Despite the bullish sentiment on Wall Street regarding the prospects of us stocks shining brightly next year, moody's analytics has poured cold water on them.

The company's chief economist, Mark Zandi, stated that due to high asset prices and the two major risks the market will face in the coming year, us stocks may experience a significant correction.

"Asset prices have risen too much," Zandi said in an interview on Monday. He pointed out overvalued indicators such as stocks, cryptos, housing, and gold prices that are at historical highs.

"But I believe that the overvaluation and high prices of these assets will collapse amid price adjustments and a sustained decline, and this risk is increasing. I truly worry this is a risk scenario," he said.

"With each day that stock prices continue to rise strongly or the credit spreads in the bonds market narrow, I grow increasingly concerned about the possibility of a correction, which would have significant impacts on the macro economy," he added.

Zandi indicated that uncertainty surrounding Trump's policies amplifies this risk, specifically pointing out two policies that could pose serious risks to the stock market.

Imposing tariffs.

Trump proposed to impose high tariffs on commodities imported from China, Mexico, Canada, and BRICS countries. Economists say that as companies pass on the tariff costs to consumers, this could lead to rising prices, thereby stimulating inflation and causing interest rates to rise.

Trump rebutted the view that his policies would lead to inflation. He imposed tariffs during his first presidential term, and prices did not rise significantly. Economists pointed out that the scope of his current tariff plan is much broader, explaining the difference in inflation forecasts.

Zandi said, "I do not support broad tariffs. If it is a small range of tariffs, then it is not a big deal. But if it is widespread tariffs, then it is a big deal."

Republican National Committee spokesman Taylor Rogers stated in a pre-election announcement, "When we send Trump back to the White House, he will again cut taxes and unleash US energy to lower grocery and other commodity prices."

Mass expulsion of immigrants.

According to data from the Center for Migration Studies, Trump also promised to deport millions of immigrants from the USA, which, if carried out to the fullest extent, could force nearly 12 million immigrants living in the USA to leave the country.

It is currently unclear how the mass expulsion will be executed. Economists speculate that if the USA expels a large number of immigrants, it could hit employment sectors with a high proportion of immigrant workers, such as construction and agriculture.

"If 0.05 million undocumented immigrants are deported, maybe that is not a good thing, but it would not be a big deal. If it is 0.5 million, then that is a big deal. It could cause all sorts of chaos," Zandi said.

The reduction of workers in some industries may force employers to raise wages to attract talent, which could exacerbate inflation.

Zandi added, "The USA, like Canada, is very reliant on immigrant labor. If people are asked to leave this country, the labor market will once again heat up, wage growth will accelerate, inflation pressures will intensify, and the Federal Reserve will not be able to cut interest rates."

Although the risk of a stock market downturn is increasing, Zandi indicated that he generally expects the market to "consolidate," especially stocks, which he expects to "be flat" over the next three to five years. Meanwhile, he predicts that corporate earnings growth next year may be between 4%-6%.

Wall Street generally expects that the ROI of US stocks in 2025 will remain positive but more moderate, with Goldman Sachs and Bank of America predicting that the stock market will rise by 10% next year.