MacroVoices #499 Has The Luke Gromen Moment Arrived?
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MacroVoices Erik Townsend & Patrick Ceresna welcome, Luke Gromen. They’ll discuss gold to bitcoin to stocks. And of course no Luke Gromen interview would be complete without an update on Luke’s outlook for the U.S. Dollar. https://bit.ly/4nn8U9t
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00:03:49 Feature Interview With Luke Gromen 01:00:19 Trade of The Week
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Luke Groman argues the US is transitioning from a gradual to a sudden phase of dollar decline driven by loss of geopolitical leverage, military-industrial base hollowing, and unsustainable debt, forcing policymakers into financial repression and secular inflation as the only viable policy path.
- US cannot sustain conventional war with China/Russia due to rare earth and manufacturing dependencies created by 40-year offshoring for dollar hegemony
- Treasury market dysfunction during trade war attempts demonstrates policy options are constrained and inflation/yield curve control is the only viable exit
- Shanghai Cooperation Organization summit and military demonstrations represent the geopolitical tipping point where denial shifts to recognition among investors and policymakers
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Key parts of the US military, particularly around rare earths and critical components, are manufactured in China, and China has stopped supplying these materials to the US military, creating a situation where the US cannot conduct conventional war without Chinese supply cooperation.
“the biggest export market for Chinese exporters relative to the US is is actually is is actually consumer electronics...ultimately you know key parts of the US military are made in China and in particular around rare earths and the the information was all out there but again I don't know if it was confusion or busyness or hubris or or what but US policy makers seem to think we have all the leverage we literally can't go to war without China on the conventional side”
The US ran down 15% of its TAD air defense missiles in only 11 days of medium-intensity combat defending Israel; combined with Israel's rapid depletion of air defenses, this demonstrates the US cannot sustain conventional war due to offshored manufacturing and inability to produce at scale.
“if you go to 3 months before that, the U it was reported that the US ran down 15% of its of its TAD THA air defense missiles in just 11 days of medium inensity combat defending Israel. Israel ran out of their air defense missiles even faster. And it was a supply chain issue. We simply can't make them fast enough because we've offshored too much of our industrial base to China.”
The US military warned in 2011 that America's hegemonic window was closing and would cease to exist by 2021, recommending the Pentagon shrink its budget by at least 20% to restore economic vitality, but political action never occurred, leaving the US now 4-5 years past the decision point.
“In Edward Loose's 2012 book, Time to Start Thinking, quote, senior US military leadership 2011 said this quote, 'The window in America's hegemony is closing. We are at a point right now where we still have choices. By 2021, we will no longer have choices.'...the US military's been warning about this for 14 years. Of course, they said we're going to be out of time in 2021. And the problem, of course, is that 2021 is almost 5 years in the rearview mirror now.”
NATO supplied Ukraine with intelligence, surveillance, reconnaissance, weapons, tactics and strategy over three years yet Russia won with Chinese support; this proves the US/NATO can be out-produced by Russia despite NATO industrial capacity, demonstrating the fundamental shift in production capability.
“over the past 3 years, NATO supplied intel, surveillance, reconnaissance, weapons, tactics, strategies to Ukraine versus Russia and Ukrainians were very good and Russia won with China's support. And so when we saw, you know, partly of that was due to the nature of war changing to to drones and missiles, partly because NATO got out produced by Russia because we again we had to get out of the industrial production business to support the dollar system over the last 40 years.”
Foreign central banks stopped buying US treasuries on net in Q3 2014, which broke the post-crisis policy paradigm and forced policymakers into a trilemma: either raise rates (failed), force domestic investors into treasuries (achieved), or grow the Fed balance sheet (pursued), with the last option being the only sustainable path given fiscal constraints.
“because foreign central banks stopped buying treasuries back in 3Q14 on net, either the Fed's going to have to raise rates, they tried to, it didn't work because the fiscal situation broke before emerging markets. They're going to have to force US domestic investors to buy treasuries. They did. or the Fed's going to have to grow their balance sheet.”
Chinese rare earth elements and factory production are critical to US military systems, and China has stopped supplying these materials to the US, meaning the US military cannot operate at scale without Chinese cooperation, which removes any leveraged negotiating position the US might have on trade or currency issues.
“The Chinese have just stopped sending the stuff as it relates to the US military.”
Historically in fourth turnings and civil wars, political parties transform into warring factions who eventually engage in literal armed conflict against their own countrymen because the ideological divide became so extreme that violent conflict felt like the only remaining option.
“What usually happens next is that political parties are transformed into waring factions who eventually go to literal armed conflict against their own countrymen because the political or ideological divide became so extreme that they felt violent conflict was the only remaining option.”
Senior US military leadership warned in 2011 that 'the window in America's hegemony is closing' and 'by 2021 we will no longer have choices,' and recommended the Pentagon shrink its budget by at least 20% and reduce global military footprint to restore American economic vitality and prosperity, but this warning was ignored.
“senior US military leadership 2011 said this quote, 'The window in America's hegemony is closing. We are at a point right now where we still have choices. By 2021, we will no longer have choices. The US is way too dependent on its military. Should sharply reduce its global footprint by winding up all wars, notably in Afghanistan, and by closing peace time military bases in Germany, South Korea, the UK, and elsewhere.'”
The US dollar's fall from reserve currency status has been a gradually-then-suddenly phenomenon, and we are now entering the suddenly phase, evidenced by the Shanghai Cooperation Organization meeting being the most significant geopolitical week since the fall of the Berlin Wall in 1989.
“I've always thought of the Luke Groman moment was sort of a gradually then suddenly phenomenon...And so with as by way of background as that context is the loop groman moment I think are we I think it's really about are we going from gradually to suddenly and and to your point I think we are I think the suddenly portion is beginning...we wrote two weeks ago we thought the fall of the or the excuse me we thought the week the the week of the SEO the Shanghai Cooperation Organization meeting was might have been the most important geopolitical week since the fall of the billing wall in 1989.”
The US has been offshoring manufacturing for 45 years specifically to support the dollar system and the bond market, not for general economic efficiency; now the cost of that strategy is becoming visible in military and production incapacity.
“we've been offshoring it to support the dollar system for 45 years and they've outproduced us...we've been offshoring it to support the dollar system over the last 40 years...the short-term focused corporate profit maximizing stuff that you did to break unions uh and support the bond market for 40 years under the guise of neoliberal economics”
Emmanuel Todd predicted the fall of the Soviet Union in 1976 based on rising infant mortality and declining female fertility rates; predicted the end of American unipolarity in 2002 via 'After the Empire'; and in January 2024 published 'The Defeat of the West' using identical metrics, showing the West is now defeated industrially and economically.
