Bull Market Is Back as Recession Worries Fade, Yardeni Says

(Bloomberg) — Closely followed strategist Edward Yardeni, who saw resilience in the US economy even as recession worries grew last year, remains sanguine on where global financial assets — including US stocks — are headed.

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“The outlook for the world economy is actually improving,” the president and founder of Yardeni Research Inc. told Bloomberg Television’s Surveillance on Wednesday. US equities “made a low on Oct. 12. That was the end of the bear market and we ‘re back in a bull market.” Since closing at 3,577.03 that day, the S&P 500 has risen almost 10%.

Of course, there will be “a lot of volatility” as markets worldwide endure central bank tightening and investors sort through the effects of higher rates on growth, he said. But “the plunge in natural gas prices in Europe suggests Europe may not have a recession. China should open” after abandoning its restrictive Covid policies, strengthening its economy.

Market benchmarks from the Nasdaq 100 to the FTSE 100 have gained so far in 2023, with the Hang Seng Index in Hong Kong advancing more than 6%.

“Investors right now are turning more optimistic about the global economy and looking where values are still cheap,” he said. “We have already had a big run in China and now they’re looking at Europe. A diversified portfolio makes sense.”

In the US, industrials stock should do well “because there is so much money in the fiscal stimulus pipeline.”

A transformation may be under way to the “Old Normal” economy that is able to grow with interest rates at a reasonable level, instead of the “New Normal of unconventional monetary policies,” he said.

Yardeni, who coined the “bond vigilante” concept in the 1980s, added, “It would be great if we could get back to an environment where interest rates are not zero.”

–With assistance from Tom Keene.