Lyn Alden: Why The Market Is Missing The Next Energy Shock

**Lyn Alden** (0:00)
Well, in the near term, I would say that the market is still underpricing the Strait of Hormuz crisis. The market's kind of gotten to its head that, wait, there wasn't like a major energy crisis yet, per se, so that means it's not going to happen. You could get another wave higher in prices and potentially another wave of shortages, energy curfews, things like that. The AI companies are losing money.
They're still venture funded. You know, they're basing the business of selling $20 bills for $10. The likely scenario is that the bubble pops, not in terms of direction, but in terms of time. In addition, I mean, for a long time, Bitcoin was the fastest horse, really, that you could invest in. It was kind of the best performer. And the rise of AI companies has challenged that because there are other places to put capital. I don't think the four-year cycle is really functionally relevant anymore.

**Alexej Jordanov** (0:49)
Welcome back to the Macroscopic Podcast. My name is Alexej Jordanov and I am your host.
Today is the 3rd of June, 2026 And I have the honor of sitting again with Lyn Alden, a recurring guest. Welcome back, Lyn.

**Lyn Alden** (1:03)
Thanks for having me again. Happy to be here.

**Alexej Jordanov** (1:06)
So, last time we spoke was around a year ago, May 2025 And a lot of things happened as always. And today we'll be exploring the surge in sovereign bond yields across the G7 and what it means for the traditional 60 to 40 portfolio. But also the geopolitical shockwaves from the Hormuz crisis and what this has actually developed into the last weeks and closing oil lanes revealing fragility on the petrodollar system. But also the historic milestone of gold overtaking US treasuries as the world's top reserve asset and where the de-de-realization stands today in hard numbers. So we'll also talk obviously about Bitcoin and whether the four-year cycle still holds. And what we can expect after this 47 percent pullback from its peak. So I'll start first with the bond market, Lyn. If you may, last year, actually, we've talked about what it means in terms of the great debasement or the global debt crisis that we are in and how it's accelerating.
How would you describe the situation we're in now? The UK GILS has just approximately approached 5%.
The French OAT is around 63 basis points over the bonds.
And Japan's 40-year JGB broke 4% in January. So it's also another level that we've seen since 2007, if I'm not incorrect. And you've said that also last time we spoke that the 40-year bond bull market is structurally over. But we haven't seen a disorderly sovereign default in the G7 nation yet. What would be the early warning signs look to you in this case?

**Lyn Alden** (2:50)
Well, the short answer is I don't really expect a disorderly default from a G7. I think this is more of a kind of a slow motion train wreck, which is their fiscal situations, I mean, it depends on which country we're talking about, but in general, their fiscal situations are a problem. They've accumulated a lot of debt. And then even their ongoing deficits are a problem because of the way they've structured what they have to pay out for, usually most countries have a slowing population, an aging population, and a very top heavy entitlement system.
And so I expect them to continue to have major fiscal issues with the US kind of really leading the pack in terms of the sheer size, the deficits relative to the economy.
And the rising bond yields, while it is obviously a problem, I generally fade the near term issue a little bit in the sense that when you do get these notably higher bond yields, it does bring in new buyers. There are people that were saying that I don't really want to buy bond yields at 3% or 4%, but if they're up to 5%, and I'm looking at equity valuations of sort in many cases, and they're saying I'm concerned about that, you know, gold's already soared. Some people are saying, you know, maybe I do want to have treasuries at 5% that actually, you know, I get somewhat of a return there. So I generally view that the disorderly part, you know, that the massive hiking that the Fed did a few years ago, that was kind of like the major part of the bond bear market. Of course, when yields are going up, prices are going down. Now it's more in this kind of sanguine place where they're not falling, the prices aren't just collapsing anymore. But still, it's been the case that owning bonds has been worse than owning equities, worse than owning gold, worse than owning most other assets. I think around the margins that will continue.