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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insights INSIGHT
Model Signals Before November Swoon
Pento's IDEC model flagged tighter financial conditions on November 6th, prompting him to cut equity exposure.
He tracked metrics like reverse repos, MOVE index, bank reserves, yen carry trade and CDS spreads to time moves.
volunteer_activism ADVICE
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.
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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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