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With $7 trillion in US debt to refinance this year, US Treasury debt auctions are akin to “selling hot dogs outside a vegan festival” writes the sharp-witted author of the Macro Butler newsletter, Lawrence Lequeu. Financial Sense Newshour recently spoke with Lawrence to get his take on the US debt deluge, rising yields, gold, and much more.

A Debt Deluge and Rising Yields

Lequeu kicks off with a staggering reality: “There’s still around 7 trillion of US debt to be refinanced until the end of this year.” With $3 trillion due in June and July alone, the U.S. faces a refinancing crunch at a time when Trump’s trade policies have “weaponized” the dollar, scaring off foreign investors. This pushes Treasury yields higher—Lequeu notes the 30-year yield hit 5%, and he predicts the 10-year could follow by summer. Higher yields mean pricier borrowing, squeezing everything from mortgages to corporate profits.

Market Volatility and the Maleficent Seven

“Rising Treasury yields have always been a trigger for much higher volatility,” Lequeu says, predicting a pullback in major indices like the S&P 500, which dropped 20% after “Liberation Day” in April. He sees a sector rotation away from the “Maleficent Seven”—his cheeky rebrand of the Magnificent Seven tech giants—toward value-driven Dow Jones stocks. These tech behemoths, bloated from globalization’s heyday, are “widely overowned, grossly overvalued” and vulnerable in a deglobalizing world. Lequeu’s bet? Blue-chip industrials will likely outperform over the years ahead.

Fortress America and Commodity Hoarding

Lequeu’s big-picture view is striking: the U.S. is retreating into “Fortress America 2.0,” abandoning its role as global cop. “America needs to focus on America first,” he says, citing Trump’s push to cut defense spending abroad. This leaves nations like Indonesia building oil reserves, wary of supply chain risks. “Countries and companies alike will be forced to stockpile strategic commodities,” Lequeu explains, driving up demand for copper, oil, and more. So goodbye to the hyper globalized world of frictionless trade and just-in-time inventories, a trend exposed by COVID but now set to continue as national security concerns and US-China trade battles reign supreme. Lequeu sees commodity prices, currently depressed, poised to surge, offering investors a hedge against a “much more dangerous” geopolitical landscape.

Gold: The Antifragile Asset

Gold takes center stage in Lequeu’s portfolio strategy, with prices near $3,300 after hitting $3,500. “Investors are still not owning enough physical gold,” he insists. Why? Gold is the “only antifragile asset with no counterparty risk,” thriving amid rising geopolitical tensions and de-dollarization. Central banks in Asia are swapping Treasuries for gold, and Lequeu notes India buying Russian oil in rupees. “De-dollarization is no longer a conspiracy theory,” he declares. More and more countries are moving away from using the US dollar in international trade, especially by settling transactions with China and other partners in their own local currencies. Gold—not the US dollar or US Treasuries—is widely seen as the safe-haven politically-neutral asset for ultimate settlement, says Lequeu.

Trump’s Stagflation Risk

Lequeu’s economic outlook is sobering: a slowdown is “baked into the cake” as rising yields hike mortgage rates, hitting housing and related sectors. But a full-blown recession hinges on oil prices. “You cannot really have a major US recession with the oil price around $62 per barrel,” he says, eyeing $75-$80 as the tipping point for “Trump stagflation.” Tariffs, already pushing car prices up, fuel “Velcro inflation.” Financial Sense Newshour host Cris Sheridan shares his frustration over rising auto costs upwards of several thousand dollars compared to last year, and Lequeu warns that corporate margins could erode if oil spikes. His S&P-to-oil ratio, still above its seven-year average, suggests no immediate recession—but vigilance is key.

Navigating the Chaos: What’s Next?

Lequeu says he has personally ditched overvalued tech, embraced blue-chip industrials, and loaded up on gold. He also floats a bold idea for risk-tolerant investors: Chinese banking stocks, which could rally if Beijing eases credit conditions. But he cautions Americans to tread carefully due to geopolitical risks. Bitcoin? He dismisses it as a “speculative tool,” highly correlated with NASDAQ and possibly a setup for central bank digital currencies. As the world shifts from Pax Americana to a fragmented, commodity-hungry landscape, Lequeu urges active management. “Uncertainty is now the new normal,” he warns, but opportunities abound for those who adapt.

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