A bullish assessment of the rebound from the march lows and the prospects for the year ahead...

American consumers almost never disappoint us. I often have observed that when Americans are happy, they spend money and when they are depressed, they spend even more money—because shopping releases dopamine in our brains, which makes us feel good.
The October 2 update of the Atlanta Fed’s GDPNow model showed that Q3’s real GDP is tracking at a record jump of 34.6% (at a seasonally adjusted annual rate, or saar) following the record 31.4% drop during Q2. That’s certainly a V-shaped recovery so far.
...there is still enough “potential” fiscal stimulus left over to provide “kinetic” energy to consumer spending over the next few months, in our opinion.
The pace of the recovery is bound to slow in 2021, and there could be setbacks. However, so far, the recovery has been impressive.

blog.yardeni.com/2020/10/tale-of-two-economies-housing-related.html

If Yardeni (or the street consensus) is right, market is trading at about 19 times 2022 earnings. What do I know, but with interest rates set at zero through 2023, that doesn't seem crazy to me.

Here’s Yardeni’s optimistic view: https://www.yardeni.com/pub/yriearningsforecast.pdf
It’s also interesting to look at the estimated sector earnings here: https://www.spglobal.com/spdji/en/documents/additional-material/sp-500-eps-est.xlsx?force_download=true
Seems to me the stock & bond markets can be totally divorced from Main Street. Certainly now that there is always the Fed put. Which is to Sa the Fed will always stop the markets from falling. Years ago I believed folk like David Stockman who said a day of reckoning was coming. Now I’m more inclined to believe FD1K.

The Federal Reserve is completing a year-long policy review and is expected to announce the results soon.
One big change would be a harder commitment to getting inflation higher, through a pledge not to raise rates until it hits at least 2%. Markets have been betting on higher inflation, with surging gold prices, a falling dollar and a rush to inflation-indexed bonds.
Yardeni said the approach would be “wildly bullish” for alternative asset classes and in particular growth stocks and precious metals like gold and silver. Guha said the Fed’s moves would see “real yields persistently lower, the dollar lower, volatility lower, credit spreads lower and equities higher.”

https://cnbc.com/2020/08/04/the-fed-is-expected-to-make-a-major-commitment-to-ramping-up-inflation-soon.html

The article made only a passing reference to the ongoing fiscal stimulus being provided to the economy. At least a sentence or two more with some counterpoints about why the stock market will decide to ignore that stimulus would have been helpful. Here is a little of what Ed Yardini is currently writing about Modern Monetary Theory (MMT).

So far, all the government stimulus has provided some support for the global economy. But the virus is still out there, and so are the recessionary forces. As a result, price inflation remains subdued even though much of the ballooning fiscal deficits are being financed by central banks’ purchases of government securities, which MMTers also support. In Kelton’s dreamland, that’s a perfect outcome, because she and her merry band of arm-linked MMTers believe that the only limit on deficit-financed government spending is price inflation. Sure enough, the US government has responded precisely as she advocates, producing one stimulus program after another. Another one is imminent, sized to the tune of $1.0 trillion, which will most likely cause the Congressional Budget Office to raise its current fiscal 2020 budget deficit estimate from $3.7 trillion to $4.7 trillion

blog.yardeni.com/2020/07/welcome-to-oz-where-mmt-enables.html

How long is "foreseeable?" Aren't we just a black swan away? Maybe even a rumor of a black swan.
Yardeni's formula seems facetious -- with an edge -- to me. It put me in mind of a government leveraged penultimate stage of the Minsky cycle.

@WABAC
Yardeni indicates in the article that the movement towards stocks since mid-March will have strong support "for the forseeable future". That -- and other things he has written elsewhere -- suggest he does not think the time of reckoning for the stock market will occur soon.

The embrace of Modern Monetary Theory (MMT) by US monetary and fiscal policymakers....triggered a huge wave of TINA rebalancing out of bonds and into stocks. It is likely to continue for the foreseeable future.

This simple equation does a good job of explaining overall market behavior since mid-March.

The stock market equation since March 23 has been: TINA + MMT = MAMU
Mother of All Meltups = MAMU
There is no alternative to stocks = TINA
Modern Monetary Theory = MMT

If this is the case, I am left wondering how the P/E ratio will be evaluated going forward.
blog.yardeni.com/2020/06/mamu-mother-of-all-meltups.html

This is an interesting look at what the Fed has been doing in recent weeks.

Creating the Zombie Apocalypse. Fed Chair Jerome Powell is doing an admirable job of playing the action hero in “2012 Zombie Apocalypse,” a 2011 film about a fictional virus, VM2, that causes a global pandemic. He is doing whatever it takes to stop the zombies from killing us by ruining our economy and way of life.

blog.yardeni.com/2020/04/fed-trying-to-contain-zombie-apocalypse.html

https://www.yardeni.com/pub/stylestaygo.pdf
This is way beyond my pay grade... I'd love to have an explanation of how these charts can be read ?
ANyone ?