“Emanuel Todd is a french anthropologist who is famous for having written three different geopolitical essays uh over the past 50 years...The first geopolitical essay he wrote was called the final fall. He published it in 1976 and he predicted the collapse of communism...Soviet Union collapses 1989...published in 2002...said that the United States would not enjoy an indefinite unipolar era...in January of 2024 what he thinks will be his last geopolitical essay...titled the defeat of the west”
Emanuel Todd, a French anthropologist, predicted the collapse of the Soviet Union in 1976 based on declining female fertility and rising infant mortality (which occurred in 1989), predicted the end of US unipolarity in 2002 (which is now obvious), and in January 2024 published his last geopolitical essay titled 'The Defeat of the West' arguing the US has been defeated industrially and economically using the same demographic metrics that predicted Soviet collapse.
“Emanuel Todd is a f French anthropologist who is famous for having written three different geopolitical essays uh over the past 50 years. So he spends most of his time studying anthropology, the human of uh the study of human family systems and organizations. The first geopolitical essay he wrote was called the final fall. He published it in 1976 and he predicted the collapse of communism based on the anthropological concepts of declining Russian female fertility rates and rising Russian infant mortality”
The U.S. consumer is bifurcating: the bottom 50% are really suffering while the top 10% are thriving ('party on Wayne, party on Garth'); this divergence in economic conditions is contributing to political polarization and violence.
“We're seeing the US economy on the consumer side actually slow which is really weird because and it's really bifrocating right the bottom 50% are really suffering and the top 10% are you know it's you know party on Wayne party on Gar”
There is no policy pathway to reshore US industrial production and manufacturing because the bond market constraint is binding: attempting to bring manufacturing home requires inflation that would trigger a debt death spiral given high debt levels, making yield curve control the only solution.
“we can't just run industrial policy to start producing a bunch of this stuff for multiple reasons we don't have the skilled trades And from the bond market perspective, you know, we could get the skilled trades if we're willing to let inflation really, really rip. But if inflation really, really rips because our debt is already so high from the things we've done, you end up in a position where the debt will create more of a problem than it solves. So basically what the report lays out is that there is no way this works unless we get into some form of yield curve control.”
Balaji Srinivasan has argued that China disintermediated red America via manufacturing and military, the internet and Bitcoin have disintermediated blue America, and the US as a nation is pulling back having lost its own game of global capitalist competition to the global south.
“our friend Bellagiasan came at this exact same issue from a completely different angle in conversation with our friend Peter McCormack a couple of months ago in July. Balagi came at it from a technologist, but he came to the same conclusion, which is essentially we're past the the point of no no return. China has disintermediated red America. The internet and Bitcoin have disintermediated blue America, right? They control media and they control the money”
The US is experiencing a bifurcated consumer situation where the bottom 50% are suffering economically while the top 10% are thriving, creating social pressure and vulnerability to political convulsion that could trigger the sudden phase of financial collapse.
“the US economy on the consumer side actually slow which is really weird because and it's really bifrocating right the bottom 50% are really suffering and the top 10% are you know it's you know party on Wayne party on Gar and that then reverberates into the geopolitical side right you're starting to see people writing articles like what is going on in America after the last two three weeks”
Foreign investors hold $62 trillion gross and $27 trillion net in US dollar assets; if even a small percentage flee due to political convulsion or geopolitical concerns, it triggers simultaneous crashes in stocks, bonds, and the dollar with no policy solution available (raising or cutting rates both fail).
“foreigners have 62 trillion gross and 27 trillion net in dollar assets. They are so long dollar assets. We saw post liberation day. What happens when just a little bit of money leaves the United States? Stocks down big, 10-year Treasury yields up big, bonds down big, dollar down big.”
China has not purchased any new crop soybeans or corn from the US this year despite repeated claims from China hawks that cutting off food to China will force capitulation; instead China sources from Brazil and elsewhere, proving US has no food leverage.
“the Chinese have not bought a single new crop soybean entered a single new crop corn from the United States this year. The Chinese aren't starving. Why? They're getting it all from Brazil. They're getting it from elsewhere. So, they don't need us on food either.”
Gold is now bigger than the Euro in global foreign exchange reserves, and if China and other central banks continue buying 800,000-1,000,000 tons annually for another 2-3 years at modest gold price appreciation, gold will become the largest global reserve asset, making the dollar/gold comparison a matter of semantics.
“gold is now bigger than the euro in global FX reserves and it after another two or three years if we assume another two or three years of call it 800 to a,000 tons of central bank gold buying we assume modest gold price appreciation for the next 2 three years gold is going to be the biggest global reserve asset and then that just gets into a question of semantics. If gold is the biggest reserve asset, it's bigger than the dollar, who what's the primary reserve asset, the dollar or gold?”
Emmanuel Todd stated in April 2025 that we are 'past a turning point, moving from defeat to dislocation' and admitted he cannot foresee the extent of dislocation and suffering that will result, paralleling his experience with Soviet collapse where the suffering exceeded predictions.
“In April of 2025, he gave a public speech uh discussing the defeat of the West in which he said, 'We're past a turning point. We're moving from defeat to dislocation.' And what makes me cautious is my past experience of the moment of the collapse of the Soviet system. I predicted this collapse, but I must admit that when the Soviet system actually collapsed, I was not able to foresee the extent of the dislocation and the level of suffering that this dislocation would bring to Russia.”
A Chinese PLA general warned in 2015 in a speech to CCP senior leadership about the same structural weaknesses and vulnerabilities now being observed; most Western investors either never saw it or dismissed it at the time.
“we highlighted a Chinese People's Liberation Army general who gave a speech in 2015 to the CCP senior leadership. He warned of some of the very same things. Most Western investors either never even saw it or or those that did kind of laughed at it. You know, they're not laughing anymore.”
The US Treasury market dysfunction and volatility spike to 175 (comparable only to Lehman, 9/11, 1987 crash) occurred on April 9th immediately after Treasury Secretary Bessent claimed on April 7th that the US has all the leverage with China and they will do what we tell them to do.
“on April 7th, Bessant, who on Wall Street, I think, is was seen by sort of the the adult in the room, if you will, within the Trump administration, right? He's our guy. He's the adult in the room. And the adult in the room, Bessant, said on April 7th, Tucker Carlson, as the debtor, as the trade debtor, we have all the leverage with China. They're going to do what we tell them to do. And on April 9th, the US Treasury market dysfunctioned severely, very badly. The move volatility index hit 175 or something intraday, which it had only done like when Lehman, 9/11, the 87 crash”
From 1940-1980, 'what was good for GM was good for America' (industrial manufacturing base); from 1980-2020, 'what was good for Goldman Sachs' was good for America (financialization); now we're entering a phase where what's good for the defense industrial base and working/middle class is good for America.
“which America from 1940 to 1980, what was good for GM was good for America. And from 1980 to 2020, what was good for Goldman Sachs and what's good for the Treasury market is good for America. And now what's good for the defense industrial base, the working class, the middle class is I think we're I think we're like two years into that is 40-year stretch of that what's being good for America.”
