Why I'm Staying BULLISH STOCKS In 2026 While Everyone Else Panics

0:00Anthony Pompliano:Hello, everyone. The U.S. economy is going through some intense chaos and uncertainty right now, and it includes a number of potential threats that loom on the horizon. Today, we're going to break down each threat and what I think is going to happen over the coming months. We're live today from the desk of Anthony Pompliano.

0:23Anthony Pompliano:Before we get into today's episode, I need your help. We currently have 44 ,781 subscribers on YouTube, but the majority of the people that watch every episode, they're not subscribed. So hit the subscribe button and let's get into today's show. All right, ladies and gentlemen, markets are gyrating and volatility is spiking. Investors are trying to figure out what exactly they should be doing. The state of the US economy is in a constant pendulum swing, swinging between a potential economic golden age and a fear of the next great recession. We just swing back and forth, back and forth. So what exactly is driving this chaos and uncertainty.

0:56Anthony Pompliano:Well, it isn't really one thing, and that's what makes the situation so unique. The dot-com bubble, if you remember, it was driven by the tech sector. The global financial crisis, that was driven by over-leveraged housing. Yet right now, in this moment, we can point out numerous threats that are coming at the economy from very different directions. There's a great article today in Bloomberg that was titled, Markets Buffeted by War, AI Stress, and Credit Cracks All at Once. And the three reporters who put it together wrote a very important section. They wrote, Trump's decision to attack Iran, no matter what he may now declare, has injected a new and potentially long-lasting shock into the global economy at a time when investors were already grappling with an array of forces threatening to upend investor confidence that until recently had seemed bulletproof.

1:40Anthony Pompliano:They said that that's fanning the most intense market volatility since April last year when prices were roiled by Trump's unveiling of global tariffs. And Iran is only part of the story. There's also the emergence of artificial intelligence as a disruptive technology capable of suddenly wiping out as well as creating wealth for shareholders and creditors. There are the soured loans that are starting to pop up in growing numbers in the booming private credit industry. There's the softening of the US job market. And there's the stubbornly high inflation that's causing doubt on whether the Federal Reserve will be able to resume cutting interest rates and possibly even force European central banks to start raising them, end quote.

2:19Anthony Pompliano:Now, I agree with Bloomberg's assessment on most of the things that they're outlining here. Every investor should be aware of these things. Artificial intelligence, war, private credit, and a soft labor market. Where I disagree, though, is on inflation. There's really two ways to think through this aspect of the US economy. Now, first, the real-time measurement of inflation are showing that current inflation levels are under 1 % nationally. The Fed's target is 2%, but we're under 1 % right now. Now, this is largely being driven by drops in housing and other material aspects of the Americans' daily life.

2:47Anthony Pompliano:You have to remember one thing. Products and services can feel expensive when you go to the checkout counter because past inflation drove prices really high. Yet at the same time, current inflation can be low, which means that prices are not getting worse at an accelerated rate. That conversation has been beat like a dead horse though. What I find most interesting is that in each of the potential threats outlined by Bloomberg, it's actually a deflationary development that would lead to lower inflation, not higher inflation. For example, let's talk about private credit for a second. Private credit's been on the rise as financial organizations lend money to small and medium-sized businesses.

3:21Anthony Pompliano:This opportunity opened up because of the passing of the Dodd-Frank Act. Dodd-Frank prevented most banks from lending to these businesses in an easy way. So now that cracks are starting to show up in the private credit industry, we have to recognize that any sort of market downturn in those activities would be highly deflationary, not inflationary, deflationary. As we see defaults, redemptions, gating, or forced deleveraging, we will start seeing lenders stop making new loans. though existing loans will get restructured or written down, and companies will lose access to refinancing abilities. And because the U.S.

3:53Anthony Pompliano:economy relies on credit expansion for a good portion of growth, if these issues start to materialize, then you can expect reduced business investment. Hiring freezes or layoffs will become pervasive. Lower M &A activity will take over the market, and we'll have lower economic growth on a macro basis. These are all known as deflationary forces. But this is not a story exclusive to private credit, though. A soft labor market is deflationary as well. Wages are the largest source of income and demand in the economy. When labor weakens, income growth slows. That then reduces spending and pricing power across the system, which is more deflationary forces.

