Ed Dowd: 'Kooky' Valuations & Weak Economy To Lead To Big Downturn By Midterm Elections

27 snips

Jan 13, 2026

In this insightful conversation, Ed Dowd, founder of Phinance Technologies, delves into the potential for a significant market downturn by 2026 due to 'kooky' valuations and economic weakness. He discusses the housing market's overvaluation, critiquing current policies aimed at propping it up. Dowd also examines geopolitical shifts, China's risky growth outlook, and the likely impacts on global trade. With warnings on tech valuations and labor market stress, he suggests necessary adjustments for future stability.

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INSIGHT

Kooky Market Valuations

Stock market valuations are at dot-com levels and 10-year forward projected returns are effectively zero.
That math implies a significant drawdown is likely if new fresh money flows into the market now.

INSIGHT

Long Yields Falling, Deflation Risk Rising

Long-term Treasury yields fell in 2025 and have more room to decline as recession risks rise.
Treasuries returned positively in 2025, setting the stage for a possible deflationary scare.

INSIGHT

Housing Correction Is Underway

Housing is beginning a predictable, slow-moving correction driven by affordability and demographics.
Prices are 30–35% overvalued and must adjust to align with incomes and job trends.

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Change around the world, especially geopolitically, is accelerating as we enter 2026.Depending on your point of view, some of these changes are positive -- potentially historically great even.Some of them are much more concerning.Where is the world order headed from here? And more granularly, how are the economy and financial markets likely to perform in 2026?For insight, we're fortunate to welcome back to the program Edward Dowd, founder of macroeconomic consulting & research firm Phinance Technologies.Ed predicts that 'kooky' valuations and growing economic weakness will lead to a market correction & recession by the midterm elections.

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