Inflation will run much hotter than consensus expects and may be reported as 'slightly elevated' despite reality, because the release valve for geopolitical tension is monetary inflation if it cannot be met with military or political resolution.
“I think inflation is going to run so much hotter than consensus thinks. I think it's entirely possible that it's reported as sort of slightly elevated and frighteningly the release valve if they do that will be more domestic political tensions.”
The US will run the economy extremely hot with inflation to reduce debt-to-GDP ratio (from 118% back to ~100%) through combination of 8%+ CPI, Fed QE with near-zero rates, and 50-70% stock market gains, which gooses consumer spending and tax returns, reducing the deficit rapidly.
“Simple. 8% CPI, Fed QE with rates at zero into rapidly rising home prices. 50 to 70% year-over-year gains in the S&P, which goosees consumer spending. It gooses tax returns. So, all they're going to have to do is run inflation hotter for longer, and the deficit will quickly fall to something sustainable.”
The discussion around Fed independence and whether they should cut or raise rates is 'noise' because policymakers have no real choices—they must anesthetize the bond market to allow reshoring, and the Fed is merely executing what policy demands given supply chain constraints.
“I think the whole discussion around Fed independence and Stephen Meyer I think is totally off base with like most US investors are playing by the old rules...They don't understand like is is inflation too high? Should they? It doesn't matter. The choice is bring the stuff back and blow up the bond market on a real basis or don't and lose.”
The Luke Groman moment is a gradually-then-suddenly phenomenon, not a single moment in time, characterized by a multi-year process of asset repricing (gold-to-oil ratio up 3x, TLT down 35%, S&P over TLT up 4x over 8 years) that precedes a rapid phase transition in market recognition and policy response.
“I've always thought of I guess the quote unquote Luke Growman moment was sort of a a gradually then suddenly phenomenon, right? Like how'd you go bankrupt little by little than all at once?”
In the post-2000 era, geopolitics has operated under the rule 'don't mess with the US-led global order or the American military will show up and kick your head in,' but this rule no longer applies because US military critical components are now made in China.
“geopolitics since the year 2000 has been like, don't do anything to mess with the rules-based global order cuz the American military will show up and kick your head in. That's geopolitics since the year 2000 in in in 10 seconds. Whoa. US military critical components are now made in China. So that too there's still denial”
Russia is not a 'gas station with nukes' as establishment consensus claimed; Russia's industrial base is in better shape than the US because the US offshored manufacturing to support the dollar system for 45 years while Russia preserved industrial capacity.
“Russia was you know the ruble was rubble Russia was a gas station with nukes blah blah blah blah blah...Either our military couldn't beat a bunch of guys who had washing machine ships in their weapons systems, which would be very disturbing, or more likely, and the truth, Russia's industrial base is in better shape than ours because we've been offshoring it to support the dollar system for 45 years and they've outproduced us.”
Foreign investors hold $62 trillion in gross dollar assets and $27 trillion in net dollar assets; post-liberation day demonstrated that even a small withdrawal of capital triggers massive dislocation (stocks down, yields up, bonds down, dollar down), so a genuine political convulsion causing capital flight would force the Fed into a policy bind where all options (raise rates, cut rates) destroy financial stability.
“foreigners have 62 trillion gross and 27 trillion net in dollar assets. They are so long dollar assets. We saw post liberation day. What happens when just a little bit of money leaves the United States? Stocks down big, 10-year Treasury yields up big, bonds down big, dollar down big. Right?”
All current manufacturing is optimized and located in China specifically to keep inflation down and support the bond market, so moving manufacturing back is inherently inflationary and would trigger debt death spiral given high debt levels, creating a dilemma that forces yield curve control.
“all this stuff is in China and optimized the way it is for to to keep inflation down to support the bond market. That's why we did this. That's why we did this at the end of the day.”
Retirees and pension funds holding 80% of their wealth in long-term Treasury bonds will experience a catastrophic loss of real purchasing power through financial repression ('going from eating steak to hamburger to kibbles and bits'), which is mathematically inevitable given the debt structure and policy constraints, but this is politically acceptable because the elderly receive 70% of all government tax receipts for entitlements.
“Look, if if you're a you know, if you're a boomer and you got 80% of your money in in long-term treasury bonds, like you're going to go from eating steak to hamburger to, you know, kibbles and bits and and that's sorry. Um and and to be honest, that makes some sense, right? Boomers are getting 70% of all-time record tax receipts. The the the elderly boomers and silent generation are getting 70% of all time tax receipts for entitlements. They we can't raise taxes. So, we're going to inflate we're going to inflate them.”
It is impossible to win a trade war with China because the Treasury market breaks (as demonstrated April 9, 2025) before China has time to suffer real pain (multimonth timescale vs. multiday Treasury crisis), making trade escalation strategically futile.
“We have no leverage on trade. Our treasury market broke in five, seven trading days after liberation day, which yes, China would have been hurt, but they weren't going to be hurt in seven days. They probably weren't going to be hurt in seven months. So, I think that was, you know, we didn't have leverage on food. We didn't have leverage on trade.”
There are seven major container ports in the world's 10 largest, and most are in China; it took China 30 years of fastest-pace human development to build these, and reshoring production cannot happen faster than that pace, making China's infrastructure advantage unmatched.
“seven or eight of the 10 biggest container ports in the world are in China and it took them 30 years working at the fastest pace in human history to build And then there's a whole scale and network around engineers and factories and roads and infrastructure and it's simply world class across the board.”
US fiscal deficit expanded in 2017 for the first time since 2009 before an emerging market crisis; this was the first time in Luke's 22+ year career that fiscal deficit widened before an EM crisis rather than after, indicating unprecedented structural imbalance.
“the deficit widen or the fiscal deficit sort of break out before you had an EM crisis, but that's exactly what happened...the first time in our career in any dollar at that point up until that point we'd been a bull in 16 up until early 17. We had never seen the US fiscal situation, the deficit widen or the fiscal deficit sort of break out before you had an EM crisis”
Foreign central banks stopped buying US Treasuries on net starting in Q3 2014; this is the moment the structural inversion occurred that required either Fed rate hikes, domestic investor demand forced through financial repression, or balance sheet expansion.
“foreign central banks stopped buying treasuries back in 3Q14 on net, either the Fed's going to have to raise rates, they tried to, it didn't work because the fiscal situation broke before emerging markets. They're going to have to force US domestic investors to buy treasuries. They did. or the Fed's going to have to grow their balance sheet.”
Yield-adjusted U.S. 10-year Treasury bonds have lost approximately 35% of their value since 2017, with the TLT Treasury ETF falling from $125 to $88 (down 35%), despite long-term Treasury bonds being a one-way trade higher for the prior 35 years, contradicting the predictions of prominent long-term Treasury bulls who expected deflation.
