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>> Bloomberg Audio Studios. Podcasts,

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>> Let's do this. Let's look at inflation,

look at our optimism within the markets.

Joining us now, definitive on Wall

Street, at C.J. Lawrence. Just a few

years ago, he helped invent the

synthesis of economics into stock market

analysis. Ed Yardeni joins us, Yardeni

Research. Ed, we got a 1-hour

conversation we're going to cram in

here. I got to first go to the therapy

that's needed as you go to retirement,

which is you've got Max, Chloe, Cooper,

and Bailey at the Yardeni house. It's a

four-dog night.

>> Yeah, it certainly is. It's the King

Charles Cavaliers, and the couch potato

dogs are

They're always on the couch, and they're

sleeping.

>> What are the kennel fees? I mean, the

vet bill must be just like seriously off

the charts.

>> you have to get health insurance for

your dogs. I mean, it's it's a

>> That's That's your Bloomberg Bernie

advice, or Yardeni

advice. Thank you very much. Why is it

Yardeni Let me go to the chart right

now. Pull up an important chart here

coming out of COVID, and then in October

of '22, a guy named Ankam Poor in the

chart area, and Yardeni in the economics

and finance said, "Courage. Buy here."

What did you see in October '22 that

gives you continued confidence in the

market?

>> Well, October '22

was a very strange bear market. Usually,

bear markets are associated with

recessions. There was no recession. As a

matter of fact, at the time, I kept

saying that we are experiencing the most

widely anticipated recession of all

times that just isn't going to happen.

It was the the Godot recession, if you

will. I I I just kept betting on the

resilience of the economy, and so I kind

of viewed the bear market as the

aberration rather than the economy,

which remained very strong. And the

earnings were holding up reasonably

well. So, I kind of viewed that as a as

a panic attack. Now, look, there were

good reasons for concerns. The Fed was

raising interest rates from zero to 5.5%

on the Fed funds rate. The bond yield

was going up. Oil prices got a a big

spike. And yet, the resilience of the

economy came through remarkably well. We

were betting on that, and that we're

still betting on the resilience of the

economy.

>> Yeah, so I want to take it to what we

are seeing right now because you said

bond yields were going up, oil prices

are going up. That's exactly what's

happening now. The stock market has kind

of slowed down a little bit. So, the

parallels between then and now, one

could say, is noteworthy.

>> Well, there's definitely parallels, but

one of the big differences is earnings.

We we've got what I call, you know,

everybody talks about FOMO, fear of

missing out. I'm talking about FEMO, and

that is fabulous earnings momentum. And

we didn't have that back in 20 2022. And

it was really at the end of 20

2022 November that we suddenly had

ChatGPT and AI revolution just starting.

>> And the the arc of this, and I just

finished Justin Baer's wonderful book on

Ned Johnson. And you know, the industry

from ERISA 1974 forward. My basic take

is we've rationalized in ownership of

bonds, which has been really difficult

since 22, since 20 1 as well. Is the

basic psychology of retirement now

afraid of stocks?

>> I don't think so. I think actually quite

the opposite. I think

a lot of my friends are retiring. We're

we're the baby boomers. I'm still

working for a living cuz I don't play

golf, so I don't know what I would do

with myself. And oh, by the way, I get

seasick on cruises. My friends are all

going on cruises. They used to go one

every 3 years. Now, they go three

a year, and I get text messages from

them saying, I don't know what you're

doing, but keep this market going up

because we're spending money like crazy,

and our net worth keeps

>> He nailed Bill Schooner's last week,

Scarlet. It was brilliant on this saying

the stock market's become

>> [clears throat]

>> the American retirement system.

>> absolutely has. Do you know that the

baby boomers have 90 trillion dollars,

trillion not billions, trillion dollars

of net worth. And by the way, there's

still some

people left from the so-called silent

generation, older than the baby boomers,

they have 20 trillion dollars. So we're

talking over a hundred trillion dollars

of retirement net worth assets for the

largest generation ever

that is retiring.

>> Are they going to use that or are they

going to actualize that or are they

going to just pass it on to their heirs?

>> Well, you know, the kids didn't listen

and they didn't they didn't like we

didn't like their friends and they were

noisy. So why leave them anything? Just

spend like crazy. But look, a lot of

people have been talking about the the K

economy that, you know, the rich are

getting richer, the poor are getting

poorer. I think that this is what's

really going on and that's the

demography. We've got a very, very

well-off baby boom generation and

they're helping their younger children

and grandchildren. The affordability

crisis is really old versus young.

