ExclusiveRAY DALIO: THE AI BUBBLE WILL BURST JUST LIKE DOT-COM

The global economic landscape is facing major inflection points as ISIS proposes a new tariff wave of at least 10% while targeting 60 trading partner nations, re-establishing a strict protectionist order. This rise in trade protectionism is occurring simultaneously with geopolitical risks in the Middle East, where the U.S. House of Representatives just voted by razor-thin margin of 215-208 to restrict military action against Iran immediately following maritime clashes that disrupted energy supply chains. In the face of complex macroeconomic fluctuations and upward pressure on treasury yields, central banks made a comeback by net-purchasing 17 tons of gold in April to fortify their strategic reserves. Meanwhile, global investment flows continue to shift heavily into semiconductor stocks, triggering serious warnings from academia and major investment funds about the risk of an artificial intelligence bubble bursting along the lines of the dot-com crisis in 2000. The U.S. officially proposed of at least 10% to 12.5% tracking 60 countries. The first noteworthy point in the international trade landscape is the highly aggressive move by the Office of the United States Trade Representative. The agency has just issued an official announcement proposing a new round of tariffs with a minimum tax rate of 10% levied on goods imported from 60 trading partners. This is seen as the largest-scale effort by the incumbent administration to rebuild a tariff empire, coming right after the U.S. Supreme Court handed down a ruling that invalidated previous broad-based tariffs. In terms of legal mechanisms, these new tariff measures are triggered of the Trade Act of 1974. The provision mandates investigations into whether trading partners are thoroughly blocking products manufactured using forced labor or slave labor. This tariff framework will be divided into two distinct groups of targets in order to optimize economic pressure. The first group includes long-standing strategic trading partners such as Canada, Mexico, the European United Kingdom. These countries and territories will face a baseline tariff rate of 10%. Meanwhile, the second group, comprising other major economies such as China's India, Japan, South Korea's Korea, Brazil, and Switzerland, will confront a higher tariff rate of 12.5%. It explained that this higher rate directly targets stations that have failed to enact or effectively enforce import bans on products linked to forced labor. This event needs to be viewed within the context of recent history. This past February, the protectionist trade agenda aimed at rebuilding the American industrial core championed by President Donald Back. The U.S. Supreme Court struck down the tariffs he imposed under the International Emergency Economic Powers Act, i.e. Pyongyang's statute does not authorize the president to impose sweeping tariffs without congressional approval. Pivoting to the use of Section 301 is precisely a tactical workaround by U.S. policymakers. Explaining the economic logic, the transmission mechanism of Section 301 reflects the goals of protecting domestic manufacturing and reshaping global supply chains. U.S. Trade Representative Jameson Greer that the failure of major trading partners to address forced labor goods is unacceptable, creating an unlevel playing field for American workers. The imposition of additional tariffs ranging from 10% to 12.5% will immediately drive up the marginal imported into the U.S., forcing businesses to recalculate their profit margins and lean toward shifting factories or supply sources out of the tariff-afflicted nations to protect their U.S. market share. This indirectly exacerbates cost-push inflationary pressures in the U.S. market share while negatively impacting the currencies of major exporting nations due to fears of shrinking trade surpluses. According to the implementation timeline, these newly proposed tariffs will enter a public comment phase in the coming weeks. The specific schedule has been set with the deadline for submitting written comments on July 6, and public hearings will officially commence on July 7 following preparatory discussions scheduled for June 22. From the perspective of international experts, these overrides widespread. Head of Trade Policy at the Henrik Foundation in Singapore noted to Bloomberg that trade partners will be heavily hit and will react sharply to this decision. She emphasized that the U.S. has opened a floodgate for a slew of new tariff and non-tariff adjustments. Given the legal nature of Section 301 tool, it is an extremely powerful tool to overturn, signaling a prolonged era of instability for the multilateral trading system. Central Banks Rebuying Gold in April Turning to developments in the financial markets and safe haven assets, the latest data from the World Gold Council shows that global central banks returned to a net buying trend in April. Total purchase volume reached 17 tons, marking a significant pivot following the dramatic sell-off in March. This development carries major significance for the structural sustainability of gold prices as central banks have historically been the core pillar anchoring the precious metals growth trend. To see the full