A Compelling Case for the Bulls
- Ed D'Agostino
- Global Macro Update
- March 10, 2023
“The S&P 500 will end the year at 4,500 to 4,800.”
That’s Ed Yardeni’s bold call. A roughly 17.5% return for the year.
“Dr. Ed” has been in the markets for over 40 years. He was an economist at the Federal Reserve Bank of New York before becoming chief economist at EF Hutton and then a chief investment strategist at Prudential Equity Group and Deutsche Bank’s US equity division.
His call is based on his projection for the price-to-earnings ratio. He believes earnings will be robust this year despite today’s concerns of a recession. And the price multiple won’t be as low as those in the recession camp are expecting.
He, along with others I know (including Jared Dillian), believe October marked the low for the stock market—and that we’re back in a bull market. Dr. Ed acknowledges stocks are not all that cheap today, and there is still a lot of uncertainty around Fed policy.
Despite this week’s news of a certain bank in distress, Ed contends the financial system is in great shape and that we’re not seeing a credit crunch, which often precedes a recession.
I spoke with Dr. Yardeni on Wednesday before the SVB saga began in earnest. Here’s what he wrote to clients this morning:
The meltdown in SVB may be the beginning of a credit crunch for tech startups since the bank has been a major lender in that space. However, we doubt that it is the canary in the coal mine for the overall credit system.
On the other hand, the bank's woes may convince Fed officials to at least slow the pace of tightening.
It is easy to succumb to the bear side of the argument, but Dr. Yardeni makes a compelling case for the bulls.
You can watch my interview with Dr. Ed by clicking the image below. You can also download the transcript here. Or, if you’d rather listen via podcast, search for “Global Macro Update” on your favorite podcast player.
Yardeni Research is giving new readers a 30-day free trial to its newest service, Yardeni QuickTakes. I’ve been receiving QuickTakes for about six weeks now, and it has made its way into my regular reading rotation.
If you are interested in giving Dr. Ed’s work a test drive, you can get a free trial here.
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