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welcome to trading nation I'm Dominic Shu one of the markets biggest bulls is on correction watch right now edy our Deni is concerned about market valuations and the impact of the corona virus outbreak the Yardeni Research founder joins us now on the phone welcome to the show and as always great to have you is coronavirus really the biggest threat to the market right now right now that's all I really see the global economy was actually starting to show signs of improving before the virus became headline news and now I suspect that the longer this virus threat continues to weigh and the global economy the more it poses a risk for the at least for a correction in the stock market so so what exactly would drive that then why is it that big risk what are the intricacies that we are either seeing or not seeing that it could either cause that economic slowdown or potential market impact well we saw the market going down on Monday quite a bit and that was it I mean it wasn't it wasn't much of a correction or negative response to the virus because China's central bank started pumping liquidity into the into their economy and we got a lot of good economic indicators out of the US and also some of these purchasing managers so the markets done remarkably well in the face of headline news that's still unsettling like cruise ships being quarantined and China basically being completely quarantined because of cancellations of flights and all that that's kind of be disruptive for supply chains and I would think that that will have some negative impact on the global economy but the US doesn't have much of a virus problem so far hopefully it won't a problem at all and on a relative basis investors desperately want to be invested in stocks because yields are so low in the money markets and in the bond markets that they're chasing after dividend yield it doesn't seem add in that in that statement that you just gave and I'm gonna be on something that you just mentioned it doesn't seem like there is much downside risk now I say that a little bit tongue-in-cheek because it seems as though when there's the potential for a military conflict in Iran in Iraq there's the potential for a virus outbreak in Asia it spreads to other parts of the world the one thing I hear more often than anything else is don't worry the central banks will get involved but the central banks have never saved anybody from a disease or they saved anybody from really a military conflict why are central banks still a big focus well because interest rates are so extraordinary low that there are a lot of people who have to have some income to live on or some income target that they that they feel they they must have and so if you're not getting much of a yield to do that in the money markets and at the bottom market then you're going to go to the stock market because that's where dividend yields are still around 2% on average and where dividend yields dividends tend to grow so that's that's what's what's working here is the central banks have basically provided no interesting reasons to buy in the fixed income markets and lots of reasons to buy in the stock market it's the tina trade right there is no alternative I'm not a big fan of calling it the tina trade because you know the bonds were pretty good alternatives and maybe even real estate some pretty good alternatives now I think it's just reach reeled I think it's that simple people are looking for yield it makes me a little bit nervous from a Content standpoint when I hear people saying that stocks of the new bonds that if you can't get a good return in the bond market look forward the stock market you know when I say correction now what I really want to convey here's I don't see a recession coming up here and I you know all in all us so off I would view as a buying opportunity but I'd like to you know if I've got some spare cash I'd like to just kind of keep it as dry powder until I get a little bit more clarity on this coronavirus all right ed before we let you go you mentioned the the dry powder the spare cash let's say some investors don't have that is now a good time to try to raise some of that dry powder or spare cash I'm you know I don't want to really be predicting corrections so I'm really just predicting that we're still in a bull market and I'm not I'm not too good at trading Corrections that the credit correction you got to get out at the top and you got to buy at the bottom and that's a pretty tough call I think it's more important to stay invested because I think it's still a bull market all right still a bull market for the long term Ed Yardeni thank you very much always great to get your insights thank you very much also for joining trading nation today and thank you for watching I'm Dominic Chu we'll see you next time around you
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