Archive

DEEP DIVE: A Very Brief History of Recoveries & Expansions

Jan 20, 2024 2 min read paid

How much longer might the current economic expansion last? That remains a widely disputed question. The debate started between the hard-landers, soft-landers, and no-landers in early 2022, continued in 2023, and now continues in 2024. We remain in the soft-or-no-landing camp. We have a sense of “déjà vu all over again” about this debate. We were among the no-landers for several years following the 2007-08 recession. We even compiled a

Ed Yardeni

Hot Chips

Jan 18, 2024 2 min read paid

Ed Yardeni

What Is Powell Thinking?

Jan 17, 2024 3 min read paid

This question was partially answered yesterday in a speech by Fed Governor Christopher Waller: "This cycle, however, with economic activity and labor markets in good shape and inflation coming down gradually to 2 percent, I see no reason to move as quickly or cut as rapidly as in the past. The healthy state of the economy provides the flexibility to lower the (nominal) policy rate to keep the real

Ed Yardeni

Dr Ed's Video Webcast 1/17/24

Jan 17, 2024 1 min read paid

The runaway inflation of the 1970s was whipped only after Paul Volcker took over as Fed chief, doing the deed but not without precipitating a recession. Powell’s efforts to engineer “immaculate disinflation,” lowering inflation without a recession, have gone well so far, as we’ve been expecting. But the specter of 1970s inflation’s twin peaks must keep him up at nights now that Middle East hostilities raise the

Ed Yardeni

Loose Houthis Can Sink Ships

Jan 16, 2024 2 min read

Chevron CEO Michael Wirth warned yesterday in a CNBC interview that the Red Sea crisis could disrupt oil supplies and quickly push oil prices higher: "So much of the world's oil flows through that region that were it to be cut off, I think you could see things change very rapidly," he said. So what did the price of oil do today? It edged down (chart)

Ed Yardeni

Market Call: S&P 500/400/600 Are Flying With The Blue Angels

Jan 15, 2024 2 min read paid

Our Blue Angels framework allows us to visualize the stock market equation P = P/E * E in one chart, where P is the stock price index, E is the forward earnings of the index, and P/E is the forward valuation multiple. Forward earnings is the time-weighted average of analysts' consensus earnings expectations for the current year and the coming year. Our analysis of the Blue Angels is that

Ed Yardeni

The Economic Week Ahead: January 16-19

Jan 15, 2024 2 min read paid

Last week had plenty of indicators that allowed us to assess the latest readings on US inflation: It is continuing to moderate. This week has plenty of reports that will allow us to assess the strength of the economy: They are likely to show some mixed readings for the goods sector. Most important will be December's retail sales (Wed). We know that aggregate hours worked fell 0.2%

Ed Yardeni

DEEP DIVE: The True Story About Long & Variable Lags In Monetary Policy

Jan 13, 2024 6 min read paid

How long is the lag between monetary policy tightening and recessions? In the past, the answer to that question depended on how long it took the federal funds rate to rise to levels that triggered financial crises that morphed into credit crunches, which quickly caused recessions. Past federal funds rate hiking cycles tended to peak when financial crises resulted from rising interest rates and tightening credit conditions (Fig. 1 below)

Ed Yardeni

There's Always Something To Worry About

Jan 11, 2024 2 min read paid

The stock and bond markets are marking time. They might continue to do so during the first half of this year. The stock market should resume its advance during the second half of the year. The 10-year bond yield may continue to hover around 4.00% +/- 25bps this year. Here are the major issues hanging over the markets currently: (1) Inflation. December's CPI release showed a slight

Ed Yardeni

This Week: January 8 - 12

Jan 10, 2024 2 min read

The second week of the month tends to be light on economic releases compared to the other weeks of the month. However, it usually includes the CPI. The Cleveland Fed Inflation Nowcasting is projecting that tomorrow's headline and core CPI inflation rates for December will both be up 0.3% m/m. We are thinking that the headline might be closer to zero given that gasoline prices continued

Ed Yardeni

Dr Ed's Video Webcast 1/10/24

Jan 10, 2024 1 min read paid

The point between Fed tightening and easing is a good time to reconsider the widely accepted long-and-variable-lags theory of monetary policy. Is the economy still vulnerable to recession from the lagged effects of the 2022-2023 tightening round? We don’t think so. The markets have already started to ease, which should offset some lagged tightening effects. Furthermore, lagged tightening effects don’t invariably cause recessions. Our work shows that recessions

Ed Yardeni

Fourth Quarter's Earnings Reporting Season Begins

Jan 9, 2024 2 min read paid

The new year is about to begin with an earnings reporting season for the last quarter of the old year. We've been optimistic on the outlook for earnings because we expected the economy to remain resilient and grow despite the Fed's aggressive tightening of monetary policy over the past two years. So we were pleased to see that S&P 500 operating earnings per share

Ed Yardeni