Why This Short Seller Doesn’t Want to Short the AI Bubble | Russell Clark

Persistent fiscal deficits, rising wages, and geopolitical tensions are fueling a structurally inflationary environment that challenges traditional investment strategies. Russell Clark, founder of Brumby Capital, argues that the current political landscape, characterized by increased government spending and pro-labor policies, makes inflation a systemic rather than cyclical issue. While the AI sector’s massive capital requirements invite short-selling scrutiny, the existential necessity of compute capacity and continued equity market support make it a precarious trade. As the era of global peace and fiscal discipline fades, capital is becoming increasingly scarce, pressuring sectors like homebuilders and alternative asset managers. Conversely, Japanese banks present a compelling opportunity, as they leverage large deposit franchises to benefit from rising interest rates. Ultimately, investors must navigate a world where government-driven industrial policy and intense competition for capital redefine market winners and losers.