Nobody likes a party pooper, but one strategist is volunteering for the job. Clocktower’s Eric Wallerstein sees the broad market sliding nearly 20% next year as rate hikes, an energy shock, and lofty valuations collide. Meanwhile, another camp says stay invested, so investors now hold two loud opinions and only one portfolio to protect.
- Wallerstein pegs the odds of that bear case at 50/50 — and told clients he expects forward price-to-earnings multiples to compress further, down to 15x.
- Even so, Barclays refuses to derisk, pointing to 30% US earnings growth in Q2 — with margins climbing in every sector but healthcare.
The AI hinge: Both camps are really arguing about whether the AI build-out pays for itself. Wallerstein fears the $3T of off-balance-sheet financing behind it, and Thursday showed the friction, with Oracle and developer Blue Owl sliding on a report of data-center project challenges. The bulls got their counterpunch when JPMorgan raised its Meta target, betting its Muse AI agent delivers the payoff. President Trump also said he doesn’t plan to restrict AI before his meeting with Xi Jinping. For now, the party pooper is waiting outside.
