Michael Pento Predictions

[7:50] I do believe the next iteration is going to be a deflationary depression after how however long this this sojourn into chaos lasts and reflation and disinflation that that carnival ride whenever it ends I think it ends in disinflation then deflation and depression and I said D and I meant it it's depression not recession

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[36:30] in in the real estate market you need a between at le I would say around my work shows around 30%. Between 25 and 30% that would bring the home price to income ratio close to where it should be. Um so that's a minimum uh drop.

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[36:49] And when you talk about the stock market, you need something north of 50% to bring it back just to bring it back to historical metrics historical normal um ratios as far as total market cap to equities or GDP or price to sales which are the two most important metrics of this of measuring the valuation of the stock market.

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[16:31] and that is when annual deficits go to $6 trillion... So we're gonna have deficits just blow out immensely.

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[39:58] thinking about inflation going, you know, higher than it's ever been before, higher than 20%, and thinking about the unemployment rate going well into double digits

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[39:58] thinking about inflation going, you know, higher than it's ever been before, higher than 20%, and thinking about the unemployment rate going well into double digits

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[18:01] it's very important for me and my clients to make sure that we are unscathed from the next recession the next credit crisis because it's going to be another lost decade or perhaps longer before we get back to even

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[33:31] I don't think you're getting any relief really. If you look at the CRB index, I don't think I don't think you're get any real relief to the middle class from falling prices at all. That's it's way out in the future.

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[3:03] About 3 weeks ago it for the first time in many years it flashed me to be buying gold miners.

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[17:06] the total market cap of equities to GDP, that ratio is the most is the is the strongest, most robust measurement metric to see if the stock market is overvalued. It's now 235% of GDP. The The average of that ratio is 100. That means the stock market has to drop by over 50% just to get back to a a mean ratio if GDP didn't fall.

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[17:38] Home prices have to drop using that same logic, home price income ratios have to drop about 30% just to go back to historical normal levels.

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[18:25] the next recession is going to quickly, in my opinion, manifest or metastasize into a depression given how elevated asset prices are relative to normal levels. So, I I've coined the phrase a triumvirate of bubbles. We've got a massive credit bubble. We've got a massive real estate bubble. And we have a massive equity bubble bubble all existing concurrently for the first time in history. So, when we have a recession, number one, it's going it's going to be very trenchant, very deep, very acute, could be a depression.

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[9:26] you're going to see deficits, as I said, approach most likely approach $6 trillion. And that's before you get any kind of helicopter money or TARP program, like we had in 2008 and 2020. So, you could see deficits rise, you know, way above 6 trillion.

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[14:58] I think he does nothing in before the uh midterms, because imagine the ire that's going to come from Capitol Hill at at from the White House. He if he was to cut rates. Well, there's only there's July and September. So, he didn't raise rates in this past meeting. He has a meeting com- coming up in a few days now. Uh end of July. Um he he's not going to really I don't think he's going to raise rates into a declining second derivative basis of inflation. I don't think he's going to do that. So, then you're talking about September and October meetings, which is just prior to the midterms. So, he doesn't do anything

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[15:30] I think what he does is he has this task force. They meet and they say, 'Oh, here's my backup. I can now start after the midterms to start to reduce the Fed's balance sheet.'

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[24:28] I think Warsh and his symposium or or task force starts to shrink that balance sheet next year, and that could engender the recession.

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[22:38] we have not repealed the business cycle. A recession is going to happen in our future. We are going to have a credit crisis.

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[18:57] So either scenario, higher rates then. Yes. And then unpack the implications of that.

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[35:44] That's the epicenter of the credit bubble. the private credit market...Now it's $2 trillion dollars in private credit. The entire subprime mortgage market was 1.3 trillion. So we're way ahead of it. I mean that alone is enough to to to start to crater banks and crater the re the um the money markets to freeze the repo market to to fracture. That's where it's going to happen.

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[36:53] stay tuned. I think if we had this interview in six months from now, I think we'd have a totally different conversation. We don't have to wait that long. And we still have to see like, you know, what the June redemptions are going to look like with some of these credit funds.

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[28:47] That's the environment we're in. I I expect it to intensify greatly as we go through time

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[8:07] I think it stays around $100 a barrel, maybe even higher depending on how much of the infrastructure they destroy in Iran in these next three weeks.

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[7:41] my base case scenario is that the war goes on for another three or four weeks. President Trump declares victory. He leaves.

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[23:53] I can confidently predict with with great sorrow and dismay that the returns going forward will not be any clo anywhere close to 7% in real terms.

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