The global economic order is moving away from the neoliberal consensus towards a mercantilist framework. This is characterized by protectionist policies, government intervention to bolster domestic industry, and viewing trade as a zero-sum game, largely in response to China's rise.
The current phase of AI development is defined by a fierce competition for finite physical and human resources. This includes a land grab for access to power grids (led by Microsoft), a multi-year backlog for NVIDIA's chips, and a battle for the world's ~1,000 elite AI scientists.
Global capital has become more concentrated in US equities and illiquid assets than ever before, a strategy that has worked for 15 years but is now described as a 'trap'. Under the surface, US equities have begun to underperform the rest of the world, signaling a potential reversal.
Leading hedge funds like Bridgewater are actively building and deploying AI-driven investment systems. After a decade-long journey, Bridgewater's 'artificial investor' is now considered capable of generating alpha and is being used with client capital, representing a major shift from human-led expert systems to machine-led reasoning.
China's leadership has recognized that competing with the US in AI is an existential necessity. To achieve this, they are reversing their crackdown on the private sector, understanding that a functional and well-funded private market is essential to foster the innovation required to keep pace.
Keep pulling the thread on Greg Jensen.