00:00Ed Yardeni of Yardeni Research, setting a year-end S&P target of 7,700 and a decade-end target of 10K.
00:07He writes this, this bull market could be one of the longer ones.
00:11Ed joins us now for more. Ed, good morning.
00:12Good morning.
00:13Let's just start with the longevity of this thing.
00:15Already several years into it.
00:16Why do you think this can take another leg and another leg car after that?
00:19Well, I think the economy has demonstrated its resilience over the past few years.
00:24I mean, all the shocks that have hit it, starting with the pandemic and then the tariffs most recently, and yet real GDP is at an all-time record high.
00:35And so I'm just extrapolating that that continues, that the economy will continue to grow through the end of the decade.
00:41And that by the end of the decade, we could very well see the market anticipating something like $100 a share for the S&P 500.
00:50Put a 20 multiple on it and you get 10,000.
00:52Certain things happened last year that people thought would be relevant and turned out to be irrelevant.
00:57I'm thinking of the tariffs of April of last year, irrelevant to the headliner, some P500 index at least.
01:02And then later on and through the year, the fact that unemployment carried on climbing and it didn't seem to disrupt this equity market.
01:08Is that going to be the story for 26 as well?
01:10Yeah, absolutely.
01:11And I think 2025 demonstrated that the economy could grow even when we have a labor market that's not growing much at all.
01:19And that can only happen if productivity is booming.
01:23And productivity growth during the first half of the decade kind of recovered.
01:28It was really quite depressed at the beginning of the decade.
01:30It's recovered to kind of its annual average of about 2%.
01:33I think we're heading to 3%.
01:35Going from 2% to 3% doesn't seem like a lot, but it is a lot when it comes to real GDP and keeping a lid on inflation.
01:42As you know better than most, what often happens coming into the new year, people look for the other thing.
01:47Not the thing that's been working for years, but they look for the other thing.
01:49Is it time to move away from tech and get to the other thing?
01:53Well, I'm in that camp.
01:54I'm in the notion that it's time to rebalance them.
01:58I mean, when you've got information technology and communication services accounting for 45% of the market cap of the S&P 500,
02:06maybe it's time to rebalance a bit.
02:08And I've been recommending also overweighting financials and industrials.
02:14And I would continue to overweight them and put some money also on an overweight basis into health care.
02:20Look, I think every company is basically turning to be a technology company.
02:24You either make it or you use it.
02:26And so I am kind of keen on the impressive 493.
02:31Everybody's focusing on the Magnificent Seven.
02:33But I don't know about you.
02:34I'm getting AI fatigue.
02:35I'm a little tired of the whole thesis here.
02:40And I think the market's starting to show that as well.
02:43And the 493 are looking more interesting because they'll be the ones that are using the technology to increase productivity at earnings.
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