Why a Recession May Never Come... and Why Gold Still Wins

Summary

Andrew Sarna argues that massive US government deficits make a traditional recession nearly impossible, capping bond yields and forcing investors to rethink core holdings. He avoids bonds as a long-term anchor, remains long gold on fiscal imbalances and geopolitical fracture, and favors energy stocks due to underinvestment and higher oil prices ahead. The AI trade is losing momentum as capex growth slows, but broad US equities may benefit from that pullback.

• US deficits of 6-7% of GDP suppress recession risk and implicitly cap Treasury yields.
• Bonds have become short-term trades only, no longer a core portfolio holding.
• Gold is a long-term buy on money printing, deficits, and a fracturing global order.
• Energy stocks are undervalued and poised to rise on chronic underinvestment and geopolitical tensions.
• AI capex growth is slowing, causing data-center supply chain stocks to roll over.
• Portfolio construction should emphasize real assets such as gold and energy over bonds.