Eric Wallerstein

Fed Pivot, Trump 2.0, SCOTUS Chevron Ruling & Earnings Broaden Stock Market Meltup

Jul 16, 2024 3 min read

We've been predicting a broadening stock market meltup in the event that the Fed starts cutting the federal funds rate (FFR) as inflation moderates while economic growth remains solid. Last week's CPI and today's retail sales report confirm that's what's happening in the economy. Fed Chair Jerome Powell's dovish comments yesterday sealed the deal: As of this morning,

Ed Yardeni
Eric Wallerstein

Panda In A China Shop

Jul 15, 2024 3 min read paid

China just loaned two young pandas to the San Diego Z00. In the past, such Panda Diplomacy suggested that relations between the US and China might be improving. It's hard to come to that conclusion currently since both US presidential candidates seem to agree that the US needs to slap more tariffs on Chinese goods. China remains very dependent on exports to boost its economy, especially since the

Ed Yardeni
Eric Wallerstein

Market Call: Earnings Reporting Season Likely To Broaden The Stock Market Rally

Jul 14, 2024 3 min read paid

We've previously written that our number one concern for the stock market is unsettling domestic and global political turmoil. The attempt to assassinate former President Donald Trump on Saturday heightened anxiety about political violence at home as the November elections approach. On the global stage, the violence of the wars between Ukraine and Russia and in the Middle East seems to be escalating. Then again, the stock market

Ed Yardeni
Eric Wallerstein

The Economic Week Ahead: July 15-19

Jul 14, 2024 3 min read paid

The economic week ahead will include updates on industrial production and business sales of goods, as well as retail sales. The upshot is likely to be another all-time high for June's Index of Coincident Indicators (Thu), as confirmed by S&P 500 forward earnings per share which climbed to another new record high during June (chart). When profits grow, the economy grows. During the current earnings reporting

Ed Yardeni
Eric Wallerstein

DEEP DIVE: A Positive Outlook For Q2 Earnings Reporting Season

Jul 12, 2024 4 min read paid

Joe has been tracking the quarterly earnings forecast for S&P 500 companies collectively each week since the series started in Q1-1994. The typical playbook: Industry analysts cut their estimates gradually until reality sets in during the final month of the quarter, when some companies warn of weaker results. The combination of falling forecasts for companies that have underperformed earlier expectations, steady forecasts for those holding good news close

Ed Yardeni
Eric Wallerstein

Disinflating CPI Broadens Market Rally As Investors Rotate To SMidCaps

Jul 11, 2024 2 min read paid

This morning, we weren't surprised by June's lower-than-expected CPI report. It does increase the odds of a cut in the federal funds rate (FFR) in September. That supports our expectation for the stock market rally to continue and broaden out from the Magnificent-7. Indeed, the Russell 2000 rose more than 3% this morning, while the S&P 500 and Nasdaq declined as investors rotated into

Ed Yardeni
Eric Wallerstein

Meltup!

Jul 10, 2024 3 min read paid

We are raising our yearend target for the S&P 500 to 5800 from 5400. We are still targeting 8000 by the end of the decade. The stock market seems to be discounting our Roaring 2020s scenario faster than we expected. We've been among the most bullish investment strategists since November 2022, but not bullish enough. The bull market might continue to achieve our targets ahead of

Ed Yardeni
Eric Wallerstein

Banking on Looser Regulation

Jul 9, 2024 3 min read paid

Bank stocks popped today after Reuters reported that the Fed is considering relaxing a regulation, i.e., the GSIB Surcharge. It requires big banks to hold additional capital due to the systemic risk they pose to the global financial system. Tweaking the GSIB surcharge would free up big banks to lend more. The S&P 500 Financials stock price index had already been doing well. It is up 37.

Ed Yardeni
Eric Wallerstein

Giving Credit To The Consumer

Jul 8, 2024 2 min read paid

The strength of the US consumer has underpinned much of the current bull market in stocks. In recent months, rising real disposable income (DPI) has fueled consumer spending even as the excess saving accumulated during the pandemic was depleted. Debt service payments have remained below 10% of nominal DPI from Q1-2020 through Q4- 2023. That's relatively low because many households cleaned up their balance sheets following the Great

Ed Yardeni
Eric Wallerstein

Market Call: The Bull Market's Alleged Vulnerabilities

Jul 7, 2024 2 min read

The stock market's bull run since October 12, 2022 has raised some concerns lately. According to the naysayers, earnings growth expectations may be too high because there are mounting signs of an economic slowdown that might lead to an economic recession. The breadth of the stock market rally continues to narrow, which may be confirming that the underlying fundamental support for the bull market is narrowing. If the

Ed Yardeni
Eric Wallerstein

The Economic Week Ahead: July 8-12

Jul 7, 2024 3 min read paid

Last month, lower-than-expected CPI and PPI inflation readings for May, along with rising unemployment claims for June, raised market expectations that the Fed will ease monetary policy sooner rather than later. The week ahead will be dominated by inflation data and jobless claims that are likely to confirm that the economy is in a disinflationary soft patch. That could boost both stock and bond prices. Consider the following: (1) CPI.

Ed Yardeni
Eric Wallerstein

Soft Patch Getting Softer. Is That Raising Odds of Fed Rate Cut in September & Stock Market Meltup?

Jul 3, 2024 3 min read paid

Last week and this week have been good ones for the recession camp of economists. Indeed, the Atlanta Fed's GDPNow tracking model's estimate of real GDP growth during Q2-2024 dropped from a robust 3.0% on June 26 to half as much today. The Citigroup Economic Surprise Index is the most negative it has been since August 2022 (chart). We are still in the soft-patch camp.

Ed Yardeni
Eric Wallerstein

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