“We also warned on that show about long-term treasuries. We said look something that jumps out at me as I try to look at the force for the trees is US retirees commercial banks and pension funds are all the biggest bid for long-term treasuries. And if those groups are on the right the right side of a major macro trade well ahead of time, it would probably be the first time I can remember in my 22 plus year career on Wall Street. And so we said that that day the TLT long-term treasury ETF was 125. Today it's 88. So down 35% in risk-free long bonds”
US fiscal deficit widened in 2017 before an emerging market crisis occurred for the first time in Luke Groman's 22+ year career, a signal that the policy model of exporting US deficits to emerging markets had broken and that devaluation or financial repression would follow.
“the key thing within that was that was the first time in our career in any dollar at that point up until that point we'd been a bull in 16 up until early 17. We had never seen the US fiscal situation, the deficit widen or the fiscal deficit sort of break out before you had an EM crisis, but that's exactly what happened.”
Home prices since COVID are up 65% in dollar terms but down 40% in gold terms and down 95% in Bitcoin terms, demonstrating the divergence between nominal appreciation and real decline when measured in hard assets.
“since co home prices I think are up like 65% in dollars they're down like 40% in gold terms and down like 95% in bitcoin terms since co”
Balaji Srinivasan argued separately (in July 2025 with Peter McCormack) that China disintermediated red America through manufacturing and the military, and the internet and Bitcoin are now disintermediated blue America, creating internal fracturing where the US government loses control to both external and internal competitors, accelerating system breakdown.
“Our friend Bellagiasan came at this exact same issue from a completely different angle in conversation with our friend Peter McCormack a couple of months ago in July. Balagi came at it from a technologist, but he came to the same conclusion, which is essentially we're past the the point of no no return. China has disintermediated red America. The internet and Bitcoin have disintermediated blue America, right? They control media and they control the money and and they're being disintermediated in the same way that China disintermediated red America with manufacturing and the military.”
Stocks will soar in dollar terms but fall in gold and Bitcoin terms; home prices are up 65% in dollars since COVID but down 40% in gold terms and 95% in Bitcoin terms, illustrating the coming depreciation of dollar-denominated assets relative to hard assets.
“I think stocks will soar in dollar terms they've already started to fall in gold and bitcoin terms and I think that's going to continue same thing with home prices you know since co home prices I think are up like 65% in dollars they're down like 40% in gold terms and down like 95% in bitcoin terms since co”
The debate about Fed independence and interest rate policy (cut vs hike) is 'noise' because the policy path is determined by structural necessity: the bond market must be anesthetized (through near-zero rates and QE/YCC) or it collapses regardless of Fed philosophy or formal independence.
“This whole debate around should the Fed cut, should they raise, are they independent, are they not? It's noise. It's noise. The variant perception is they are doing to the Fed what they are doing because they have to because of what we just laid on the supply chain front.”
NATO supplied Ukraine with intelligence, surveillance, reconnaissance, weapons, tactics, and strategies against Russia for 3 years, yet Russia won with Chinese industrial support, proving that the US and its allies can be out-produced and out-matched in conventional warfare by peer competitors with intact industrial bases.
“NATO supplied intel, surveillance, reconnaissance, weapons, tactics, strategies to Ukraine versus Russia and Ukrainians were very good and Russia won with China's support.”
WTI crude oil moved above its 200-day moving average for the first time in a month, the November-December spread widened to 60 cents suggesting front-curve backwardation may have bottomed, and oil has been left for dead by markets focused on gold, uranium, and AI stocks despite positive price action.
“WTI moved back above its 200 day moving average for the first time in a month late Wednesday. More importantly, the XZ spread, that's the November December WTI spread, widened back out to about almost 60 cents, almost double what it was a couple weeks ago. That may suggest that front of curve backwardation may have bottomed...throughout uh August and going into September, every time oil is sold, it held the line around that 616263 level uh establishing a base which is very close to the Fibonacci retracement zones of that May uh to July rally. So now uh see oil strengthening back above that 50-day moving average. What I particularly like about oil is that nobody really is interested right now with gold and uranium and uh and the AI stocks all ripping. Oil has been left for dead. But really to me this is what the kind of a backdrop where I get super bullish because when nobody's paying attention but the price starts behaving in a more bullish way is what sometimes when the most asymmetry exists.”
Gold is overbought on a technical basis and due for a correction despite long-term bullish fundamentals, and traders should be buying dips rather than chasing rallies; gold can reach 3,900-4,000 but measured moves suggest these targets are possible.
“Despite that, we are now seriously overbought and ripe for a correction on a technical basis, the long-term fundamentals couldn't be more bullish...What we have is an extraordinary bull market where uh every dip is almost immediately bought. Now, there are all the measured moves technically that measure all the way out to 3,900 to 4,000. So, there is nothing stopping gold from tacking on a couple hundred bucks to the upside...Overall, I remain quite bullish gold, but uh uh really this is a a period where you should be focused on buying dips and not chasing rips.”
US dollar index failed to break above its 50-day moving average in July despite an attempt, completed a double bottom retest of July lows, and now another complete retest of June lows, but the dollar is extremely oversold with everyone positioned short and any sustained move above 98 level would signal neutralization of the downtrend.
“Going back to July, we had an attempt on the dollar index to break back above its 50-day moving average. It spectacularly failed, and we saw throughout the summer a breakdown for a complete double bottom retest of its July low. And so now a complete retest of its June low. But now that that held in the post FOMC period, we now have seen the dollar try to work its way back above the 50-day moving average and above what I consider a critical level around the 98 level. Now, what is interesting about this? Well, the dollar bearer has now been, you know, eight plus months in play and it is very consensus. And now I while I'm not necessarily bullish on the dollar, what I do recognize is that it's incredibly oversold and uh everyone is relatively short the dollar in terms of positioning.”
The assassination of Charlie Kirk and shooting at UnitedHealth CEO Brian Thompson, combined with public figures justifying or normalizing these acts, marks September 2025 as the beginning of the Second American Civil War due to media and elected official reactions rather than the actions themselves.
“I will call September 2025 as the month the Second American Civil War began...it's not the actions...what we're seeing is not the actions of individuals...it's the reaction of the news media and the elected public officials that are not saying violence is always bad and crime is always bad. They're saying some of them at least are saying, 'Huh, maybe this is justified.'”
The US will run the economy extremely hot with inflation well above consensus expectations in order to reduce the real value of debt, inflate away the deficit, boost nominal GDP growth, and enable wage increases and reshoring without triggering immediate debt spiral, making real asset ownership (stocks, gold, bitcoin, real estate, copper) the correct positioning against financial repression.
“I think what's going to happen is we are going to run this economy so hot and I think we're going to repress the real value of long-term treasuries so much versus gold and Bitcoin and stocks and that will ultimately fix the problem.”
China's consumption is much higher than Western analysts understand, and the UN has understated Chinese economic output, production, and purchasing power parity, meaning China's actual economic power is greater than conventional metrics show.
