AI vs Affordability and Rates

A macro update highlighting the conflict between AI-driven growth and global affordability, while warning of 'higher for longer' oil prices and rising global bond yields.

Key Takeaways

• 1.The concept of Universal Basic Income is gaining traction as AI-driven tax revenue and job uncertainty weigh on confidence, particularly in South Korea.
• 2.The oil market is transitioning to a 'higher for longer' regime, with WTI prices of $80+ being priced into 2027, creating a significant headwind for global affordability.
• 3.Retail interest in semiconductor and AI trades appears to be plateauing while institutions and hedge funds are increasingly crowded in 'must-have' positions.

Table of Contents

• China, Iran, and a Whole Lotta Nothing
• The Oil Curve
• AI versus Affordability
• Which Brings Us to Rates
• Globally, U.S. Treasuries, are fairly generic.
• Defense Spending Requires Money
• The AI and Data Center Build Out Competes for Money
• Bottom Line

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