Ed Yardeni Talks Year-End Market Rally

Summary

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Bloomberg Talks: Ed Yardeni Talks Year-End Market Rally

Date: November 28, 2025
Host: Paul Sweeney and Tom Sweeney
Guest: Ed Yardeni, President of Yardeni Research

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Episode Overview

This episode features a post-Thanksgiving conversation with renowned market strategist Ed Yardeni. The hosts dive deep with Yardeni on the resilience of the U.S. economy, drivers of the current bull market, the impact of technology, and the prospects for markets and monetary policy heading into year-end. With the economy proving robust in the face of persistent challenges and the Fed’s outlook uncertain, Yardeni outlines why he remains optimistic—especially about productivity growth, the “Roaring 2020s,” and the broader market beyond just the “Magnificent Seven” tech stocks.

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Key Discussion Points & Insights

1. The Yardeni Approach: Extrapolating the Bull Market

[03:14]

• Resilience of the Economy: Yardeni credits ongoing economic strength primarily to the resilience of consumers, particularly baby boomers, who collectively hold immense wealth and continue to spend and support younger generations.
  • Quote: “I’m seeing all my friends retiring...the baby boomers have $80 trillion of net worth. It’s the wealthiest generation ever to retire.” – Ed Yardeni [03:21]
• Trickle-Down Support: Many retirees assist their adult children financially, helping with mortgages and family expenses, creating a “trickling down” effect that bolsters consumer spending.

2. The Roaring 2020s and Productivity Boom

[04:36]

• Labor Shortages and Technological Solutions: Anticipating baby boomer retirements, Yardeni foresaw tight labor conditions, leading companies to focus on boosting productivity through technology—especially Artificial Intelligence (AI).
  • “AI could be an important technology. Never expected it would just come out of the blue in 2022, but it did.” – Ed Yardeni [04:59]
• Recent GDP Growth: Real GDP up nearly 4% in the last two quarters; productivity gains have offset labor force limitations and helped maintain consumer purchasing power.

3. Nominal GDP, Profits, and Animal Spirits

[06:40]

• Nominal GDP’s Importance: Yardeni, drawing on his Yale economics background, emphasizes nominal GDP as a central driver—fueling both revenue and profits.
  • Quote: “Nominal GDP runs profits, and profits run nominal GDP and runs revenue...” – Ed Yardeni [07:08]
• Productivity as “Fairy Dust”: Enhanced productivity enables higher real GDP and lower inflation while maintaining strong nominal gains—a “magic mix” for markets.
  • “Productivity is like fairy dust. It makes everything better.” – Ed Yardeni [07:29]

4. The Magnificent Seven and Market Concentration

[08:02]

• Dominance of Big Tech: The Magnificent Seven now make up 30% of S&P 500 market cap and roughly 25% of its earnings—reflecting their disproportionate impact.
  • “They have, some of them have moats around them...it’s kind of like Game of Thrones.” – Ed Yardeni [08:03]
• Concentration Risk? Yardeni isn't worried, as these firms generate vast cash flow and are constantly integrating innovation through acquisitions. This does frustrate small- and mid-cap managers, as potential “next Microsofts” get bought out early.
  • “These companies...basically have internal investment banking departments...that they can leverage up in their businesses.” – Ed Yardeni [08:41]

5. Prospects for Small and Mid-Caps; Market Breadth

[09:08]

• Interest Rate Sensitivity: Russell 2000 tends to outperform on expectations of FED easing. However, a large portion lacks earnings.
• Beyond the Big Names: Yardeni prefers the “Impressive 493”—the rest of the S&P 500—believing they will benefit from technology-driven productivity and that market gains will eventually broaden out.

