SI423: Why Trend Following Might Outlast the AI Arms Race ft. Mark Rzepczynski

Niels Kaastrup-Larsen and Mark Rzepczynski explore why the changing structure of global markets may be creating a very different environment for trend followers. They discuss why today’s bond selloff may represent a return to normal rather than an anomaly, how declining safe-haven benefits could reshape government debt, and why geopolitical fragmentation may increase divergence across markets. Mark also examines commodity shortages and the conditions that can produce explosive price moves. Finally, they turn to AI and machine learning, asking whether increasingly similar quantitative models are shortening the life of alpha and why trend following may prove unusually durable in an increasingly crowded investment landscape.

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Episode TimeStamps:

00:00 - Why trend following may be different in the age of machine learning

02:09 - France, rising yields and changing perceptions of safe assets

07:27 - Trend following performance and a changing bond market

16:29 - Why the structure and participants of markets matter

20:26 - Liquidity, capital flows and the plumbing behind financial crises

27:58 - Globalization, capital flows and the role of the dollar

35:33 - Crises, market upheavals and commodity supercycles

37:32 - Why today’s higher bond yields may actually be normal

45:31 - Are Treasuries losing some of their safe-haven advantage?

52:26 - Geoeconomic fragmentation and what it means for tr