A growing lack of consensus and an increase in dissents within the FOMC regarding the future path of monetary policy is expected to cause more market uncertainty.

The AI buildout is projected to require $800 billion of CapEx this year and over a trillion dollars next year, which is likely to be inflationary.

High demand driven by AI is creating supply shocks and fragile choke points, causing prices to rise for components like GPUs and semiconductors.

Morgan Stanley's primary macro investment theme is the emergence of a multipolar world, which is driving intense reshoring and diversification of supply chains.

Over the long run, AI is expected to be disinflationary by lowering the cost of goods and services through productivity benefits.

Morgan Stanley's thesis is that over the next 18 months, the inflationary impact of AI infrastructure CapEx will precede any disinflationary productivity gains at the company level.

The Federal Reserve is expected to remove the projection for an interest rate cut for this year, and possibly one or two cuts for next year, in its upcoming Summary of Economic Projections.

While core PCE inflation is above 3%, the Dallas Fed Trimmed Mean PCE inflation rate is closer to 2%.

The global competition for technological innovation is expanding into new frontiers like space, with a focus on dominating the atmosphere with satellites.

Over the last 4 to 5 months, the AI buildout has increased producer prices, and this inflation is beginning to affect consumer prices.

The Federal Reserve has a tendency to favor inflation metrics that reinforce its current policy view.