On our first day at Yellowstone National Park yesterday, my wife Valerie and I spotted lots of bison, but no bears. I believe this is a bullish omen for the stock market. They were all grazing quietly. We hope to see some bears today. Hopefully, they won't pose a menacing threat to us.
Of course, at Yardeni Research, our outlook for the economy and financial markets isn't derived from faith-based but rather data-based analysis. Based on the data, we expect that the tug of war between the bulls and the bears will continue over the rest of this year in the stock market. However, the bulls should be back in charge by next year.
In the near-term, we are encouraged by the resilience of consumer spending. Q1's S&P 500 earnings were better than analysts expected, and the analysts remain upbeat about earnings in coming quarters.
Valuation multiples are closer to their historical fair-value averages, as long as a recession isn't in the cards.
On the other hand, yesterday's Dallas Fed business survey confirmed the weak readings for May of the other four regional Fed business surveys. Let's see whether today's M-PMI report is as weak as suggested by the regional surveys. Another concern was yesterday's jump in oil prices. The previous six recessions prior to the pandemic coincided with rapidly rising oil prices.
Let's see what today brings. We will be bringing a can of bear spray, just in case.
