Core Viewpoint - Veteran investor David Roche predicts a bear market in 2025 driven by smaller-than-expected rate cuts, a slowing U.S. economy, and an artificial intelligence bubble [1][2][3] Group 1: Federal Reserve and Interest Rates - Roche expects the Federal Reserve to resist reducing rates to the market's desired level of 3.50%, with the Fed's median forecast for 2025 at 4.1% [2] - Market participants anticipate rates below 4.1% by September 2025, according to the CME FedWatch Tool [2] Group 2: Economic Growth and Corporate Profits - Roche warns that corporate profits will not meet expectations due to a slowing economy [2] - The anticipated economic slowdown is expected to contribute to a bear market [3] Group 3: Artificial Intelligence Sector - The AI sector is viewed as having "entered bubble terrain decisively," which is expected to contribute to slower economic growth [3] - Roche predicts that the AI bubble will exit its current state over the next six months, further impacting the economy [3] Group 4: Market Predictions - Roche forecasts a bear market of approximately minus 20% in 2025, potentially starting at the end of 2024 [3] - This prediction does not take into account the outcome of the U.S. Presidential election in November [3]
Bear market is coming in 2025, warns David Roche, but the Fed will step in before it turns 'draconian'