Doomberg Raises Odds of a US-Brazil Armed Confrontation to 25% and Questions Whether Treasuries Still Qualify as Reserve Assets
Risk Takers podcast interview, October 26, 2026, one day after Brazil's presidential runoff
Brazil: From Long Shot to a Live Risk
The most market-relevant claim in the conversation was Doomberg's reassessment of Brazil after Luiz Inácio Lula da Silva's runoff win over Flavio Bolsonaro. The author of the widely read energy and finance Substack said the probability of an armed confrontation between the US and Brazil has risen to 25% from 15%. He noted that the average observer would put the figure below 1%. Doomberg described the earlier 15% figure as a long-shot call published "under the masthead" several months ago, and said it was never its base case.
The logic is geopolitical rather than electoral. Doomberg argues that the US is retreating to the Western Hemisphere as it confronts a transition from unipolarity to multipolarity, and that a BRICS member sitting in that hemisphere "never made any sense." Aligned conservative candidates have been winning across the region, in Argentina, Colombia and El Salvador, and Brazil under Lula is the glaring exception. That helps explain why prediction markets had Bolsonaro's son near 80% before the vote. Doomberg attributes the roughly 20% overnight drop in Brazil's equity ETF to a rising risk of civil unrest, and says it sees "no universe" in which the US stays out of one. It points to color revolutions, contested elections and street riots as the same toolkit seen in Ukraine, Belarus and the Middle East.
Doomberg did not endorse claims of outright fraud. It said Lula's closing-debate answer on his missing finger, in response to a flippant remark from Bolsonaro, was enough to move a point or two. It acknowledged "election shenanigans" and said an extended voting window ordered by a judge who was formerly Lula's attorney will not help matters. Its summary: "Objectively the following two statements can be true. Lula probably won the election fair and square, and none of his opponents are going to believe it." The firm also flagged that Brazil is already a 4 million barrel per day oil producer, and it mentioned a weekend piece on the potential of the equatorial margin.
Treasuries as Reserves: A Concept Aired for the First Time
Asked whether the recent spike in Treasury yields was a local high, Doomberg floated an idea it said it was discussing publicly for the first time and had conceived over the weekend. It asks whether Treasuries still qualify as reserves. The standard definition of a reserve asset is a neutral asset for settling international trade imbalances, and Doomberg argues Treasuries are plainly not neutral. Central banks have been shifting toward gold. The firm cited rumors, unconfirmed, that cash-strapped Saudi Arabia has been forced to sell gold because it is not permitted to sell its Treasuries.
"If you're not permitted to sell them, what are you permitted to sell? Gold," Doomberg said. "If you can't sell it, it's not a reserve. It's a mark-to-market piece of paper that nobody has confidence in." The near-term implication is counterintuitive. Gold sells off in liquidity events while yields stay controlled, as happened last week when yields fell and gold failed to rally ahead of a possible resumption of the Middle East conflict. Over a decade, it argued, the combination of financial repression and a shift in hegemony is "pretty bullish for the nominal price of gold." Doomberg stressed it had not yet thought the consequences through enough to elevate the idea to its formal research. The host noted that central bank gold buying has accelerated since the sanctions on Russia.
On fiscal policy, Doomberg saw no restraint. It cited CBO figures showing fiscal 2026 spending of $7.4 trillion, up from $7 trillion, and called DOGE "a complete failure." Its view on government spending is that "there's somebody on the other end of every dollar of that spending that is happy to receive it." It reiterated that all roads lead to yield curve control. It also cautioned that gold is volatile in debasement episodes, citing 50% to 60% swings in the Deutsche mark gold price during the Weimar years. Doomberg described gold as insurance against a dollar collapse and said it does not want that outcome, since its own business and most of its assets are dollar-denominated.
Oil: All Risk Premium, With a Glut Waiting
With Brent at $117, Doomberg called oil "basically all risk right now." Its core argument is that crude is worthless until it reaches a refinery. Ukraine's campaign against Russian refineries, which it says is aided by the CIA, has removed the main customers for oil. That explains why diesel and crack spreads have spiked while crude has not gone higher. It cited a RAND analyst's estimate that Russian refinery throughput is back above domestic demand but still only about 65% of historical norms.
