The AI Cycle Will Turn This Year but First Things Get Even Crazier | Andreas Steno Larsen

Why It Matters

Understanding the Fed’s likely neutral stance and a steepening yield curve helps investors position for higher‑rate environments, while transparent macro ETFs like HFGM offer a practical tool to capture returns amid rising volatility and shifting global dynamics.

Key Takeaways

• Semiconductor cycle may peak this year, then turn later
• Fed likely to maintain neutral stance, delaying rate cuts
• Yield curve expected to steepen, benefiting banks and private credit
• Strong dollar threatens emerging markets, except India shows resilience
• Global macro ETFs like HFGM offer transparent, low‑fee alternatives

Summary

The episode with Andreas Steno Larsen focuses on the coming “AI cycle” but centers on a broader macro transition. He argues the semiconductor boom will peak by year‑end, with a wave of late‑cycle IPOs signaling the final stretch of the current cycle, while the Federal Reserve is likely to abandon its easing bias and adopt a neutral stance.

Larsen points to Fed Governor Chris Waller’s June comments as evidence that rate cuts are off the table, with market pricing showing a 42.7% chance of a 25‑bp hike at year‑end. He expects the long end of the Treasury curve to steepen, pushing 30‑year yields toward 6%, a move he says benefits banks and private‑credit providers. He cites Japan’s 4% 30‑year yields as a template for how foreign investors influence U.S. curve dynamics.

Notable remarks include Waller’s “scrap easing bias” stance and the observation that a steeper curve is “by design” to attract Japanese pension funds after FX‑hedging costs. Larsen also highlights the HFGM unlimited global‑macro ETF as a transparent, low‑fee way for investors to capture macro returns without traditional fund constraints.

The analysis suggests investors should prepare for heightened volatility, favor assets that profit from a steepening yield curve, and monitor the strong dollar’s impact on emerging markets—particularly India, which remains an outlier. Allocating to transparent macro‑focused ETFs could provide diversification as the AI‑driven cycle intensifies.

Original Description

Learn More About Unlimited HFGM Global Macro ETF $HFGM: https://unlimitedetfs.com/hfgm

Andreas Steno Larsen, macro researcher from Real Vision, joins Max Wiethe on Other People’s Money to discuss the shifting macro regime where inflation has returned and is pushing US Treasury yields over 5%. They discuss the market’s expectation for interest rate hikes and how the new Fed chair Kevin Warsh will react to this environment. They also discuss the other dominant force in markets right now, the AI buildout. Steno Larsen argues that things are going to get crazier before the cycle turns later this year, but in the meantime the shortages in the AI supply chain are creating unappreciated winners in the technology sector.

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Timestamps:

00:00 Intro

00:50 Inflation and the Big Macro Shift

01:43 Transitory Inflation Debate

04:19 Bond Trade Timing

06:13 Steep Curve Playbook

09:41 Why Steepening Helps

12:24 Strong Dollar EM Risk

14:35 HFGM Unlimited Funds

16:51 India Data Versus Rupee

18:24 Energy Supply Countdown

21:23 LatAm Underperformance

23:27 AI Inflation Link

26:52 Korea Semis Surge

28:26 Momentum with Earnings

30:39 Quantum Hype Warning

32:24 Semis Cycle Peak Question

34:47 Late Cycle Winners Flip

39:01 IPO Supply and Rotation

43:35 Valuation Metrics Reframed

46:11 Hidden Scarcity Trade

49:21 Goods Inflation Returns

51:15 AI Jobs and Robotics

54:07 White Collar Disruption Map

59:53 LLMs and Bad Facts

01:04:47 Momentum vs. Value Edge

01:06:15 Rapid Fire Outlook and Wrap