Eric Wallerstein

Dow 60,000: Here We Come

May 22, 2024 3 min read

The Dow Jones Industrial Average closed above 40,000 for the first time on Friday, May 17 (chart). Today it is back down slightly below this level. We hope the title of this QT doesn't turn out to be a jinx, but we are still aiming for Dow 60,000 by 2030 in our Roaring 2020s scenario. Along the way, there could be corrections and even another bear

Ed Yardeni
Eric Wallerstein

Why Are LargeCaps Doing Better Than SMidCaps?

May 21, 2024 2 min read paid

Why has the S&P 500 LargeCaps stock price index been more expensive than the indexes for the S&P 400 MidCaps and S&P 600 SmallCaps since the pandemic (chart)? From around 2005 until about 2019, the forward P/E of the S&P 500 had mostly been below the forward P/Es of the SMidCaps (chart). The last time that LargeCaps sported higher P/

Ed Yardeni
Eric Wallerstein

Anatomy Of The Bond Yield

May 20, 2024 2 min read paid

We expect that the 10-year US Treasury bond yield will remain rangebound between 4.00% and 5.00% for the foreseeable future. We expect to see it more often below 4.50% (the mid-point of the range) than above it. This is consistent with our view that interest rates have normalized: They are back to where they were prior to the "Great Abnormal" period from the Great Financial

Ed Yardeni
Eric Wallerstein

Market Call: From Dow 40,000 To Infinity & Beyond

May 19, 2024 3 min read

The Dow Jones Industrial Average closed above 40,000 on Friday for the first time. It's on track to rise 50% to 60,000 by 2030, in our opinion (chart). The S&P 500 should rise by as much to 8000. That target could be achieved with a forward P/E of 20 and forward earnings at $400 per share, up 60% from an estimated $250 per

Ed Yardeni
Eric Wallerstein

The Economic Week Ahead: May 20 - 24

May 18, 2024 2 min read paid

The week ahead is a light one for economic reports. The focus is mostly on the housing sector, which is showing signs of bottoming if not recovering. Meanwhile, we will continue to focus on Dr. Copper, the metal with a PhD in economics. We watch the price of copper as an indicator of global economic activity, which seems to be improving though the price of oil has yet to confirm

Ed Yardeni
Eric Wallerstein

DEEP DIVE: Consumers Running Out of Excess Saving. Will They Drop Or Continue To Shop?

May 17, 2024 4 min read paid

Bears have been growling since mid-2022 that the US consumer will soon be “tapped out” of the excess savings accumulated during the Covid-19 fiscal stimulus spree from 2020 to 2021, forcing them to rein in spending. Consumers also may soon have maxed out their credit cards, according to this gloomy narrative. Consider the following: (1/4) Sure enough, two San Francisco Fed economists in a May 3 post observed that

Ed Yardeni
Eric Wallerstein

Bad News About Goods Is Good News For Bonds & Stocks

May 16, 2024 2 min read paid

The Dow is flirting with 40,000 currently, confirming that good news is good news and bad news is also good news for the stock market these days. That's because the bad news is also good news for the bond market. On balance, the news is that inflation is moderating and the economy is growing. Yesterday's April CPI report confirmed that inflation remains on course to

Ed Yardeni
Eric Wallerstein

Inflation's Puzzle Pieces Painting Bullish Picture

May 15, 2024 2 min read paid

The S&P 500 rose to a new record high of 5308.15 following today's economic numbers. It could easily reach our yearend target of 5400 well ahead of schedule! For now, we are sticking with this target, as well as 6000 for 2025 and 6500 for 2026. That's consistent with our Roaring 2020s scenario (60% subjective probability). If the market continues its near-vertical ascent,

Ed Yardeni
Eric Wallerstein

Good News on Inflation & Jobs Today

May 14, 2024 2 min read paid

Ed Yardeni
Eric Wallerstein

The Blob Keeps Growing. So Why Aren't Bond Yields Soaring?

May 13, 2024 2 min read

The federal deficit narrowed a bit to $1.63 trillion over the 12 months through April (chart). However, over the same period, the US Treasury had to raise $2.63 trillion by issuing marketable securities, which now total a record $26.9 trillion. The Treasury had to borrow more than the deficit to replenish its checking account at the Fed, which was down to almost zero last June. The blob

Ed Yardeni
Eric Wallerstein

The Week Ahead: May 13 - 17

May 12, 2024 3 min read

The week ahead is jampacked with economic indicator releases. The big ones are for inflation, retail sales, and production. They may be somewhat stagflationary on balance, showing inflation remains too high while economic growth is slowing. Nevertheless, we still expect to see inflation moderate with solid economic growth over the rest of this year. Here are a few observations on this week's key indicators: (1) CPI. The Cleveland

Ed Yardeni
Eric Wallerstein

DEEP DIVE: The Causes of Recessions & Bear Markets, a Recap

May 11, 2024 4 min read paid

There are three ways that recessions typically are triggered: 1) a monetary-tightening-induced financial crisis turns into a credit crunch; 2) a geopolitical crisis causes oil prices to soar; or 3) speculative asset bubbles burst. All three have caused recessions in the past. Consider the following relevant points: (1/6) The most common reason recessions have occurred in the past is the tightening of monetary policy, usually as the Fed became

Ed Yardeni
Eric Wallerstein

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