ALERT: 2027 Will Be A "Disaster" For Both Stocks & Bonds | Michael Pento

October 4, 2026

AI Summary

5 min read

In December 2021, Michael Pento went neutral on stocks, correctly calling the 2022 rout. By 2023 he was net long again. Now, for the first time since that call, his 12-point model has shifted once more. He has neutralized his portfolio—every long position offset by a short—and he believes 2027 will be a "disaster" for both stocks and bonds.

The Fed is pricking the AI bubble

Pento’s argument rests on three converging forces. The first is the Federal Reserve itself. He argues the Fed is fighting inflation by raising the federal funds rate, but that tool only works on one of inflation’s three current drivers: the debt-fueled AI investment bubble. It does nothing about the war in Iran (which raises energy prices), tariffs (which raise import costs), or the structural inflation baked into a debt-based monetary system. To break the AI spending spree—which Pento says accounts for 50% of GDP growth and 80% of earnings growth—the Fed will need a series of rate hikes that will crush the middle class through higher credit card, mortgage, and auto loan payments. "That's a very dangerous road to tread on," he says.

The bond market is fracturing

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What you'll learn

1 (01:01) **Michael Pento's Thesis: 2027 as a "Disaster" for Stocks and Bonds** - Pento explains why he has shifted from net long to neutral in his portfolio, warning that 2027 will likely be a disastrous year for both asset classes.
2 (07:00) **The Bond Market is Fracturing** - Pento details the structural breakdown in the bond market, driven by inflation, insolvency, and shifting global demand for U.S. Treasuries.
3 (12:38) **Critical Warning: High-Yield Spreads Blowing Out While Treasury Yields Rise** - Pento identifies an unusual and disturbing divergence in the credit markets that signals serious stress.
4 (14:11) **Market Internals Are "Really, Really Scary"** - Pento provides data on the breadth of the current market correction to justify his shift to neutral.
5 (15:43) **Current Portfolio Positioning: Longs Offset by Shorts** - Pento details his neutral portfolio, explaining which sectors he is still long and how he is hedging.
6 (17:08) **The Fed's New Sheriff: Kevin Warsh Will Not Enable Fiscal Profligacy** - Pento and host Adam Taggart discuss the implications of Kevin Warsh's leadership at the Fed.
7 (21:49) **The Fed Will Eventually Cave, But Much Later Than Expected** - Pento explains when he believes the Fed will step in, and why that timing is dangerous.

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Show Notes

EXPIRES AT MIDNIGHT TONIGHT!! LOCK IN YOUR EARLY BIRD PRICE DISCOUNT FOR THOUGHTFUL MONEY'S FALL ONLINE CONFERENCE (OCT 17TH) at https://www.thoughtfulmoney.com/conferencePlan for next year to be a "disaster" for both stocks & bonds (and real estate, too) warns money manager Michael Pento.We recorded a special session yesterday, as his model has just shifted, causing him to cease being net long.He's now net neutral, and expects to switch to net short as things deteriorate from here.For all the details why, watch this video.#marketcorrection #recession #inflation _____________________________________________ Thoughtful Money LLC is a Registered Investment Advisor Promoter.We produce educational content geared for the individual investor. It’s important to note that this content is NOT investment advice, individual or otherwise, nor should be construed as such.We recommend that most investors, especially if inexperienced, should consider benefiting from the direction and guidance of a qualified financial advisor registered with the U.S. Securities and Exchange Commission (SEC) or state securities regulators who can develop & implement a personalized financial plan based on a customer’s unique goals, needs & risk tolerance.All the details on Thoughtful Money's relationship with the financial advisors it endorses, many of whom regularly appear on this program, can be found in the following documents. We highly recommend you review these documents as they cover the terms that will apply should you choose to work with one of these firms at any time after watching this video.Thoughtful Money Disclosure Document: https://thoughtfulmoney.com/disclosureThoughtful Money Agreement: https://thoughtfulmoney.com/agreementIMPORTANT NOTE: There are risks associated with investing in securities.Investing in stocks, bonds, exchange traded funds, mutual funds, money market funds, and other types of securities involve risk of loss. Loss of principal is possible. Some high risk investments may use leverage, which will accentuate gains & losses. Foreign investing involves special risks, including a greater volatility and political, economic and currency risks and differences in accounting methods.A security’s or a firm’s past investment performance is not a guarantee or predictor of future investment performance.Thoughtful Money and the Thoughtful Money logo are trademarks of Thoughtful Money LLC.Copyright © 2026 Thoughtful Money LLC. All rights reserved.