This Should Be A Market Collapse… Why Isn’t It? | Ed Yardeni

Markets stable despite Iran blockade

Investors view the April 13 naval blockade as a temporary disruption, with markets remaining stable because they anticipate oil will eventually flow and commodities will reach global markets.

March 30 marked the S&P 500 bottom

Yardeni maintains that March 30 represented the market low, with the subsequent rebound triggered by signals of a short conflict duration and policy responses to extreme bearish sentiment.

Historical crises create buying opportunities

Citing the market bottom after Midway in WWII despite years of war remaining, Yardeni argues markets discount geopolitical shocks early and recover before conflicts resolve.

Three-stage oil price framework

Yardeni outlines scenarios where $100-125 triggers inflation fears and Fed hawkishness, $125-150 sparks growth fears, and $150+ causes demand destruction requiring dovish policy.

Economy handles $100 oil better than 1970s

The modern US economy is less energy-intensive and more services-based, allowing it to absorb current oil prices without the stagflationary shocks seen during the 1970s oil crises.

Tariffs stalled disinflation at 3%

Trump's tariffs prevented CPI from falling to the Fed's 2% target by pushing durable goods prices positive, though they did not cause overall inflation to spike higher.

Maintains 7,700 S&P target

Yardeni sticks to his year-end target based on $310/share earnings for 2025 and $350 for 2026, noting that industry analysts are even more bullish at $320 and $370 respectively.

Recession probability lowered to 20%

Reduced from 35% due to resilient first-quarter earnings expected up 12% and Trump's indication of a two-to-three-week conflict timeline limiting sustained economic damage.

Corporate earnings diverge from small business sentiment

While NFIB small business optimism has declined, Yardeni prioritizes actual hiring data over sentiment surveys, noting corporations continue reporting strong earnings and expansion plans.