6. Federal Reserve Policy: Confusion and Frustration

[10:04]

• Fed’s Mixed Signals: Yardeni has suggested repeatedly (jokingly) that he could perform the Fed’s job for half the pay, with less confusion.
• Fed “Flying Blind”: The post-pandemic era, with its unique productivity boom, has left the Fed uncertain about the “neutral rate,” as reflected by the wide range in published dot plots.
  • “They have no idea what the neutral rate is. I think you have to look [at] the neutral rate ex post, after the fact.” – Ed Yardeni [11:16]

7. Longevity and the Power of Compounding

[12:03]

• Investment for the Long Haul: Yardeni encourages investors to plan for long lives and harness compound growth.
  • “Spock from Star Trek basically told us ‘live long and prosper.’ And that’s what we’ve been doing...all investors should assume they’re going to live long, and...let the magic of compounding make their retirement prosperous.” – Ed Yardeni [12:07]

8. Lighthearted Moments: Dogs and Thanksgiving

[12:32]

• Personal Touches: The segment wraps up with friendly banter about dogs, the post-Thanksgiving holiday, and even buying doggy sweaters—a signature playful tone to end the show.

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Notable Quotes

• “It’s a lot of money...I also see a lot of my friends helping out their adult kids with mortgage down payments...So there’s a lot of trickling down going on.” – Ed Yardeni [03:39]
• “The digital revolution...this could very well be the roaring 2020s. And so far, so good.” – Ed Yardeni [04:18]
• “These companies are earning a lot of money...it’s one of the reasons small and mid-cap managers have been frustrated.” – Ed Yardeni [08:36]
• “My preference is the...impressive 493...there’s 493 companies in the S&P 500...benefiting from what the Magnificent Seven are creating.” – Ed Yardeni [09:29]
• “The Fed really frustrates me...I’d be more than happy to do what the Fed does for half the price...” – Ed Yardeni [10:09]
• “You have to look [at] the neutral rate ex post, after the fact.” – Ed Yardeni [11:16]
• “Live long and prosper...let the magic of compounding make your retirement very, very prosperous.” – Ed Yardeni [12:07]

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Timeline of Key Segments

| Timestamp | Topic | |---------------|-----------| | 03:14 | Yardeni on extrapolating the bull market and boomer wealth | | 04:36 | Productivity, labor shortages, and the digital (AI) revolution | | 06:40 | The importance of nominal GDP and productivity “fairy dust” | | 08:02 | Magnificent Seven’s dominance; concentration risk | | 09:16 | Prospects for small/mid-cap stocks and market breadth | | 10:04 | Federal Reserve critique; uncertainty over rates | | 12:03 | Long-term investment advice; power of compounding | | 12:32 | Lighthearted banter about dogs and the holiday |

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Tone & Flow

The episode blends analytical rigor with a relaxed, good-humored holiday spirit. Yardeni’s optimism is grounded in historical context, economic fundamentals, and practical experience. The hosts and Yardeni riff effortlessly, toggling between market strategy, economic theory, and witty anecdotes.

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For Listeners Who Missed the Episode

• Ed Yardeni remains bullish on the market, anchored by U.S. consumer strength, technological productivity, and his vision for a “Roaring 2020s.”
• He’s not fazed by tech concentration, believing the benefits will ripple to the wider market.
• Despite rate cut expectations, Yardeni critiques the Fed as “flying blind” and urges investors to take the long-term view.
• Memorable for: Clear optimism, economic literacy, playful banter, and some motivational advice for investors young and old.

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Transcript

[Indiana University Announcer]

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[Bloomberg Studio Announcer]

Bloomberg Audio Studios Podcasts, Radio News Sweeney with makeup.

[Paul Sweeney]

I have no makeup.

[Tom Sweeney]

No.

[Paul Sweeney]

Ed Yarden. He said I'm not wearing makeup in this hour, Mr. Yardeni in studio, a gift for you from Team Surveillance Dana Telsey and Retail America Julia Coronado. To me, the key thing with the Fed is not are they going to raise cut rates, but are they going to do it? 2, 3, 4, 9. Major mystery.

[Tom Sweeney]

I'm looking at the warp function here. Got an 80% chance of a rate cut here in December. That's good enough for I think the market. We'll see what they do in the new year.

