00:00Just going back to that rare earth suggestion, is that positive?
00:04Do we need, is supply chain a real headache for the businesses out there right now?
00:08Yeah, absolutely.
00:09You know, what we're seeing is a fundamental shift in how the U.S. has really been addressing
00:13supply chain resilience over the past few years and absolutely top of mind following
00:18the export control measures by China back in 2025.
00:22What in essence we're doing is we're creating a strategic reserve of rare earth metals for
00:27the digital economy, which means that we're less at the behest of foreign entities as
00:32we try to continue to move forward right in AI innovation and all the potential for the
00:37economy that that really houses.
00:39A lot of the focus has been not so much on supply chain of rare earths as well as that,
00:45but also really just the bottlenecks that we see in delivering the AI hope and euphoria
00:49that is built into the market, whether that's power, that's energy, whether that's land.
00:52Natalie, where do you stand in terms of the reality of AI and what has been thus far driving
00:58a lot of stock and shares higher this year?
01:02Yeah, absolutely.
01:03I mean, 2025, we saw a really intense increase in valuations.
01:08There's a lot of hope in what AI can deliver.
01:11We heard that at the Davos Economic Forum, also loud and clear by many key tech and political
01:18leaders as well.
01:19Now, in order for these valuations to hold in 2026, and what we're really going to have
01:23to see, and it's going to sort of earmark the year, is a close, right, in the gap between
01:27how much is being spent on AI and the ROI that we're actually going to achieve.
01:33If we get those productivity gains, then this is absolutely a great story of foresight.
01:38If we don't see those productivity gains, then we're going to have a conversation much more
01:42housed around capital misallocation.
01:44But, Natalie, how's that going to show up?
01:46As an economist, are you looking at jobs data?
01:49I mean, because at the moment, all we're seeing is jobs cut upon jobs cut, which in some ways
01:54seems to be going back to AI.
01:56Yeah, I mean, it's fascinating, right?
01:57What we're seeing in the overall jobs data, I'll first sort of approach that and then tell
02:01you as an economist what I'm looking at.
02:03We look at the jobs data.
02:04There's not a whole lot of evidence that the jobs that are currently being cut is due to AI,
02:11right?
02:11We know that that's what companies are saying.
02:13At the same time, it's not really showing up in a clear way in the data.
02:17On the other hand, what we do really need to see is almost a discontinuous jump in the
02:22productivity data, right?
02:24So if we're sort of on this level increase, what we really want to see with AI is we're
02:29jumping up and then we're on a totally new level playing field.
02:32When we see that, and there should be early adopters in some key industries, I'm thinking,
02:37you know, health care, consulting, finance, we should see those early signals and they
02:41should be showing up in the data.
02:43As soon as 2026, you think?
02:46That, I firmly believe that's going to need to happen in 2026 in order for these valuations
02:51to be deemed worthwhile.
02:53We're going to be getting into these big stories that are in the market today of how, at the
02:58moment, we continue to fuel the ever-needing expansion of AI infrastructure, whether it's
03:03Oracle selling debt and equity, whether it's, well, whether or not NVIDIA is going to be
03:08giving up to $100 billion or not to open AI.
03:11How are you seeing that narrative continue in 2026?
03:14Are we going to have to see a pullback in the amount that companies are committing?
03:17You know, I think it's more so we're really going to have to see the ROI in a meaningful
03:22way that we can go back to.
03:25And again, that gets back to productivity.
03:27So, and the risk really is, as we sort of pull all of these levers and they get more
03:30and more complex, it becomes a much more opaque environment, right, for investors to really
03:35operate in.
03:35And so the risk of those valuations maybe being artificially bolstered goes up.
03:41Just from your perspective, the narrative of circular deals, is that actually,
03:46in many ways, we often put it in a negative context, but that is exactly what NVIDIA should
03:51be doing, investing in its own clients to be able to foster the potential ROI that we
03:56might see in this lockstep jump?
03:59Yeah, I mean, absolutely, right?
04:00So if we see this truly meaningful transformation in the economy that's sort of promised with
04:06AI, then we're in a great spot, right?
04:08These circular investing schemes, that is excellent foresight by these companies.
04:13If we don't see that, right, that's the real risk of pretty significant market correction,
04:19right?
04:19Because that investing scheme, it is bolstering the overall revenue numbers that we're seeing.
04:24What, therefore, are some more of the headwinds?
04:25Other than waiting for ROI, we're also still tackling tariffs.
04:30We're still worried about South Korea's relationship with the United States, for example, in the
04:33here and now, let alone China.
04:34What could be the headwind that you're looking out for?
04:37You know, one headwind I'm particularly interested in tracking is actually jobs, right?
04:43So we're in a labor market overall when we talk about the macroeconomy that's quite soft.
04:47But when we speak specifically to AI, machine learning, sort of these high-powered tech jobs,
04:53we have a little bit of a bottleneck there.
04:55And so something really interesting that came out of the U.S.-Taiwan trade deal just a few
05:00weeks ago was this goal, right, of onshoring significant supply chain efforts from Taiwan
05:06to the U.S.
05:07In order to do that, we're also going to need significant changes in our workforce development.
05:12And there's a risk there, right, because we've had meaningful policy changes over the last
05:16year alone.
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