Episode summary
MacroVoices #556 Luke Gromen: US Midterms & Beyond
MacroVoices
· · 55 min · Hosts: Erik Townsend, Patrick Ceresna · Guests: Luke Gromen
Summary
Luke Gromen argued that the Strait of Hormuz disruption has taken longer to hit the global economy because China reduced demand and drew down strategic reserves, while the U.S. and other countries also released oil from SPRs. He said the first visible food shock may not come through this year, but instead through lower fertilizer application and weaker yields next year, which could later make crop inflation worse even if the near-term effect looks muted.
He framed the bigger geopolitical risk as a war of endurance, arguing Iran does not need to defeat the U.S. militarily if it can outlast America’s missile resupply rate and strain the bond market. He also suggested that any escalation around the midterms may be delayed until after the election, and that the conflict could keep dragging on because Iran, Russia, China, and even Israel all have reasons to let it continue.
The conversation then shifted to rates, equities, and AI. Gromen saw the recent move in the 10-year Treasury as unusual and possibly a signal that markets were reacting to political and fiscal risk. He and the analyst argued that AI may become a credit problem through consumer job losses, with consumer lenders, banks, and the broader financial system exposed if layoffs spread. The episode closed with a warning that AI could become “too big to fail,” but also a source of political and social instability if the jobs impact accelerates.
Key takeaways
- Luke Gromen said China’s lower oil demand and global SPR releases helped delay the expected economic damage from the Strait of Hormuz closure.
- He argued that Iran’s strategy is to outlast U.S. missile replenishment rates, not to beat the U.S. militarily.
- Gromen said the bigger AI risk may be consumer credit, because mass white-collar layoffs could hit mortgages, cards, and auto loans.
- The analyst said Capital One is a direct way to express that consumer-credit risk because of its exposure to credit cards and auto lending.
- Gromen warned that if AI spending slows, a recession could force much larger Treasury issuance and leave the Fed as the only buyer.
Notable quotes
“There's only one buyer. It's the Fed. Fed's going to have to print money and buy treasuries and they will say we're not monetizing the debt and we're not monetizing and it's it'll all be bull crap”
“Iran has more leverage than the Western narrative suggests because Iran doesn't have to beat the US. It just has to beat the bond market”
“The Americans are going to run out of air defense missiles on X date and when they do then we can hit them with impunity”
“If AI displaces workers and reduces their earning power, then the outstanding debts still need to be serviced, productivity gains for businesses could therefore come with deteriorating credit quality for consumer lenders”
“This Microsoft news I think was like the we're going to need a bigger boat moment for the employment argument around AI”
How the episode opens
There's only one buyer. It's the Fed. Fed's going to have to print money and buy treasuries and they will say we're not monetizing the debt and we're not monetizing and it's it'll all be bull crap.
That was Forest for the Trees founder Luke Groman. I'm Eric Townsend and this is Macrovoices, the free weekly podcast targeting professional finance and sophisticated private investors. Episode 556 was produced on October 29th, 2026.
Luke Groman was ridiculed after his April 16th appearance on Macrovoices because many of our listeners thought his prediction that the straight of Hormuz could remain closed as long as early July was outlandish. Now that the straight has remained effectively closed for fully twice as long as Luke's outlandish prediction, we wanted to bring him back for an update. And don't worry, we'll start with why the predictions that both Luke and I made for how bad the economic effects of that closure could be have so far yet to be realized.
And I'm Patrick Szna. Let's dive straight into this interview.
Luke, it's great to get you back on the show. I want to cut to what I'm sure is already in everybody's mind, which is you were on this program on the 16th of April. Frankly, we got ridiculed when you said this situation in Iran could stretch out as long as the 4th of July.
People thought it was crazy. What is Luke Roman smoking to think it could possibly go that long? Well, now it's gone twice as long as that.
But the predictions that both you and I made in terms of what the consequences would be for global financial markets and the global economy, if the straight of Hormuz stayed closed for even half as long as it's been closed, they really haven't materialized in the way that we feared.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- strait of hormuz disruption
- china oil demand
- strategic petroleum reserve releases
- ai credit risk
- us midterms
Watch the episode
Watch “MacroVoices #556 Luke Gromen: US Midterms & Beyond” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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MacroVoices, this episode and its artwork belong to Erik Townsend. Octagon is not affiliated with the show; this page is an independent summary.
