Legendary Trader Victor Sperandeo: Fed's Balance Sheet, Not Rates, Threatens AI Bull Market

Legendary trader Victor Sperandeo states the Federal Reserve's balance sheet reduction, or quantitative tightening (QT), poses a greater risk to the AI-driven bull market than interest rate adjustments. Sperandeo argues investors are overly focused on interest rates, overlooking the critical impact of liquidity changes on crowded trades like AI stocks. Speaking at an ETFGlobal ETP forum in June 2026, Sperandeo explained that while rate cuts lower the cost of money, they do not guarantee increased availability. He highlighted that reducing the money supply while cutting rates would not be inflationary. Sperandeo suggests a potential market top around the Fed's June 2026 policy meeting if an incoming Fed Chair were to pursue simultaneous rate cuts and balance sheet reduction. Sperandeo draws on his experience during Paul Volcker's era, where tight monetary policy led to liquidity crises, forcing him to liquidate positions. This underpins his view that liquidity, controlled by the balance sheet, is a more underestimated monetary policy lever than interest rates.