Luke Gromen: Black Diamond Markets & The Avalanche of Worry

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Jul 9, 2025

Luke Gromen, founder of Forest for the Trees, shares his macroeconomic insights and market predictions. He anticipates a positive outlook for risk assets in late 2025 due to deregulation and a weakening dollar. Gromen discusses how gold and Bitcoin could thrive amidst market volatility and explores the implications of a declining dollar on global dynamics. He highlights the Federal Reserve's policies and geopolitical tensions, while expressing cautious optimism for the second half of the year despite looming short-term challenges.

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INSIGHT

Positive Outlook for Late 2025

Luke Gromen expects the second half of 2025 to be positive for risk assets due to dollar weakness and benefits from the new tax bill and deregulation.
He believes short-term concerns exist but sees a temporarily peaceful global conflict environment because countries need China for rare earth supplies.

INSIGHT

Dollar Weakness: Double-Edged Sword

Dollar weakening acts like a debt jubilee, stimulating global growth due to large foreign dollar debt.
However, excessive or disorderly dollar decline can trigger inflation and capital outflows, causing simultaneous declines in dollar, bonds, and stocks.

INSIGHT

Critical 10-Year Treasury Yield Threshold

U.S. 10-year Treasury yields rising above 4.6%-4.8% triggers reflexive selling and spike in bond and equity volatility.
Hedge funds with high leverage quickly deleverage Treasuries when yields rise, exacerbating market distress.

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In this episode of On the Tape, Luke Gromen, founder and president of Forest for the Trees, returns to discuss current market trends. Luke anticipates that the back half of 2025 may be positive for risk assets due to benefits from the tax bill, deregulation, and dollar weakness, though he maintains long-term concerns. He sees gold and Bitcoin benefiting from market volatility and explores the implications of the dollar's decline as the world's reserve currency. The discussion also covers the Federal Reserve's strategies, tariffs, and China's influence on global conflict dynamics. Luke shares insights on why he remains net bullish for the second half of the year, while also highlighting short-term concerns.

Timecodes

0:00 - Intro

1:30 - Where We Left Off

8:40 - The Dollar

14:45 - Tax Bill Fallout

19:30 - The Fed

29:55 - Gold/Oil Ratio

37:30 - Bitcoin

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