Global Strategy Weekly

This report argues that markets are distracted by the AI bubble, ignoring a brewing Japanese financial crisis characterized by surging bond yields and currency instability. It further highlights BIS warnings that AI investments risk a bust similar to previous technological cycles.

Key Takeaways

• 1.The Bank for International Settlements (BIS) warns that current AI capital expenditure boom resembles past technological bubbles and could lead to a 'protracted investment bust'.
• 2.Japanese government bond yields are surging to 30-year highs, signaling a potential loss of market confidence in the Bank of Japan's monetary policy.

Table of Contents

• Boom-bust cycles are a regular feature of past major innovations
• AI firms' investments are increasingly financed by debt
• Circular AI financing is widespread

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