TLDR
- Ed Yardeni believes earnings growth will drive stock market increases this year.
- Despite external shocks, the U.S. economy remains resilient, supporting earnings.
- Yardeni sees geopolitical crises as potential market buying opportunities.
- He expects the “roaring 2020s” to continue, with strong economic growth and high stock prices.
- Yardeni remains confident that the market will rise without a recession, driven by solid earnings.
Ed Yardeni, president of Yardeni Research, shared his outlook on the stock market and the economy. He believes the market may see a rise driven by earnings growth. Yardeni’s comments came during an interview with CNBC’s “Closing Bell,” where he discussed the economic resilience and market outlook for this year.
Earnings Growth Will Drive the Stock Market Higher
Yardeni emphasized the role of earnings in driving stock market growth. He noted that the economy has shown strong resilience despite multiple challenges. “The economy has been remarkably resilient through thick and thin,” said Yardeni.
He highlighted that the strong GDP growth in recent quarters has supported corporate earnings. This, in turn, has led to a “melt-up” in stock prices, with earnings fueling the market’s upward momentum.
Yardeni also pointed out that despite various external shocks, the U.S. economy has continued to perform well. Last year, tariffs and geopolitical tensions affected the market, but the economy held strong. “Earnings are extremely resilient,” he stated, underscoring that strong earnings will likely continue to drive the market higher.
Focus on Economic Strength, Not Volatility
Yardeni acknowledged that the market could face volatility due to political and economic uncertainties. He discussed how policy changes and geopolitical tensions often create noise in the market.
However, he believes that the focus should remain on the long-term economic strength rather than short-term volatility. “Geopolitical crises are very often buying opportunities,” Yardeni noted, pointing out that past crises have often led to market rallies.
He also touched on the impact of tariffs and trade policy on the market. Yardeni explained that market reactions to policy news may be exaggerated, but ultimately, the market adapts. He referenced the recent discussions around tariff increases on Europe and the potential legal challenges, suggesting that such issues are more noise than a threat to the economy’s fundamentals.
Strong Economic Outlook for the Roaring 2020s
Yardeni has been optimistic about the economic outlook for the decade. He has previously forecasted a “roaring 2020s” scenario, and his views are aligned with the recent market trends. “We’re six years into the decade, and the stock market is at an all-time high,” he said.
Yardeni remains confident that without a recession, stock prices will continue to rise, supported by strong earnings and steady economic growth. The interview also touched on the potential for future growth, with Yardeni asserting that the market has a strong foundation.
He noted that while the trajectory may not be certain, the potential for growth remains high. As the economy avoids a recession, Yardeni believes that the market will continue to rise, driven by earnings rather than speculative factors.
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Source: https://blockonomi.com/stock-market-set-to-rise-on-earnings-growth-yardeni-predicts/