# 2026 Will Be a Roller Coaster Market (Here’s How to Survive It) w/ Michael Lebowitz Source: https://www.youtube.com/watch?v=RU6NIP0w7gc Recap page: https://rapidrecap.app/video/RU6NIP0w7gc Generated: 2026-01-15T16:07:19.537+00:00 --- ## Quick Overview Michael Lebowitz predicts that 2026 will be a volatile "roller coaster year" for markets, driven by the Federal Reserve's policy path regarding Quantitative Easing (QE) and the potential for political uncertainty surrounding Donald Trump, suggesting that while gold and silver have performed well recently, the market's focus will shift to how the Fed navigates these factors, potentially leading to high volatility and a downward trend in valuations for high-flying sectors like AI. **Key Points:** - Michael Lebowitz expects 2026 to be a volatile "roller coaster year" for markets due to Fed policy uncertainty and political factors. - The Federal Reserve's ongoing Quantitative Easing (QE) is likely to persist for more than a few months, despite reserves shrinking, as they seek to add liquidity. - Lebowitz suggests that if the Fed's decision on the tariff case is delayed, the market will react strongly, with expectations that the Fed will be forced to cut rates or engage in further easing. - The current narrative favoring high-growth sectors like AI might change if the Fed continues its hawkish stance, as high valuations could face pressure. - Gold has performed well over the last 5-6 years, while silver has shown recent strength, benefiting from inflation hedging demand, though silver's performance is less parabolic than in past bubbles (like 2008 or 2011). - A key risk is that if the Fed continues tightening, the market could see a "de-leveraging" or a downward shift in valuations, especially for highly valued stocks like those in the AI sector. ![Screenshot at 00:00: Michael Lebowitz, CFA, and John Gillen begin the discussion, with Lebowitz foreshadowing that 2026 will be a volatile market period due to Fed policy and other factors.](https://ss.rapidrecap.app/screens/RU6NIP0w7gc/00-00-00.jpg) **Context:** This episode of the Milk Road Macro podcast features host John Gillen interviewing Michael Lebowitz, CFA, a portfolio manager with over 35 years of experience in financial markets, focusing on trading, portfolio construction, and risk management. The discussion centers on macroeconomic outlooks for 2026, particularly concerning Federal Reserve policy, inflation, and the potential impact of political events like the upcoming election on market dynamics. ## Detailed Analysis Michael Lebowitz, CFA, predicts that 2026 will be a volatile "roller coaster" year for the markets. He notes that despite the Federal Reserve currently shrinking reserves, they are still adding liquidity to the system, and he expects QE to continue for more than a few months. A major factor driving near-term market reaction is the Supreme Court's delayed ruling on a tariff case; Lebowitz suggests that if the ruling is unfavorable to the administration, the market will react strongly, anticipating the Fed might be forced to cut rates or reverse course. He notes that Trump's administration has shown a tendency to make populist moves, like imposing tariffs or enacting measures like credit card fee caps, which can influence Fed behavior. Regarding specific assets, gold has performed well over the last few years, and silver has shown recent strength, though not as parabolically as in past bubbles. Lebowitz suggests that if the Fed continues its current path or if earnings growth slows unexpectedly, high valuations in sectors like AI could face pressure. He emphasizes that the market is pricing in rate cuts by June or July, but the Fed's commitment to fighting inflation remains a key uncertainty that could lead to continued volatility. Furthermore, he points out that the Fed's narrative of liquidity being short is not entirely consistent with the actual flow of money into the system, which may continue to fuel rallies despite underlying economic weakness. ### Supreme Court Tariff Case Delay - The Supreme Court delayed its decision on the tariff case; Lebowitz suggests a negative ruling for the administration would force the Fed's hand to cut rates or implement easing measures. ### Fed Policy & Liquidity - The Fed is accumulating reserves despite public statements suggesting liquidity is short; this accumulation fuels market momentum, but Lebowitz remains wary of high valuations. ### Gold & Silver Performance - Gold has performed well over the last 5-6 years, and silver has shown recent strength due to inflation hedging, though the recent rally in silver is less parabolic than in past bubbles. ### AI Sector Concerns - High valuations in the AI sector are a concern, as continued high valuations rely on sustained earnings growth, which may slow down if the Fed remains hawkish. ### Political Influence - Lebowitz believes Trump's populist tendencies (like tariff threats or credit card fee caps) create uncertainty that the Fed must manage, potentially influencing future policy decisions. ### Market Rotation - The rotation out of high-flying tech/AI stocks into value/small-cap stocks might continue if the Fed maintains its tightening stance. ![Screenshot at 00:00: The start of the interview featuring John Gillen \(Host\) and Michael Lebowitz, CFA, with a "COMING UP..." graphic.](https://ss.rapidrecap.app/screens/RU6NIP0w7gc/00-00-00.jpg) ![Screenshot at 00:15: Michael Lebowitz discussing his expectation that QE will last longer than a few months, regardless of shrinking reserves.](https://ss.rapidrecap.app/screens/RU6NIP0w7gc/00-00-15.jpg) ![Screenshot at 00:32: John Gillen introduces the topic of the delayed Supreme Court tariff ruling and its potential market impact.](https://ss.rapidrecap.app/screens/RU6NIP0w7gc/00-00-32.jpg) ![Screenshot at 02:22: Michael Lebowitz expresses his primary fear regarding the market: valuations being too high relative to growth.](https://ss.rapidrecap.app/screens/RU6NIP0w7gc/00-02-22.jpg) ![Screenshot at 35:09: The Milk Road Macro animated outro screen featuring the Milk Carton character balancing the globe.](https://ss.rapidrecap.app/screens/RU6NIP0w7gc/00-35-09.jpg)