Michael Pento, president and founder of Pento Portfolio Strategies (PPS), returns to The Julia La Roche for episode 368 to warn that the three asset bubbles in stocks, credit, and real estate continue growing to unprecedented levels, with total market cap now at 230% of GDP versus a 90% average. He reveals that Powell has quietly printed $170 billion since December in an undeclared QE program, calls Powell's tenure "horrific," and celebrates his departure. Pento explains he's "nervously long" the market using his five-sector inflation-deflation model, currently positioned for stagflation with commodities, precious metals, and energy. He warns that credit markets will fracture first, with private credit now at $2 trillion (bigger than the $1.3 trillion subprime market in 2008), and predicts June redemptions could trigger a death spiral. Pento believes we need a 50% market correction to return to normalcy, warns we could see 15% interest rates like the 1980s but with a far worse debt backdrop, and argues the bottom 80% of Americans are already living in depression-like conditions while crony capitalism enriches the top 20%. He sees two paths forward: voluntary asset price reconciliation or forced hyperinflation leading to currency reset.

Links:

https://pentoport.com/

https://twitter.com/michaelpento

0:00 Introduction - Michael Pento returns after 6 months

0:59 Big picture macro view - Bubbles grow bigger

2:19 Powell's "horrific tenure" - $4.5 trillion printed

3:32 QE program continues - $170 billion since December

4:39 Kevin Warsh-led Fed - What changes are coming?

5:52 Warsh will punish Wall Street, boost Main Street

7:06 Stock bubble metrics - 230% of GDP (average is 90%)

8:24 Crony capitalism vs. free market economics

9:10 Why capitalism gets a bad name

10:01 Home price to income ratio at all-time highs

11:01 Disconnect between stock market highs and consumer sentiment lows

11:35 Only top 20% doing well - The "i-shaped economy"

12:33 AI spending reminds Michael of 1999 tech bubble

13:33 Are you confident Kevin Warsh can get us back to normalcy?

14:41 What would normal market valuations look like?

15:06 Would need 50% correction to return to normal

17:05 Wouldn't printing just set us up for more problems?

18:57 Either scenario leads to higher rates

19:37 Implications of double-digit rates on everything

20:38 Are you still nervously long the market?

21:19 Michael's not a perma bear - History of market crashes

23:02 How dangerous can this bubble be when it bursts?

24:03 Michael's 5-sector inflation-deflation model

25:14 Precious metals trade - Why only 6% position

26:41 Energy thesis - After Iran war

27:30 Explaining the 5 sectors - Which is most worrisome?

28:25 Stagflation is the base case going forward

29:01 Post-recession: $6 trillion deficits, $12 trillion Fed balance sheet

29:55 Could we see 15% interest rates like 1980?

31:17 What's the end game here?

33:21 Are we past the point of no return?

34:58 Which bubble bursts first - The epicenter?

35:44 Watch credit markets first - Private credit warning

36:46 June redemptions could trigger death spiral

37:47 Is private credit too big to fail now?

38:21 Risk not getting attention - Pressure on middle class

40:00 Buy now pay later defaults surging

40:29 Bottom 80% living in depression conditions

41:18 Preventing tremors creates epic shocks

42:48 Has anyone talked about $170 billion of QE since December?

43:24 What makes Michael hopeful for the future

44:01 Closing thoughts