwhile, attention is increasingly shifting back toward inflation and the Federal Reserve. While markets appear comfortable pricing peak inflation, 42 Macro believes sticky inflation represents the more prominent trade ahead.
If you are not confident your portfolio is positioned correctly for the evolving macro landscape, partner with 42 Macro for data-driven insights and proven risk management overlays—KISS and Dr. Mo—to help you stay on the right side of market risk.
— Team 42
