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The author Dr. Ed Yardeni
Dr. Ed Yardeni
Dr. Ed Yardeni is the President and Chief Investment Strategist of Yardeni Research, Inc., a provider of independent investment strategy and economics research for institutional investors. In this blog, we highlight some of the more interesting relationships and developments that should be of interest to investors. Our premium research service is designed for institutional investors.

Dr. Ed Yardeni

Inflation Peak-a-Boo (5/9/22)

We concur with Fed Chair Powell that getting inflation back to Earth needn’t crash our strong, liquid economy. The Bond Vigilantes aren’t as far behind the inflation curve as the Fed: They’ve already tightened credit conditions in the financial markets significantly. We expect inflation to peak this summer between 6%-7% and to recede to 3%-4% next year with no recession. … We may have spotted the first signs of peaking inflation already, in lower three-month than y/y...

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The Big Leak (5/2/22)

Spooked investors have driven valuation multiples down to the low end of our projected range and deposited the Nasdaq in a bear market and the S&P 500 back in correction territory. … Today we examine the causes and effects of global inflation. … Excessive US fiscal and monetary stimulus ignited the US inflation conflagration by triggering a demand shock that triggered a supply shock. When much of the stimulus leaked abroad (confirmed by trade data), it fueled global...

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The Forces of Inflation vs The Forces of Deflation (4/25/22)

The stock market is correcting again, fear is rising again, and valuations are sagging under the weight of a hawkish Fed and rising bond yields. Yet consensus expected S&P 500 earnings continues breaking records. With 2022 shaping up as a volatile year for stocks, we anticipate a rally following the current selloff. … Also: Might “stayflation” frustrate the Fed’s 2.0% inflation goal? … We explain our view of inflation as a tug-of-war between four...

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How Will the Fed Stop The Wage-Price Spiral? (4/18/22)

Can the Fed pull it off? Can it surgically subdue inflation without inflicting much collateral damage on the US economy? The now unanimously hawkish FOMC intends to try. Their current game plan seems to anticipate five increases of 50bps each, possibly at the next five FOMC meetings. … Meanwhile, we are on the lookout for signs of peaks in the latest inflation indicators; used car and truck prices are the first. … Rent and wages, on the other hand, are spinning upward along...

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Don’t Fight the Fed When the Fed Is Fighting Inflation (4/11/22)

The war in Ukraine has heightened the odds of higher-for-longer inflation, tighter-for-longer monetary policy, and recession in the US and Europe, which we peg at 30% and 50%, respectively. … The global economy is stagflating, indicators suggest. … Will reining in inflation take just a nudge from the Fed or an all-out recession-triggering shove? We hunt for the answer in FOMC officials’ recent views and the latest inflation data. … Also: The Bond Vigilantes are...

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Inflating Earnings (4/4/22)

Crosscurrents should continue to buffet the S&P 500’s forward P/E multiple in both directions, but the earnings portion of the equation should rise in the higher-for-longer inflationary environment we project. The S&P 500 is a good inflation hedge provided that the downward-blowing crosswinds continue to be offset by inflating earnings. … Today, we detail all the variables that go into our stock market assessment—including our stagflationary economic outlook; our...

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Twists & Turns of the Yield Curve

Two different yield-curve spreads are sending contradictory signals, and one of them is giving some investors the recession heebie-jeebies. But the other, more “official” yield-curve spread suggests no recession in sight, and ditto most other leading indicators. We see a stagflationary environment this year, with real GDP growing an average of 2.0% per quarter and inflation remaining persistent. … Also: A couple of short-maturity spreads relative to the federal funds rate...

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A Very Brief History of The Rise & Fall of Modern Monetary Theory (3/21/22)

Now that the Fed is tightening, US monetary policy is no longer bullish for stocks; the “Fed Put” is dead. Replacing it: the “CFO Put,” i.e., the market-buoying activities of corporate CFOs. But the tug-of-war between bearish and bullish forces may not be won decisively by either side in coming months; we see a volatile sideways-trading S&P 500. … Yield-curve inversion fears are misplaced. Inversion doesn’t cause a financial crisis/credit...

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Inflation, Liquidity & Valuation (3/14/22)

The big question before stock investors now is: With inflation likely to remain troublesome, are valuations still too high or will ample M2 liquidity keep them elevated? We examine a handful of indicators that shed light on the relationship between inflation and valuation. … Will chronic labor shortages fuel a wage-price spiral over the rest of the decade, as predicted by Charles Goodhart? Our money remains on businesses deploying productivity-enhancing technology to get around their...

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It’s a Mad, Mad, Mad, Mad World (3/7/22)

With the whole world at the mercy of Mad Vlad, the pandemic now seems like a walk in the park. A nuclear power plant catastrophe has been narrowly averted, but Putin’s war has melted down Russia’s stock market and currency. … For the US economy, we now see stagflation, with persistently higher inflation and less economic growth than expected before the war. A recession can no longer be ruled out. … For stock investors, we think 2022 will continue to be one of this...

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