FTFL - Cold Weather, Hot Takes

This article appeared in our December 2025 issue of From the Front Lines, Bowen’s roundup of news and trends that educate, inspire and entertain us. Click here to subscribe. 

It’s prediction season, time to prognosticate!

Prediction: The AI market will experience a correction

Spiciness level:🌶️

Hardly a novel prediction, right? We’re guessing you had a Thanksgiving dinner discussion about the AI bubble. 

Some data points for your next family gathering:

• 65% of US VC funding YTD has gone to AI
• 29% of US VC funding YTD has gone to just two companies
• Total private capital raised by these two companies is equivalent to the total proceeds from US company IPOs on Nasdaq and NYSE since 1/1/23
• One of these companies recently issued a  “Code Red” to fend off its far more profitable rival
• The S&P 500 has effectively become an AI index: 6 of the top 7 companies are AI infrastructure or AI hyperscalers
• These 6 represent 28% of total S&P 500 market cap
• $1 trillion of circular spending deals between Nvidia, Oracle and OpenAI remind us of this classic Onion headline

Follow-up prediction: That correction will come in March

Spiciness level:🌶️🌶️🌶️🌶️🌶️

How about that for a crystal ball? Our thesis is pretty simple:

1. Nvidia just threw down an absolute monster Q3 – $57B in revenue was up 62% vs 3Q24; Q4 guidance of $62B was not only $3.3B over consensus estimates, but also implies growth increasing to 65%
2. Investors surely would covet this performance, right? Nope. The stock is currently down 6% and has traded as low as 9% down in the days since the announcement. The bar for stock price appreciation has been set impossibly high.
3. Our guess is that come March, a few weeks ahead of earnings season, some combination of leaks and investor nerves will start a selloff. Then when Q1 numbers merely whelm instead of overwhelm, we’ll see a further drop.

To be clear, we’re not predicting a doomsday scenario or extended desert reminiscent of the post-dotcom crash, but rather a literal “correction” – a brief downward adjustment upon which the market can start to grow again.

What will be interesting to see is if OpenAI, which has an insatiable need for funding, can avoid a down round. Or how Anthropic’s IPO plans might be affected.

Prediction: The Trump administration will announce its intent to repeal 2002’s Sarbanes-Oxley Act and replace it with less stringent requirements

Spiciness level:🌶️🌶️🌶️

• US non-SPAC IPO counts have averaged 130 per year the last 4 years, down 70% since the 2000s
• The total number of public companies has been decreasing for the last 30 years
• SOX compliance scope, hours and costs are increasing
• This administration has a predilection for weakening governing regulations, and Trump has already asked the SEC to consider replacing quarterly reporting with six-month reporting

Prediction: Chinese currency will be THE global markets story of 2026

Spiciness level:🌶️🌶️🌶️🌶️

As we entered 2025, all eyes were on the incoming Trump Administration’s plan to reorganize global trade, with the principal instrument being tariffs. After 10 full months, the US has collected over $250 billion in tariffs, China has exceeded $1 trillion in annual trade surplus and many industries have experienced fallout. 

What’s in store in 2026? While we likely will see a modification of tariff policy and almost certainly see interest rate reductions based on a new Fed Chair, the prediction here is not what the US will do, it is what China will do. 

The Economist’s Big Mac Index tells the story better than any real economist ever could. The price of a Big Mac in USD is $6.01 and the price of a Big Mac in CNY is $3.60.

With CNY:USD at ~7:1 some have argued that strengthening could go all the way to 3.5:1. Our prediction is that in 2026, China will slowly start to increase the value of its currency by up to 30%.

The global implications of this will be profound. More lasting than the peak Trump tariff rate on Chinese goods of 145% in April 2025. And who could have guessed that? 

And finally, as a sports-obsessed firm…

Prediction: A D-I college football coach will admit to using ChatGPT during games to call plays 

Spiciness level:🌶️🌶️🏈

Caution: a Gatorade bath for CoachGPT will probably void its iPhone warranty.