AI

In Section II, Jonathan examines the humanoid robot segment of the emerging physical AI landscape, concluding that humanoid robots are a potential but not yet imminent investment theme.

Higher oil prices threaten the global economy, warranting an underweight stance on equities. Over the long haul, industrial metals will fare better than crude.

In the short term, there is plenty to be worried about in macro beyond the Middle East. The market was on thin ice before the Iran conflict. In the long term, the base case scenario remains bullish, but the war in the Middle East needs to be brief.

Fears of widespread job losses due to AI are overstated. For investors, the key is that white-collar anxiety is accelerating a red-hot blue-collar economy via lower yields. Upgrade Private Real Estate to overweight.

Tech companies have historically generated profits from three main sources: 1) economies of scale; 2) network effects; and 3) proprietary technologies. AI threatens to undercut all three sources. 

The capex debate is better framed not as boom versus bubble, but as around capacity, leverage, and cash conversion. ROEs have compressed, but revenue growth and margin expansion offer a credible path back. Spenders likely have time to make good on their investments, though the market’s leash may be shorter than anticipated. 

If humanoid robots were to become substitutable for workers, the AI age could lead to rapid growth in the size of the effective global labor force. The result could be a larger version of the “China shock,” which followed China’s entry into the global economy.

MacroQuant recommends a slight underweight in equities, favors a below-benchmark duration stance in fixed-income portfolios, remains bearish on the US dollar, has upgraded oil and copper to overweight, and is bullish on gold.

The AI trade has broadened beyond Public Markets, pulling Private Credit deeper into the ecosystem. Investors are right to understand their overlapping exposures between Public Equities, Venture Capital, Data Centers, and now Private Credit. However, risks from rising Venture Capital Debt and Asset-Based Lending are going unnoticed.

Much like the 2000 episode, we expect this year to unfold in two stages: A “Great Rotation” from tech stocks to non-tech names in the first half of 2026 followed by a broad-based selloff in stocks in the second half on the back of a weakening US economy.