Clocktower Strategist Predicts 20% S&P 500 Slump by 2027

Eric Wallerstein, chief macroeconomic strategist at Clocktower, warns that the S&P 500 could slump nearly 20% to 6,300 by 2027. He describes the current market as priced for perfection and states that a garden variety bear market is increasingly becoming his base case.

Wallerstein attributes this potential decline to a combination of energy shocks, excessive valuations, global central bank tightening, and slowing earnings growth. He specifically identifies risks from a potential AI credit event involving $3 trillion in off-balance sheet financing and the possibility of a telecom-style bubble burst in AI capital expenditures.

He predicts investors may pivot toward gold, which could drive prices to $6,000 per ounce next year. Wallerstein assigns a 50/50 probability to his bear case, citing the unpredictability of the AI trade and the war in Iran as primary volatility factors.