Episode summary
Stephanie Pomboy: 2027 Is Going To Be "Brutal In A Way We Haven't Experienced"
Thoughtful Money
· · 1 hr 8 min · Hosts: Wolf Richter, Adam · Guests: Stephanie Pomboy
Summary
Stephanie Pomboy argued that the latest CPI print is mostly a rearview-mirror signal, not proof that inflation is reaccelerating. She said oil prices have already rolled over, consumers are under mounting stress, and companies are increasingly unable to pass through higher prices because demand is being squeezed by necessities rather than robust discretionary spending. She expects the inflation narrative to flip from “hot” to disinflationary as 2027 approaches, though she thinks holiday spending could temporarily delay that shift.
Her bigger concern is that the affordability strain is real and broad-based. Pomboy said 96% of September consumer spending was non-discretionary, making the headline spending numbers look healthier than the underlying household reality. She pointed to buy now, pay later usage, credit cards, home equity lines, and even brokerage withdrawals as signs that consumers are funding consumption by raiding future balance sheets.
On markets, she warned that bond yields are in a secular bear market with cyclical rallies, that credit spreads are an important warning sign, and that the peak in rates is not in. She sees state-level anti-business regulation, especially around AI data centers, as a meaningful risk to growth and to the AI-driven market leadership. In her view, 2027 could bring a sharp market break and then a Fed rescue, with “buckle up” as the right investor posture.
Key takeaways
- Pomboy said the CPI is lagging and will likely matter less than weakening consumer demand and falling oil prices as 2027 approaches.
- She estimated that 96% of September consumer spending was non-discretionary, arguing the consumer is much weaker than headline spending suggests.
- Pomboy expects buy now, pay later, credit cards, home equity, and brokerage withdrawals to become less sustainable as household stress builds.
- She said bond yields are in a secular bear market, and that the peak in rates is not in yet.
- Pomboy sees state-level regulation, especially around AI data centers, as a real threat to the AI trade and to economic growth.
- She warned that 2027 could bring a brutal market episode followed by central bank intervention.
Notable quotes
“it's going to be brutal in a way that we haven't experienced”
“I think that uh clearly it it is rearview mirror”
“I calculated that 96% of the consumer spending in the month of September was non-discretionary stuff”
“I don't think the peak in rates is in”
How the episode opens
Like I said, buckle up. It's there's going to be a lot coming at us. There has been over the last few months, but I think that uh the market girrations are going to get pretty wild.
Um and it's going to be brutal in a way that we haven't experienced. Welcome to thoughtful money. I'm Thoughtful Money founder and your host, Adam Tagert.
Very happy to be welcoming the macro maven herself, Stephanie Pomboy, back to the channel for her monthly macro update for all of us thoughtful money afficionado. Steph, thanks so much for joining us.
Thank you for having me. Um trying to think of something uh upbeat that I can talk to you about today. — I know. I know. As we're recording this, markets are off. Um not nearly as much as they were off last week uh last Thursday. Um, but a lot to talk about. It's the first time you've been on since the uh the midterm elections and um we just have a lot of things that we could chat about. But let's start with today's news, which is the hot CPI data that came in.
Um it came in at what was it 4% month overmonth which
Was higher than the.3% expectation. Um and it's it's been higher than previous um uh data points uh in the data set here. So folks are starting to you know get real worried that inflation is picking back up again.
We had um a Fed speaker come out today. Yeah, it was it was Waller uh who basically said before the CPI print came out and said I'm in favor of a 25% rate hike unless it comes in at 3%. And then it came in at or sorry at.3 and then it came in at 04.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- cpi and fed rate odds
- oil prices and disinflation
- interest rates and bond yields
- credit spreads and junk bond yields
- ai data centers and market risk
Watch the episode
Watch “Stephanie Pomboy: 2027 Is Going To Be "Brutal In A Way We Haven't Experienced"” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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Thoughtful Money, this episode and its artwork belong to Adam Taggart | Thoughtful Money. Octagon is not affiliated with the show; this page is an independent summary.
