Taps Coogan – December 5th, 2021

Enjoy The Sounding Line? Click here to subscribe for free.

Dr. Ed Yardeni, creator of the highly informative website Yardeni Research and author of ‘In Praise of Profits,’ recently spoke with Fox Business to reiterate his bullish outlook for markets once we get through “a little bit of volatility,” declaring this the “most panic prone bull market of all time.”

Ed Yardeni on his outlook for the market and Omicron:

“There are a lot of questions as to whether this (Omicron) will be as bad as Delta was and if that’s the case than we can deal with that. But, there is some speculation that it might be worse and that the vaccines and the therapeutics might not work on it, but it’s all speculation…  What I do know for sure is that we dealt with the Alpha, Beta, and Delta versions very well… Our experience with lockdowns is that they don’t really work and they just create havoc for the economy, so as long as we don’t get the lockdowns and as long as we don’t get severe restrictions on mobility, I think the market continues to move higher after a little but of volatility here.”

On the most ‘panic prone market in history’:

“I’ve been bullish since 2009 and I’ve been keeping a little diary, if you will, of all these panic attacks that we’ve gotten along the way and this has been the most panic prone bull market of all time and that makes sense because people were traumatized by the Great Financial Crisis… On the other hand we have so much liquidity, so much stimulus, and the economy is really doing quite well… I view this as panic number 71…”

On the outlook for monetary policy:

“I think (Powell) is going to play it both ways. I think he is going to be a two handed economist… It leads the market to conclude that tapering will continue but it will probably not be at a faster pace and we’re still looking for two to three increases in the Fed Funds Rate in the second half of next year, which is no surprise.”

Ed Yardeni really has been bullish since 2009 and he underlines the one essential truth of investing in the post-Global Financial Crisis world: there is no point being structurally bearish if central banks are going to swoop in at the first sign of trouble.

Indeed, the only down year the S&P 500 has had since 2009 was 2018 and that was one of the best years in the real economy. The ‘problem’ in 2018 was that the Fed meaningfully reduced its balance sheet.

To the extent that the Fed is now worrying about inflation, one aught to be worried about markets, though Dr. Yardeni clearly doubts the Fed’s sincerity about accelerating the tapering. How can you blame him?

Would you like to be notified when we publish a new article on The Sounding Line? Click here to subscribe for free.