Ed Yardeni

A Good Week For a Change

May 29, 2022 2 min read paid

Last week was the first good one for the stock market in quite a while. The S&P 500 rose 6.6%, with two of the index’s most depressed sectors this year outperforming for a change: Consumer Discretionary (9.2%) and Information Technology (8.1%). Nevertheless, the best-performing sector this year so far has been Energy, and it was up 8.1% last week too. Financials (8.0%

Ed Yardeni

Tech Has Had a Rough Year, but What Comes Next?

May 28, 2022 3 min read

The front cover story of the May 30 BusinessWeek is titled THE GREAT TECH ROUT (linked below). Might this be the latest contrary indicator for bullishly-inclined investors? The story was actually posted on Bloomberg on Thursday, May 26 at 12:01 AM EDT. The Nasdaq fell to the year's low of 11,264.45 on Tuesday, May 24. It was up 7.7% by Friday's close.

Ed Yardeni

Are the Economic Fundamentals Bullish or Bearish for the S&P 500?

May 28, 2022 2 min read

There is a remarkably close fit between the yearly percent change in the S&P 500 stock price index and the national manufacturing purchasing managers index (M-PMI). The latter is available only through April; the reading for May will be released next week, on Wednesday, June 1. However, the M-PMI is highly correlated with the general business indexes of the regional business surveys compiled by the Federal Reserve Banks

Ed Yardeni

Inflation May Be Peaking

May 27, 2022 2 min read paid

The headline and core PCED inflation rates both edged down in April to 6.3% and 4.9%, raising expectations that inflation is peaking. That's consistent with our view that the headline PCED inflation rate should peak between 6%-7% during H1-2022 and fall to 4%-5% during H2-2022, and 3%-4% next year. The FOMC is still likely to raise the federal funds rate by 50bps at

Ed Yardeni

Three Related Signals of a Global Economic Slowdown

May 26, 2022 1 min read

The widely followed proxy for the expected inflation rate in the 10-year TIPS market dropped in recent days from over 3.0% to 2.6%. Is that just volatility? Or, is it signaling a global economic slowdown since it is highly correlated with the nearby futures price of copper, which has also been weak lately? The expected inflation rate is also highly correlated with the Emerging Markets MSCI stock price

Ed Yardeni

How Worrisome Is April’s Drop in M2?

May 25, 2022 1 min read

How worried should we be about April’s $81.2 billion drop in M2? And what about the $91.2 billion drop in demand deposits from January through April? Furthermore, the Fed is about to start a second round of quantitative tightening (QT2) in June. Won’t that dry up liquidity, causing a recession and further stock market losses? Maybe, but: (1) M2 is still more than $3 trillion above

Ed Yardeni

GDPNow Nowcast Down, New Orders Up

May 25, 2022 1 min read

First the bad news: The Federal Reserve Bank of Atlanta’s GDPNow model estimate for real GDP growth is 1.8% (at a seasonally adjusted annual rate), down from 2.4% on May 18. The Atlanta Fed’s “nowcast” for Q2 gross private domestic investment growth decreased from -1.8% to -4.8%, reflecting weak housing indicators. The good news is that new orders for manufactured durable goods increased 0.

Ed Yardeni

Homebuilders Slammed As Sales Fall, Costs Soar

May 24, 2022 1 min read

There's lots of stagflation in the new home market. During April, new home sales (registered when contracts are signed) dropped 16.6% m/m and the months' supply of new homes jumped to 9.0 from 6.9 in March. Here's more: (1) The m/m sales declines were widespread in the South (-19.8%), Midwest (-15.1), West (-13.8), and Northeast (-5.9)

Ed Yardeni

A Short History Of Falling P/Es

May 23, 2022 1 min read paid

In the past, there have been dives in the S&P 500’s valuation multiple similar to the one so far this year: (1) The valuation deterioration in the early 1970s was associated with the devaluation of the dollar by President Nixon and the first of the decade’s two energy price shocks. Along the way, Franklin National blew up. Inflation was a protracted problem throughout the 1970s. (2)

Ed Yardeni

Dr Ed's Weekly Webinar 5/23/22

May 23, 2022 1 min read

Today, we zero in on stock market bears—why they’ve been wrong for 13 years (quantitative easing), why they’re right currently (quantitative tightening), and why we believe their outlook is too pessimistic. Below is exclusive early access to Dr Ed's Weekly Webinar for paid members. This post and video will open to the public on Wednesday. Primarily, we don’t expect an imminent recession because conditions