4:30And we already know artificial intelligence is highly deflationary. We squeeze inefficiencies out of the economy and that allows companies to produce more profits with fewer employees. Elon Musk continues to say that he believes the rise of AI will be a supersonic tsunami that hits the US economy with such a force that the government's gonna be overwhelmed and they're gonna need to start printing more money in an emergency fashion. Who knows if that's gonna happen as quickly as he believes, but no one, not a single person, can argue that AI is not deflationary. It's very obvious in all of the data points.

5:01And then this brings us to war. Normally, war is an inflationary force. Governments usually need to print a lot of money. They need to borrow capital and they need to be able to do it to afford the war. But the inflationary forces will never materialize if the war is short and it doesn't become a prolonged affair. Now, given that all of the communication coming out of the current administration is that the goal is a short war, I'm much less worried about the current Iran situation creating meaningful inflation that causes issues in the economy. That could change if the war is prolonged, but right now I'm not worried about it.

5:34So this brings me to what I think is going to happen from here.

5:36Anthony Pompliano:First, when it comes to monetary policy, I believe that we will see more interest rate cuts than most people are expecting. If we get deflationary forces in the US economy, that's gonna force the Fed's hand. But we also know the Fed chair nominee, Kevin Warsh, remember the guy that Trump just hand-selected? He has explicitly said that he believes interest rates should be lower as well. And so I wouldn't bet money that he's saying one thing publicly, and then he does another thing once he actually gets put into the Fed chairmanship. Second, asset prices have been incredibly resilient this year.

6:06We violently extradited Nicolas Maduro from Venezuela. We negotiated more access to Greenland. We bombed the hell out of Iran. We've been bombing narco-terrorists in Ecuador. And now we're threatening Cuba with regime change. Yet through all of this, the S &P and NASDAQ are both down less than 2 % year to date. Just look at these charts from public.com. You'd expect the stock market to be substantially lower, but that's not the case. Gold's up 20 % during the same timeframe. And my guess is that asset prices will continue to do fairly well given the economic backdrop. The tougher areas for asset prices have been software stocks and Bitcoin, and you can see in these charts from public.com that they've both sold off and they seem to be trading in lockstep with each other.

6:46But lastly, I believe that we will see an immense wave of innovation that drives GDP growth higher. I still think people are drastically underestimating the power of artificial intelligence and robotics. These technologies are gonna be pervasive throughout our lives and we barely understand how profound the impact's gonna be. As the innovations start to appear, we should enter a zone of exponential production. Robots will be helping to create more robots. AI software will start writing more software. It's where the exponential component comes from. Humans will not be the limiting factor anymore.

7:16Anthony Pompliano:And as we hit that escape velocity, my greatest hope is that we're able to claim victory on the age of abundance that's driven by the economic golden age. There's no promise that it's gonna happen, but I'm optimistic that it can happen. And your challenge as an investor is to sit and understand all of the chaos, all of the uncertainty, all of the threats coming from different directions. But also remember one important thing. Asset prices usually continue to go up and to the right over a long period of time. And they go up and to the right because the government can't stop printing money. As they print more money, they debase the currency and that drives asset prices higher.

7:52Anthony Pompliano:Stocks are going to be much higher when it comes to a couple of years from now. Bitcoin, gold, real estate, everything will continue to go up and to the right. Everything that you hear in the news or you read in the headlines, it is all short term. Remember, understanding it is helpful, but ignoring it is essential. And I think that's what great investors do is they keep their eyes on the long run and they understand buying great assets and holding them forever. It was good for Warren Buffett, but it'd be good for your portfolio as well. That's it for today's show. Thank you guys so much for watching.

8:24Anthony Pompliano:Please remember to subscribe on YouTube and I'll see you all live from the desk of Anthony Pompliano tomorrow.