Market veteran Ed Yardeni believes that the stock market is in the perfect sweet spot to move higher, pointing to three signs that the US is in a “Goldilocks” economy. This ideal scenario, where inflation falls while economic growth remains robust, is great news for investors.
Yardeni, the president of Yardeni Research, sees three key indicators that suggest stocks are in the ideal environment to rally even higher. Firstly, the job market remains robust, with the unemployment rate near a record low and strong job growth reported in the January non-farm payrolls report.
Secondly, inflation is cooling, with consumer prices rising at a moderate pace and inflation expectations falling to the 2% range. This bodes well for the Fed’s target and could lead to lower interest rates, which could further boost the stock market.
Lastly, businesses are feeling positive about the economy, with sentiment rebounding sharply in recent months. This suggests that the rolling recession in the goods sector may be bottoming out, according to Yardeni.
Overall, Yardeni has been bullish on the US economy for months, likening the current climate to the “roaring ’20s.” He has even predicted that the S&P 500 could reach 5,400 by the end of the year, implying a significant return for investors.
With all these factors in play, it seems like the stock market is in the perfect scenario to continue its upward trajectory. Investors will be eagerly watching for further signs of economic strength and potential market gains in the coming months.
