July 21, 2024

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Top markets analyst sees 3 scenarios for stocks in the 2020s

2 min read

Every year, when most Americans are decorating Christmas trees and building gingerbread houses, a few markets-minded reporters are busy detailing the stock market and economic forecasts of giant investment banks for the coming year. Bank of America, JPMorgan Chase, Goldman Sachs, all of the big names are featured prominently in these year-end outlook articles—but interestingly, so is Ed Yardeni, founder of Yardeni Research. 

Yardeni doesn’t run an investment bank, offering instead something more like a boutique sell-side investment consulting firm, but his years of experience as a chief investment strategist, economics professor, and Fed economist have earned him a reputation as one of Wall Street’s top analysts. This standing means Yardeni’s often prescient forecasts merit close attention. After all, he was one of the few analysts to accurately call last year’s stock market rally when most economists were still forecasting recession.

In a Sunday note, Yardeni outlined three throwback scenarios for stocks (and the economy) this decade. Two of these three “historical precedents” will be music to the ears of investors, but the other could be a nightmare. 

Here’s how one of Wall Street’s most respected minds sees the U.S. economy and stock market heading back to the future in 2024.

The 1920s — 60% odds

With a string of positive economic data—including optimistic inflation figures, retail sales reports, and consumer sentiment surveys—helping lift two of the three major stock market indices to a record high last week, Yardeni argued Sunday that the U.S. economy is most likely headed for a “Roaring 2020s” scenario.

A combination of falling interest rates, fading inflation, and a productivity boom due to the deployment of new technologies like AI and robotics will ultimately help usher in an era of growth and abundance, according to the veteran economist and market watcher.

Yardeni has been pushing this Roaring 2020s…

Will Daniel

2024-01-22 14:01:00

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