Oct 29, 2026 · 55 min
Hormuz pressure tests Treasury markets and the AI boom
MacroVoices #556 Luke Gromen: US Midterms & Beyond
The episode connects geopolitical disruption, election uncertainty, fiscal strain, and AI investment risk through one question: who will absorb mounting government and private debt?
- 1Luke Gromen argues that Treasury-market stress could ultimately force the Federal Reserve to create money to purchase government debt.
- 2The AI investment boom may face a credit-driven reversal as labor displacement weakens consumers and infrastructure spending strains cash flow.
- 3Market Desk analysis finds a firm dollar, weak euro, bullish oil, fragile gold and copper, and continued pressure on uranium equities.
Don't miss
Luke Gromen argues that Iran’s objective need not be military victory; enough pressure to challenge the bond market could expose Western financial weaknesses.
The brief
Luke Gromen argues that the Strait of Hormuz disruption matters less as a simple oil shock than as a test of Western policy assumptions and Treasury-market resilience.
The central macro question is whether fiscal pressure, inflation, and weak demand for government debt eventually force the Federal Reserve to monetize Treasuries.
The hosts debate whether election uncertainty or a credit-driven AI investment bust poses the larger threat, with labor displacement adding pressure to consumer credit.
Patrick Ceresna’s Market Desk finds mixed signals across assets: a firm dollar and bullish oil contrast with weakness in the euro, gold, copper, uranium equities, and corn.
The episode’s standout argument is that Iran need not defeat the United States militarily; sustained pressure on markets could expose vulnerabilities in Western finance and policy.
What was said on this episode
43 statements · 10 positive · 28 negative · 5 neutral
The Federal Reserve will print money to purchase Treasury securities.
“The Fed's going to have to print money and buy treasuries”
Listen at 0:01
The Hormuz conflict’s economic effects are taking longer to spread than expected.
“What we got wrong was how quickly it would take to ripple through.”
Listen at 2:07
Fertilizer shortages will reduce crop yields next year and later raise global food inflation.
“the first stage of a real problem... that will show up in food inflation around the world, it's not going to show up this year. It's going to show up in theory in lower yields next year”
Listen at 3:09
Reduced fertilizer demand will ultimately raise row-crop prices.
“ultimately very, very bullish for prices, for crop prices, row crop prices”
Listen at 3:49
Iran can prevail by outlasting the bond market rather than defeating the United States militarily.
“Iran has more leverage than the Western narrative suggests because Iran doesn't have to beat the U.S. It just has to beat the bond market.”
Listen at 8:02
Sustained Iranian attacks could exhaust U.S. air-defense missiles.
“The Americans are going to run out of air defense missiles on X date.”
Listen at 9:51
The Iran conflict will continue for an extended period.
“I think it's going to continue dragging on because I think the Iranians are happy to have it drag on.”
Listen at 12:50
The Federal Reserve should not raise interest rates under current conditions.
“I think raising rates all else equal is the wrong thing.”
Listen at 13:49
Fiscal consolidation would sharply reduce stocks and commodities while benefiting bonds.
“stocks are going to tank, commodities are going to tank, and you're going to want to own bonds.”
Listen at 17:32
U.S. consumer debt outstanding totals approximately $19 trillion.
“there is $19 trillion in consumer debt outstanding”
Listen at 20:17
AI will displace many white-collar jobs.
“if you assume that AI is going to really displace a lot of white collar jobs”
Listen at 20:38
AI-related layoffs will make comparable reemployment difficult for displaced workers.
“all of these people getting laid off, they're not going to find another job. Not easily and probably not at the same wage”
Listen at 21:49
AI-related unemployment could cause 5% of consumer loans to default within three years.
“let's pretend 5% of those default as a result of AI, just sometime in the next two years, three years”
Listen at 22:10
A 5% consumer-debt default increase would equal 40% of U.S. banks’ equity base.
“every 5% default rate increase on consumer debt as a result of AI unemployment or deflation in wages is equal to 40%, 4-0% of the total equity base of the United States banking system.”
Listen at 22:29
Microsoft’s workforce reduction materially strengthens the case for AI-driven job losses.
“this Microsoft news, I think, was like, we're going to need a bigger boat moment for the employment argument around AI.”
Listen at 23:52
Luke Gromen holds 30% of his liquid net worth in cash and Treasury bills.
