The Julia La Roche Show #233 Michael Pento: The Great Asset Bubble Reckoning is Coming, Why We Could See A 50% Correction
Feb 14, 2025
Michael Pento, President and founder of Pento Portfolio Strategies, warns of a looming financial disaster. He critiques the Fed's inflation tactics, stating it’s been above 2% for years. Pento identifies a trio of asset bubbles in stocks, real estate, and credit that could lead to a shocking 50% market correction. Drawing from over three decades of experience, he emphasizes the importance of monitoring liquidity and discusses the impact of political shifts and the burgeoning national debt.
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Inflation Concerns and Market Bubbles
- Michael Pento criticizes Fed Chair Powell's positive inflation outlook, citing prices remaining above the 2% target for almost four years.
- He warns of a "triumvirate of bubbles" in equities, real estate, and credit markets, fueled by $5 trillion of post-COVID liquidity.
Evidence for Market Bubbles and Potential Correction
- Pento presents evidence for the equity bubble, including market cap to GDP over 200% and record-high price-to-sales ratios.
- He highlights the interconnectedness of the equity, real estate, and credit bubbles, predicting a minimum 50% correction.
Liquidity Model and Market Timing
- Pento uses a 20-point liquidity model to predict market downturns, including factors like real Fed funds rate and reverse repo facility.
- He emphasizes the importance of recognizing when liquidity becomes a problem, signaling a need to exit the market.