Gundlach and Zulauf Warn: AI Bubble Burst Could Trigger U.S. Stock Market Peak in Q3
Taylor Wilson
"New Bond King" Jeffrey Gundlach and European macro investor Felix Zulauf issued a joint warning: the AI bubble, runaway U.S. debt, and private credit are converging into systemic risk, with U.S. equities potentially peaking as early as Q3 and a 30%–50% global decline to follow.
Why are two heavyweight bears speaking in unison?
Jeffrey Gundlach — widely called the "New Bond King" — and European macro investor Felix Zulauf recently appeared together in a public forum.
Their views align closely across three domains: the AI bubble, U.S. Treasuries, and private credit. Both see systemic financial risk building.
This means → This is not a lone bearish call. A trans-Atlantic, cross-asset-class risk consensus is forming.
Has the AI trade run its course?
Both believe hype around AI-linked assets is nearing its end. U.S. stocks could peak as early as Q3 this year.
After the peak, they project a 30% to 50% decline across global markets.
In plain terms = their read is that the AI story is still being told, but share prices have already borrowed years of future expectations — and when reality catches up, the drop will be steep.
What is wrong with U.S. Treasuries?
Both judge that U.S. government debt has "completely spiraled out of control."
They expect authorities may resort to yield-curve control — YCC, where the central bank caps Treasury yields to keep borrowing costs artificially low — or even a large-scale restructuring of U.S. debt.
This means → reaching for YCC or restructuring would amount to admitting the U.S. can no longer service its debt through market forces alone — virtually unprecedented in postwar history.
Why is private credit being compared to the eve of subprime?
Both warn that private credit today echoes the pre-2006 subprime pattern.
In plain terms = the core of the subprime crisis was risk layered and hidden where no one could see it. They believe private credit is replaying that script now.
Once that hidden risk surfaces, it could trigger broader financial turmoil.
How seriously should we take these calls?
These views come from public remarks cited by Wall Street CN. They are market opinions, not based on inside information.
Whether all three risks materialize simultaneously — and whether the timeline truly converges on Q3 — remains to be tested by macro data and market action.
This reflects a deeper tension in the current market: the bearish logic grows sharper by the day, yet the trigger point remains the biggest unknown.
Content is for reference only, not financial advice.