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Wall Street's renowned bearish investor has a bearish view on the 2026 market and anticipates that the Federal Reserve will speed up interest rate cuts.
BlockBeats News, December 16th, Wall Street's renowned short seller Peter Berezin-led market research firm BCA Research released its latest report "Return of Nasdog," providing a cautious outlook on the future market. The core viewpoint is that the artificial intelligence boom will come to an end, and at the same time, U.S. economic activity will significantly slow down. BCA Research stated that the issue of overinvestment in the field of artificial intelligence should have been apparent long ago. By 2025, the proportion of U.S. investment in technology and software as a percentage of GDP will reach 4.4%, approaching the level of the Internet bubble era. Considering that the annual depreciation rate of artificial intelligence assets is usually around 20%, this means that tech giants will bear $400 billion in depreciation costs each year, an amount that even exceeds their total profits in 2025.
BCA Research also mentioned that the expected price-to-earnings ratio of the S&P 500 Index in early 2026 will reach a high of 22.6 times, much higher than the historical median of 18 times. The already fragile stock market will find it even harder to sustain under the impact of the collapse of the optimistic narrative surrounding artificial intelligence. BCA Research predicts that "by the second half of 2026, almost all sectors of the U.S. stock market will collapse." However, this will also prompt the Federal Reserve to accelerate its interest rate cuts in the second half of 2026. By the end of 2026, the federal funds rate will drop to 2.25%, and the 10-year U.S. Treasury yield will fall to 3.1%.
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