2 days ago
Market Already Feels Like a Melt Up, Ed Yardeni Says
00:00
If the Fed were to cut by 50 basis points next month, would you change your view? Would you see this as something other than a head fake? Well, I think with then I would just say we're in a melt up. I mean, it feels like a multiple already. We've seen this the correction at the early at the beginning of the year, we've seen multiples go from 22 forward P for the S & P 500 at the beginning of the year, down to 18. We didn't get down to 15, we didn't get down to ten. The market figured out and kind of agreed with me that the economy was resilient and we're not going to have a recession. And when it did that, suddenly boom, we went right back up to 22. And so the market ain't cheap. And the reality is, if the Fed cuts when there's still, as you said, a lot of ambiguity about whether it really needs a cut, it doesn't really need a 50 basis point cut, let a 25 basis point cut. The administration needs interest rates to come down because they'd like to see the interest cost of the debt come down. But the economy, I think, is going to surprise everybody in the next few months, especially the consumer, as you also indicated, and show some resilience on the consumer part and capital spending. A lot of it is technology related that's going to continue to go. And so I think, you know, as the drums beat for more rate cuts here and we're probably now going to get one in September, and then there'll be expectations for another one after that before the end of the year. I think we're in melt up situation. So, you know, right now I'm still kind of sticking with 6600 and the S & P 500. But by year end, because I, I think there's still a couple of indicators here that might suggest that maybe the Fed shouldn't be lowering rates, but absent that, we could go right back to 60 907,000 by the end of the year in a melt up situation. And the problem with melt ups is that followed by meltdowns.
