Researcher Ed Yardeni shares his case for the 'roaring 2020s'

Frank Holland (Anchor) 00:00.310

the roaring twenties are alive and well that according to our next guest ed yard denny he's the president of yard denny research

Frank Holland (Anchor) 00:07.110

he joins us now it's good to see you so we were just a little delayed on the roaring twenties maybe thanks to covid and here we are about to regroup

Ed Yardeni (President) 00:17.670

well i think we've been doing pretty well since since the beginning of the of the decade i mean think of all the shocks that the economy has been hit by the pandemic the lockdowns for two months then the social distancing the supply chain disruptions inflation the fed tightening

Ed Yardeni (President) 00:35.470

tariffs and here we are at an all time record high for real GDP all time record high for real consumer spending and real consumer spending per household pretty good

Frank Holland (Anchor) 00:46.870

what messes up the story i think we need to explore that right i had three people i had three people on top of the show largely bullish i just finished an interview with kevin simpson he's bullish makes the comments hard to be anything but which makes people nervous and says

Frank Holland (Anchor) 01:02.790

that's exactly a reason maybe not to be as bullish i

Ed Yardeni (President) 01:05.470

agree i agree it's something to be concerned about look i'm expecting that we'll get up be up by ten percent next year but i'm i am thinking that maybe in the first half of the year it's going to be a a rough rough going as as it was at the beginning of this year and what i am

Ed Yardeni (President) 01:21.790

concerned about here is we've got sort of a confluence of two policies fiscal and monetary policies that are going to be very stimulative at the beginning of the year monetary policy is on course to buy forty billion dollars per month in treasury bills through april of next year

Ed Yardeni (President) 01:41.390

and the fiscal authorities are about to give us some pretty substantial refunds in the april period reflecting the fact that the big beautiful bill did not take the tax cut into consideration it was retroactive so we're going to have some pretty substantial fiscal stimulus as

Ed Yardeni (President) 02:04.520

well and some pretty large deficit numbers i would think i mean the money has to come from somewhere and it's going to be deficit financed so the bond market get gets spooked by all that and the bond market really hasn't cooperated has not been cooperating with the fed the feds

Ed Yardeni (President) 02:19.990

lowered rates by a hundred and seventy five basis points since twenty twenty four and the bond yields still above four percent

Frank Holland (Anchor) 02:28.510

so when you have people like torsten slack and others say higher for longer and investors need to adjust themselves to that idea sounds like you're one of

Ed Yardeni (President) 02:37.430

them yeah i've been in that camp for a while i've been arguing for quite some time that bond yields are kind of back to normal they should be between four and five percent i really don't have a problem with that what's whatsoever and that's where they were before the great

Ed Yardeni (President) 02:52.230

financial crisis i see productivity a lot of growth i mean certainly the second and third quarter numbers for GDP suggests productivity LED growth that implies that the so-called normal interest rates or the neutral interest rate isn't three percent it's probably more like four

Ed Yardeni (President) 03:09.320

percent and so i think a lot of what the fed 's doing here in terms of easing is not going to help the labor market very much because the structural problems there but it is going to continue to fuel asset inflation as we're seeing particularly now in precious metals

Frank Holland (Anchor) 03:24.630

so we don't even need rate cuts at this point but you know there are some who say but some who say that they should just do it anyway as we discussed with steve liesman just follow the greenspan model from the the mid nineties when there were the same concerns or at least

Frank Holland (Anchor) 03:39.350

similar today then that there are there are today but productivity saved the day and you've been talking so much about that same thing

Ed Yardeni (President) 03:47.790

absolutely yeah i mean it's the rory twenty twenty is based on a productivity LED economic growth i think we've seen a fair amount of it i think we'll see more of it over the the rest of the decade that will keep inflation down but again i think that in that kind of environment

Ed Yardeni (President) 04:05.510

you don't need lower interest rates normal interest rates is what you need and normal interest rates i think more like four to five percent in a roaring twenty twenty scenario i i don't want to melt up meltdown scenario and greenspan certainly gave us some of that in the late

Ed Yardeni (President) 04:21.840

nineteen nineties and two thousand