Markets, Earnings, and Oil

SPEAKER_1 (0:02)

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Tom Keene (0:27)

So the basic act here folks is I control the show.

No, Mrs. Keene controls the show. She hears Yardeni is going to be on and I get a text message. Ed, with your dogs, do you get their teeth cleaned for $1,300 each time?

Ed Yardeni (0:45)

Well, no, we brush them ourselves.

Tom Keene (0:47)

You brush them yourself?

Ed Yardeni (0:49)

Yeah, we love our dogs.

Tom Keene (0:49)

That Bill and Kenofee won't let me do that. They're going to take my hand off.

Ed Yardeni (0:53)

$1,800 is too much.

Tom Keene (0:54)

Do you medicate them?

Ed Yardeni (0:56)

No, no, no, no. No, they're good dogs and they get groomed and the groomer brushes their teeth.

Tom Keene (1:05)

I get a call from Mdani's office when I get the dogs groomed, it's so damn expensive. It's outrageous what we're paying for that.

Ed Yardeni (1:12)

The affordability crisis in dog grooming.

Tom Keene (1:15)

That segues us right to the equity markets. Thank you. The show can continue now. Mrs. Keene is happy to have that. Ed Yardeni with us with all of his iconic work linking economics to the markets as well. Do you reaffirm a roaring 20s scenario?

Ed Yardeni (1:29)

Seven years in, we're so far so good. Real GDP all-time record high, stock market all-time record high, so far so good. Just three more years. I mean, there are issues ahead, but it's amazing how well the economy has performed despite all the shocks that it's had to absorb since the beginning of the decade. So far so good, as I said.

Paul Sweeney (1:51)

Ed, well, you are the quintessential card counter when it comes to looking at fixed-income markets and your work on debt levels in the US, in France and abroad, but you're referring to bond yields back to their quote-unquote old normal here in your latest. Talk to us about the old normal. I love it.

Ed Yardeni (2:08)

Well, there's an expression that people use to explain where interest rates are right now, and that is higher for longer.

Paul Sweeney (2:18)

Right.

Ed Yardeni (2:18)

And I don't know, that just doesn't... It rubs me the wrong way, quite honestly. I don't think it's higher for longer. I think it's normal for longer. We're back to normal rates. The abnormal rate environment was between the great financial crisis and the great virus crisis. Right before the great financial crisis, we were running between 4% to 5% and occasionally spiked above 5%.

Deja vu all over again.

Paul Sweeney (2:44)

And you rightly point out that it's basically, when we look at household ownings of treasuries or any or corporate owners, it's minuscule compared to where it has been in years past. Yet, you know, now we look at the size of the US. Treasury market and people are actually equating the fundamentals of the US economy to the level of yields. Is that something that we can kind of wrap our arms around and get used to and see in other countries?

Ed Yardeni (3:07)

Well, when it comes to the US., one of my guideposts for trying to figure out where bond yields should be is to look at the growth rate of nominal GDP and the growth rate of nominal GDP right now is 6.3%. We're below that at, well, last Delict, we were 5.19%.

I would say that if we got anywhere close to that, I'd worry, but right now it looks like normal for longer.

Tom Keene (3:32)

Ed Yardeni with the Yardeni Research again, the research I can't say enough about is daily assay. Look for that at Yardeni Research. We protect the copyright of all of our guests. So I finished last night the Wigglesworth, a fabulous debt.

And like Sidney Homer shows up on page 29, Seema Shaw's in there at the end of the book as well. Mary Child shows up on page 372 Yardeni is in the prologue.

He shows up on Roman numeral XII, and Robin put you in early and often because of this great phrase, ban vigilantes. I would suggest there's a ginormous consensus now that the vigilantes are out there. What is the level of our vigilantiness right now?

Ed Yardeni (4:19)

Well, right now, they're sightseeing in France. That's where the ban vigilantes...

Tom Keene (4:24)

But even France has come in a little bit off the Le Pen speech.