[Paul Sweeney]

Futures futures up 11 now after the CME soiree that we've had this morning, the vix, I still think you get.

[Tom Sweeney]

A good VIX quote there.

[Paul Sweeney]

Yeah, we'll have to see. We'll see if we get under 16. And Oliver Chen on Madison Avenue. Luxury here coming up as well with TD Cow and right to it for the interactive broker studios for you worldwide.

[Lisa Matteoli]

Lisa Mattel, you said at futures.

[Ed Yardeni]

Yeah.

[Lisa Matteoli]

Advancing on this day after Thanksgiving, but it's an early close. Don't forget the stock market closes 1:00pm Wall street time. The bond market open until 2:00pm Wall street time. S&P futures rising a tenth of a percent. Same for Dow futures. Nasdaq futures up 2.10 of a percent. Over to the yield space, the two year 3.47%. That's little change. And the yield on the ten year 3.99%. And that is little change. The Bloomberg Dollar Spot Index, not much movement there. Bitcoin up about 1% at just above 92,000. A few stocks to ch. Alphabet up more than 1%. Amazon up Amazon up nearly 1%. Black Friday shopping moving into full swing. That is your Bloomberg business flash.

[Paul Sweeney]

Paul and Tom, Lisa Matteo, thanks so much. This is our Thanksgiving gift to you. And it is not only the question of nailing this bull market. Ed Yardening, lonely. I'm going to give Ralph Vancompura joy as well. A few October's ago saying get on board. But it is someone who's taken Yale economics and folded it into his strategy for participating in the American experience. No one has done this in the last 34 years post Covid. Like Edward Yardeni. We're honored he joins us in our studio today. Are you here just as an excuse before shopping.

[Tom Sweeney]

Shop.

[Paul Sweeney]

Are we shopping after? No, no, no, no.

[Ed Yardeni]

I came just for you. And not only that, I figured it wouldn't be much of a traffic jam on the Long Island Expressways. True. So it's a combination of your request and it's a perfect day to commute.

[Paul Sweeney]

How do you extrapolate? The first question for Global Wall street is to say Yardeni as an audacious call that everyone's catching up to aspects. Dow 53,000, whatever. What is the, the Denny process to extrapolate out?

[Ed Yardeni]

Well, I think that what we've gotten right over the past few years is the resilience of the economy, which is then, of course related to the resilience of the consumer. And I think I sort of had inside information. I'm a, I'm a baby boomer and I'm seeing all my friends retiring. And then I'm looking at the data from the Fed and it shows that the baby boomers have $80 trillion of net worth. It's the wealthiest generation ever to retire.

[Tom Sweeney]

Thank you.

[Ed Yardeni]

And you know, I guess some of them intend to spend it all because the kids didn't listen, you know, they didn't clean up the room, whatever. But it's a lot of money. And, and I also see a lot of my friends helping out their adult kids with mortgage down payments. With mortgage payments and with the kids, you know, after school activities. So there's a lot of trickling down going on. And I think the consumers have been resilient. I've also been talking about the digital revolution with the technology boom. I mean, it was back in 2020 that I started to posit that this could very well be the roaring 2020. And so far, so good.

[Tom Sweeney]

So far so good. And on that front, I've told my kids the last check I write is going to bounce. So, you know, get to work. So, Ed, given that backdrop here, what is your view of this economy here? I mean, the labor market, people are concerned about the labor market. How do you think about that?

[Ed Yardeni]

Well, one of the reasons we talked about the roaring 2020 is we anticipated that there would be a slowdown in the availability of labor. Baby boomers will be retiring. And we also would find that as a result of that, companies would be under a lot of pressure to increase their productivity and perceive that there are a lot of technologies that existed in not too long ago in 2020, and that we did spotlight that. AI could be an important technology. Never expected it would just come out of the blue in 2022, but it did. And so we think that technology, technologies are there to increase the productivity of workers. And we're seeing that just even now. I mean, second and third quarters. Looks like real GDP is up almost 4% each of those quarters. And at the same time, the BLS have been reducing the forecasts in anticipation of what the labor force will be. That adds up to tremendous productivity, which is great for real purchasing power of consumers, by the way.

