In this insightful discussion, Michael Pento, a seasoned money manager and macroeconomic commentator, returns to share his expertise on market cycles. He warns of expanding asset bubbles in credit, real estate, and stocks, raising the possibility of a significant market downturn in 2026. Pento explains his defensive strategies, recent market movements influenced by the Fed, and the potential AI credit bubble. He advises careful portfolio allocations to navigate looming risks like liquidity shortages and fiscal pressures.
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Adjust Exposure From Liquidity Signals
Use liquidity and volatility indicators to adjust equity exposure ahead of market stress.
Pento reduced net long exposure from 40% to 15% after his model signaled tightening.
insights INSIGHT
Why $40B/Month Is QE, He Says
Pento calls the Fed's $40 billion/month T‑bill purchases 'QE' because it expands the Fed's balance sheet and creates high-powered money.
That action mollified financial conditions and narrowed credit spreads after the selloff.
insights INSIGHT
AI Gains Built On Borrowing
Pento sees the AI investment wave as heavily financed by borrowing rather than cash flow, making it fragile.
He argues stripping AI winners from S&P earnings would show falling EPS and weak GDP contributions.
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When today's guest was on this channel earlier this year, he warned that a 'triumvirate" of three massive asset price bubbles -- in credit, real estate and stocks -- threatened to take down our fragile economy and dash the retirement hopes for millions.Since then, the bubbles have only expanded.Will they expand further -- or pop -- in 2026?To find out, we have the great good fortune to welcome money manager Michael Pento back to the program.
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