Despite geopolitical tensions, markets are buoyant due to sustained consumer spending. However, as individuals increasingly rely on debt, a critical moment of truth looms, potentially accelerated by events like a closure of the Strait of Hormuz.

<p>Markets are flying high despite geopolitical turmoil because a broad-based willingness to keep spending has been matched by an ability to keep doing so. But as more economic participants exhaust their means and rely on debt, a painful moment of truth will arrive—sooner rather than later if the Strait of Hormuz remains closed.</p>