“we then highlighted that ultimately there's a fundamental misunderstanding between how much China can outproduce that actually that the United Nations has has understated Chinese production and consumption and economic that China's real purchasing power paridy economic growth”
The US Federal Reserve balance sheet was $4.4 trillion at the time of Luke's first Macrovoices appearance in September 2017, and is now $6.6 trillion after nearly four years of Quantitative Tightening, meaning QT failed to shrink the balance sheet as intended.
“from the date of our first show with you, you know, Fed balance sheet was $4.4 trillion. It's $6.6 trillion now after nearly four years of QT.”
India has not fully pivoted to China/Russia despite the Shanghai Cooperation Organization meeting photo, but the photo was clearly intended to signal to India that it should pivot by showing India alongside Russia and China in a position of apparent authority.
“You see the pictures uh with with Putin um Modi and she which to me I think discredited an army of think tankers in Washington, right? Because we were supposed to be sort of you know splitting those three any number of different ways against each other.”
Current US entitlements (Social Security, Medicare, veterans benefits) are 70% of all-time record federal tax receipts and will require inflation/debasement of money rather than tax increases because politics makes tax hikes infeasible.
“Boomers are getting 70% of all-time record tax receipts. The the elderly boomers and silent generation are getting 70% of all time tax receipts for entitlements. They we can't raise taxes. So, we're going to inflate”
Gold's run higher, while spectacular in returns, is actually a signal of systemic failure rather than something to celebrate, because gold only rises when currency and geopolitical systems are breaking down.
“The reason gold is ripping higher is that the world is going to...Rick Rule's wisdom that this raging gold bull market is nothing to celebrate even for us gold bulls...The reason gold is ripping higher is that the world is going to...have these problems”
The Shanghai Cooperation Organization meeting and subsequent Putin-Xi-Kim military parade constituted a clear message that nuclear-armed powers are unified and warning the West not to interfere; this was the biggest geopolitical signal of the year but was replaced in US news coverage by Sydney Sweeney celebrity content.
“I was taken aback by a photo I saw of Vladimir Putin, Narendra Modi and Xihinping...at a military parade. I mean, that's a pretty unmistakable message. The the guys that are in charge of most of the nuclear warheads on this planet are working together and they don't want to be messed with.”
Bitcoin and Ethereum volatility is roughly 3-4x higher than gold and long-duration bonds, meaning risk-parity sizing would require much smaller Bitcoin notional exposure than equal-dollar sizing to maintain comparable risk across gold/Bitcoin/treasury short positioning.
“Bitcoin's volatility runs dramatically higher, about three times that of gold and roughly four times that of long bonds. That means if you really tried to equalize risk across the trade in the risk parody framework, you'd need a much larger treasury short against a relatively small Bitcoin position.”
The Fed balance sheet was $4.4 trillion in September 2017 and is $6.6 trillion now after nearly 4 years of QT, meaning the QT has been insufficient to actually shrink the balance sheet despite official narrative.
“Fed balance sheet was $4.4 trillion. It's $6.6 trillion now after nearly four years of QT.”
China's actual economic size and purchasing power parity growth have been understated by the United Nations; the international recognition of this underestimation is just beginning, which will accelerate the recognition that China is outproducing the US at scale.
“there's a fundamental misunderstanding between how much China can outproduce that actually that the United Nations has has understated Chinese production and consumption and economic that China's real purchasing power paridy economic growth”
Chinese exporters are most dependent on consumer electronics exports (not US market), and China consumes much of its own production, meaning US trade leverage through tariff threats is minimal because Chinese demand is domestically driven and not dependent on US market access.
“you start looking at some of the stuff that actually the biggest export market for Chinese exporters relative to the US is is actually is is actually consumer electronics. And that for a lot of other stuff the Chinese consume a lot of their own stuff.”
The current fourth turning (Strauss-Howe framework) is likely to culminate between 2029 and 2034; the critical question is whether it ends via Second American Civil War or nuclear World War III, with the former being preferable to the latter.
“Strauss and how's work on the fourth turning or kandraf winter...my best guess is that this fourth turning will end sometime between 2029 and 2034. American Civil War II is something that the vast majority of Americans and the rest of the world can survive. Nuclear World War III is not.”
The gold to oil ratio reached 61 barrels per ounce (all-time high) from a starting point of 22 barrels in September 2017; GDX (gold miners) went from 22 to 73 (triple+); TLT (long bonds) fell from 125 to 88 (-35%); S&P/TLT went from 20 to 75 (nearly quadruple) demonstrating the trade Luke Groman recommended was correct.
“gold to oil ratio was 22 barrels an ounce. Today it's 61 barrels an ounce, all-time high...GDX gold miners which is a proxy for gold to oil ratio was 22 bucks at 73 today...TLT long-term treasury ETF was 125. Today it's 88. So down 35%...S&P over TLT ETF was 20 and today...the S&P over TLT is 75x”
The optimistic scenario is financial repression executed smoothly through inflation without domestic political convulsion, but recent assassination events (Charlie Kirk, Brian Thompson, United Healthcare CEO) and polarized reactions to them (with some media and officials suggesting violence was justified) indicate the US is entering a phase of domestic political breakdown that could trigger capital flight and financial instability.
“I hope we can get through this without a real domestic political convulsion. I am admittedly less confident about that after the assassination of Charlie Kirk, after the assassination of the um United Healthcare CEO Brian Thompson and and maybe more importantly the polarized political reaction to those assassinations”
The US military and intelligence communities have known for years about US industrial decline and supply chain vulnerability, but this information has not been acted upon or integrated into public policy, explaining the gap between official (optimistic) messaging and private (alarmed) assessments.
“The logistics are the guys within the US military and intelligence communities. And I I just get the sense that they've done the digging on the supply chains and like they know we don't have the leverage.”
Most investors are currently in denial about China's ability to leverage its trade advantages; bargaining phase has begun (trying to build coalitions to isolate China) but will eventually move to depression (recognizing isolation is impossible) and acceptance (restructuring around Chinese primacy).
“I think there's still a lot of of like I think we're no longer in the denial stage of China 2025...they're not in denial...they're a little bit angry still...I think we're really in this bargaining stage...well we can get a we can get the Europeans and we can sort of block out China and the bricks...we're only looking at it from one side”
SPY/TLT (S&P 500 divided by long-term treasuries) ratio was 20 in September 2017 and is now 75, a 3.75x increase, showing massive relative outperformance of stocks over bonds as financial repression thesis predicted.
“the S&P over TLT is 75x. So, nearly quadruple in 8 years.”
Gold is now bigger than the euro in global foreign exchange reserves, and after another 2-3 years of 800,000-1,000,000 tons of annual central bank gold buying plus modest gold price appreciation, gold will become the biggest global reserve asset, raising the question of whether gold or the dollar is the primary reserve currency.
