Recession Odds Are Rising... But A 2008-Level Crash Is NOT Happening

0:00Hello everyone. Recession odds are increasing across Wall Street. We've got a narrative violation in the job market and there is new data out that suggests Americans are quietly getting much, much richer than everyone thought. We're live today from the desk of Anthony Pompliano.

0:23Before we get into today's episode, I need your help. My goal is to get to 1 million subscribers on YouTube. We currently have 45 ,200 of you that already hit the button. That means we need more. Hit the button, get subscribed, and let's get into today's show. All right, ladies and gentlemen, recession odds are on the rise based on all of the experts. Everybody on Wall Street, they're yelling and screaming and they're all worried. Jeff Cox writes for CNBC, in recent days, economists have pulled up their risk assessments of a U.S. contraction. And it's all amid heightened uncertainty over geopolitical risk and a labor market that for the past year has shown strains over that year.

0:58Now, Moody's analytics model has raised its recession outlook for the next 12 months to 48.6%. Goldman Sachs, they boosted their estimate to 30%. Williamton Trust, they said the odds are at 45%. And EY Parthenon has it at 40%. But they do give a caveat that those odds could rapidly rise in the event of a more prolonged or severe Middle East conflict. Now, in normal times, the risk for a recession is any given 12-month span is around 20%. So while the current predictions are hardly certainties, Jeff says, they signify elevated risk. Now that's Wall Street. That's the experts. Let's go to the people, to the street.

1:33Poly market, it's got odds at 35%. It was as low as 21 % at the end of February. Koushi says the odds of recession by the end of the year, 32%. And they were as low as 19 % back in early January. So why exactly is this happening? Why is everyone freaking out? Oil prices are spiking. Stagflation concerns are widening. The labor market is weakening. and the unknown duration of the war has people on edge. It's hard to navigate concerns about both the growth and the labor market in the United States at the same time. And obviously the next Fed chairman, they're going to have their hands full. But guess what, everybody?

2:05Chill out. Even if we go into a technical recession, that would be two straight quarters of negative GDP growth, there still is not going to be the big massive global financial crisis that we had in 2008. How do I know that? Well, it's because the central bank now has tools at their disposal. They got a playbook that they know how to use. If we head towards a serious recession, the Federal Reserve is going to whip out that playbook. They're going to open up to page 68 and they are going to say, you know what we should do? We should drop interest rates to zero. We should print trillions of dollars and we should get ourselves out of this problem.

2:39And so you don't have to worry. If you are an investor, any sort of recession is going to be overwhelmed by government and central bank response. Now, it doesn't mean people may not lose their jobs in the short term. It doesn't mean that there couldn't be some volatility. There is still the need to pay attention and know what's going on. But the fact that people are worried about a recession as if the entire global financial crisis is going to crumble on itself. People have lost their minds. They don't understand what the Federal Reserve is really going to do. And I tend to think that it's all fear mongering, just trying to drive clicks.

3:10So yes, recession odds are going up. But guess what? Every single recession odds I just read to you, all of them are below 50%. That means that there are higher odds. we don't get a recession, then we do. And so chill out. Life is good and everything's going to be just fine. Okay. We got a big narrative violation right here. Everyone saw when AI came out, engineers, their jobs are cooked. Everyone else, they're going to lose their jobs. Well, that's not really true. Lenny Rautsky, he recently came out with a brand new labor report. He says the engineering job openings, they're at the highest levels we've seen in over three years.

3:46Now that's interesting because three years ago and some change, that's when ChatGPT came out. Lenny says that there are over 67 ,000 engineering openings at tech companies globally right now and 26 ,000 just in the United States. He says, we don't know if there would have been more open roles if not for AI or if AI is actually leading to more open roles. But since the start of this year, the increase in open engineering roles is accelerating even more. Now, from my perspective, and I know this may be unpopular, I am now focused on only hiring engineers for all of our open roles. What I mean by that is software engineers are expected to write code and I want them to produce software products inside of our companies.

