MacroVoices #538 Lyn Alden: Is The War Really Over and What’s Next For Markets?

3/26/2026 8:11:29 PM	short term cautious up	5 days later	+0.48%	+0.24%
3/26/2026 8:00:06 PM	short term cautious up	5 days later	+0.48%	+0.24%

Introduces the episode: Iran conflict appears to be ending, dollar broke out, stock market rolling over. Guest is Lyn Alden to discuss Hormuz crisis, Fed, deficits, AI trade, energy.

Eric Townsend

Market recap: WTI dropped ~885 bps to 69.28, dollar broke out to 101.54, gold declined ~900 bps towards 4000.

Patrick Serezna

Asks if the Iran conflict is really over, noting Secretary Wright's statement that traffic is normal in Hormuz.

Eric Townsend

Lyn Alden

The conflict is likely past the worst but details remain unresolved (enriched uranium, inspectors, funding). The MOU essentially tries to reconstruct the 2015-2018 deal.

Egypt had an energy curfew in April due to natural gas scrambling, highlighting regional energy vulnerability.

Oil sold off to pre-crisis levels, below 200-day MA at 69.92. Asks if oil keeps falling or finds a bottom.

Eric Townsend

Lyn Alden

Oil depends on Hormuz: if strait stays open, current price is rational near-term; if closed again, oil climbs. Over time, oil trends higher. Countries should refill reserves now.

Large reserve stockpiles saved the market during the crisis; this is the time to refill, especially for markets without pricing power like Egypt.

Asks about new Fed Chair Warsin: many expected aggressive cuts but dot plot signals possible hike. What about Fed policy and character change?

Eric Townsend

Lyn Alden

Fed had to maintain credibility with a hawkish tone given high inflation. If inflation rolls over, language may become more patient. The Fed will likely look through energy crises and focus on non-energy inflation. Balance sheet: gradual print scenario, liquidity-neutral measures, no big QE around the corner.

Warsin historically hawkish but auditioned with dovish arguments on AI productivity. The Fed will not allow illiquid treasury or repo markets.

Dollar broke out to the upside despite conflict ending. Asks for explanation.

Eric Townsend

Lyn Alden

Dollar move driven by repricing of rate hike odds and still-alive AI trade attracting capital to US equities. Dollar likely trades in a choppy band; more upside would pressure US economy. Looks more at dollar vs EM currencies than euro-weighted index.

The euro is the biggest comparable but few are bullish on European economy.

Asks about deficits: will they ever be paid back? Treasury Secretary forecast 4% deficit-to-GDP by end of administration.

Eric Townsend

Lyn Alden

Deficits will stay in mid-to-high single digits as % of GDP. Fiscal is more powerful than people expect and is the north star for owning high-quality assets. The two-speed economy reflects who benefits from fiscal/AI capex vs who doesn't.

Demographics changed the baseline; 3% was considered extreme 10-20 years ago. US has longer runway due to reserve currency status and inflexible dollar demand. Consequences show up as political polarization, not acute debt crises.

Asks about Michael Every's view on stablecoin statecraft as a way to sustain US deficits.

Eric Townsend

Lyn Alden

Stablecoins are growing organically and will likely exceed $1T market cap. They extend the dollar's runway but are not a magical fix—even $1T in new stablecoins covers only ~half a year of deficits. They are another type of buyer, not a solution to structural deficits.

Stablecoins are mostly yieldless, good for payments/working capital, less for savings. They create net new treasury demand but the scale is small relative to deficit size. Citi's bull case of $3T was cited by Treasury Secretary but was their bull case, not base case.

Asks if stablecoins have the same liquidity depth as Treasuries for absorbing large capital flows.

Eric Townsend

Lyn Alden

Top stablecoins have high liquidity and are growing, but still not as deep as repo or Treasury markets. They contribute to the dollar's network effect. Organic demand exists globally (e.g., Nigeria uses stablecoins, Egypt uses physical dollars). US just needs to not get in the way.

Rapid selling of stablecoins could destabilize underlying assets, so regulatory monitoring makes sense.

Asks about AI: how long can it continue holding up the market?

Eric Townsend

Lyn Alden

AI capex cycle has legs for several quarters. Some AI stocks are overvalued but can stay expensive due to narrative momentum (like Tesla). Bears expecting immediate collapse are premature. However, a larger pullback is likely eventually and would be healthy.

Micron earnings were strong. SpaceX at 100x revenue is testing market appetite. Hyperscalers are going free cash flow negative and issuing bonds aggressively. Low switching costs between AI models reduce economic moat for model providers. Bottlenecks (chips, energy) are more interesting.

Agrees narratives can outlast expectations, but notes dot-com bust happened despite internet being a big deal. Asks if upcoming AI IPOs (Anthropic, OpenAI, SpaceX) could create a similar phenomenon.

Eric Townsend

Lyn Alden

Yes, a larger version of the mini-busts seen in Nvidia (cut in half then recovered) is likely. Government pressure on centralized AI models is marketing for open-source versions, many non-US. Real cybersecurity risks exist from AI tools probing codebases.

Bernie Sanders and JD Vance both discussed partial nationalization of AI companies. US mixed messaging on AI could slow centralized models and benefit open-source alternatives, including Chinese ones.

Raises concern about AI energy demand vs. US energy policy. China has better energy planning. Asks what this means for US AI dominance.

Eric Townsend

Lyn Alden

China has a massive energy advantage built from its industrial base, now translating to AI. US is better than Europe but faces challenges. Data center power/water/ noise issues are solvable but require proper cost management. Nuclear is a powerful long-term solution. US has natural gas as a bridge.

SpaceX's orbital data center narrative is not viable on an investable time horizon due to launch costs and maintenance challenges. China and US are the top two in AI for a reason.

Asks for deeper analysis on SpaceX orbital data center viability given physics of launch costs.

Eric Townsend

Lyn Alden

Sides with the under on orbital data centers in the next 5-10 years. Reusability needs to radically improve to bring per-lift cost down enough. Not investing in SpaceX.

SpaceX has been successful with Starlink, and I like them more than Tesla, but orbital data centers are not near-term viable.

Thanks Lyn and asks where listeners can find her work.

Eric Townsend

Lyn Alden

Directs listeners to linalden.com for free newsletters and low-cost research services covering macro conditions and specific opportunities.

Trade of the week: long natural gas via December 2026 futures or bull call spreads to express the AI power bottleneck theme. Prefers UNL ETF over UNG for structural reasons (contango roll yield drag).

UNG rolls front-month futures and suffers negative roll yield in contango. UNL holds laddered exposure across the curve. Options on futures allow defined risk convexity.

Patrick Serezna

Market recap: S&P 500 retraced half of post-peace deal rally, pressure from Korea KOSPI limit down, but Micron earnings triggered relief. Leadership concentrated in semiconductors, breadth weak. Oil collapsed from 80 to 69, oversold, forced liquidation. Dollar broke above 100 decisively, next test 102-103. Gold in corrective phase, key level 4000, next magnet 3600 if broken.

Oil's intermediate fair value may be $80-85. Dollar breakout could be sustained or just funding stress. Gold remains in profit-taking cycle with lower highs and lower lows.

Patrick Serezna

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