Veteran market strategist Ed Yardeni believes the recent pullback in equities has already run its course.
In a new CNBC interview, Yardeni says he is standing by his bullish outlook for the year, even after recent volatility driven by geopolitical tensions and shifting macro narratives.
“I am going to stick by it. I’ve been whipped around quite a bit… but basically I’ve stuck with my 7700 S&P 500 by the end of the year. I had been thinking that we could get a 10 to 15% correction and the S&P 500 dropped 9%. But there’s an exit ramp. That’s what the markets were looking for.
They at first were very concerned that this could be an endless war. There was no obvious way out. The obvious way out is the president to declare that we won and get out, and that’s effectively what he did… so I think Monday was the bottom.”
Yardeni’s call hinges largely on the idea that markets had been pricing in worst case geopolitical scenarios, particularly around conflict in the Middle East and potential disruptions to global oil supply. As those fears begin to ease, he argues, equities are responding accordingly.
He acknowledges that oil prices could remain elevated but believes the US economy is resilient enough to absorb the impact.
At the same time, Yardeni says concerns about severe supply disruptions have been tempered by alternative supply routes and ongoing diplomatic developments in key shipping corridors.
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