The firm's view is that all paths lead lower. Durable peace with Iran and a Russia-Ukraine settlement would bring a "wildly large glut," with Guyana, Brazil, Argentina, Canada, Mexico, Venezuela and the North Sea all adding or restoring supply. A renewed US-Israeli strike on Iran could send oil to $200 and collapse the global economy, but Doomberg argues that scenario also ends in a glut through demand destruction. "Oil can print up here. It can't stay up here," it said, allowing that nominal prices could hold if the dollar is debased enough. It gave credit to Energy Secretary Chris Wright and Treasury Secretary Scott Bessent for keeping prices more contained than most expected, and described their tools as "band-aids on the ship." Doomberg also said that with supply already near redlining, "not much more" can be destroyed before the glut thesis fails.
Doomberg was candid about its own miss. It had forecast $30 to $40 oil before the Iran war. It said it assumed rational actors would not start wars they were "condemned to lose," and that this error has burned it twice, with Europe's conflict with its energy supplier Russia and with Trump's Iran war.
Iran, the Midterms and a Base Case of US Retreat
Doomberg operates on a mental model that the world has been in "World War III" since 2014, with the US and its allies on one side and Russia, Iran, China and North Korea on the other. Its stated base case is that "the US is going to get run out of the Middle East." The key swing factor is whether the US and Israel launch a third round against Iran. Doomberg said it sees a real possibility, citing weekend reports that Prime Minister Benjamin Netanyahu ordered a strike and was rebuffed by the military, though it noted that gold and oil gave no sign of a strike overnight. It argued that Iran is a harder target than Ukraine's war suggests, since Russia has fired thousands of precision missiles and tens of thousands of drones without knocking Ukraine offline, while Iran can hit stationary Gulf energy assets. If the war does not escalate, it argued, the West is quietly acknowledging defeat, with consequences for gold, silver, crypto and debt.
On the US midterms, Doomberg's base case is a Democratic sweep, based on second-term history and a "visceral" split in Trump's base over the Iran war. Its arithmetic: "It's a 50/50 country. So if he even loses 10% of his base, that's 5%. That's a landslide to the other side." A Republican win, in its view, would trigger left-wing riots. After a Democratic sweep, it sees either a Clinton-Gingrich-style deal-making path, which it considers unlikely, or an "orgy of corruption and impeachments" and a pardon spree, which it fears. It dismissed the idea that AI will matter at the ballot box, saying that "the average person doesn't take two seconds of their day to think about AI." It said opposition to data centers may be partly manufactured by foreign propaganda.
The Scorecard and the Long Shots
Doomberg walked through six mental models from a premium presentation last fall and said most of them played out: the US is chronically short of air defense missiles; China has leapfrogged the West technologically; crude oil is China's only remaining vulnerability; the US will try to eliminate China's economic leverage; the human is infinite compute; and the US has started arresting former presidents. On the third point it noted that China has shed about 5 million barrels per day of crude demand since the Iran war. It did not answer whether that is sustainable. It also cited its earlier calls on Mark Carney's election, British Columbia's turn to a conservative government and the capture of Nicolás Maduro, and acknowledged a miss in predicting Ed Miliband as UK prime minister.
Its newer long shots are provocative. It sees a hot war between the Philippines, as a US proxy, and China in the near term. It also says there is a "much greater chance that Germany breaks back up than people think," arguing that "East Germany and West Germany are unnatural." Doomberg's framing is option-style. It says that if consensus prices an outcome at 1% and the true odds are 15%, the call is worth making even if it fails. The track record of calls cited here is selective and self-reported, and several of them cut against widely held views.
Information Hygiene
Doomberg devoted time to its research method, which will anchor the first chapter of its forthcoming book, "why most analysis fails." The firm says it avoids algorithmic feeds and relies on curated lists of accounts, dropping those that post obvious fakes. It also follows ordinary Russian and Ukrainian citizens with small followings for ground-level signal, such as an hour-and-a-half wait for gasoline in Moscow. The book is optimistically due in fall 2027, more realistically early spring 2028. Doomberg also noted that EQT is reported to be acquiring Range Resources, which caused it to postpone a planned EQT deep dive.