picture, we need to place the April data against the backdrop of March. In March, the market witnessed a net selling volume of nearly 30 tons, the largest single-month sell-off in years predominantly driven by transactions from Turkey, which put short-term downward pressure on gold prices. Moving into April, the balance shifted as net buying ed heavily in Eastern Europe and Asia. Over the past 36 months, these two regions have continuously led the market, with cumulative average monthly purchases reaching 12 tons and 11 tons, respectively. The aggregate activity of all central banks worldwide over the same period hit an average net buying level of 29 tons per month. Looking at individual countries in April, the National Bank of leading position by purchasing 14 tons of gold. This move brings Poland's year-to-date total purchase volume to 45 tons, boosting its total gold reserves to 595 tons, which equates to roughly 30% of the nation's total reserve assets. In Asia, the People's Bank of China, PBOC, by net purchasing 8 tons of gold in April. This marks China's highest single-month purchase since December 2024, while extending its continuous net buying streak to 18 months. Currently, China's official gold reserves of its total strategic reserves equivalent to approximately 2,322 tons. Concurrently, the Czech National Bank maintained consistency with a modest but steady purchase, raising its total reserves to 79 tons, representing 6% of total reserves. Conversely, the Central Bank of Uzbekistan net sold 1 ton of gold in April. However, taking the year-to-date figures as a whole, the second-largest net after Poland with a cumulative accumulation of 24 tons. Currently, Uzbekistan's gold holdings account for a staggering 88% of its total national reserves, equivalent to around 414 tons. The Central Bank of Russia also continued its net selling streak for the fourth consecutive month with a sell-off volume of 6 tons in April, bringing its year-to-date total sales to 22 tons. As for Turkey, the heaviest seller of the previous month, its reserve carted a near flatline in April as short-term gold USD swap contracts expired, leaving only long-term contracts ranging from one to three months. This capital flow reallocation mechanism reflects a profound economic logic regarding structural risk management. Gold by Eastern European countries and China for 18 to 38 consecutive months is a defensive behavior aimed at diversifying assets and reducing reliance on the U.S. dollar amid escalating financial sanctions and geopolitical tensions. However, the gold market currently faces massive short-term headwinds. An analytical report from Goldman Sachs points out that while the recovery in April signals that central bank demand remains solid, this clip is only a fraction of last year's average pace. Notably, the primary catalyst past the propelled gold price remains conspicuous absent robust buying from ETFs. Currently, ETFs continue to net sell as speculative capital and following liquidity have entirely rotated into ticky-duck dirt and memory chip stocks. From the viewpoint of Goldman Sachs analysts, the market is currently focusing too heavily on short-term headwinds rather than long-term structural tailwinds as U.S. Treasury yields and the DXY index continue to maintain their upward momentum. Courtesy of the incredible resilience of the U.S. economy in the face of mounting crude oil price pressures, the positioning of gold investors will continue to be put to the test and remain under significant duress in the coming period. The U.S. House of Representatives voted by a slim to block military action against Iran. A non-financial macro factor that possesses a direct impact on energy political developments in Washington. On June 3, the U.S. House of Representatives passed a landmark resolution directing the removal of U.S. armed forces from hostile military actions against Iran. The vote tally registered a deep division, passing by a razor-thin margin of 215 votes, favored to 208 votes against. Regarding the specifics of the legislative event, four Republican lawmakers chose to break ranks to vote alongside Democrats in support of the measure. The resolution invoked the War Powers Resolution 1873 in search of explicit authorization from Congress if he wishes to sustain them. Under the provisions of the War Powers Resolution, the President is obligated to withdraw armed forces from conflicts not authorized by Congress within 60 days, with an additional 30-day extension permitted solely for safe withdrawal purposes. The reality on the ground in the Middle East explains why this resolution was brought forward with such urgency. Although Washington and Tehran declared a ceasefire on April 7, U.S. military forces have continued to enforce an armed blockade against Iranian seaports. This has led to multiple exchanges of fire and missile strikes. Most recently, on June 2, U.S. forces attacked an Iranian oil tanker, which immediately met with retaliation via Iranian missiles and drones targeting U.S. military positions in Kuwait and Bahrain. The crisis escalating since late February has pushed the systemic risk of the energy market to alarm levels. The transmission mechanism from these shocks to foreign markets is incredibly sensitive. Any