MacroVoices #557 Michael Every: The Blue Tsunami Lands on Markets... and Geopolitics

Michael Every said Democratic gains were larger than he expected and could constrain U.S. foreign policy, though their effect on the Iran war may not become clear until Congress returns after January. He had expected Trump to escalate against Iran after the midterms but before the new Congress took office; the election instead makes a limited action followed by retreat more likely. Such a retreat would not sustainably lower energy prices or improve the U.S. strategic position, while a successful U.S. action could sharply reduce energy prices. A president facing domestic opposition may also find it harder to sustain a war without congressional or public backing.

Every warned that a U.S. retreat from the Middle East could create a power vacuum for Iran, Russia, China, North Korea, Israel, or Turkey, shifting influence toward U.S. rivals or intensifying competition among regional powers. He described Israeli nuclear escalation as an extremely remote but consequential “fat tail” risk, noting Israel’s restraint in the 1973 Yom Kippur War. On Russia-Ukraine, Washington’s turmoil could make Putin doubt Trump can secure congressional Pentagon funding, potentially making a deal less attractive to Russia. Further escalation, including Ukrainian strikes on Russian oil refineries, could lift crack spreads; if it coincided with Middle East conflict, energy prices could stay high until a resolution. Every stressed that neither peace nor a Russia-Ukraine deal is necessarily imminent, and that this two-front escalation is not his base case.

Markets initially sold off after the election and then recovered, but Patrick Suresna cautioned that the rebound may be narrow and short-lived. Apple, Microsoft, and Amazon each gapped up about 5–6%, while semiconductors and other AI infrastructure stocks fell to fresh multi-month lows. The Nasdaq did not join the reversal or reclaim its 50-day moving average, leaving the move’s significance dependent on whether it lasts beyond a one-day recalibration. Oil fell $18 from Friday’s peak to its post-election-day trough; Suresna attributed nearly all of the decline to repricing geopolitical risk premium. He said a settlement would require meaningful concessions and willingness on both sides, and that if conditions change little, some risk premium could return. Every regarded the optimism about lasting energy-price relief as substantial.

The dollar’s decline also drew different readings. Every said weakness reflected uncertainty about the range of outcomes from Trump’s policies, despite the usual tendency for geopolitical tensions to support the dollar; the host cited a Wednesday-evening dollar index reading of 101.18, near its lowest in at least a couple of months. Suresna said the retreat remained within the pre-election range and did not break the dollar’s bull trend, describing the market as a buy-on-dip. He said a meaningful breakdown would require both the oil decline to prove correct and a major peace deal to be imminent. Treasury yields across maturities also stayed within pre-election ranges, suggesting bond traders had not yet concluded that the election changed the macro outlook. Suresna warned that refinery attacks could constrain refining capacity even if crude prices fell.

Every linked the political and market outlook to U.S. industrial capacity. He said tariffs, alongside other industrial-policy measures, have historically been a main route to reindustrialization; removing them might lower costs in the short term but reduce government revenue and leverage to build industry. Without tariffs or another workable approach, he warned, U.S. economic resilience and the capacity to support the military-industrial complex could weaken. He hypothesized a bargain in which the U.S. retains tariffs on China and Chinese transshipment while it and partners such as Europe establish a common external tariff and lower tariffs between themselves. Canada and Brazil were described as major holdouts in their respective efforts, and Every warned that without a broader bargain developments could become “really interesting and really messy.”

Every said data-center pauses prompted by high electricity bills coexist with large sums still flowing into the sector and U.S. officials’ view of it as a national-security priority. He expects officials to frame the race against China for Congress as comparable to Sputnik or the Manhattan Project, but said the availability of water, copper, chips, and electricity remains uncertain and some buildout may be “fantasy.” Nuclear and uranium stocks fell more than the broader market and stayed down during its recovery, despite nuclear power’s potential role in meeting electricity demand. He also argued that the U.S.-led order built on military power after World War II and military and financial power during the Cold War is crumbling; deindustrialization threatens its ability to sustain that role. Sustained high sulfur prices and energy disruption could eventually affect food prices, though fertilizer disruption has not clearly reached grain prices, and timing, stocks, and demand destruction will matter.