Michael Pento: Spiking Bond Yields Could Crash Credit Markets
Tom welcomes Michael Pento of Pento Portfolio Strategies back to the program. He explains his twenty-point model based on growth and deflation indicators to determine where the market is heading. The premise is that you want to ride key asset bubbles higher while being cautious of potential volatility. The global economy is based on sand, and when the storm comes, the foundation is washed away. When bond yields start disrupting credit markets, you want to take a much less risky approach with your investments.
The government borrowed four trillion last year, and we are looking at another two trillion in relief coming shortly. We’re going to have GDP growth this year because of the recovery. Watch the credit markets; there isn’t any wiggle room left for central banks.
Michael discusses the fallacy in modern economic thought that inflation is no longer a concern and that governments can print without consequence. He explains how inflation will unfold and why central banks regularly miss their targets. If they stop printing money, you will see a collapse in asset bubbles and a depression unlike any of us have seen. They can’t control inflation with more inflation.
Mr. Pento explains why worldwide central banks are already effectively conducting yield curve control.
Michael believes a lot of debt is threatening to collapse, and the markets are incredibly fragile. The entire financial system could shutdown over what should be minor issues.
He explains their current fund allocation and why gold has a proven history, and why they are currently not holding any gold assets. A fiscal and monetary cliff is arriving this year which will be very dangerous for the stock markets.
Lastly, he discusses why governments may be permitting digital currencies but questions what may happen when they consider these as direct competitors to their coming new digital systems.
Talking Points From This Episode
- Watch the credit markets for volatility.
- Central Banks are out of options.
- Cryptocurrency risks.
- Fiscal and monetary cliff coming this year.
Time Stamp References:
0:00 – Intro
0:32 – A Twenty Point Model
4:43 – Possible Fed Actions
8:45 – Bond Market Risks
13:30 – Yield Control Now!
15:19 – Bubbles Everywhere
16:46 – Gamestop & System Fragility
18:17 – Portfolio Weighting Gold
22:25 – His Market Position
24:48 – Governments & Crypto
29:22 – Volatility & Inflation
30:30 – Wrap Up
Michael Pento is the President and Founder of Pento Portfolio Strategies with over 27 years of investment experience. He was the portfolio creator and consultant to Delta/Claymore’s commodity portfolios that raised over $3 billion, distributed through Claymore/Guggenheim’s sales network. He is the author of the book “The Coming Bond Market Collapse” and has a weekly podcast called “The Mid-week Reality Check.”