Despite valuation concerns, Yardeni Research president Ed Yardeni remains bullish about the market (^DJI, ^GSPC, ^IXIC). The strategist and economist shares his bullish earnings outlook on Market Domination Overtime with Julie Hyman and Josh Lipton.
The equity market is “not cheap,” Yardeni says, adding equities have “already been in a great bull market, but their earnings outlook remains very strong.”
“I think from here on, the bull market continues on earnings, less on valuation,” the strategist says, highlighting that strong bank earnings drove stock prices higher.
He notes that strong performance from the financials sector (XLF) is a positive sign for earnings at large: “I actually thought today and tomorrow the financials would be most important because to really get a sustainably strong bull market. It’s very, very helpful to have a strong financial sector, and that’s what we have for sure.”
“I think we need to increasingly convince investors that even though valuations are high in the tech area, this is not going to be a repeat of the late 1990s and early 2000s [with a] tech bubble, followed by the tech wreck. I don’t think that’s what we’re looking at. I think we’re looking at earnings continuing to march higher for tech, communication services, [and] industrials because I think the US economy is on course for a productivity boom based on the technologies that are available to accomplish that.”
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