Commodities expert warns economic slowdown could hit markets in 2026

Economic Outlook - The U.S. economy is showing multiple signs of decline, including a weakening labor market, persistent inflation pressure, and growing political uncertainty, which may lead to heightened volatility across financial markets in 2026 [1][12] - The labor market is losing momentum, evidenced by rising jobless claims and falling job openings, with initial job claims reported at 231,000 against an expectation of 212,000, and job openings at 6.5 million versus an expected 7.1 million [8][9] Interest Rates and Stock Market - Declining interest rates typically support equities; however, this cycle is different as rate cuts driven by slow growth, weak corporate earnings, and layoffs could damage stock prices instead of lifting them [2][3] - The current economic conditions suggest a potential recession or very low economic growth, despite lower stock market valuations being generally positive for interest rates [3] Investment Trends - Rising economic and political anxieties are pushing both individual and institutional investors toward alternative assets, such as industrial and precious metals, with over 20% of global financial assets still in cash [5][6] - Safe haven assets like gold, silver, and industrial metals are experiencing increased demand as investors seek alternatives to traditional stocks and bonds [6] Market Dynamics - Recent equity strength has been concentrated in artificial intelligence and crypto stocks, which are described as increasingly unstable, leading to a more defensive stance among investors [4] - The metals market is influenced by algorithmic trading, with 90% of futures volume generated by automated systems, causing metals to move together in response to price patterns and macro signals [7] Federal Reserve Challenges - The Federal Reserve is described as "stalemated," facing persistent inflation while economic momentum fades, with producer price inflation remaining near 3% [10][11] - The increasing unemployment and layoffs, coupled with smaller companies' reluctance to hire, place the Fed in a difficult position between combating inflation and preventing a recession [11]