“all of a sudden gold is now bigger than the euro in global FX reserves and it after another two or three years if we assume another two or three years of call it 800 to a,000 tons of central bank gold buying we assume modest gold price appreciation for the next 2 three years gold is going to be the biggest global reserve asset and then that just gets into a question of semantics. If gold is the biggest reserve asset, it's bigger than the dollar, who what's the primary reserve asset, the dollar or gold?”
The US ran down 15% of its Patriot air defense missiles in 11 days of medium-intensity combat defending Israel, and Israel exhausted its air defense inventory even faster, demonstrating that the US cannot sustain a conventional multi-front war against peer competitors due to manufacturing constraints created by decades of offshoring to China.
“if you go to 3 months before that, the U it was reported that the US ran down 15% of its of its TAD THA air defense missiles in just 11 days of medium inensity combat defending Israel. Israel ran out of their air defense missiles even faster.”
The bargaining stage of grief (per Kübler-Ross model applied to policy recognition of China interdependence) involves attempts to isolate China through coordinated international coalitions or diversify supply chains to India and Vietnam, but these are unrealistic because the scale of Chinese manufacturing capacity (built over 30 years at fastest pace in human history) cannot be replicated elsewhere in any reasonable timeframe without massive inflationary cost.
“When you hear things like Secretary Bessant telling PY that he's going to punch him in his effing face uh at Shamath's birthday party at the White House a couple weeks ago, I think that's anger. I think he's under a lot of stress. I I would be too. And now we're kind of starting to get I think mainstream into this bargaining. Well, like maybe if we sort of cobble together the Europeans and and the Argentinians and we can create this buying group and we can cut out China and like it's bargaining. It's it's it ain't going to work.”
The Shanghai Cooperation Organization summit in September 2025, which featured Putin, Xi Jinping, and Modi together, coupled with a Russia-China military parade and a new major gas deal to be priced in rubles (not dollars), represented the most significant geopolitical week since the fall of the Berlin Wall in 1989, signaling the point at which China, Russia, and India publicly demonstrated confidence they could reshape the global order without US permission.
“I said I thought what had just happened the week before at this Shanghai Cooperation Organization meeting or SEO meeting might have been the biggest geopolitical week since the fall of the Berlin Wall. And what we pointed out was you had this meeting which you saw the pictures uh with with Putin um Modi and she which to me I think discredited an army of think tankers in Washington”
Trump administration Treasury Secretary Marc Bessent said on April 7th that the US, as the trade debtor, has all the leverage with China and they will do what the US tells them to do; on April 9th, the Treasury market dysfunctioned severely with volatility hitting 175 intraday, the highest since Lehman, 9/11, and 1987, forcing the Trump administration to back down (first TACO instance).
“Bessant, who on Wall Street, I think, is was seen by sort of the the adult in the room, if you will, within the Trump administration, right? He's our guy. He's the adult in the room. And the adult in the room, Bessant, said on April 7th, Tucker Carlson, as the debtor, as the trade debtor, we have all the leverage with China.”
The broad equity market (S&P 500) is overbought and due for a technical correction of 5-10%, having gone the longest time without such a correction since the May-July 2025 liberation day rally, and a significant deterioration in market breadth (50% of S&P 500 stocks downtrending) is already signaling distribution despite new highs in the index.
“And while at any one moment the stock market can continue in a bull trend, there's simply no technical breakdown. One has to recognize that we are in the ninth inning of this run and inevitably some form of a correction is going to get underway.”
The 10-year Treasury yield at 4.14-4.25% represents a technical resistance level where the primary trend will be tested; if yields weaken (fall) through this level it confirms the Fed's accommodative bias and refutes market expectations of rate hikes, but if yields break above 4.25%, it suggests real yields are rising and debt dynamics are breaking down.
“I think this kind of even 420 425 yield area is going to be very important. If the primary trend is now lower yields, this should be the resistance level on yields and we should see them start to weaken from here.”
Gold-to-oil ratio reached 61 barrels per ounce in 2025 (up from 22 in September 2017), indicating a multi-year relative repricing in favor of monetary metals that signals declining faith in fiat currency relative to energy/commodities, consistent with anticipation of financial repression and inflation.
“That day gold to oil ratio was 22 barrels an ounce. Today it's 61 barrels an ounce, all-time high.”
Long-term US Treasury ETF (TLT) fell from 125 to 88 (35% decline) between September 2017 and September 2025, despite 35 years of prior bull market in long-duration bonds, validating warnings that retirees and pension funds were overweight the worst-positioned asset class for the coming monetary shift.
“We said that that day the TLT long-term treasury ETF was 125. Today it's 88. So down 35% in risk-free long bonds when you know long-term treasuries had basically been a one-way trade for the prior 35 years up to that point.”
The U.S. has made really bad long-term decisions for 40 straight years (specifically around supporting the dollar system through offshoring and neoliberal policies), and we are now at the point where we have run out of room to kick the can down the road; policymakers now have no choice but to run the economy hot and repress real Treasury values.
“When you make really bad long-term decisions for 40 straight years sooner or later you run out of room to kick the can and we're there right for a number of different reasons we're there.”
China and Russia signed a major gas deal that will be priced in rubles and foreign currency rather than dollars, representing a fundamental shift in global energy market structure away from dollar denomination.
“we had Russia and China signing a major gas deal uh that could reshape global energy markets according to the FT in which the head of gas prom said it was likely going to be priced uh the same way the other gas deals were between them which was to say in rubles and in foreign currency which is to say not the dollar.”
The Pentagon released drafts of a new national defense strategy report stating it would pivot away from China in a more realist view and focus on a Monroe Doctrine-like policy in the US hemisphere, signaling a strategic retrenchment.
“the US Pentagon uh released the new national defense strategy report or at least uh drafts of it to the Washington media and they said it was going to be pivoting away from China in a much more realist view and focusing on a more sort of Monroe doctrine-like policy in our own hemisphere.”
Using Strauss-Howe Fourth Turning theory, Eric Townsend forecasts the Fourth Turning that encompasses this period will culminate between 2029-2034, with the previous Fourth Turning ending in World War II, and predicting that either a Second American Civil War or a Nuclear World War III will be the capstone event—and he hopes the outcome is civil war rather than nuclear conflict because civil war can be survived economically and politically while nuclear war cannot.
“Charting dates on a cycle with 80 to 100year periodicity is tricky business, but my best guess is that this fourth turning will end sometime between 2029 and 2034. American Civil War II is something that the vast majority of Americans and the rest of the world can survive. Nuclear World War III is not. And frankly, the biggest question in my mind is which of those two events will be the culminating event that ends this fourth turning.”
Spot uranium has lagged uranium mining stocks in recent months; rotation from speculative uranium miners into spot uranium (SRUUU/physical uranium ETFs) is warranted because miners already had their speculative run and spot uranium still has room to reach new highs.
