Taps Coogan – February 2nd, 2022

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It’s not much of a low, the S&P 500 only fell about 10%, but creator of Yardeni Research and author of ‘In Praise of Profits,’ Ed Yardeni, is calling the recent selloff over amid a “capitulation bottom.” He sees moderating inflation and continued earnings growth supporting a ‘soft landing’ in the economy and upside for stocks.

Ed Yardeni:

“Loan demand is coming up and M&A activity is very strong. Technology was, in the benefit of hindsight clearly overvalued. Now, it is less overvalued. I think there are opportunities in technology now… In my mind we are going to remain kind of volatile here for a while… but by the second half of the year, I think the market will be following earnings higher…”

“We could very well have a soft landing here. The economy was very strong in the fourth quarter. There was a lot of inventory building, the consumer is slowing down, I think consumer are starting to resist high prices and that’s actually a good way to bring inflation down… I think we are actually seeing a peaking in the inflation rate right now. I’m not going to tell you that it’s going to come straight down in the next few months, but in the second half of the year I think it is going to come down… Japanese car production soared in November, suggesting that they are getting the semiconductors to finish off the cars…”

“The offset is going to be rent inflation is going to be a problem, so I don’t think we see 2% inflation anytime this year or next year. I think it comes down to maybe 3%…”

While it seems a bit too eager to be calling the end of a 10% correction a “capitulation bottom,” the selloff in tech stocks has been much more severe with the Nasdaq Composite falling nearly 20% to the low on January 24th and many recently IPO’d companies and momentum stocks falling 50%+.

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