What Happens To Markets, Economy, After Government Shutdown? | Bob Elliott

Summary

Bob Elliott says the US economy is in a late-cycle slowdown, with labor-market weakness, tariff-driven inflation, and growth-negative policy weighing on households. He argues markets are still rising because of AI/mega-cap speculation, but that this is a tactical bubble to ride with caution. For 2026, he sees bonds as the dark horse and gold as supported by underownership and fiat debasement. He expects cash, real-economy companies, BDCs, and private credit to underperform.

• Government shutdown likely has modest market impact unless it becomes prolonged.
• Tariffs and tighter immigration are drags on growth, with tariff inflation still ramping.
• Fed easing benefits are mostly priced; more cuts would require worse economic data.
• Markets are driven by mega-cap AI speculation while equal-weight stocks lag the real economy.
• Bob favors gold and bonds for 2026, citing underownership, high real yields, and fiat debasement.
• He warns AI capex may not earn enough revenue, and most non-winning AI companies risk a major investment bust.
• He sees BDCs, private credit, traditional consumer-demand companies, and cash as likely underperformers.