[Paul Sweeney]

Edgardening with us, folks. The celebration is Friday after Thanksgiving. We welcome all of you. Paul, help me. 1:00pm is equities.

[Tom Sweeney]

Yes.

[Paul Sweeney]

2:00Pm bonds.

[Tom Sweeney]

Right.

[Paul Sweeney]

It's nuts. Why do they do two separate.

[Tom Sweeney]

No, I don't know who's in charge of this stuff.

[Paul Sweeney]

We welcome all of you across the surveillance nation on all the ways you listen to us on YouTube, subscribe to Bloomberg podcast, and of course, we welcome Bloomberg Television Worldwide. A special good morning. Jomana Versace in Dubai. She's pretty killing it on Horizons. Good morning in the Middle east on this special day for America. Futures up 11. Dow futures up 48. Ed yardening with this as well. I want, I want to describe this, Ed, because I think it's important. James Tobin came out of Harvard studying under Schumpeter. Basically the Nobel Prize this year, folks, was a Nobel prize Schumpeter never got. Went down to a school in New Haven, Connecticut, and under him was Willem Bouder, Edmund Phelps, a young lady, Janet Yellen as well.

[Ed Yardeni]

Film and I were there at the same time getting our graduate degree. Agrees.

[Paul Sweeney]

It's just really, really, really austere. In the heart of Tobin and his wonderful, eclectic economics of the 20th century was pay attention to nominal GDP. To me, the great missed call here to bring it over to corporate is animal spirit. Does your bull market extrapolation hinge just simply on nominal gdp?

[Ed Yardeni]

Well, it does, certainly. A nominal GDP runs profits, and profits run nominal GDP and runs revenue and.

[Paul Sweeney]

Runs at the top of the income statement, Right?

[Ed Yardeni]

And, you know, profits typically lead to companies expanding their operations in both labor and in capital. In the current situation, as we just discussed, there's a shortage of labor, so we're seeing a lot more spending on capital to increase the productivity of labor. And it's all good. Productivity is like fairy dust. It makes everything better. It makes real GDP better.

[Paul Sweeney]

Right.

[Ed Yardeni]

It makes inflation lower. And so you still get an increase in nominal gdp, but it's the right mix.

[Paul Sweeney]

Let me get one more in here because Paul's got like eight questions. With that said, when you look at Mag 7 which you have nailed, they're not under the same microeconomics of traditional corporations. Are they discuss that.

[Ed Yardeni]

Well, they have, some of them have moats around them and it's kind of like Game of Thrones where you know, one is rising and another one's falling and it's a very dynamic situation. But they DO account for 30% of the market cap of the S&P 500 but they also account for something like 25% of the earnings.

[Paul Sweeney]

Paul, can you see Zuckerberg going? Cue the dragons.

[Tom Sweeney]

So yes, as we think about what a lot of people have called concentration risk in this marketplace. Is that a risk to you? How concerned are you about it?

[Ed Yardeni]

Well, it's not a concern to me because these companies are earning a lot of money and they have a tremendous amount of cash flow and they also basically have internal investment banking departments where they are able to find small companies that they can leverage up in their businesses. I think it's one of the reasons that SmithCap small and mid cap managers have been frustrated because anytime that they put in the next Microsoft in their portfolio it gets bought out.

[Tom Sweeney]

Exactly. Well how about for the small and mid cap investors out there? Presumably lower interest rates should help those companies. Is that enough?

[Ed Yardeni]

I think we can see it in the way things trade. Whenever it is expectations that the Fed will lower rates, the Russell 2000 does better. The problem is the Russell 2000 has what, something like 40% of companies that don't have any earnings. That's a little bit of a problem. But when people are excited and you know, risk, risk on, they're willing to buy those kind of companies. But my preference is the, I call them the impressive 493. Yeah, everybody's focusing on the magnificent seven. There's 493 companies in the S&P 500 that are going to benefit. Are benefiting from what the Magnificent Seven are creating. These companies, the Magnificent Seven are going to continue to do well unless their products really do improve productivity. For the 493I think that's happening and I do expect that the market will broaden out.

