Deep Dive

DEEP DIVE: Fiscal Policy - A Trillion Here, a Trillion There

May 1, 2023 3 min read paid

We have been on Wall Street as economists and strategists for more than 40 years. Over that entire period, doomsters have been scribbling away, producing lots of articles and books about the US federal deficits and debt. The only pause in their doom and gloom was during the late 1990s and early 2000s, when the federal government ran a surplus for a brief time. Nevertheless, while the annual federal deficits

Ed Yardeni

DEEP DIVE: Artificial Intelligence - Everything Everywhere All At Once

Mar 24, 2023 4 min read paid

The announcements have come fast and furiously. Anyone who has anything to do with AI is broadcasting it to the world loudly. Chip manufacturers, software providers, social media companies, and the average Joe all are talking about how they’re harnessing the power of AI to work faster and smarter. This week’s news has been dominated by Nvidia’s impressive AI offerings unveiled at its software developer conference and

Ed Yardeni

DEEP DIVE: A Baby-Boom Theory of the Tight Labor Market

Mar 14, 2023 2 min read paid

The persistently strong demand for labor has surprised everyone from soft landers to hard landers. Fed officials are flummoxed. They’ve raised the federal fund rate by almost 500bps since early last year to cool labor demand and wage inflation. Yet the labor market remains hot. During January, the demand for workers measured as the sum of employment and job openings totaled 171.0 million, 5.1 million more than

Ed Yardeni

DEEP DIVE: S&P 500 Earnings Season's Greetings

Mar 9, 2023 2 min read paid

The Q4-2022 earnings season is over. Joe reports that S&P 500 earnings data are out for the quarter. We weren’t surprised by the top-line or bottom-line numbers. That’s because we follow the weekly data series on forward revenues, forward earnings, and the forward profit margin. They continue to steer us in the right direction for assessing the near-term outlook for the comparable quarterly data (Fig. 1)

Ed Yardeni

DEEP DIVE: US Economy - Soft, Hard, Or No Landing?

Feb 25, 2023 4 min read paid

We think we coined “rolling recession” back in the mid-1980s to describe the economic slowdown that many feared would turn into an economy-wide recession. We think the phrase accurately describes the performance of the US economy since early last year. It’s similar to a “growth recession,” “mid-cycle slowdown,” and “soft landing” but includes the concept that different areas of the economy are experiencing the slowdowns at different times. We

Ed Yardeni

DEEP DIVE: The Fed Is Fighting the Markets

Feb 18, 2023 3 min read paid

Fed officials have indicated that they’d rather see stock and bond prices fall than continue to rise, as they’ve been doing since October of last year. In their opinion, financial markets’ strength has eased financial conditions in the economy, offsetting some of their efforts to tighten financial conditions to bring inflation down. Joe and I question their logic. In our opinion, the drop in bond yields since late

Ed Yardeni

DEEP DIVE: Who Will Win the AI Search Arms Race?

Feb 9, 2023 4 min read paid

This week, both Microsoft and Google made announcements touting their artificial intelligence (AI) prowess and plans as they battle to dominate the nascent AI niche, which some believe will be as important as the iPhone or cloud computing. Of course, they’re not alone. Venture capitalists poured money into the more than 75 startups, by some counts, that aspire to conquer the hot area. Let’s look at what some

Ed Yardeni

DEEP DIVE: The Fed - Peak Hawkishness?

Jan 31, 2023 3 min read paid

The FOMC’s two-day meeting ends tomorrow. At 2:00 p.m., the committee will issue its statement, and at 2:30 p.m., Fed Chair Jerome Powell will hold his usual after-meeting press conference. For the other Fed officials, the blackout period preventing public comments ends on Friday. The next blackout period starts on March 11. So we can look forward to lots of commentary from the Fed heads

Ed Yardeni

DEEP DIVE: Pessimistic Consensus

Jan 20, 2023 6 min read paid

It’s hard to be a contrarian for very long these days because the consensus seems to change so quickly. At the end of last year, there seemed to be widespread agreement that the first half of 2023 would continue to be bad for stocks as the Fed continues to raise interest rates and the market discounts a recession during H2-2023. The bear market in stocks was expected to continue

Ed Yardeni

DEEP DIVE: The Fed: ‘Moderation’ Is the Word

Nov 30, 2022 4 min read paid

Bond yields fell and stock prices rose in response to Fed Chair Jerome Powell’s speech today at the Brookings Institution. Most importantly, he confirmed that the FOMC is on track to raise the federal funds rate by 50bps rather than 75bps at the December 13-14 meeting of the committee. Here is how he concluded his speech: This is an excerpt from our Nov 30 Morning Briefing. “Monetary policy affects

Ed Yardeni

DEEP DIVE: US Is A Net Exporter Of Fossil Fuels

Nov 21, 2022 2 min read paid

Climate activists believed that if governments were to impose regulations that limit fossil fuel production, fossil fuel prices would rise, encouraging more usage of renewable energy sources. Nevertheless, government support still would be needed to make renewable sources cost competitive. That reality combined with geopolitical developments have made the transition from fossil to renewable fuels far less smooth than climate activists had assumed. This is an excerpt from our Nov

Ed Yardeni

DEEP DIVE: Has the S&P 500 Discounted a Hard Landing?

Nov 4, 2022 4 min read paid Featured

One of our accounts recently asked us to assess the extent to which the stock market has discounted a garden-variety recession. That’s an interesting question. We have been thinking and writing about this question all year. This is an excerpt from our Oct 31 Morning Briefing. Our current assessment is that the market has discounted a rolling recession, a.k.a. a “soft landing,” “growth recession,” or “mid-cycle slowdown.

Ed Yardeni

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