4:22Media engineers, which you've probably never heard of before, but a media engineer is now expected to create synthetic media assets and capture attention of target audiences. I call them legal engineers. Well, those people are expected to leverage the existing tools to automate an entire legal department at our company. And a finance engineer, they should do the same thing for the finance department. See, the latest AI advancements turn anyone into an engineer if they know how to use the tools correctly. If you can prompt, If you've got curiosity and you're a self-starter, you're now an engineer.

4:52You have the power of software at your fingertips. And I want those people working in our companies and automating away entire departments of people. So guess what? We got more engineers today than we've ever had. Some of them have true technical software backgrounds, and some of them have domain expertise and they're learning how to talk to a computer and have the computer automate what they're doing. All of those people are engineers, in my opinion, and we want more engineers working in our companies. You ever wonder how the guy down the street got rich? Wonder what he's doing with his money?

5:24Well, Rachel Ensign over at the Wall Street Journal, she wrote this great article saying they're rich, but not famous, and they're suddenly everywhere. And in this article, she highlights the rise of what she calls the stealth rich. Now, these are Americans worth tens or hundreds of millions, and they built their wealth the unglamorous way. They owned businesses, they accumulated assets, and they let compounding work over time. But this isn't just like a one-off anecdote or an edge case. It signals a profound structural shift in how wealth is being created in America. And the consensus view, in my opinion, is still drastically underestimating how durable and widespread this trend's become.

5:58Now, more Americans are becoming wealthy at younger ages than at any point in history. And it's not through speculation or bubbles, regardless of what the media tells you. They're getting rich through multiple long-term forces compounding simultaneously. Take public markets as an example. The S &P 500 has evolved into one of the most reliable wealth creation systems ever created. It's driven by persistent passive flows, tax-advantaged accounts, and global demand for U.S. assets. And this has created a regime shift where valuations can sustainably stay higher than those historical averages. And the passive investing, it ain't a bubble.

6:31It's a structural change in the market. Now, private markets, they tell a similar story. Middle market businesses are now global. They're tech-enabled cash flow machines with better tools. They've higher margins and they have greater exit liquidity than ever before. Real estate's transitioned into a luxury asset. They've constrained supply and concentrated ownership among higher income households. And that provides a structural floor under the prices. Technology acts as a powerful force multiplier. It enables asymmetric outcomes and scalable advantages that concentrate large financial rewards in the United States.

7:04Now, if we also layer in easier monetary policy relative to the massive debt levels, we can see that there's an expanding, sophisticated investor class in those high productivity industries. There's ongoing globalization that favors U.S.-centric systems. And the largest intergenerational wealth transfer in history is ongoing right now. These dynamics are accelerating capital flows into public equities, private businesses, and alternatives. And it creates a powerful reflexivity. Let me tell you what I mean here. There's rising asset prices that generate more wealth. That then fuels further investment and earnings.

7:36The result is abundant capital, expanding ownership in these businesses, and a market structure where drawdowns are shorter and more aggressively bought. We're in a structurally bullish regime, and I don't really see anything that's going to take us out of that. This ain't your grandpa's market. The ownership class is growing rapidly and becoming the dominant force. America didn't announce that it got rich. The accumulation was quiet and intentional, and the bears have been warning of overvaluation and impending corrections for a long time. But the more uncomfortable truth may be, well, what if we're still in the early stages of a generational bull market?

8:12What if stock can keep rising, the dollar can keep losing value over time, and those who consistently deploy capital into legitimate financial assets, they just continue to compound wealth and all the bears are wrong. Pessimists sound smart, but they almost never make money. And my guess is if America got rich quietly, it's only going to continue because these forces are unstoppable, and they're going to continue to be a tailwind for investors. That's it for today's show. Thank you guys so much for paying attention and watching. Please remember to subscribe on YouTube, and I'll see all of you live tomorrow from the desk of Anthony Pompliano.