Ed Yardeni

Expecting a Debt Deal

May 25, 2023 3 min read paid

Our good friend Jim Lucier of Capital Alpha is one of the best Washington watchers we know. He has given us permission to share his latest thoughts on the debt ceiling issue with you. His basic message is that this too shall pass. Here are some of his main points from his commentary today: (1) We think that House Speaker Kevin McCarthy (R-CA) will be able to round up fully

Ed Yardeni

DEEP DIVE: Stocks Discounting Earnings Recovery

May 25, 2023 3 min read paid

The stock market discounts earnings over the next 52 weeks. How do we know this? Most industry analysts provide earnings estimates for the current year and the coming year. They might provide earnings estimates or earnings growth forecasts beyond that period, but investors aren’t likely to have as much confidence in earnings forecasts beyond the next 52 weeks. Of course, industry analysts don’t forecast earnings on a 52-week-ahead

Ed Yardeni

Dr Ed's Video Webcast 5/24/23

May 24, 2023 1 min read

The Fed sought to allay fears of bank runs when it provided backstop funds to banks. Consider the fears allayed—so far, at least. The disintermediation threat hasn’t descended; it hasn’t wrought a credit crunch, a recession, or widespread economic destruction. Now if fears aren’t stoked by further talk of bank runs, maybe, just maybe, the threat will go away. … Also: The high-inflation saga‘s loose ends

Ed Yardeni

Raising Odds of Soft Landing

May 24, 2023 1 min read paid

Beware: Bullish sentiment is improving, which is bearish from a contrarian perspective. On Tuesday, Rick Rieder, who is BlackRock’s chief bond strategist, said “I think the U.S. economy’s in much better shape than people give credit.” That's been our position for a while. In a May 23 report, the strategists at Evercore ISI reiterated that a hard landing is their base case with a 60%

Ed Yardeni

What's the Matter with China?

May 23, 2023 2 min read paid

The People’s Bank of China (PBOC) stands out among the major central banks. It is the only one that has been continuing to provide additional monetary policy stimulus. This suggests that China’s economy isn’t performing as well as the government would like to see. The PBOC’s reserve requirement ratio for commercial banks has been lowered three times since the start of 2022. Over the past 12

Ed Yardeni

What's Driving Bond Yields?

May 22, 2023 2 min read paid

Two of our favorite technical indicators for the 10-year Treasury bond yield are currently bullish. The yield tends to be highly correlated with the ratio of the nearby futures prices of copper to gold (chart). The ratio suggests that the yield, which is currently 3.70%, should be much closer to 2.00%. We view the ratio as a risk-on versus a risk-off indicator. The Citigroup Economic Surprise Index (CESI)

Ed Yardeni

Market Call: Bad Breadth Still An Issue

May 21, 2023 2 min read paid

Will the stock market rally broaden? If it doesn't do so, will the rally fade? Below, Joe Feshbach offers his opinion from a trader's perspective. In our opinion, concerns about the market's bad breadth is just another brick in the wall of worry that the stock market has been climbing since the bear market bottomed on October 12, 2022. It has been widely noted

Ed Yardeni

The Economic Week Ahead: May 22-26

May 20, 2023 2 min read paid

On Friday, Fed Chair Jerome Powell said that monetary policy is "restrictive." So Fed policy will be data-dependent, particularly so on inflation indicators. For those of us in the "pause" camp, he seemed to suggest that's possible. He acknowledged that the banking crisis is bound to tighten credit conditions reducing the need for the Fed to get more restrictive. That's been our

Ed Yardeni

Bull Market or Rally in a Bear Market?

May 18, 2023 2 min read paid

Our short answer to the question posed in the title: "Bull market." The S&P 500 rose to a new high today of 4198.05 for 2023 taking out the February 2 closing high of 4179.76 (chart). The market has climbed a Wall of Worry thanks to Wall Street's Worriers, who've predicted that the banking and the debt ceiling crises could make

Ed Yardeni

Misleading Economic Indicator?

May 18, 2023 2 min read

Today's Composite Economic Indicators, compiled by the Conference Board, are pointing in different directions. The Index of Leading Economic Indicators (LEI) fell in April for the 13th straight month, sinking 0.6% m/m and 8.6% over the period to the lowest level since September 2020 (chart). The LEI, which peaked at a record high last February, has led recessions by 12 months on average. While the

Ed Yardeni

DEEP DIVE: Bad & Good Breadth