“I'm sitting in 30 percent of my liquid net worth and cash and T-bills”
Listen at 25:16
AI has become strategically too important to be allowed to fail.
“AI is now too big to fail.”
Listen at 27:55
A collapse in AI credit financing would cause major losses and a recession.
“if the credit mania bursts, then, yeah, there's going to be massive losses. You're going to have a recession”
Listen at 28:11
An AI-driven recession could add approximately $2 trillion to the deficit.
“You very easily could add another $2 trillion deficit.”
Listen at 29:32
A severe Treasury supply shock would force the Federal Reserve to monetize debt.
“There's only one buyer. It's the Fed. The Fed's going to have to print money and buy treasuries.”
Listen at 31:56
A severe Treasury-supply crisis will force the Fed to monetize debt.
“The Fed's going to have to print money and buy treasuries.”
Listen at 31:58
AI could eliminate jobs in large workforce reductions, including Microsoft’s 27% figure.
“you're going to start whacking people's jobs. In 5 and 10 and in Microsoft's point, 27% chunks.”
Listen at 37:29
Preventing an AI collapse could produce five years of U.S. social unrest.
“here's the next five years of social unrest in the United States.”
Listen at 38:27
AI-related political conflict will begin intensifying in 2027.
“I think it's going to start getting litigated in 2027.”
Listen at 39:03
AI-driven job losses will trigger Molotov-cocktail unrest in U.S. cities.
“I think it's going to get litigated with model top cocktails in city centers around the United States”
Listen at 39:07
AI-driven job disruption will accelerate political instability in the United States and West from 2027.
“It'll start to get litigated in 2027 in accelerating political instability in the West and in the United States as AI does all of this.”
Listen at 39:56
AI-driven worker displacement would weaken consumer borrowers’ ability to service debt.
“If AI displaces workers and reduces their earning power, then the outstanding debts still need to be serviced.”
Listen at 41:11
Ceresna recommends a January 2027 Capital One $200/$175 bear put spread.
“With Capital One, symbol COF, trading around $204.88, I'm looking at the January 15, 2027, 200 by 175 bear put spread”
Listen at 41:50
Patrick Ceresna recommends a January 2027 Capital One bear put spread.
“I'm looking at the January 15, 2027, 200 by 175 bear put spread”
Listen at 41:56
The U.S. dollar’s prevailing bullish trend remains intact.
“the prevailing bull trend in the dollar remains intact”
Listen at 46:44
“if this 111 level gives out, the euro may be starting another leg down.”
Listen at 47:03
Oil’s uptrend likely anticipates post-midterm geopolitical re-escalation.
“oil is trending higher and very likely anticipating a re-escalation of the situation in the post-midterm period.”
Listen at 47:57
Crude oil remains in a decisive bullish trend.
“crude oil remains in a decisive bull trend”
Listen at 48:07
WTI could rise back toward its previous $120 highs.
“a technical upside is back to the $120 previous highs on WTI”
Listen at 48:19
Gold remains vulnerable to a technical breakdown.
“gold remains at a risk of a breakdown”
Listen at 49:08
Gold risks a technical breakdown and an additional 5–10% decline.
“gold remains at a risk of a breakdown because a key technical breakdown like this would leave room for even a 5% to 10% further drawdown.”
Listen at 49:08
Patrick Ceresna remains bullish on gold over the long term.
“Overall, I remain very bullish gold long term”
Listen at 49:17
Gold is undergoing a macro-driven distribution cycle.
“there is clearly a distribution cycle underway driven by macro catalysts”
Listen at 49:22
Copper below 650 could force liquidation of crowded bullish positions.
“any breakdown below 650 could squeeze out the very crowded trade.”
Listen at 50:26
Investors should remain neutral on copper until meaningful accumulation appears.
“I would remain relatively neutral copper until we see some sort of technical price action showing some meaningful accumulation.”
Listen at 50:32
Continued uranium-equity weakness could create a major buying opportunity.
“whether that ends up being a critical buying opportunity”
Listen at 51:14
Uranium equities may eventually present a significant buying opportunity.
“whether that ends up being a critical buying opportunity.”
Listen at 51:14
The Magnificent Seven remain central to the direction of major equity indexes.
“the MAG7 remain the focal point”
Listen at 52:21
Statements are attributed to the speaker as said on the episode and reflect their view at the time, not PodLume's. They are not advice.
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