“the only thing left in the nuclear space that's still cheap was sput. That's the one that invests directly in the uranium spot market...the uranium uh stocks, the the miners, they already had their run on speculation. It's time for a rotation out of those more speculative uranium miners into sput”
A Chinese People's Liberation Army general gave a speech in 2015 to senior CCP leadership warning of economic and military vulnerabilities if the US changed its policy approach, and most Western investors either never saw this speech or dismissed it as bluff, but the speech's warnings are now proving accurate.
“we highlighted a Chinese People's Liberation Army general who gave a speech in 2015 to the CCP senior leadership. He warned of some of the very same things. Most Western investors either never even saw it or or those that did kind of laughed at it. You know, they're not laughing anymore.”
Most Western investors do not understand that the real constraint on policy is no longer ideological (Fed independence, inflation targeting) but purely logistical and structural; until investors recognize this shift in constraint, they will continue to misread Fed and government policy as discretionary rather than determined.
“Most people that have been doing it as long as I have they're playing by the wrong rules. They're playing by the old rules. They don't understand like is is inflation too high? Should they? It doesn't matter. The choice is bring the stuff back and blow up the bond market on a real basis or don't and lose.”
The market is transitioning from the bargaining stage (denial → anger → bargaining) to depression and acceptance; currently most investors are still in denial or early bargaining (e.g., 'we can move supply chains out of China'), but when supply chain logistics become undeniable, the market will snap into acceptance and demand gold, Bitcoin, and stocks over bonds.
“when you look at the reaction to post-liberation day along the five stages of grief, right? Denial, anger, bargaining, depression, and acceptance. There's still a lot of investors that are just now getting out of denial that out of this, hey, we have all the leverage.”
Despite repeated claims from China hawks that cutting off food exports to China would cause them to starve, China has not purchased a single new crop of soybeans or corn from the United States in 2025, instead sourcing food from Brazil and elsewhere, proving China can substitute US agriculture and has no vulnerability to US food leverage.
“yet the Chinese have not bought a single new crop soybean entered a single new crop corn from the United States this year. The Chinese aren't starving. Why? They're getting it all from Brazil. They're getting it from elsewhere. So, they don't need us on food either.”
Eric now believes the Second American Civil War began in September 2025, not based on individual violent acts but based on the political reactions to those acts by media and elected officials who suggested some violence was justified by systemic injustice.
“I'm going to call September 2025 as the month the Second American Civil War began is not the actions, but rather the reactions. Any of these events could happen at any time. But for both some parts of the corporate media and some elected officials to publicly take the position that some of the people killed in America in crimes had it coming.”
The US dollar has likely entered a secular decline phase after the multi-year bear setup established in July and reinforced through September 2025, and the next major downside target is 89 on the dollar index (DXY), with potential for much lower levels if Luke's geopolitical thesis accelerates the process of moving away from dollar-denominated trade and reserves.
“My next major target lower is 89. But if Luke's really right that we're going from the uh the slow part to the fast part where things accelerate, then 89 is just the first step on the way down.”
For retail investors without access to futures or prime brokers, deep in the money options (synthetic positions) can replicate the financial repression trade with smaller capital requirements and without traditional shortselling margin complications, though with their own complexity.
“By using deep in the money options as a synthetic, you can replicate the position in a risk controlled way with smaller capital requirements and without traditional shortselling margin headaches.”
The S&P 500 has experienced the longest and largest rally without a 5% correction in recent history, making pullback/correction technically inevitable even if the bull trend continues long-term.
“this has now been the longest and the largest in magnitude rally without a 5% market correction. And while at any one moment the stock market can continue in a bull trend, there's simply no technical breakdown. One has to recognize that we are in the ninth inning of this run and inevitably some form of a correction is going to get underway.”
Freeport-McMoran's force majeure declaration on Indonesian copper mine accident pushed copper back above the 200-day moving average and away from an impending death cross, suggesting supply concerns will support prices above the $4.90 level.
“Freeport Mcmaran declared force majeur in the wake of a serious accident at a copper mine in Indonesia a couple of weeks ago. that shock, panic, uh, whatever you want to call it, move took us back above the 200 day moving average.”
The 10-year Treasury yield at 4.14-4.25 represents key resistance; if yields break above this level, it would signal that the primary trend has turned higher for rates and the market is rejecting lower yields; if this level holds, lower yields (bond rally) is more likely.
“I think this kind of even 420 425 yield area is going to be very important. If the primary trend is now lower yields, this should be the resistance level on yields and we should see them start to weaken from here. And if for whatever reason yields strengthened above these levels, it would have to be acknowledgment that something has changed in the rates markets”
Market breadth deterioration is already occurring: 50% of S&P 500 stocks are downtrending even though the index holds at 52-week highs, signaling weakening internal momentum beneath index headline strength.
“we've seen in the S&P 500 is that while it held at 52- week highs, the deterioration of the market breath approached 50% where literally one out of every two stocks in the S&P 500 was already downtrending.”
Trump's post-truth social posts about China, Russia, and Kim Jong-un 'conspiring against the United States' and 'losing India and Russia to China' were not impulsive but rather reflections of classified briefings that Trump was publicly revealing.
“President Trump...will several times a year actually tell you what's going on by virtue of sort of some sort of impulsive expost or or true social post. And I think these were one of these. I think he got a briefing about like uh sir this is happening and he immediately took to his phone”
For simple asset managers not interested in leverage or derivatives, the financial repression trade can be implemented using Harley Basman's PFIX (interest rate hedge ETF) paired with physical gold and Bitcoin holdings, providing exposure without complexity.
“for asset managers simply owning physical gold and bitcoin, you can easily pair the position with an ETF like Harley Basman's interest rate hedge which is the symbol pfix.”
GDX (gold miners ETF) was $22 per share in September 2017 and is $73 today, representing a 3.3x gain and serving as a proxy for the gold-to-oil ratio performance over 8 years.
“GDX gold miners which is a proxy for gold to oil ratio was 22 bucks at 73 today.”
Gold is tremendously bullish long-term due to financial repression and political risks, but Eric Townsend would prefer to be proven wrong and lose significant money on gold because it would mean the geopolitical and financial risks did not materialize, similar to how people who profited from pandemic prediction would prefer a false alarm.
“I've honestly never hoped ever in my life more to be proven wrong, humiliated publicly, and lose money in the process than I do right now on my overweight gold long because it simply does not make sense to stay long gold here and not take profits unless you have an extreme view as to what could happen next”
In April/May 2025, Emanuel Todd stated 'We're past a turning point. We're moving from defeat to dislocation,' warning that he did not foresee the extent of dislocation and suffering that followed the Soviet collapse in 1989, and cannot foresee how severe Western dislocation will be.
“in April of 2025, he gave a public speech uh discussing the defeat of the West in which he said, "We're past a turning point. We're moving from defeat to dislocation." And what makes me cautious is my past experience of the moment of the collapse of the Soviet system. I predicted this collapse, but I must admit that when the Soviet system actually collapsed, I was not able to foresee the extent of the dislocation and the level of suffering that this dislocation would bring to Russia.”
