Eric Wallerstein

Super Macro. Not So Super Micro.

Oct 31, 2024 3 min read paid

Some of the air is coming out of the AI trade. Super Micro Computer hasn't been super recently. It fell 12% today after auditor Ernst & Young resigned due to inaccurate financial reporting, and is now down 66% over the past six months (chart). Super Micro Computer is a key vendor for building out Nvidia-based clusters of servers used for training and deploying AI models Meta and Microsoft

Ed Yardeni
Eric Wallerstein

Going Nowhere Fast?

Oct 30, 2024 3 min read

The S&P 500 equal-weighted index has been going nowhere fast since the Fed cut the federal funds rate (FFR) by 50bps on September 18 (chart). The same can be said for the Russell 2000. The stock market rally has stopped broadening since the Fed's rate cut! Why is that given that the current earnings season has been mostly upbeat? The problem is that the bond yield

Ed Yardeni
Eric Wallerstein

Dr Ed's Video Webcast 10/30/24

Oct 30, 2024 1 min read paid

Goldman Sachs’ bold projection that the next 10 years may be a “lost decade” for stocks, with mere 3% annual returns, is unlikely in the extreme, says Dr Ed. It seems to rest on the assumption that valuations in the future will be lower than today’s. Even without expanding valuation multiples, earnings growth would likely boost the S&P 500 price index at a pace that’s at

Ed Yardeni
Eric Wallerstein

Help Still Wanted

Oct 29, 2024 2 min read paid

We don't expect to be disappointed by October's payroll employment report on Friday. Both September's JOLTS report and October's consumer confidence survey suggest that the labor market remains in good shape. Better yet, it may be improving. The impact of bad weather and strike-related layoffs will make a dent in October's payroll employment number, but that doesn't mean

Ed Yardeni
Eric Wallerstein

Modern Monetary Magic At Work

Oct 28, 2024 3 min read

Republican Everett Dirksen was the Senate Minority Leader during the 1960s. Cautioning that federal spending had a way of getting out of control, Dirksen reportedly observed, "A billion here, a billion there, and pretty soon you're talking real money." Proponents of Modern Monetary Theory (MMT) have been claiming in recent years that the US federal government can run large budget deficits to fund social welfare programs

Ed Yardeni
Eric Wallerstein

Market Call: Sweep Stakes

Oct 27, 2024 3 min read paid

We still think that gridlock would be the most bullish outcome of the November 5 presidential and congressional elections, making it difficult for the next president to deliver on all the promises he or she made during their campaigns to win the White House. More than half of our Founding Fathers were lawyers. They designed a system of checks and balances that required lawyers to get anything done and even

Ed Yardeni
Eric Wallerstein

The Economic Week Ahead: October 28 - Nov 1

Oct 27, 2024 3 min read paid

The week ahead is jampacked with key indicators for the labor market, economic growth, and inflation, as well as more Q3 S&P 500 earnings. The first estimate of Q3 GDP will be followed by the September PCED inflation rate and October payroll employment. We're expecting continued strong growth and disinflation, though we anticipate that employment was muddled by one-time factors and that some components of the

Ed Yardeni
Eric Wallerstein

DEEP DIVE: The Case for a Higher R-Star

Oct 25, 2024 3 min read paid

Fed officials indicated that the September 18 rate cut was likely to be followed by more cuts. They deemed that 5.25%-5.50% was too restrictive, which is why they cut it by 50bps to 4.75%-5.00%. That’s still restrictive, in their opinion. According to their September 18 Summary of Economic Projections, collectively they seem to be aiming to lower the federal funds rate to 2.

Ed Yardeni
Eric Wallerstein

Risk & Reward In Emerging Markets

Oct 24, 2024 3 min read paid

The three-day BRICS summit of emerging market economies (EMEs) in Kazan, Russia concluded today. The group launched by Brazil, Russia, India, and China in 2006 has done little in terms of rivaling US global economic and financial hegemony. However, the Russia-Ukraine war and fears of financial sanctions imposed by the US and its allies on adversaries have caused many countries to align closer to Russia and China or apply to

Ed Yardeni
Eric Wallerstein

Bond Vigilantes Started Voting Early

Oct 23, 2024 3 min read

The US presidential and congressional elections aren't until November 5, but the Bond Vigilantes are voting early. The 10-year US Treasury bond yield has risen a whopping 63 basis points to 4.25% since the Fed's September 17-18 meeting (chart). In exit polls, the Bond Vigilantes are saying they are voting against Fed Chair Jerome Powell's dovish monetary policy because the economy is running

Ed Yardeni
Eric Wallerstein

Lost Decade Ahead For Stocks With Only 3% Annual Returns?

Oct 22, 2024 3 min read

We've been asked to comment on yesterday's grim forecast by economists at Goldman Sachs that the S&P 500 will produce annualized returns of only 3% (before accounting for inflation) over the next 10 years. They reckon that the range of possible outcomes includes -1% at the low end and +7% nominal returns at the high end. In our opinion, even Goldman's optimistic

Ed Yardeni
Eric Wallerstein

Sell Bonds, Buy Gold?

Oct 21, 2024 3 min read

Yes, that has been our advice since mid-August. Our August 19, 2024 Morning Briefing was titled, "Get Ready To Short Bonds?" We wrote: "Bond investors may be expecting too many interest-rate cuts too soon if in fact August’s economic indicators rebound from July levels and the Fed pushes back against the markets’ current expectations for monetary policy. So we are expecting to see the 10-year Treasury

Ed Yardeni
Eric Wallerstein

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