[Tom Sweeney]

What is our Federal Reserve going to do here? I think the market's saying December we're going to get a rate cut. After that, not sure.

[Ed Yardeni]

Well, the Fed really frustrates me for the past few years. Every now and then I've written that I'd be more than happy to do what the Fed does for half the Price. My condition is, I continue, they allow me to, to work from home. I would do regulation or supervision, just macroeconomic policy. But a year ago when they started cutting rates, you know, they're down 150 basis points since September of last year. I said, I don't think that's a good idea because the economy is doing pretty well and inflation is still above 3%. But they just wouldn't listen to me. They did it anyways. And you know what? The bond yield went up last year. Remember, they cut the fed funds rate by 100 basis points. My friends, the bondage. Lance took it up 100 basis points.

[Paul Sweeney]

So Taylor Rule with plug ins. I can go eight ways here, folks, on the plugins of Taylor Rule. I'm, I'm going to say this, Dr. Yudaney, as clearly as I can. With the pandemic and with this original productivity experiment we're working, they're flying blind.

[Ed Yardeni]

Blind.

[Paul Sweeney]

They're make. I mean, you know, with me, Pharaoh Bramo sitting on the set, the Fed decides we're making it up as we go.

[Ed Yardeni]

Well, they basically admit. Admit as much in their, in their dot plot. In the dot plot, you know, when you ask what is the neutral rate? So on average we think it's 3%, but then when you look at the dot plot, it's somewhere between 2 and 4% is the kind of range you get. So they have no idea what, what the neutral rate is. I think you have to look the neutral rate exposed after the fact.

[Paul Sweeney]

I got one final question. Kurt Soup is is out in Indianapolis for Creative Financial Group and he's writing up these brilliant mistakes you make in retirement Tweets Real value add. Kurt S U P E Can't say enough about how he gets you thinking. How is Ed Yardening saying we should invest if we're all going to live forever?

[Ed Yardeni]

Well, I think the baby boomers especially were raised by Spock. And I know Dr. Spock has some influence on our, our mothers, but Spock from Star Trek basically told us live long and prosper. And that's what we've been doing. So I think, you know, all investors should assume they're going to live long and along the way should. They should let the magic of compounding really make their retirement very, very prosperous.

[Paul Sweeney]

Michael Barr emails and he's already on the way back to pick up the pieces after the Lions lost. Ed Yardening ask him about his dog. Did you bring your dog today?

[Ed Yardeni]

No, I, you know, we have four King Charles Cavaliers and Max always likes to take a snooze on my couch in my office. So Max is very, very famous.

[Tom Sweeney]

I watched the dog show yesterday.

[Paul Sweeney]

Did you?

[Tom Sweeney]

Great stuff.

[Ed Yardeni]

Yeah, that was great.

[Tom Sweeney]

Yeah. Yep.

[Paul Sweeney]

So some beautiful dog shined.

[Tom Sweeney]

Oh, I knew one Best in show. I forget. I forget that. Yeah, but it was a.

[Ed Yardeni]

But it really is true. If you want a friend, get a dog.

[Paul Sweeney]

I bought puppy sweaters from Canine Styles Manhattan yesterday. I had to remortgage the middle child. Yep, they're expensive.

[Ed Yardeni]

They are expensive.

[Paul Sweeney]

It's outrageous.

[Ed Yardeni]

If you get. If you get a dog, make sure you get health insurance.

[Paul Sweeney]

Sure.

[Ed Yardeni]

Absolutely.

[Paul Sweeney]

Yeah. Well, with kennel fee, it's hopeless. Ed Yardeni, thank you for joining us worldwide today. Just a real treat after Thanksgiving.

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