ED Yardeni, Yardeni Research, says “the drop in oil prices is a very good development in that regard. Inflation is going to continue to moderate. The economy is going to slow down and that should lift stock prices in the US, maybe even year-end Santa Claus rally.”
Do you think the yields are going to continually remain in focus given that the bond market is sending a lot of warning signals?
Absolutely. The bond market has been the major source of aggravation for equity investors and that is why the stock market has been so weak in September and in early October. But on the other hand, if it stabilises, that should lift the stock market, become less of a concern and we may find some stability here, maybe between 4.5% and 5%. The drop in oil prices is a very good development in that regard. Inflation is going to continue to moderate. The economy is going to slow down and that should lift stock prices in the US, maybe even year-end Santa Claus rally.
