Charu Chan 3.0 3 ideas

The speaker stated that AI is power-hungry and geopolitical tensions are tightening energy supply, meaning significant investment will continue to flow into energy. Meeting AI's growing power demand requires expanded energy infrastructure and supply, which is further strained by geopolitical disruptions in critical regions like the Strait of Hormuz. This creates a long-term structural investment tailwind for companies involved in energy mineral exploration, production, and related infrastructure. A rapid de-escalation in the Middle East and a swift normalization of energy trade, or a slowdown in AI capital expenditure.

Chan argues that AI adoption is structurally disinflationary (lowering costs in software, legal, financials). If inflation falls faster than expected due to AI productivity, the Fed can cut rates more aggressively (Chan expects cuts in mid-year and Sept). Lower US rates reduce the cost of hedging against the dollar, leading to USD weakness. SHORT USD; LONG AUD (as a beneficiary of commodity demand and weaker USD). Tariffs proving inflationary, forcing the Fed to keep rates higher for longer.

The fiscal risk premium in Japan is being "repriced" and reversed. Chan targets 148 on the pair. As the fiscal situation stabilizes and the risk premium unwinds, the Yen strengthens. Additionally, if US rates fall (see USD thesis), the yield differential compression favors the Yen. LONG JPY. Bank of Japan refusing to hike rates or intervening ineffectively.