Wall Street veteran Edward Yardeni sees two key demographics giving stocks a boost currently through at least next year: Millennials in addition to baby boomers.
According to Yardeni, This particular comes down to their spending habits.
“They [Baby Boomers] are increasingly becoming minimalists. They are trading down in terms of houses in which they want to live in,” the Yardeni Research founder told CNBC’s “Trading Nation” on Friday.
“At the same time, we’ve got millennials who are also minimalists,” he added. “Many prefer to rent in addition to stay within the City, in addition to not buy houses, in addition to not even buy cars.”
Less spending may seem counterintuitive, since spending accounts for around 2/3 of U.S. economic activity. However, Yardeni contended This particular’s bullish, because This particular helps prevent the U.S. economy coming from overheating.
“Put This particular all together in addition to you’ve got an economy in which continues to grow led by consumer spending, however not in a fashion in which suggests in which a boom will be going to lead to inflation, in addition to a Fed reaction in which leads to a bust,” he said. “So, all in all, I put This particular together as still a very favorable environment for stocks.”
His thoughts came as the S&P 500 Index was logging its worst day of August. The drop came amid President Donald Trump’s decision to double the size of metal tariffs on Turkey, which created a currency crash there.
Still, Yardeni isn’t letting the latest geopolitical developments affect his bullish case.
“This particular all creates a lot of commotion on a global basis. This particular kind of makes the U.S. look like an island of serenity, all things considered. I think This particular genuinely favors investing within the U.S. as opposed to investing on a global basis,” he said.
Yardeni has been one of the street’s most consistent bulls — turning positive a few days after the S&P 500 hit an intraday low of 666 on March 6, 2009. He sees no reason to start getting bearish currently: Yardeni will be maintaining his year-end cost target of 3100, a 9 percent gain coming from current levels.
“The earnings picture genuinely has been phenomenally strong. I’ve been bullish on earnings, in addition to This particular’s coming in even stronger than I expected,” he noted.
in addition to, if the economy continues to grow, next July will mark the country’s longest expansion in history — a milestone he believes will be within reach.
“What the stock market cares about most will be the business cycle,” Yardeni said. “As long as investors perceive in which the U.S. economy can continue to grow without a risk of recession, you get a bull market.