Episode summary
S&P 500 Set to Extend Climb as CME Trading Resumes
Bloomberg Surveillance
· · 9 min · Guests: Ed Yardeni, Daniel Noorian, Guillermo Hernandez Sampere
Summary
Ed Yardeni argues that the economy has stayed stronger than expected because consumers remain resilient, helped by baby-boomer wealth and a steady transfer of money within families. He says baby boomers have about $80 trillion of net worth and are supporting adult children through down payments, mortgage payments, and other expenses, which keeps spending power intact.
He links that resilience to the market’s gains, saying the key story is nominal GDP and productivity. In his view, a tighter labor supply from retirements forces companies to invest more in technology and capital, lifting real GDP while keeping inflation lower. He points to real GDP growth of almost 4% in the second and third quarters as evidence that productivity is improving.
Yardeni also says the so-called Mag 7 are not a danger so long as they keep generating cash and helping the rest of the market. He expects the S&P 500 rally to broaden beyond the biggest names, and he thinks the market is pricing in a December Fed rate cut even though he believes the central bank has been too loose and does not really know the neutral rate.
Key takeaways
- The guest says baby-boomer wealth, estimated at $80 trillion, is still supporting consumer spending through direct help to younger family members.
- The guest ties market strength to nominal GDP and says productivity gains from technology are boosting real GDP while easing inflation.
- The guest sees the Magnificent Seven as a source of cash flow and broad market support, not a concentration risk.
- The guest expects the market to broaden out beyond the Mag 7 as lower rates and productivity gains lift the rest of the S&P 500.
- The guest says the Fed is guessing on the neutral rate and thinks it cut too aggressively even though inflation was still above 3%.
Notable quotes
“baby boomers have $80 trillion of net worth. It's their wealthiest generation ever to retire”
“there's a lot of trickling down going on. And I think the consumer's been resilient”
“Productivity is like fairy dust. It makes everything better”
“I think you have to look the neutral exposed after the fact”
How the episode opens
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.
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 their wealthiest generation ever to retire. Thank you. And, you know, I guess some of them intend to spend it all because the kids didn't listen.
You know, if you 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 consumer's been resilient. They've also been talking about the digital revolution with the technology boom.
I mean, it was back in 2020, they started to posit that this could very well be the roaring 2020s. And so far, so good. 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 given that backdrop here, what is your view of this economy here?
I mean, the labor market, people are still concerned about the labor market. How do you think about that? Well, one of the reasons we talked about the roaring 2020s is that we anticipated that there will be a slowdown in the availability of labor.
A 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 could be an important technology.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- sp 500 rally
- cme outage
- fed rate cuts
- tech valuations
- black friday retail
Companies and tickers mentioned
- GOOGL
- GOOG
- AMZN
- CME
- Alphabet Inc.
- Amazon.com Inc.
- CME Group Inc.
- CyrusOne Inc.
- Liquidnet
- MPPM
Watch the episode
Watch “S&P 500 Set to Extend Climb as CME Trading Resumes” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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