Totally agree. What @davidmoran described resembles the 2004 tsunami in Indonesia. Can't located the footage showed on CNN that go something like this: an earthquake occurred out in the Pacific Ocean and people were running into the exposed beach as the ocean pulled back. Then the outer waves grew taller and taller as they moved inland quickly and continued to surge. Boats, cars, and houses were tossed around like toys. The sound of people were indescribable.
Here is one video that showed the carnage resulting from the tsunami in Thailand.
https://bing.com/videos/search?q=tsunami+indonesia+youtube&&view=detail&mid=A3A63753C8C7FF817A0CA3A63753C8C7FF817A0C&&FORM=VRDGAR&ru=%2Fvideos%2Fsearch%3Fq%3Dtsunami%2Bindonesia%2Byoutube%26qs%3DMM%26form%3DQBVR%26sp%3D7%26pq%3Dtsunami%2Bindonesia%2B%26sk%3DHS1MM5%26sc%3D8-18%26cvid%3D1B1D0441DBF3432DB7A12BAE798AD205
The impact of this global virus crisis, termed by Ed Yardeni is far from over and likely to last for awhile before recovery.
Just imagine those people who went into the exposed beach as the ocean pulled back.

@davfor. The Yardeni chart is really good! c

IMO, the headline could be misinterpreted as Ed Yardeni has been bullish and continues to be bullish since March 2009. (Read his blog.) What he was referring to in the cited interview was whether he would currently invest spare cash at these levels, given the uncertainty / risk of the coronavirus. From the headline, one could imagine that Yardeni is sitting on a pile of cash which I believe not to be accurate.

Thanks for the story. At around 1% returns on cash that’s an expensive seat cushion. :)
“ ‘If I’ve got some spare cash, I’d like to just keep it as dry powder until I get a little bit more clarity on this coronavirus,’ Yardeni said.“
Keeping dry powder ? Gosh - That one goes way back. Younger ones here may not know it.
- “Dry Powder” INVESTOPEDIA
Another oldie I like - (opposite of keeping powder dry): Backing up the truck .
- “Back Up The Truck” INVESTOPEDIA

The link includes a link to the interview....

That’s Yardeni pointing to the possibility of a 10% drop from recent market highs in an interview on CNBC on Friday.....
Yardeni, who says he’s going to keep cash on the sidelines until he gets more clarity on the coronavirus, remains bullish longer term.
“Interest rates are so extraordinarily low,” he said. “The central banks have basically provided no interesting reasons to buy in the fixed-income markets and lots of reasons to buy in the stock market.”

https://marketwatch.com/story/heres-why-one-longtime-market-bull-is-keeping-powder-dry-even-with-the-fed-giving-a-green-light-to-buy-stocks-2020-02-09

@Edmond Thanks for the heads up about Yardeni's blog. His latest entry was definitely worth reading. I used to follow him but somehow lost touch with his writings. My email address is now back in his updates que. It does not appear the central banks are ready to give up on their easy money policies. So, from his perspective, it sounds like additional asset price inflation is probably in the cards. Too bad his cryptic ending comment does not spell out more clearly when he thinks that approach probably won't continue to work any more. It seems like we are already in the era of diminishing returns. Perhaps jeremy grantham's ponderings about a gradual reversion towards the mean for asset prices over several years makes as much sense as anything? Its hard to quickly step too far away from risky assets when interest rates are so close to zero and additional liquidity keeps getting pumped into the system.

@Edmond: Always been a fan of Ed Yardeni.
Regards,
Ted
Blog:
http://blog.yardeni.com/

Ed Yardeni has been around Wall Street for decades. -- Maybe even back as far as the old Wall Street Week era. Having been around a long time, he brings experience, sobriety, and perspective to his analysis, which is often lacking by most of today's professional "blogsters".
I 'check in' on his blog from time-to-time. This week's post (dated 8/5/19) seem particularly cogent, and covers a lot of ground about markets, the national economy, "stagnant income" (he thinks the data shows income has NOT been static), and much more.
blog.yardeni.com

Children have an economic value in rural agricultural communities, but not in cities.

Does Yardeni even realize how he sounds to ordinary human beings?

FYI: Something is wrong with the global economy. It's not functioning as it "should," or traditionally has. Actually, the world economy seems downright dysfunctional. This distortion relative to past norms reminds me of the skewed, tragi-comedic worldview of Garp in John Irving's best-selling 1978 novel “The World According to Garp,” about a man born out of wedlock to a feminist icon.
The U.S. economy, meanwhile, is showing some signs of similarly unusual behavior, but it doesn't appear as abnormal as the rest of the global economy — so far. I am using the objective meaning of the word "abnormal" without drawing any subjective implications just yet. In other words, for investors, the world is what it is. Our investment conclusions must be derived based on how it is, not on how it ought to be.
Regards,
Ted
https://www.marketwatch.com/story/theres-a-lot-more-to-the-stock-markets-slide-than-trump-and-trade-wars-2019-08-05/print