The new sellers’ pounding last week raised the question of whether the markets “hit bottom”. Not yet, estimates the old man of the American stock market Ed Yardeni, who warns that the fall of shares will continue until inflation peaks.
As he characteristically told CNBC, “I do not think we will slip out of it relatively quickly, not really at least.”
With a Ph.D. in Economics from Yale and tenure at the Central Bank and the US Treasury Department, Ed Yardeni is well known to those who have been monitoring US markets for decades.
During the pandemic he had expressed quite optimistic estimates about the course of the stock markets, which were largely confirmed, but not that last summer that the S&P 500 would reach 5,000 points.
One step that was abruptly halted and under the new context in which Yardeni’s position was expressed yesterday on CNBC was that, in his opinion, investors learned this year “do not mess with the Fed”.
A motto that generally refers to the idea that investors should align their positions with the bank’s monetary policy moves, to the contrary.
“For many years, the idea of not dealing with the Fed was about a case where the Fed would be lax (easing monetary policy). That’s where you want to be long in stocks,” said Yardeni Research chairman Yadeni Research.
“But what has changed dramatically this year is that ‘not dealing with the Fed’ now means not fighting the Fed when it is dealing with inflation. And that means it is not a good environment for stocks, in the short term.”
And with the S&P 500 completing its 11th week of decline in the last 12 last Friday, just as the Dow Jones was just a stone’s throw from the bear market, Yardeni estimates the slump “is not going to end” until we see clear signs. that inflation has reached its peak.
“We need to see a peak in inflation before the market moves significantly higher,” he said, estimating that this could happen next year.
However, Ed Yardeni believes that markets are “somewhat exhausted” in terms of sales.
“Where we are, it’s a little late to panic,” he said. “I think long-term investors will see that there are some great opportunities.”
Source: Capital
I am Sophia william, author of World Stock Market. I have a degree in journalism from the University of Missouri and I have worked as a reporter for several news websites. I have a passion for writing and informing people about the latest news and events happening in the world. I strive to be accurate and unbiased in my reporting, and I hope to provide readers with valuable information that they can use to make informed decisions.