Retiring people, they don't really care

if the Fed tightens. Retiring people

really don't

care much

about the labor market cuz they're

retired. All they really care about

really is the stock market.

>> How should our audience of retirement,

of personal finance, how should they

synthesize the Fed madness? You and I

remember when Arthur Burns had smoke

coming out of the pipe and we

interpreted that. Now we've got this

parlor game. Yeah, how does Ed Yardeni

filter that if it's for long-term

investment?

>> Well, I I think you focus on the

economy. If you believe in the

resilience of the economy, if you

believe that the labor market is in

balance, we got a 4.3% unemployment

rate, which is

awfully good.

Uh we have an inflation problem. The Fed

is going to have to probably raise

interest rates at least once, maybe

a second time, maybe even a third time

according to where the two-year Treasury

note yield is right [clears throat] now.

I think you you kind of grin and bear it

and try to

enjoy your retirement life cuz I think

the market will continue to defy the the

bears because the economy will continue

to defy the pessimists.

>> You were saying that the boomers don't

care about the Fed raising rates.

They're going to enjoy their retirement.

I'm not a boomer. I'm a Gen Xer. So, I

got to work for longer and I'm wondering

whether a higher for longer interest

rates means that I have to rethink,

reassess, pivot my investment strategy.

>> Well,

the short answer is yes, but

I'm not a big fan of the higher for

longer idea about interest rates. I

think interest rates are back to normal.

In other words, 4 to 5% 10 year treasury

bond yield is a sign of a very healthy

economy.

It's It's a yield that made sense before

the great financial crisis. The

aberration,

higher for longer implies we're going to

be going back to zero

closer to zero interest rates.

>> That was the abnormal.

>> Yeah, now six six six and a half percent

seven percent mortgage rates seem

awfully high to a lot of people compared

to what? Compared to where they were

when the economy wasn't doing so well.

>> Ed, you're I know that you're seeing the

Odyssey. I guess it's tonight you're

going to see the Odyssey.

They don't know that you were writing a

newsletter in Sparta a few years ago.

We all know that after the 1920s roaring

20s, it wasn't pretty. What happens

after the Danny roaring 20s of this 21st

century?

>> Yeah, I'm I'm trying to sort that out

now.

I'm I think that if the roaring 2020s

works

and

in other words, if the economy doesn't

have a recession, the stock market

continues to go up, I've got 10,000 on

the S&P 500 by the end of the decade. If

If that works, there's no particular

reason why it couldn't be the roaring

2030s. As a matter of fact, that

talking

>> about a a decade as roaring, that's what

the stock market usually does during

decades. There've only been a few

decades where the market was just kind

of flat, where it was

a nothing kind of environment. And

certainly that was

the

the 1930s were terrible.

And the 1970s were no picnic. And then

the the period around the great

financial crisis was So we've had we've

had

decades where you made nothing, but

there were lots of decades where the

market's done very well. Not just the

1920s.

>> Be nice to the 1970s. We had Bob Seger.

So we got through it somehow.

>> You are bullish on the equity market.

You've long been bullish on the equity

market. You talk about boomers, this

generation that is feeling pretty good

with the gains that they've seen. What

would surprise other people about how

you spend, how you save money

given what has happened?

>> Well, I

I found over the years that I can't

really trade. I can't really manage my

own money because I'm too busy doing my

day job.

And the other thing is there's kind of a

conflict of interest if my portfolio

suddenly is sinking and turns me

pessimistic and then I'm writing

pessimistic and it's kind of just

reflecting my own personal angst. So I

try to basically stay in in ETFs and

you know, keep things somewhat liquid.

Also have stocks and and bonds, but

mostly in an ETF portfolio.

>> How far out do you go? How colorful do

you get with your ETFs?

>> Well, you know, as I as I get old as I

get older, I don't need bonds that go to

for 30 years. So maybe you know, maybe I

should do that.

>> I think [laughter] you should consider

the triple leveraged all cash fund.

>> That would be secure.

>> Yeah, but basically I

believe in the market. I believe that

the S&P 500 has been

awfully good and even better has been

the Nasdaq 100. Technology has been

a leading sector in our economy.

>> Okay, so it looks like growth all the

way for Dr. Ed Yardeni.

>> Yeah, and I think, you know, a lot of

these so-called Trump accounts probably

will get invested that way.