Market Outlook 2026

Following America’s explosive kidnapping of an OPEC country’s leader, the United States stock and bond market repercussions were virtually zero. After all, Venezuela was a barely functioning country, with decrepit oil infrastructure and unproven mountains of Coltan.

In board rooms across the world’s largest financial institutions and portfolio managers voted on their 2026 asset allocations and as the first day of trading in the new year showed us, they will not back away anytime soon from selling from buying into AI hardware stocks folly.

Folly makes money but inevitably it goes too far and as a result companies go out of business en masse and investors permanently lose capital.

The so-called “Four Horsemen” of the 1999 dot.com bubble, Microsoft, Intel, Dell, and Cisco have reincarnated in the five public horseman of today’s AI boom – Microsoft, Google, Meta, Amazon and Oracle and just like in late 90’ we are witnessing a catastrophically overbuilt supply and nowhere near enough demand in their promise of a $3trillion in spending on AI infrastructure over the next 3 years.

OpenAI, the private owner of the widely used GenAI platform ChatGPT, has committed a dreamy $1.4 trillion in spending alone over the next 8 years. Its revenues are less than 2% of this, and its losses are more than 2% of this.

This is the foundation of what is yet to come.

Since the fourth-quarter 2024 I have been working on a framework that has since shaped much of my thinking about commodities cycle and the upcoming “Carry Bubble”.

Carry regimes come with several important quirks. To begin with, they are momentum-driven feedback loops rather than mean-reverting systems. When trillions of dollars chase levered short-volatility trades, both implied and realized volatility are pushed lower—just as a flood of money into a long-Nvidia position inevitably drives the stock higher.Carry trades depend on the premise that what has worked will continue to work, which is essentially what low volatility represents. As a result, winners are carried upward: large companies grow larger, growth stocks surge, and value investing is pushed to the sidelines.

Despite their persistence, carry regimes are not the natural state of financial markets. Over long stretches of history, value has consistently outperformed growth and small-cap stocks have outperformed large caps. But those fundamental patterns are often suspended during extended carry regimes.

During these periods, real assets tend to hold very little appeal for most investors. Why bother with a finite, delineated resource when volatility is low, interest rates are benign, and the market offers a AI that promises to remake the world? As a result, natural resource equities typically struggle in major carry regimes. At best, investors ignore them and at worst they become part of the short book.

But carry regimes are inherently unstable and they persist only as long as conditions allow, and then they unwind abruptly. That was the pattern in 1929, in the 1970s, and again in 1999 and it will be the pattern in this cycle as well.

What brings a carry bubble to an end, and what does the market look like afterward? In almost every instance, the catalyst is a major shift in the monetary regime something large enough to reset the system and restore balance.

A carry regime thrives when tomorrow looks like today; it ends when tomorrow looks markedly different. With so much capital tied to levered short-volatility positions, a meaningful rise in volatility is usually enough to trigger a broad unwind. These are, in effect, two ways of describing the same phenomenon. At the centre of it all are the Central Banks.

For a carry trade to unwind in a lasting way, Central Banks must either be unable or unwilling to operate as they normally do. That can take the dramatic form of a central bank—or its currency—losing credibility,or a more measured form: a major shift in the monetary regime.

In practice, a Central Bank that can no longer conduct business as usual in a independent way. Ring a bell?

I believe we are nearing another monetary regime change and although the exact form of the coming regime change is uncertain, it is increasingly clear that tomorrow will not look like today. And that is precisely the environment in which carry regimes give way.

The belief of a coming switch from carry to anti-carry is the main reason behind my continuous positioning throughout 2025 in natural resources, commodities and minerals.

Last year's price action further confirmed that switch, which is an underway broad based capital rotation into hard assets and the commodity related sectors is entering a new acceleration stage that will last for several years to come.

Going into 2026 our core allocation is in silver, silver miners, gold, goldminers, copper, rare earth minerals, uranium and we will be positioning ourselves in oil as well.

A special mention should be made about uranium.

Despite its strong performance, overall investor interest remainssubdued, and speculative sentiment continues to lean heavily negative.

When the uranium bull market finally approaches its top, we have little doubt that sentiment, hedge funds included, will swing to a wildly bullish extreme. That will be the moment to step aside. For now, with speculators firmly entrenched on the bearish side, it is hard to imagine we are anywhere near such a peak. The uranium bull market still has many years ahead of it, and I take considerable comfort not only in the lack of broad investors interest but also in the hedge fund community’s persistent scepticism.

Given the enormous growth assumptions, the expansion of uranium supply over the next fifteen years will be critical. On that front, the challenges are already beginning to surface. The supply problems emerging today will only deepen the structural deficits now developing in global uranium markets.

Problems are already emerging at several of the world’s largest prospective sources of new production, and I believe the structural deficit in global uranium markets is poised to widen sharply in the near term as these supply issues continue to accumulate.

Over the past two years, the positive narrative around uranium has been driven almost entirely by demand. I believe that is about to change. Supply challenges may soon become the dominant force pushing uranium prices materially higher for years to come.

“In the business world, the rear view mirror is always clearer than the windshield” Warren Buffett