Summary

Ed Yardeni argued that the current geopolitical crisis has increased uncertainty, but not enough to overturn his core bullish view. He described the situation as “fog of war,” noting that markets are reacting to rapidly shifting headlines, especially around US policy, Iran, and oil. While he initially expected a short conflict, he now sees a more prolonged and unpredictable situation, with the main economic risk coming through higher energy prices and weaker consumer confidence.

Even so, Yardeni continues to assign a 60% probability to his “Roaring 2020s” scenario: no recession, continued earnings growth, strong productivity, and a resilient US economy. He sees today’s decade as analogous to the 1920s, emerging from severe shocks such as the pandemic, inflation, and war, but still capable of strong expansion. He attributes this resilience to productivity gains, AI-led capital spending, healthy household wealth, and continued support from affluent baby boomers, who are spending freely and often helping younger family members financially.

He raised the probability of recession from 20% to 35%, largely because of war-related oil shocks and the risk of a stagflationary environment resembling the 1970s. However, he does not expect oil prices to spiral uncontrollably, and believes the US economy is less energy-intensive and more flexible than in past decades. He also expects the Fed to remain on pause, looking through temporary inflation pressures rather than reacting aggressively.

On markets, Yardeni still targets 7,700 for the S&P 500 by year-end and 10,000 by 2029. Sector-wise, he favors industrials and healthcare, is more neutral on technology and the Magnificent Seven, and remains watchful but not alarmist about private credit and private equity risks.

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