Macro Analyst Eric Johnston says Stagflation is Near as Cantor Fitzgerald Buys More Bitcoin

Eric Johnston, Chief Equity and Macro Strategist at Cantor Fitzgerald, recently shared a sobering outlook on the U.S. economy and stock market. Speaking on CNBC’s Closing Bell Overtime, Johnston described stagflation—a combination of slowing economic growth and rising inflation—as the likely best-case scenario over the next six months. 

His insights reflect growing concerns about the sustainability of current equity valuations amid persistent macroeconomic headwinds. Meanwhile, Cantor Fitzgerald is strategically increasing its Bitcoin exposure, signaling a shift toward alternative assets in uncertain times. This article delves into Johnston’s macroeconomic views, the risks facing traditional markets, and the role Bitcoin may play in a stagflationary environment.

Eric Johnston’s Stagflation Warning: A Macro Outlook

Johnston’s analysis centers on the challenging economic backdrop characterized by slowing GDP growth coupled with elevated inflation. He explains:

“We think that the risk-reward here for equities is quite poor. As far as the economy goes, the real question is — we're going to slow, we're going to have slowing growth and we're going to have rising inflation. The real question is how much are we going to slow and are we going to go negative? That backdrop right there makes it such that our best case scenario for the next six months is a stagflationary environment.”

He further highlights that when GDP growth falls more than 200 basis points below inflation, earnings tend to decline year-over-year, dragging down stock market returns. Johnston notes the S&P 500 currently trades at roughly 20 times earnings estimates, which he believes are overly optimistic given the economic risks. Historically, during recessionary periods, valuations tend to compress to around 16 or 17 times earnings.

Equity Market Valuation and Risks

Despite the looming stagflation risk, the equity market remains relatively elevated. Johnston points out:

• The equity risk premium—the additional return investors demand over risk-free assets—is only 70 basis points, well below the 20-year average of 300 basis points. This suggests stocks may be overvalued given the economic uncertainty.
  
   
• Investors have become conditioned to expect Federal Reserve and government interventions during downturns, which has supported higher stock prices despite fundamental weaknesses.
  
   
• Tariffs, described as one of the biggest economic shocks in decades, continue to weigh on growth, with rates expected to remain above 10% on imports, perpetuating economic headwinds.
  
   

Given these factors, Johnston recommends a defensive investment stance, favoring cash, short-term Treasury securities, and gold—which has recently surged due to its scarcity and safe-haven appeal.

Cantor Fitzgerald’s Increasing Bitcoin Position

In response to macroeconomic uncertainty and the risk of stagflation, Cantor Fitzgerald has been increasing its Bitcoin holdings. Bitcoin is viewed as a potential hedge against inflation and currency debasement, offering portfolio diversification beyond traditional assets.

Johnston’s macro perspective underscores why alternative assets like Bitcoin are gaining traction among institutional investors. With fiat currencies facing inflationary pressures and equities trading at high multiples amid slowing growth, Bitcoin’s fixed supply and decentralized nature provide an attractive store of value.

Conclusion

Eric Johnston’s analysis from Cantor Fitzgerald paints a cautious picture for the U.S. economy and equity markets, with stagflation looming as the most probable near-term scenario. Slowing growth, persistent inflation, and elevated tariffs create a challenging environment for corporate earnings and stock valuations. 

Against this backdrop, defensive assets such as gold, cash, and short-term Treasuries are prudent choices. Additionally, Cantor Fitzgerald’s growing Bitcoin exposure signals a strategic pivot toward alternative assets that may better withstand macroeconomic volatility. Investors should carefully consider these dynamics when positioning their portfolios in 2025.

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FAQ

Who is Eric Johnston?
Eric Johnston is the Chief Equity and Macro Strategist at Cantor Fitzgerald, providing expert analysis on economic trends and market outlooks.

What is stagflation?
Stagflation is an economic condition characterized by slow or negative growth combined with rising inflation, leading to challenging investment environments.

Why is Cantor Fitzgerald buying more Bitcoin?
Bitcoin is increasingly seen as a hedge against inflation and currency risk, offering diversification amid uncertain macroeconomic conditions.

What does an equity risk premium of 70 basis points mean?
It means investors are demanding a relatively low extra return for holding stocks over risk-free assets, suggesting equities may be overvalued given current risks.

How do tariffs impact the economy?
Tariffs increase costs for imports, reduce trade efficiency, and can slow economic growth by raising prices and disrupting supply chains.