Ed Yardeni Dismisses U.S. Stock Market Bubble Concerns

Ed Yardeni, a senior market strategist at Yardeni Research, has dismissed concerns about a bubble in the U.S. stock market. According to Jin10, Yardeni attributes the current market rally to 'Fabulous Earnings Momentum' rather than speculative trading. He suggests that if the U.S. economy can avoid a recession in the coming years, the current forward price-to-earnings ratio of 20 to 22 for the S&P 500 Index appears reasonable. Yardeni has coined the term 'FEMO' to differentiate the current market surge from 'FOMO' (Fear of Missing Out), which is often driven by hope and speculation rather than fundamentals. Yardeni acknowledges that the recent sharp rise in some semiconductor stocks gives the market a 'melt-up' feel. He forecasts that under the grand scenario of the 'roaring 2020s,' the S&P 500 Index could reach 10,000 points by the end of this decade, implying a 33% increase. Yardeni notes that he has only observed one significant market sell-off this year, in March, and believes a similar sell-off is unlikely before the year's end. His FEMO theory also supports his target of 8,250 points for the S&P 500 Index in 2026, a target that ranks highest among analysts tracked by Bloomberg.