Valuation

MARKET CALL: The Best Trump Trade

Mar 16, 2025 3 min read paid

So far among the best Trump trades has been to short the S&P 500 since February 19 through last Thursday (chart). It fell 10.1% over this period. Let's call it the "Trump Thump." We aren't convinced that the correction is over despite Friday's rally and extremely bearish sentiment readings, which tend to be bullish from a contrarian perspective. In

Ed Yardeni
Eric Wallerstein

The Trump Put Is Kaput!

Mar 12, 2025 3 min read

Vertigo is a sensation of spinning or whirling such that the person or their surroundings appear to be moving. The stock market didn't do much today, but everything else seemed to be spinning. The epicenter of all this vertigo continues to be the White House. More and more economists are increasing their odds of a recession. We raised ours to 35% a week ago. JP Morgan's

Ed Yardeni
Eric Wallerstein

Ahead of the Earnings Pack

Dec 27, 2024 3 min read paid

We've been bullish on the stock market since October 2022. We remain bullish, targeting 7000 on the S&P 500 by the end of next year. That puts us near the head of the pack (chart). Here's more on earnings and valuation: (1) Our forecast for revenues, earnings & margins. We are the head of the pack on the outlook for S&P 500

Ed Yardeni
Eric Wallerstein

Small, Medium, and Large Cap Stocks

Nov 18, 2024 2 min read paid

The rally in the S&P 1500 has certainly broadened in recent weeks as the Fed started to cut the federal funds rate (FFR) by 50bps on September 18 and again on November 7 by 25bps. The S&P 400 MidCaps and S&P 600 SmallCaps have been rising in record high territory in recent weeks along with the S&P 500 which has been rising

Ed Yardeni
Eric Wallerstein

Raising Odds Of A Meltup

Sep 19, 2024 4 min read paid

We've focused on three scenarios since the start of the decade: a 1920s-style Roaring 2020s, a reprise of the 1990s stock market meltup, and a rerun of That '70s Show with geopolitical shocks causing oil prices and inflation to spike. We haven't had to change our subjective probabilities of 60/20/20 for these three alternative outlooks. However, Fed Chair Jerome Powell is forcing us

Ed Yardeni
Eric Wallerstein

Market Call: The Bull Market's Alleged Vulnerabilities

Jul 7, 2024 2 min read

The stock market's bull run since October 12, 2022 has raised some concerns lately. According to the naysayers, earnings growth expectations may be too high because there are mounting signs of an economic slowdown that might lead to an economic recession. The breadth of the stock market rally continues to narrow, which may be confirming that the underlying fundamental support for the bull market is narrowing. If the

Ed Yardeni
Eric Wallerstein

Technology Now & Then

Jun 24, 2024 3 min read paid

Are stock market valuations too high? There is no obvious answer to the valuation question. So we are dependent on history for some guidance. We don’t have to go very far back in time to find a meltup that looks similar to the current one. The obvious analogy is to that of the late 1990s: (1) Valuation multiples, now & then. The S&P 500 peaked at a

Ed Yardeni

The S&P 500/400/600 Performance Derby

Mar 18, 2024 2 min read paid

The S&P 500 LargeCap stock price index is up 44.0% since the end of the latest bear market on October 12, 2022. The S&P 400 MidCap and S&P 600 SmallCap are up 29.5% and 17.8% since then. The S&P 500 and S&P 400 are trading at record highs, while the S&P 600 remains below its

Ed Yardeni

How To Spot A Meltup

Feb 14, 2024 2 min read paid

We are sure that Fed Chair Jerome Powell has recently reread former Fed-Chair Alan Greenspan's December 5, 1996 speech in which he famously asked: "But how do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions as they have in Japan over the past decade? And how do we factor that assessment into monetary policy?" How

Ed Yardeni

MegaCap-8 Continue To Impress

Feb 6, 2024 2 min read

Through Friday’s close, the S&P 500 price index is up 4.0% ytd to a record high. The MegaCap-8 collectively has outperformed with a gain of 7.6%, also a record high (chart). Without the MegaCap-8 stocks, the S&P 500 would be up 2.5% ytd. The MegaCap-8 now accounts for a record-high 28.3% of the S&P 500’s market capitalization (chart)

Ed Yardeni

Valuation-Led Meltup

Dec 28, 2023 2 min read paid

Meltups and meltdowns in the stock market are mostly attributable to rapid increases or decreases in earnings valuation multiples. The current meltup is no different. The S&P 500 is up 16.2% with its forward P/E up 14.5% since the October 27 correction low. That's mostly because investors have become more confident that inflation will continue to slow while the economy continues to grow.

Ed Yardeni

Market Call: Investors Broadening Their Horizon

Dec 17, 2023 2 min read paid

The current bull market started during October of last year. Since then, the bears have been warning that it was a rally in a bear market. That's because most of them expected a recession, and many of them still do. In addition, they've observed that the rally has been narrowly led by the MegaCap-8. The rest of the stock market seemed to be comatose. Our view

Ed Yardeni

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