Is the AI investment cycle a sign of history repeating?
Artificial intelligence has become the defining investment theme of the current market cycle, with capital expenditure on AI infrastructure reaching unprecedented levels. Hyperscalers have announced nearly $400 billion in capex for this year alone, and forecasts suggest annual increases of 30% in the years ahead. As investors weigh the promise of this transformative technology against the risks of overbuilding, the debate intensifies: will markets continue to run efficiently or are we repeating the excesses of past tech booms that led to busts?In Episode 76 of The Flip Side podcast, Brad Rogoff, Global Head of Research, and Venu Krishna, Head of US Equity Strategy, examine the forces behind the AI investment surge and consider the bull and bear cases that surge presents. They explore whether current spending is justified by demand, how power and infrastructure constraints could shape the outlook, and what lessons can be drawn from previous cycles of rapid tech expansion.With AI capex now central to both equity valuations and broader economic growth, this episode unpacks the critical questions facing portfolio managers as they navigate one of the most consequential debates in today’s markets.For deeper insight, clients can access related Barclays Research on Barclays Live:Equity Strategy: Lost My Chain-of-Thought: Could the AI narrative stumble?Food for Thought: Generative AI vs. cash generationEpisode 69 'Is there too much hype for AI and the hyperscalers?'Important Content Disclosures
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US bank regulatory reform: Capital relief or systemic risk?
In June, US banking regulators, led by the Federal Reserve, proposed changes to the supplementary leverage ratio (SLR), a regulatory measure used to ensure financial stability by limiting excessive leverage.Despite expectations that easing the SLR rules will unlock lending and liquidity in the US economy, concerns remain over potential risks to financial stability. While large US banks tend to maintain capital buffers well above regulatory minimums, critics believe the Fed’s proposal could shift capital away from the intended outcomes and toward shareholders or proprietary trading.In Episode 75 of The Flip Side podcast, Global Head of Research Brad Rogoff and US Large-Cap Bank Analyst Jason Goldberg debate whether the SLR changes will strengthen or strain the US banking system.Clients of Barclays Investment Bank can read more on bank capital in several recent publications:Large-Cap Bank Capital Outlook: SCB improvement near-term, more meaningful changes looking outFed issues proposal to reduce SLR minimum, the first of several capital changes expectedSLR relief - Why we think it helps
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Are oil markets set to heat up or burn out?
Despite widespread expectations of weakening demand for oil, market fundamentals are showing signs of tightening. A slowdown in US shale production and resilient demand across emerging economies could point to a potential shift in the price of oil.When it comes to demand, elevated refining margins and unexpectedly low inventory levels suggest that actual demand may be outpacing modelled projections.On the supply side, extended development timelines for new projects and the lingering effects of pandemic-era underinvestment have left the market increasingly exposed to potential shortfalls.In Episode 74 of The Flip Side podcast, Global Head of Research Brad Rogoff and lead equity analyst for European energy Lydia Rainforth consider the evolving dynamics of the oil market.
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Do the risks of NBFI lending outweigh the opportunities?
Commercial & Industrial loans from banks are on the decline, and lending to Main Street and consumers from non-bank financial institutions (NBFIs) is on the rise. But here’s the paradox: traditional banks are fuelling this rise of NBFIs by lending capital to what were once their competitors. While this systemic shift plays out among lenders, there are questions about whether post-global financial crash regulations – such as stress testing and liquidity requirements – are keeping pace with this market as it grows. Could further growth in this $1 trillion market threaten the stability of the wider banking system?In Episode 73 of The Flip Side podcast, our Global Head of Research Brad Rogoff and Senior High Grade Financials Analyst Pete Troisi debate whether the risks outweigh the opportunities in this evolving market.
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Is the US bond market starting to rebel?
US Treasury bonds are widely regarded as the “world’s risk-free asset.” However, in recent weeks, global investors have increasingly shied away from 30-year US bonds, opting for flexible, shorter-term maturities, due to a combination of growing interest rate risk, sticky inflation and economic uncertainty.As a result, 30-year interest rates are within striking distance of their highest level since the global financial crisis. This demand for risk premium is not limited just to US long-dated bonds; UK gilts and Japanese 30-year bonds have also experienced new highs recently, suggesting the bond market could be starting to rebel.In episode 72 of the Flip Side podcast, our Global Head of Research Brad Rogoff joins Global Chairman of Research Ajay Rajadhyaksha to assess the situation and debate whether the high rates are transitory or here to stay.Clients of Barclays Investment Bank can read further analysis of these topics in the latest Global Rates Weekly titled ‘Unusual uncertainty’ on Barclays Live.
This podcast series features a lively debate between two of Barclays’ Research analysts taking opposing viewpoints on timely topics of importance to economies and businesses around the globe.
By hearing arguments and insights on both sides, we hope you will come away with a greater understanding of the economic implications of sometimes polarizing issues. For more insights from our experts: https://www.ib.barclays
Important content disclosures: https://www.ib.barclays/disclosures/important-content-disclosures.html
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