Famous Wall Street bear predicts a bearish market in 2026 and anticipates the Federal Reserve will accelerate rate cuts

BlockBeats news, on December 16, the market research firm BCA Research, led by well-known Wall Street bear Peter Berezin, released its latest report "Return of Nasdog," making a cautious judgment on the market outlook. The core view is that the artificial intelligence boom will come to an end, and U.S. economic activity will slow down significantly. BCA Research stated that the problem of over-investment in the artificial intelligence sector should have become apparent earlier. In 2025, investment in the U.S. technology and software sectors will account for 4.4% of GDP, approaching the level seen during the internet bubble. Given that the annual depreciation rate of artificial intelligence assets is typically around 20%, this means tech giants will bear $400 billions in depreciation costs each year, an amount that even exceeds their total projected profits for 2025.

BCA Research also mentioned that the expected P/E ratio of the S&P 500 at the beginning of 2026 will reach as high as 22.6, far above the historical median of 18. The already fragile stock market will find it even harder to sustain itself under the shock of the collapse of the optimistic artificial intelligence narrative. BCA Research predicts that "almost all sectors of the U.S. stock market will collapse in the second half of 2026." However, this will also prompt the Federal Reserve to accelerate rate cuts in the second half of 2026, with the federal funds rate dropping to 2.25% and the 10-year U.S. Treasury yield falling to 3.1% by the end of 2026.