The market is at the start of the next commodity supercycle, Carlyle’s Jeff Currie said
The market is at the beginning of the next commodity supercycle, according to energy strategist and investor Jeff Currie of the Carlyle Group.
In a series posted on X Friday morning, Currie laid out a different argument for why the market is ready for the start of next year’s commodity rally cycle that he called “the most unprecedented trade in modern financial history.”
First, commercialization of artificial intelligence is facing major challenges, as the four “Magnificent Seven” companies – Alphabet ( GOOG , GOOG ), Meta ( META ), Microsoft ( MSFT ), and Amazon ( AMZN ) – are expected to spend more than $700 billion in capital expenditures in 2026 alone.
One of those constraints is material. The Iran conflict caused the largest energy supply shock in history as the oil market lost more than 13.7 million barrels per day, according to Goldman Sachs. Traders argue that even after the conflict has been resolved, the playing field in the Persian Gulf – one of the world’s most important markets for everything from energy and metals to fertilizers – has changed.
At the same time, the metal complex has run ahead, with demand for copper (HG=F), aluminum (ALI=F), and other metals booming, even as the world’s top 20 miners are using 40% less than they were at the peak of the last supercycle in 2012, Currie said.
One of those constraints is computer capacity. As leading AI labs, such as Anthropic (ANTH.PVT), OpenAI (OPAI.PVT), and Google’s DeepMind, have pushed the boundaries of their frontier models, computing has emerged as a significant barrier.
Demand has reached such a high level that the Chicago Mercantile Exchange is now working to create a futures market for computing, marked by rental prices for graphics processing units (GPUs). Shares in Cerebras ( CBRS ), the chip designer that is looking to rival Nvidia ( NVDA ), opened at a 90% premium to their IPO price when the company went public on Thursday.
All of that computing power depends on the physical infrastructure of semiconductor materials and manufacturing, from power to metals.
“The opportunity exists because capital has chased commercialization of AI while ignoring the physical assets that AI needs to work — assets that have been the best-performing asset class of the decade,” Currie wrote.
Second, as physical resources become tighter, the market is becoming increasingly vulnerable to global recession, Currie argued, moving to the opposite side of the last commodity supercycle that began in the early 2000s with the emergence of China as a world economic power and the increasing connectivity of international markets.
In the context of globalization, Currie argued, supply chains tighten and competition for scarce resources increases, which moves the market from the “HAGO” model – referring to “heavy goods, global operations” – to the “HALO” model, which Currie describes as “heavy goods, local jobs,” instead of the usual meaning of the word “heavy goods low.”
“The big cycle of the 2000s was HAGO – Heavy Goods, Globalization. China mergers, Russia piping, dollar recycling, everything moving across borders without conflict,” Currie wrote. “That kingdom is dead.”
His closing argument: “Be tall. Tie up. Wait a little longer to ride.”
Jake Conley is a news reporter covering US equities for Yahoo Finance. Follow him on X at @byjakeconley or email him at jake.conley@yahooinc.com.
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