Investing.com -- Yardeni Research says its long-standing “Roaring 2020s” scenario could be regaining momentum after recent market turbulence.
In a note published April 24, analysts pointed to a string of ultra-bearish headlines as a potential contrarian signal and noted improved investor sentiment and economic indicators.
“We repeat our conclusion from a week ago: Contrarians of the world, unite! Now, we would add that our Roaring 2020s scenario might be back on track soon,” Yardeni wrote.
The firm notes that the S&P 500 is up more than 7% from its Monday lows, the VIX has dipped below 28, and high-yield corporate bond spreads have narrowed from 461 to 348 basis points.
A more dovish tone from the Federal Reserve is also playing a role. “The 10-year Treasury yield fell 7bps today after Cleveland Fed President Beth Hammack told CNBC that the Fed could cut interest rates if the data deteriorated by the FOMC’s June meeting,” Yardeni noted, while adding, “We still doubt that will happen.”
Yardeni also flagged the market’s confidence in Treasury Secretary Scott Bessent, writing, “Investors believe he is more like one of us given his hedge fund career.”
Still, the note cautioned that “trade deals will need to be inked soon for the stock market to sustain its current bounce.”
On the consumer front, Yardeni sees resilience. “The US consumer remains strong,” Capital One’s CEO said this week, pointing to “improving delinquency rates, lower charge-offs... [and] stable consumer debt servicing burdens.”
They added that weekly Redbook retail sales rose 7.4% year-over-year, and credit card company stocks are rising.
While the Fed’s Beige Book showed tourism softening, Yardeni highlighted record employment in leisure and hospitality, along with record spending on air transportation and lodging. “The consumer is doing well,” they concluded.