armed conflict in the Strait of Hormuz or Iranian seaports directly threatens global crude oil supplies. When crude oil prices are driven higher by geopolitical risk premiums, it instantly translates into cost-push inflationary pressure for developed economies. High inflation forces the Federal Reserve to hold interest rates higher for longer and turns up 10-year U.S. Treasury yields and fuels the ascent of the dollar index, weighing heavily on non-yielding assets like gold and inflating the cost of capital for corporations worldwide. This political event also exposed deep fractures within the U.S. political establishment regarding legislative authority over war. House Speaker Mike Johnson, the resolution's passage was a strategic mistake, risking negative interference with President Trump's negotiating efforts to secure a last peace deal with Iran. He emphasized that the president is in the process of concluding an agreement and Congress needs to grant him flexibility, rendering this resolution highly unreasonable at this juncture. Conversely, Representative Rosa DeLauro, a Democrat, declared that Congress should have acted sooner to rein in U.S. military forces and expressed hope that more Republicans would recognize the core of the issues. This marks the law militia's second attempt in recent weeks, following a similar vote of 2-12-2-12, and the Republican leadership had also previously postponed a scheduled vote on May 21. Currently, the bill will move to the Senate, where its passage remains far from guaranteed, and it will almost certainly face a presidential veto from President Trump if approved. Ray Dalio warns of an artificial intelligence. The Fox segment focuses on the internal structure of the capital market, where a profound divergence is playing out between technological expectations and cash flow realities. The founder of Bridgewater Associates billionaire investor Ray Dalio recently appeared on Bloomberg TV and delivered a highly cautionary assessment regarding the investment frenzy surrounding artificial intelligence AI. He laid bare the textbook characteristics of a classic asset bubble in the making, sky-high valuations rampant speculation, and most critically the phenomenon of paper wealth vastly outstripping the actual cash flows generated from business operations. Looking back at history for comparison, Ray Dalio drew a parallel connecting the current environment directly to the bursting of the dot-com tech bubble in 2000. He emphasized that every monumental technological shift in human history has spawned an asset bubble because no one can predict the ultimate market size with absolute precision. In a tech war, corporations are forced to choose between two strategies, either deploy a massive amount of capital to capture market share without caring whether that capital is excessive, or tighten their belts only to lose market share entirely to rivals. It is precisely this existential competitive pressure that drives capital expenditures and corporate valuations to unimaginable heights. The operational mechanism of a bubble bursting was explained succinctly by Ray Dalio through the law of liquidity conversion. The trigger for a bubble's implosion is essentially the process of converting paper wealth into hard cash. When the market hits a threshold limit, institutional investors begin to experience a need for profits to service other financial obligations, forcing them to liquidate assets to harvest cash. When the volume of sell orders overwhelms the market's absorption capacity, the bubble bursts. The current AI-driven market is moving down precisely this hazardous trajectory, notwithstanding the fact that AI is a magnificent technology. Nonetheless, a nuanced perspective must be established. AI technology will endure, but many participating enterprises will vanish. The laws of macroeconomics will weed out weak business operations as fierce competition draws a sharp line between winners and losers, a process completely independent of the technology's long-term impact. The foundational innovations of AI will continue to profoundly reshape global economic and social structures, much like the internet did after the dot-com bubble deflated more than two decades ago. In stark contrast to Ray Dalio's cautious stance, NVIDIA's chief executive for Jensen Huang recently declared highly superior rates of return for inventors. The manufacturing stock group is currently the hottest-burning sector on Wall Street, propelled by insatiable demand for high-bandwidth memory chips used in AI data centers, directly pulling U.S. equity indices to all-time record highs. This contradiction between short-term speculative capital-driving stoic multiples on one side and macroeconomic warnings regarding actual cash flows from AI deployment on the other stands as the single largest structural risk confronting fund managers heading into the second half of this year. Costs remains a complex puzzle for medium-term economic growth prospects. You've been watching Unseen Ledger, where we turn data into insight and insight into advantage. Tell us in the comments what stories or topics you'd like us to explore next. Your perspective helps shape our next episode. 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