Knock-On Effects Could Make This Worse Than The Dot-Com Bust | David Rosenberg

Adam Taggart | Thoughtful Money® Sep 6, 2026 1:36:59

Summary

Today's market setup could inflict more damage than the dot-com bust, because nearly every sector now correlates with one AI trade.

Two fragile pillars prop up growth: AI data center capex and an equity wealth effect that has pushed the personal savings rate sharply lower.

Rising real interest rates will likely compress equity multiples well before any earnings disappointment, Rosenberg argues.

Bond yields may fall on a November 4 Treasury refunding shift, despite the hawkish turn from new Fed chair Kevin Warsh.

Rosenberg's new ROSY ETF launches September 9 on the TSX via Corton Capital, anchored in commodities, healthcare, and global equities.

Mike Preston shows Agnico Eagle (AEM) forming a cup and handle on the chart and is watching for an upside breakout.
AEM is part of the gold/silver miner basket that Preston expects could roughly double recent highs if the cup-and-handle patterns resolve.

Mike Preston notes Newmont is the only gold miner in the S&P 500 and recently made a new high before pulling back into a handle.
Newmont is shown alongside other miners in cup-and-handle formations that Preston expects to resolve to substantially higher targets.

Mike Preston shows Eldorado Gold (EGO) had a 50% pullback from $50 to $25 before forming a cup and handle, and is watching for a breakout through $50.
EGO is part of the broader gold/silver miner basket that Preston expects could roughly double recent highs if cup-and-handle formations resolve.

Top takeaway Rosenberg argues the bubble is in investor psychology and expectations, not in the technology itself, and warns that knock-on effects of an AI-trade unwind could be worse than the dot-com bust because nearly every sector is now correlated with that one trade.
Rosenberg says the equity market is in 'extra innings' — with a CAPE near 40 and a negative equity risk premium — and that rising real interest rates will compress P/E multiples even if earnings hold up.
Rosenberg flags housing as the ignored risk: the Fed Beige Book commentary on housing is poor, mortgage rates are backing up, and housing has powerful multiplier effects on the economy (as it did in 2007–2009).
Rosenberg is bullish on commodities and hard assets — oil, pipelines, energy infrastructure, rare earths, and gold/silver miners — citing expected multi-year supply-demand deficits in basic materials.
Rosenberg prefers non-US equities (Japan, Europe, India, Brazil, and emerging markets ex-Taiwan/Korea) over the S&P 500, and favors duration in 10-year and 2-year notes given a roughly 2.5% real yield on the 10-year.

Top takeaway Preston says he bought S&P 500 put options with a 7,200 strike (running through mid-October) for about 12 basis points at the portfolio level to hedge tail risk if the market breaks down.
Preston argues markets are in 'full-blown greed' on the bubble chart — late innings, with a CAPE near 40 and household equity allocations near all-time highs — and expects a possible blow-off top above 8,500 on the S&P before a final peak.
Preston is bullish on gold, silver, and miners, highlighting cup-and-handle formations across Eldorado Gold (breakout trigger above $50), Newmont, Franco-Nevada, Agnico Eagle, and GDX (trigger near 106); he says the move could roughly double recent highs on the miners.
Preston notes that healthcare has shown positive relative strength and has no correlation to the AI trade, and that New Harbor has healthcare exposure.
Preston says New Harbor's technical breadth indicators have weakened (though not to a fire-alarm level), which prompted adding put-option hedges rather than reducing equity exposure.

Top takeaway Rosenberg argues Warsh is the main driver of the backup in 10-year Treasury yields, noting that two-thirds of the rise in recent months happened on just three days that all coincided with Warsh speaking publicly.
Rosenberg says Warsh has shifted hawkish since becoming Fed chair — markets went from pricing in two more rate cuts to two rate hikes, and three dissenters wanted to raise rates at the July meeting.
Rosenberg criticizes Warsh's Jackson Hole guidance as incoherent, including Warsh's preferred 'private final sales' indicator, which strips out net trade even though AI investment relies on imported inputs.
Rosenberg says Warsh is trying to make the Fed less interventionary and less likely to 'ride to the rescue' when markets fall, which Rosenberg links to the current dyspepsia in the bond market.