I like to view asset allocation through forecasting macro themes. Right now I see two future scenarios and wanted to know your thoughts.
**Scenario 1: Fiscal Trap**
Inflation stays sticky at 5-8%. The Fed wants to hike but can't because debt/GDP just hit 100% and interest payments are already $1T/yr \[PGPF\]([https://www.pgpf.org/programs-and-projects/fiscal-policy/monthly-interest-tracker-national-debt/](https://www.pgpf.org/programs-and-projects/fiscal-policy/monthly-interest-tracker-national-debt/)). Deutsche Bank is calling this "fiscal dominance," where the Fed is constrained from hiking because it risks a fiscal crisis \[Fortune\]([https://fortune.com/2026/05/02/interest-payments-us-debt-future-deficits-oustanding-borrowing-fiscal-outlook/](https://fortune.com/2026/05/02/interest-payments-us-debt-future-deficits-oustanding-borrowing-fiscal-outlook/)). Real rates stay negative. Gold and commodities win.
Simon White at Bloomberg believes equities have even higher duration now than in the '70s thanks to tech's dominance, and when inflation is elevated, investors repudiate duration. Stocks were the worst-performing major asset class in the 1970s, behind Treasuries, corporates, and commodities.
**Scenario 2: AI Productivity Miracle**
AI delivers a genuine productivity surge that kills inflation without rate hikes, similar to what the internet did in the late '90s. Tech goes parabolic. Gold bleeds out like 1995-2000, when it fell to $250/oz and central banks were dumping their reserves. Warsh is pushing this narrative hard, calling AI "structurally disinflationary" and "the most productivity-enhancing wave of our lifetimes" \[Schwab\]([https://www.schwab.com/learn/story/fed-watch-can-ai-productivity-gain-cut-inflation](https://www.schwab.com/learn/story/fed-watch-can-ai-productivity-gain-cut-inflation)).
The '90s productivity miracle arrived into Clinton surpluses, low debt, and no energy wars. Today we have 100%+ debt/GDP, a $2T deficit, sticky 3% core PCE, and a live Middle East conflict pushing commodity prices higher \[IMF WEO April 2026\]([https://www.imf.org/en/publications/weo/issues/2026/04/14/world-economic-outlook-april-2026](https://www.imf.org/en/publications/weo/issues/2026/04/14/world-economic-outlook-april-2026)). Central bank gold buying is also creating a structural floor that didn't exist in the '90s \[World Gold Council\]([https://www.gold.org/goldhub/research/why-gold-2026-cross-asset-perspective](https://www.gold.org/goldhub/research/why-gold-2026-cross-asset-perspective)). That all points to Scenario 1.
But if AI productivity actually shows up in the data, none of the debt math matters the same way, and anyone sitting in commodities eats years of opportunity cost watching equities rip.
