Echoes of 1987
Michael Belkin, author of the widely read Belkin Report, believes the bond market is delivering a warning that equity investors have yet to fully absorb: the era of easy money is ending, and stocks face a potentially painful adjustment.
The Belkin Report strategist draws a parallel with 1987, when he worked at Salomon Brothers. Bonds fell sharply while stocks initially continued climbing, before equities reversed and ultimately crashed.
“The bonds sold off and the stock market ignored it back then,” he says.
His forecasting model has been bearish on bonds globally. He attributes the pressure to heavy government borrowing, AI-related debt issuance and the unwinding of years of artificially low interest rates.
Belkin believes the global bond sell-off—and the painful adjustment away from years of artificially low interest rates—is not over.
Weakness Beneath the Surface
Belkin’s concern extends beyond technology valuations. He sees deteriorating financial, industrial and transportation stocks as evidence that economic conditions may be weaker than upbeat official assessments suggest.
His model previously favored banks and brokers, but those signals reversed. He also points to widening credit spreads and falling high-yield bonds as signs that financing conditions are tightening.
Private-equity firms are particularly vulnerable in his assessment: weaker debt markets can complicate efforts to sell investments and return capital. At the time of the interview, Belkin said his model was generating bearish signals for Blackstone (BX), Apollo (APO) and KKR (KKR).
Meanwhile, resilience in technology leaders risks obscuring broader weakness.
“The sector rotation is saying something completely different,” he says of the contrast between market behavior and optimistic economic messaging.
Energy Leads, Gold Faces a Test
Energy remains one of Belkin’s preferred sectors. He argues that investors underestimate both supply uncertainty and the economic damage from higher fuel costs, which flow through transportation into consumer prices.
“I think the energy crisis is not over by any stretch of the imagination.”
His stance on precious metals is more conditional. Although fundamentally bullish over the long term, he uses his model to adjust exposure rather than maintain a permanently bullish position.
He remained long gold-related investments at the interview but acknowledged weakening conviction as higher yields and a stronger dollar created pressure.
“I’m feeling a little bit less confident on the next move in gold.”
Outperformance Is Not Protection
Belkin stresses a distinction: defensive sectors can outperform the market while still losing money.
Healthcare, consumer staples and energy retain relative appeal in his forecasts, but their absolute-return outlook has weakened.
Using 200-week moving averages as reference points—not model-generated price targets—he estimates potential declines from interview levels of approximately 26% for the S&P 500 (SPY), 33% for the Nasdaq 100 (QQQ) and 55% for the semiconductor ETF SMH.
He does not claim to know whether a decline would unfold through a crash or a prolonged retreat.
Cash Preserves Opportunity
Belkin’s conclusion is to prioritize liquidity over reflexive dip-buying.
“The best place you could be right now is cash,” Belkin said.
Recalling portfolio managers who lacked buying power near the 2009 bottom, he argues that staying fully invested through a downturn can leave investors unable to exploit genuine bargains.
His message is straightforward: reduce vulnerability now so that a future buying opportunity becomes actionable rather than merely recognizable.
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