Why We Haven't Had a Typical Crash

In this episode of The Wrap, Chris Whalen argues that the AI narrative is stalling and we're witnessing a sustained rotation from tech, AI, and crypto into safer, income-generating stocks. Chris points out that JPMorgan — arguably the best-run bank in America — has fallen from the top of his rankings to 87th place in just six months, a dramatic shift showing managers are rotating into smaller cap names. He describes this as a "manic, momentum-driven market" where the extraordinary gains of 2025 are now being given back. Chris is skeptical of both the AI and crypto narratives, calling them "driven by Wall Street hype," and notes that crypto is suffering specifically because the AI story has broken down. For 2026, he advises looking for safety and income rather than growth, remains long gold and silver despite volatility, and cautions that "this year is going to be a much more difficult year" for most sectors. On housing and the Fed, Chris lays out what Kevin Warsh and Scott Besant must do: swap the Fed's $2 trillion MBS portfolio to Treasury, restructure low-coupon securities into CMOs, and bury them in insurance company balance sheets to unlock the housing market.

Links:    

The Institutional Risk Analyst: https://www.theinstitutionalriskanalyst.com/ 

Inflated book (2nd edition): https://www.barnesandnoble.com/w/inflated-r-christopher-whalen/1146303673

Twitter/X: https://twitter.com/rcwhalen    

Website: https://www.rcwhalen.com/   

Timestamps:

0:00 Welcome and intro

01:00 AI narrative stalling, tech's worst week since November

1:59 Is this a healthy correction or something bigger?

4:58 JPMorgan now ranks 87th — what does that tell you?

6:36 Small caps rule right now — managers rotating to safety

7:30 What does it mean if managers won't own the best bank in America?

8:30 The link between crypto and AI

11:32 Chris is skeptical of both AI and crypto narratives

11:57 What's the next legitimate growth story for the US?

13:15 All that trapped private equity capital in tech

14:55 Fannie and Freddie earnings — but where's the growth?

17:00 What Warsh and Bessent need to do to fix housing

19:00 Should the Fed engage in fiscal issues?

21:54 The Fed's real mandate — keeping the Treasury market open

23:00 What should Warsh do with the MBS on the balance sheet?

24:58 Why we haven't seen a typical crash cycle

26:17 What's the trade for 2026? Safety and income

28:08 PennyMac's mistake — buying Cenlar

31:58 Viewer mail

34:39 Gold and silver portfolio — lots of opportunity despite volatility

35:00 Closing