Larry McDonald: S&P 500 Could Crash 30% Over the Next Year

Larry McDonald says 60%–120% increases in oil, gas, and diesel prices, alongside a 100-basis-point rise in the 12-month Treasury yield, delivered an estimated $300 billion hit to U.S. consumers and pressured McDonald’s and Home Depot shares. He also warns that higher rates could intensify bank stress as commercial real estate loans reset from 2%–3% to 7%–10%, while predicting that as much as $150 billion could leave Bank of America for higher-yielding accounts.

Larry McDonald argues that sanctions and the confiscation of Russian assets have encouraged central banks to shift from Treasuries to gold, citing a roughly $600 billion–$700 billion decline in China’s Treasury holdings. In the separate context of financing the $40 trillion debt burden, he says financial-repression-like policies could push money toward hard assets, while the guest presents U.S. gold repricing as one possible—not imminent—way to support the Treasury market.

The guest argues that a global stablecoin could reinforce the dollar’s reserve-currency role, while Larry McDonald forecasts stablecoins could reach $1 trillion–$1.5 trillion over five years and direct international investors toward U.S. assets. He says stablecoin issuers would need to hold Treasury bills, potentially creating new buyers for short-term government debt.

Larry McDonald sees a disconnect between the S&P at record highs and roughly 60 prominent brands down 35%–80%, alongside rising concentration: technology makes up 50% of the index, and Nvidia and Apple together account for about 13%. He says passive inflows can reinforce the largest holdings and argues that planned inclusion of SpaceX, Anthropic, and OpenAI could expose passive investors to companies whose combined value he says rose from $360 billion to $5.1 trillion in three years.