Western central banks will probably have to engage in yield curve control or its proxy (stable coins or other mechanisms) in order to manage the transition from dollar-based to gold-based reserve system, though the exact form is uncertain.
“ultimately over time that means western central banks are probably going to have to engage in some form of yield curve control or its proxy through you know the genius act stable coins however they want to do it.”
India's bureaucratic structure inherited from British administration makes industrial development slower than China's; therefore even if decoupling were possible, India cannot match Chinese speed, reinforcing that reshoring is not a viable alternative.
“I remember being an investor in a in a Chinese spway. The Indian management team come in, they go, "Luke, you have to understand in India, you know, the British invented administrative or admin uh um administrative stuff and the uh the Indians perfected it." Like it is just, you know, it takes longer to get stuff done there.”
The depreciation in Treasuries has been consistent since 2017, with multiple leading institutional holders (U.S. retirees, commercial banks, pension funds) all positioned on the 'right side' of this major macro trade years in advance, which would be unprecedented in Luke's 22+ year career if true.
“US retirees commercial banks and pension funds are all the biggest bid for long-term treasuries. And if those groups are on the right the right side of a major macro trade well ahead of of time, it would probably be the first time I can remember in my 22 plus year career on Wall Street.”
Copper has broken above the 200-day moving average after Freeport-McMoRan's force majeure announcement in Indonesia; if it can hold above $4.90 and avoid a death cross, a long-overdue recovery may be underway, which comports with Luke's view that the economy will run hot.
“if we can get above four spot 90 or so and stay there and that number that I'm quoting is on the December 25 chart, Hotel Golf Zulu 5 on that chart above four spot 90. If we can get there and stay there, then I think the long overdue recovery in copper may finally be upon us.”
Uranium spot prices have had a legitimate technical breakout and will see momentum building; the correlation between uranium spot and uranium mining stocks has deteriorated, suggesting a rotation from speculation mining stocks into spot uranium (SRUUF) is underway, as spot was the last remaining cheap asset in the nuclear complex.
“Uranium up 864 basis points up to 83. Even first legitimate technical breakout of spot prices, but will we see momentum just start to build from here?”
What is normal for the spiders (those positioned correctly for inflation like gold, Bitcoin, stocks) is chaos for the fly (those in long-term treasuries), and retirees and others holding 80% of their wealth in long-term bonds will experience gradual degradation from eating steak to hamburger to kibbles and bits.
“I always say it and so people will laugh when I say it here is is what you know what's normal for the spiders. Chaos for the fly, right? Like you're long gold with all this happening today, you're not unhappy. If you own Bitcoin, I think if you own stocks, you're not going to be unhappy. You own long-term bonds, I think you you're be fine, but I think you're going to go from, you know, eating steak to eating hamburger to eating dog food to eating kibbles and bits.”
Luke would prefer to lose money on his gold position because a false alarm is better than the geopolitical scenarios he is hedging for, and the bullish gold case fundamentally rests on recognition that the system is in real danger, not speculation.
“I would much prefer an outcome where I lose a considerable percentage of my net worth on the gold trade because it turned out that oh, in the end, actually, all my geopolitical concerns were overblown and it turned out to be a false alarm. Crappy returns and even a huge loss still beats the heck out of World War II in my book.”
WTI crude oil has been left for dead by market attention (overshadowed by gold, uranium, AI stocks) but is showing bullish behavioral patterns (establishing support, moving above 50-day MA) with the November-December spread recovering from backwardation, suggesting asymmetric upside risk if broader energy demand accelerates or supply disruptions occur.
“What I particularly like about oil is that nobody really is interested right now with gold and uranium and uh and the AI stocks all ripping. Oil has been left for dead. But really to me this is what the kind of a backdrop where I get super bullish because when nobody's paying attention but the price starts behaving in a more bullish way is what sometimes when the most asymmetry exists.”
The timing of the transition from gradual to sudden phase is likely 6 to 9 months away, driven by fiscal constraints (true interest expense plus entitlements plus veterans affairs equals 100% of receipts, which are highly stock-market-sensitive), bifurcating consumer weakness, and potential geopolitical or domestic political triggers.
“we're we're to the wall there. We're seeing the US economy on the consumer side actually slow which is really weird because and it's really bifrocating right the bottom 50% are really suffering and the top 10% are you know it's you know party on Wayne party on Gar and that then reverberates into the geopolitical side right you're starting to see people writing articles like what is going on in America...could be a geopolitical trigger I don't know or not a geopol but a domestic political trigger I don't know or simply just a a spooking foreign investors, right? We have so much foreign money here. 62 trillion gross, 27 trillion net. If they start to get spooked about the domestic political situation, do they take 5 10% of their money home? Then what happens?...Yeah, I think we are like right on the cusp of exactly what you describe. And there can be domestic political, there could be market, there could be trade, there could be geopolitical, there could be any number of things uh that could spark it...I don't know when that moment's coming, but like I don't think it's years away anymore. I think we're I think that's you know I think it's six to nine months away”
Eric's target for the US dollar index on the long-term basis is 89 level, down from current levels around 97-98, representing a major downward reversal from the 116 peak reached during the 'dollar milkshake' scenario.
“My next major target lower is 89. But if Luke's really right that we're going from the uh the slow part to the fast part where things accelerate, then 89 is just the first step on the way down.”
Eric would not be trading the stock market position at this moment due to lack of directional conviction, but if forced to trade would use a long straddle on E-mini S&P futures to hedge against significant volatility in either direction.
“I have very little directional conviction right here, but frankly, I'm pretty darn confident that whatever comes next won't be boring. I'm not trying to trade this one. If I were, it would be a long straddle on E- mini S&P futures.”
The US had so many 'secular dollar bulls' that Macrovoices brought Luke on in September 2017 explicitly to offer a 'credible secular dollar bear' counterpoint, showing how contrarian the bearish dollar view was at that time.
“he led off by saying that, you know, we had so many secular dollar bulls we wanted to bring listeners a credible secular dollar bear.”
Luke Groman's Forest for the Trees research operation provides institutional and retail products analyzing long-term macroeconomic and geopolitical trends, available at fft-lc.com and via his social media (xlukeman), and two sample reports from September 9 and September 12, 2025 are linked in the Macrovoices research roundup.
“You can find out more about what we do at fft-lc.com or for both for institutional and massmarket products and uh uh on xlukeman, all one word.”
Forest for the Trees' services and products for both institutional and mass-market investors can be found at fft-lc.com or via @xLukeMan on social media.
“You can find out more about what we do at fft-lc.com or for both for institutional and massmarket products and uh uh on xlukeman, all one word.”
Americans likely need 15-20% annualized returns on their early correct macro calls (as referenced by Luke) to justify being early by several years, as an illustration of the cost of getting the timing wrong.
“I think probably maybe, but you know, we should all get 15 to 20% kele levered returns on our early calls.”