Archive

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

The Economic Week Ahead: November 11-15

Nov 10, 2024 3 min read paid

The week ahead will provide updates on inflation, consumer spending, and manufacturing. We expect inflation might have stalled in October, interrupting its decline toward the Fed's 2.0% target. We still expect a solid increase in inflation-adjusted incomes last month, which should fuel strong consumer spending. The goods sector likely remained depressed last month, especially as hurricanes and worker strikes weighed on manufacturing hours worked. Here's

Ed Yardeni
Eric Wallerstein

Powell's Mixed Message Remains Dovish

Nov 7, 2024 3 min read

The Federal Open Market Committee (FOMC) cut the federal funds rate (FFR) by 25bps today as widely expected. We expected it as well, though we still believe that the now 75bps cut in the FFR since September 18 is too much, too soon because both the economy and the labor market remain strong. In his press conference today, Fed Chair Jerome Powell acknowledged several times that both remain solid. He

Ed Yardeni
Eric Wallerstein

Trump 2.0 and the Financial Markets

Nov 6, 2024 4 min read paid

Donald Trump's win and the Republican sweep of the House (probably) and the Senate (certainly) is consistent with our Roaring 2020s scenario. Indeed, it increases the odds that the good times will continue through the end of the decade and possibly into the 2030s. Stocks soared today on the widespread perception that Trump 2.0 will include a cut in the corporate tax rate and reductions in business

Ed Yardeni
Eric Wallerstein

Dr Ed's Video Webcast 11/6/24

Nov 6, 2024 1 min read paid

The bond market seems to be ignoring developments that usually halt rising yields in their track. Investors seem focused instead on the stimulus—both fiscal and monetary—that’s likely coming to an economy that doesn’t need it. The effective result: The bond market is tightening the economy itself. The Bond Vigilantes are back and threatening to take the 10-year Treasury bond yield up to the 5% realm. That

Ed Yardeni
Eric Wallerstein

25bps Cut? We Strongly Dissent!

Nov 5, 2024 3 min read paid

We may or may not know tonight who will be the next president, but we should know which party will win a majority in the Senate and the House. It appears that Republicans are likely to do so. In this case, a Harris administration would be gridlocked, while a Trump administration would have more power to implement his policies, including higher tariffs (raising inflation risks) and lower taxes (ballooning the

Ed Yardeni
Eric Wallerstein

Contrarian Curses & Tricky Cross Currents Since September 18

Nov 4, 2024 3 min read paid

Investors often rejoice when a stock they own is selected to join a major market index. Index funds collectively have trillions of dollars in AUM and must buy the stock in bulk, giving a boost to its price. But sometimes these bestowed honors can be a curse for the newbie. Super Micro Computer, for instance, joined the S&P 500 on March 18. It had peaked at a record

Ed Yardeni
Eric Wallerstein

Market Call: Trend Spotting

Nov 3, 2024 3 min read

Some of our best friends are technicians. Ed was at Prudential Equity Group at the same time as Ralph Acampora, the renowned market historian and technical analyst. Ralph's analysis often confirmed Ed's fundamental analysis. So in our spare time we like to follow the charts for clues about the future, and we occasionally spot trends that seem to support our forecasts. Currently, we are focusing on

Ed Yardeni

The Economic Week Ahead: November 4 - 8

Nov 3, 2024 3 min read paid

The blockbuster event in the week ahead is Tuesday's presidential election. We're rooting for gridlock, or a divided government. Both parties seem intent on passing policies which would widen the federal government budget deficit that's already too wide. Notwithstanding the stimulative outlook for fiscal policy, the Fed is widely expected to cut the federal funds rate (FFR) by 25 bps on Thursday to a

Ed Yardeni
Eric Wallerstein

DEEP DIVE: Ten Useless Macroeconomic Theories

Nov 1, 2024 6 min read

It’s difficult to count the number of mainstream macro theories that we’ve debunked over the past few years. Many long-used relationships and correlations have been upended by record monetary and fiscal stimulus during the pandemic, a wave of early retirements by Baby Boomers, and interest-rate hikes off ultralow levels. We’ve been busy shooting them down since early 2022. Taking great pains to keep it short, below is

Ed Yardeni
Eric Wallerstein

Super Macro. Not So Super Micro.

Oct 31, 2024 3 min read paid

Some of the air is coming out of the AI trade. Super Micro Computer hasn't been super recently. It fell 12% today after auditor Ernst & Young resigned due to inaccurate financial reporting, and is now down 66% over the past six months (chart). Super Micro Computer is a key vendor for building out Nvidia-based clusters of servers used for training and deploying AI models Meta and Microsoft

Ed Yardeni
Eric Wallerstein

Going Nowhere Fast?

Oct 30, 2024 3 min read

The S&P 500 equal-weighted index has been going nowhere fast since the Fed cut the federal funds rate (FFR) by 50bps on September 18 (chart). The same can be said for the Russell 2000. The stock market rally has stopped broadening since the Fed's rate cut! Why is that given that the current earnings season has been mostly upbeat? The problem is that the bond yield

Ed Yardeni
Eric Wallerstein