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Joining us now Ed Yardeni, Yardeni Research president. Frequent guest. We have We've been through a lot together Ed and I remember liberation day. Yeah. I needled you and said you you you briefly lost your nerve. Briefly. And then you went right back to where did you What was your 2025 target? Uh 7,000.
And you had gone down briefly and then it and then it came back. This time you didn't You didn't wait You didn't wait You didn't flinch which you know, tariffs [clears throat] are one thing. Uh Attacking Iran and and Well, you live in Iran, I guess. Yeah, but $100 $110 Brent. Lot of reasons to maybe not stand firm, but but you did and I think you were at Were you at 77 for 7,700 and
for 2026. Right. Now I'm at stuck with that. Now I'm at 8,000. Manly. That was manly. Yeah. Uh personally, I don't know if I'm allowed to say manly. Anyway, it was manly. Now where you going? Well, now I'm using 8,250. Uh I've been bullish, but not bullish enough as it turns out. The The earnings estimates of analysts have been phenomenal.
I've never seen anything like it. Uh the first quarter earning season uh the we're finishing up now um has turned out to be gangbusters. Not only that, but the analysts are actually raising their estimates for the second, third, and fourth quarters and the year as a whole they're talking about something like 23% which is uh extraordinary uh increase in an economy that's been growing all along.
But I I think the key to all this is uh and I've been I've been saying this for some time that don't underestimate the resilience of the economy, the resilience of the consumer, and if that's continues to be the case, then the same goes for earnings. In the past things have happened where you know, it wasn't the wrong move to underestimate the strength of of the consumer or the economy or businesses.
You haven't explained to me you say don't underestimate it. You haven't asked me explain to me why and and you know what I'm going to give you your answer for you. Please do. A B C D and E it's E. It's all it's all of the above. It's AI, it's it's the big beautiful bill. It it's the consumers, you know, we've got a lot of retiring baby boomers and they're rich.
They're they're rich. They're 89 trillion dollars in net worth and a lot of them have paid off their mortgages. They're they're spending money. Why are corporations doing so well? Well, corporations cash flows at an all-time record high. Corporate profits at an all-time record high. You not tell me why?
I think it's because it's the US economy is strong and not only that but the global economy is strong. I still want reasons. I cuz it doesn't always not always like that. Yeah, I you know, I've been doing this for a while and the kind of one of the things I've learned over the years is we we pay too much attention to Washington and sometimes we don't really really give a
of Washington not because of it. that's exactly it. We've we've done remarkably well despite the Washington and I think the same thing can be said globally more and more countries around the world that you know, entrepreneurs, business people, consumers are just continuing to do what they want to do.
So Washington doesn't kill it. If Washington you're saying in spite of. So if they're not actually going out of their way to make it difficult for businesses then the US is going to flourish. And Well, I think clearly we've got a administration that's deregulating, that's trying to stimulate the economy.
I mean the reality is under Biden a lot of money was spent to build infrastructure in manufacturing for semiconductors and now under the current administration uh we're seeing the same kind of push to you know, for if nothing else for national security reasons uh to bring the supply chains back to the United States.
So, it's all extremely stimulative. Uh we also uh have uh the big beautiful bill, which is stimulative not just for the consumers with tax refunds, uh but also with 100% depreciation. Right, 100% depreciation. When does uh input costs because of $110 Brent oil Mhm. Let's say that goes on. Let's say it goes on for another 6 months.
Well, I think one of the things that's different between now and what happened in 2022 when we had a big spike in inflation and a big spike in uh in in energy is we're not seeing a wage price spiral. Wage inflation really took off in '21, '22. Remember there was a big shortage of of labor. Uh now that's just not the case and wage inflation's moderated quite quite a bit.
Uh I think the big story is productivity and I've been talking about this being the roaring 2020s and the similarities with the 1920s is uh tremendous technological innovation that led to enormous productivity. And productivity is very does It makes everything better. It makes growth better, inflation lower.
Uh it's great for corporate profits and it's uh it actually boosts wages relative to prices. And what it maybe that's the half-empty view of of AI is that people are are just happy to have their jobs. They're not asking for more money. Yeah, I I think AI on on on a net balance is going to be creating jobs uh instead Instead of coders, we need prompters.
I mean, we need people to actually monitor these systems. You can't just kind of leave them on their own and this But at this point um even though we're steady at 4.3% unemployment, you're not seeing a lot of of hiring and therefore you Can people ask for raises right now? think there's already an indications the labor market is improving.
We've seen the past two two employment numbers have been very strong and But I know wage price spiral though. That's what you your supervisor is I again I think a big difference is that the labor market is in equilibrium. Supply is equal to demand. So, we're not seeing a lot of upward pressure or down or downward pressure.
Here's the question about jobs that I often think about. So, the the best example of and you we haven't I we haven't talked about this Joe since I can't haven't seen you in a week. The best example I think right now about AI creating jobs Yeah. in an industry that people thought that was going to lose jobs is actually radiologists around mammograms.
I don't know if you followed this story. So, everybody thought that mammograms were going to be read by computers and radiologists were all going to lose their jobs. Correct. AI has helped make mammograms so much cheaper. More women happily are getting mammograms. As a result, they need more radiologists to actually look at this stuff and communicate back with the patient to explain what's going on.
The question though that I have about that is is that a short-term flip right now Mhm. until we get to a point where you could use less radiologists to to either communicated or the computer communicated or what's going to happen? does it not a radiologist. So, in the moment I get it and I go oh that's an interesting example because it's sort of completely antithetical to what people thought.
But I don't know what that looks like long-term. Well, you know what's really odd is everybody knows that the coders, software programmers are are losing jobs except for one anomaly here and and that is if you look at Indeed job postings for software programmers it's going up. So, maybe it's there's some software programmers that you don't need anymore and others that you do need.
I think a lot of people are losing jobs they're going to find them pretty rapidly and and we've seen in the latest employment report the duration of unemployment is going down. Continuing claims which we get every single week, has been coming down and but Neela Richardson though did say last week that the new jobs that are being added are not necessarily great jobs.
That often they're part-time jobs, often they pay less, it's smaller businesses that are hiring. They don't always come with all the benefits of the big companies jobs and and that was just with the last Well, you know, a lot of the job creation has been obviously in health care and health care is you know, they pay pretty well there.
Um for various kind of applications. don't you think to yourself that a company that's going to go spend, you name the number, on you know, sort of redoing all their tech around AI Yeah. think to themselves, I'm only spending this money if I'm going to get it back plus plus. Uh or that I'm going to somehow save it in some other way.
And therefore they have to be thinking that they're going to be reducing a hiring freeze for really since the beginning of last year and I think a lot of companies said, you know what, we're we have to figure out how the AI works and what we can do with it and so they looked all around their firms, which is a great way to increase your productivity, is to actually see where this kind of technology might work and what they found is that in some instances AI can be used to augment productivity of workers so you don't have to get rid of workers.
Some areas they did let go of workers but I think in other areas they've concluded, you know, AI is not really relevant to what we're doing in this division. But again, the the labor market numbers themselves speak to the point that I'm making here I don't know why everyone thinks things are improving.
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