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Dr Ed's Video Webcast 11/20/24

Nov 20, 2024 1 min read paid

The US Constitution was designed to promote gridlock. But the benefits of gridlock are undermined by lawmakers’ spending freely because the Constitution lacks a balanced budget requirement. … Gridlock is good for investing, but the stock market tends to do well no matter who is in the White House. Trump’s proposals—representing a radical change from Biden’s policies—are likely to materialize because he won a clean sweep. Today,

Ed Yardeni
Eric Wallerstein

An Earnings-Led Meltup For Stocks?

Nov 19, 2024 3 min read paid

We are often asked if the current bull market in stocks has turned into a meltup that could soon be followed by a meltdown. That's a risk we currently give a 25% subjective probability. Relatively high stock valuations are the main worry for many investors (chart). However, our bullish outlook for strong productivity-led economic growth means that earnings rather than valuations can lead the market higher. Coupled with

Ed Yardeni
Eric Wallerstein

Small, Medium, and Large Cap Stocks

Nov 18, 2024 2 min read paid

The rally in the S&P 1500 has certainly broadened in recent weeks as the Fed started to cut the federal funds rate (FFR) by 50bps on September 18 and again on November 7 by 25bps. The S&P 400 MidCaps and S&P 600 SmallCaps have been rising in record high territory in recent weeks along with the S&P 500 which has been rising

Ed Yardeni
Eric Wallerstein

The Economic Week Ahead: November 18-22

Nov 17, 2024 3 min read paid

The week ahead will provide important updates of housing and manufacturing indicators. The latter should show that economic growth may be broadening to include the goods sector, which has been relatively flat since the Fed started raising interest rates. Since the start of the bull market, we've been recommending overweighting the following cyclical sectors S&P 500 Information Technology, Communication Services, Financials, Industrials, and Energy (chart). We

Ed Yardeni
Eric Wallerstein

MARKET CALL: Powell's Latest Pirouette

Nov 17, 2024 3 min read

Fed Chair Jerome Powell is an accomplished danseur. His pirouette's are masterful. He did another such pivot on Friday in prepared remarks for a speech [starts at 19:00] to business leaders in Dallas. He said that, "the economy is not sending any signals that we need to be in a hurry to lower rates." That's what we've been saying since Powell

Ed Yardeni
Eric Wallerstein

DEEP DIVE: S&P 500 Earnings In The Roaring 2020s

Nov 15, 2024 5 min read paid

Strategy I: Roaring Ahead In Sunday’s QuickTakes, Eric, Joe, and I raised our outlook for S&P 500 earnings as well as our price targets for the index. We did so because we believe that Trump 2.0 represents a major regime change from Biden 1.0 (or was that Obama 3.0?). The corporate tax rate will be lowered from 21% to 15%. Personal income from tips,

Ed Yardeni
Eric Wallerstein

Trump 2.0 Supercharges Our Stay Home Investment Strategy

Nov 14, 2024 3 min read paid

We've been bullish on the dollar for a while. Since, the Fed's September 18 meeting, the US Dollar Index (DXY) is up 5.8% (chart). Roughly half of that move has occurred since last Tuesday's US elections. The strong dollar confirms our view that the Fed has already cut the federal funds rate too much too soon, and now likely won’t be lowering

Ed Yardeni
Eric Wallerstein

Sticky Landing For Inflation?

Nov 13, 2024 3 min read paid

Today's CPI report suggests that inflation may be getting stuck north of the Fed's 2.0% target. The headline and core CPI inflation rates rose 2.6% and 3.3% y/y during October. Goods prices are still deflating. But supercore inflation, rent inflation, and wage growth all rose last month suggesting they are getting sticky at relatively high rates. This along with strong economic growth

Ed Yardeni
Eric Wallerstein

Dr Ed's Video Webcast 11/13/24

Nov 13, 2024 1 min read paid

Something’s amiss with Fed Chair Powell’s explanation for lowering the federal fund rate a second time in two months despite an economy he admits is performing remarkably well. He tied the rationale for the move to the theoretical “neutral FFR,” implying that monetary policy needs to be less restrictive to reach that point, even though that point is intrinsically unknowable. Also implied was that the related risks are

Ed Yardeni
Eric Wallerstein

From Election Uncertainty To Policy Uncertainty

Nov 12, 2024 3 min read paid

The NFIB survey of small business owners was released today showing a record high in their uncertainty index during October (chart). That's not surprising since the polls showed that the presidential race was too close to call, raising the prospect of a contested election. The same happened prior to the previous two elections. The uncertainty index will undoubtedly fall when November's survey is released. However, it

Ed Yardeni
Eric Wallerstein

China: A Deflating Dragon

Nov 11, 2024 3 min read paid

Over the past three years, most American economists believed that a recession would be necessary to bring inflation down to 2.0% in the US. While the US economy managed to avoid a downturn, those predictions may have been right. The recession, however, was in China as the huge negative wealth effect of falling property and stock prices caused Chinese consumers to retrench. China's government encouraged manufacturers to

Ed Yardeni
Eric Wallerstein

Market Call: Animal Spirits Are Back & Boosting the Roaring 2020s! Fueling A Meltup Too?

Nov 10, 2024 3 min read paid

Just after Donald Trump won the presidential race on November 8, 2016, we observed that the economy and stock market were charged up with "animal spirits," a term coined by John Maynard Keynes meaning spontaneous optimism. Animal spirits are back now that Trump won a second term on November 5 and in a clean sweep if the Republicans win the House, which seems likely. The stock market jumped

Ed Yardeni
Eric Wallerstein