US Stocks Are in a Long-Term Bull Market, Yardeni Says

You know, look, and I don't want to get too in the weeds of Dow Theory. I know there's some big believers in that and of course a lot of naysayers. But one thing I don't think is debatable right now is that there had been this sort of disconnect, I think between what was going on in the manufacturing part of this economy and the services side of the economy. Is that a concern? It really hasn't been a concern to us. We've been anticipating and perceiving that we are in a recession, but it's been a goods recession. You know, we had that massive buying binge after the lockdowns were lifted where people wanted to go out and and shop. They couldn't really do much in services. So we saw just record spending on goods and then it all kind of came to a halt in around March 2021. So everybody got loaded up with goods about what they wanted. Then they started seeing the services were opening up. What's interesting is the goods didn't take a dive. They just kind of went sideways for a while and they're still going sideways. And anything related to goods like trucking, like train transportation has been also kind of in a in a stalled state. So that's the weak part of the economy. The services is doing absolutely fine. Well, then that gets to the question though too, as to which direction the signals are going. Are we learning more about the economy based on what we're seeing in markets or are we learning more about markets and that psychology based on what we're seeing out of the economic data? Well, the economic data still looks pretty good to us. The initial unemployment claims came down again. There was some concerns that maybe it was about to swing to the upside. But the initial claims I think are the key weekly indicator that we have on the labor market, which is the key leading indicator that we have on the consumer. And the consumer looks fine. They're they're still getting jobs. There's still plenty of job openings. Small businesses are depressed, not because their business isn't good, but because it's hard to find workers. So All in all, I think we're looking at an economy that remains remarkably resilient. And while everybody is coming to conclude that maybe we're going to have higher for longer interest rates because that's what Fed officials are signaling, I view it as normal for longer. Weren't normal interest rates. Economy's done fine with these level of interest rates, as has the stock market. I think that's a great point. Normal for longer, that's a total mindset shift. It feels than like getting a few more cuts, right? In that environment, what still gives you the most value? Where can you still find value in a normal forever? Well, I think at this point my advice to people who've been investing in the market is stay with it. I still like information technology industrials. Financials have done very well. I mean there been some LaGrange, I suppose in the financials. Biotech has had a bit of a move here. But All in all, I'm kind of anticipating that the US economy is going to continue to do well. We are starting to see some green shoots in the global economy. So I think all the stocks that are being sold today are probably the ones that are going to make a comeback and maybe this is just a short term opportunity to hop aboard what I think is a long term bull market. Does that include small caps right now? Ed? Well, it's interesting. We've looked at the earnings story on the small caps. We're talking about when it you know, there's the S&P has 5500, the 400 is the mid caps and the 600 is the small caps. We're not big fans of the Russell because they got like 2000 names in there and a lot of them, quite a few of them aren't making money. So the S&P 600, the small caps, their earnings are kind of flattish. I think they're still more exposed to higher interest rates than are than are the large caps. And they're I think having more trouble finding workers and they're I finding it harder to use technology to increase productivity. So I think at this point stay with the large caps, but I think if you want to go down the cap range, I I would go to mid caps and they've done very well too. Information technology mid caps have been on fire.