Geopolitics, AI-Driven Energy Demand, and Asset Allocation Outlook
Weekly Market Commentary (07/01/2026)
Key Market Observations:
Venezuela Events and Geopolitics: The situation in Venezuela has sparked widespread concern about new China-US economic confrontation trends and energy security. Tensions in the region have escalated with the departure of a Chinese envoy and a display of U.S. power. Despite geopolitical tensions, the Venezuela situation has not yet had a negative impact on capital markets; conversely, the potential control over oil resources is viewed as beneficial for the U.S. economy.
Energy Demand and AI: The rapid development of Artificial Intelligence (AI) has led to a surge in electricity demand, subsequently increasing the need for related raw materials and energy.
U.S. Position: From the U.S. perspective, securing cheaper and more stable oil sources is a key economic interest.
Market Outlook:
We remain cautious as the current equity and fixed-income markets present a complex risk-reward profile. While the S&P 500 maintains its upside potential, the unusual positive correlation between stocks and bonds serves as a critical warning signal for a potential market crisis. This instability is driven by a tug-of-war in the bond market: concerns over the Federal Reserve’s independence and "irresponsible" monetary policy are putting downward pressure on bond prices, while synchronized easing across the U.S., Europe, and China provides a counter-narrative for lower rates. This standoff has left bond investors increasingly cautious.
The outlook for commodities and alternative assets remains bullish but specialized, driven by inflationary pressure and shifting global alliances. Beyond the steady growth of gold, geopolitical tensions and new China-US economic confrontation dynamics are expected to drive significant price increases in strategic materials like tungsten, chromium, and silver, which are vital for both defense and AI-driven energy infrastructure. Meanwhile, Bitcoin remains a high-uncertainty asset; while it offers diversification benefits, it should be approached with caution, with exposure strictly limited to a controlled percentage of the overall portfolio.
Disclosure: This material is for informational purposes only and does not constitute investment advice, a recommendation, or an offer to purchase or sell any securities. This commentary is only a synthesis which does not provide the full picture. Reliance on the information provided herein is at the sole discretion of the reader.
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This material has not been reviewed or approved by any Canadian securities regulator.