Remember AI?
Not long ago it was the only story. Nvidia at five trillion. Data centres everywhere.
Now? Commodities have stolen the show.
Rocks are hot. AI got left behind. Everyone’s moved on.
The meltdown was brutal
February and March 2025 kicked it off.
DeepSeek landed, hinting (or proving) you could run frontier models at a fraction of the compute cost, depending on who you asked. The trillion-dollar GPU thesis started cracking.
Nvidia dropped twenty percent in weeks. Microsoft fell seven percent in a session. Meta announced seventy billion in AI capex and spooked the market.
By November, the sell-off resumed. Big tech couldn’t prove ROI fast enough. Hedge funds split down the middle, half buying, half dumping.
Michael Burry went short.
That’s where we entered 2026.
Agentic AI is the actual story now
While everyone panicked, the tech shifted underneath.
Agentic AI is here. (Or wants to be)
These are autonomous agents that plan, execute, and adapt without babysitting. They run workflows. They make decisions. They replace people.
The tech isn’t properly ready yet. Recent tests show agentic systems pass just 2.5 percent of realistic remote work tasks.
But twenty-three percent of organisations are already scaling agentic systems somewhere. Another thirty-nine percent are running experiments.
(That’s according to the cheeky boffins at McKinsey)
When it works properly, entire workflows will disappear. That changes how labour gets priced.
Rates could flip the whole game
AI stocks live and die on future cash flows.
When rates were low, investors in some high‑growth names paid roughly five dollars today for each dollar of expected future revenue; as rates rose, that multiple fell to around 2.8 times.
The business stayed the same. Time just got more expensive.
Trump wants rate cuts. Jerome Powell’s term ends in May. The two Kevins, Hassett and Warsh, were first out of the block for replacing Powel. But things could get very interesting with an expanded field.
Both Kevins lean towards cutting rates. If they deliver, forward-dated cash flows suddenly look cheap.
AI valuations would explode.
Four ways this could play out
Scenario planning is important. As we’ve already seen this year, things can shift quickly.
But consider the following:
Scenario 1: Commodities win, AI stays “dead”.
Supply shocks keep tightening. Critical minerals and much of the commodity universe run higher. Big tech stays flat or bleeds. Resources become the only trade worth taking. (This is the current predominant thinking)
Scenario 2: AI comes roaring back.
Rates drop. Agentic breakthroughs land. Capital floods back into tech. Trump’s Fed pick juices the trade. Commodities stall out.
Scenario 3: Both rip higher.
Stimulus flows. China reopens properly. Demand for compute and raw materials explodes together. Wild scenes.
Scenario 4: Everything melts down.
Debt breaks. Private credit unwinds. AI and commodities crash together. Cash is the only position that works.
I’m not going to share some of my most “out there” theories on alternative scenarios just yet.
And I’m not picking definitively which one wins.
But the intersection of tech and rocks is where I’m looking.
Tomorrow, I’ll show you exactly how tech and geology collide.
Warm regards,
Lachlann Tierney,
Australian Small-Cap Investigator and Fat Tail Micro-Caps
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Murray’s Chart of the Day – US Dollar Index
Source: Tradingview
Last Monday, 19 January, I put a stake in the ground and said the US Dollar Index [TVC:DXY] was about to sell off.
I said:
The stage is set for the US Dollar Index [TVC:DXY] to slide..
It is basically decision time.
If we see a rally in the US Dollar Index above 102.00 I will happily fall on my sword and admit I am wrong.
But until then I think the US Dollar is on the road towards 95.00 or lower.
Fast forward just 9 days and the US Dollar Index has plummeted nearly 4% from 99.37 to a low of 95.55 (currently 95.81).
You can see on the daily chart above just how sharp the decline has been since I gave that warning.
The reason for the call made on that day was technical. I had a sell signal on the monthly chart.
I can’t give you the exact reasons for the signal because they are reserved for paying members.
But I hope it makes it clear that you should be reading my Chart of the Day updates every Monday and Wednesday, because you sometimes get the heads up before major moves.
Make no mistake, the way the US Dollar Index moves from here is important to watch.
There has been intervention in the USDJPY to stop the slide in the Yen.
There are huge carry positions that benefit from continued weakness in the Yen.
If we see a sharp rebound in the Yen it may ignite an unwind of carry trades as we saw in August 2024.
There is also a rising risk of repatriation of money back to Japan as interest rates continue to rise there.
If they both happen in unison, we may see a sharp nosedive in the Magnificent 7 and US bonds.
That outcome is probably the major wildcard to consider as markets continue to hit new all-time highs day after day.
Regards,
Murray Dawes,
Retirement Trader and International Stock Trader
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