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joining us now is someone who's gotten it right all year Eddie Ard Denny president of yardi research who called for the Roaring 20s is leaning into that now talking about disinflation we're seeing it now what keeps you up at night Ed considering that so far you've gotten a lot of things very right well I've been sleeping pretty well quite honestly um I I guess I do worry about the Middle East the geopolitical situation uh the fog of War you never know how things uh unfold once a war starts and we have this fairly contained localized War uh in Gaza and that the risk is that it becomes a regional war and it affects the price of uh of oil but so far the price of oil has been telling telling me telling me that there's not going to be a regional war going on here any anytime soon so putting aside some of those tail risks is the risk in your mind that people aren't bullish enough considering that everyone's been uh upping their expectations for end of the year targets but we're catching up to it really quick already it hasn't even been the end of the year yeah I think that's true I at the beginning of the year I was talking about 4600 and I wasn't bullish enough we're already above that for the end of this year and then I'm looking for 5400 next year and now there's more people talking about over 5,000 and then for 2025 I'm talking about 6,000 so I I I think I'm bullish enough I I don't think uh things can get much better than that so that's that's kind of at the top end of the scale on optimism I think uh but I think in the near term here we've got uh everybody seems to be too happy at least in terms of the sentiment indicators so that's at a near-term basis I don't lose any sleep over it but I do watch it and with only what a week or so left until 2024 the fact that everyone is maybe too happy right now is that why you haven't boosted your year and target for this year I believe that was at 4600 and uh we're pretty firmly above that right now Ed yeah well you know I I don't uh fine-tune my my my forecast uh that much uh because we are as you said we're only a week away so what's the point of uh getting cute about it uh instead I'm uh I did did uh talk I am talking about 5,400 by the end of next year and 6,000 after that so that's that just puts me in the bullish Camp pretty pretty clearly yeah if I uh of course had to put out these forecasts I think I'd revise on like December 30th every year and just nail it every single time but I do want to talk a little bit about 2025 because 6,000 is a staggering number and 2025 feels very very far away what is the work that gets you there and how do you project that with uh a certain degree of confidence well uh first uh in a short term basis um looks like there's still some uh what I call dieh hard hard Landers who think that we're going to have a recession next year I've been talking about a rolling recession for the past two years and I think uh in the next in in the next two years we'll have rolling recoveries clearly we're starting to see a rolling recovery in the housing market I think we've bottomed in terms of retail uh merchandise a lot of inventory is piled up now I think consumers are going to go back next year and buy some Goods in addition to services and I think commercial real estate will uh be in a rolling recession uh in this coming year but then beyond that I think there will be a recovery so I I think uh that's the way I look at the business cycle is sort of spread out but most importantly I think we've got a labor shortage significant chronic labor shortage and I think companies will uh use technology to increase productivity dramatically right now we're averaging about 1.8% over the past five years I think by the end of the decade we'll be looking at three and a half to 4 and a half% which sounds far-fetched if not delusional I admit uh but uh that's the way uh productivity booms Cycles have gone in the past this one should do the same does it worry you at all and I realize that anecdotes can't tell entire stories and you can't extrapolate out in entire research paper for one particular example but let's take a look at Nike they came out and they said that they're going to be cutting workers they're going to be having Cost Cuts and it is because uh yes they are working down their inventory but because of weakness and weakness that they expect to continue going forward does that kind of contradict some of your optimism about the recovery in the retail space yeah well that's a good point and that's why I think uh a lot of forecasters missed the the past couple of years and had this attitude that or view that the only way inflation could come down in the United States is if we have a recession uh you mentioned the the phrase Immaculate uh disinflation and I think that's what we've had we've had inflation come down without a recession and the reason for that is because the Chinese and the Europeans have done us a great favor they've had the recession so on a global basis uh particularly China has been exporting deflation their ppi is down on a year-over-year basis even their CPI is down a little bit on a year-over-year basis so I think the United States is uh going to uh benefit from uh the recession uh the property depression in China for a long time in terms of having low inflation and I think Europe starts to recover from its shallow recession next year which will help us on the export side and let's bring this conversation to the bond market because uh the reversal that we've seen there has been stunning and of course you've done a lot of great work on deficits what that means for bonds and the demand for bonds and it felt like for a while maybe the Bond vigilantes were reappearing why did deficit concerns seem to fall off the radar yeah I've I've uh had the point of view for many years that I'll care about the deficit when the bond market cares about the deficit in the past Supply really hasn't been much of a problem because you get the biggest Supply in recessions when interest the Federal was cutting interest rates uh we had this brief period where the Bond vigilantes saddled up and started to uh to move on concerns of fiscal excesses and that period didn't last very long basically from August to October we saw this uh monstrous increase in the the 10year bond yield from basically 4 and a qu% to 5% and here we are back below 4% uh I think you know there's an expression don't fight the FED um maybe we should also say don't fight Janet yen now that she's a treasury H because she very cleverly cut back on the supply of uh long-term bonds and notes and uh issued a lot of bills and the bond Vil land said oh if that's the way you're going to play the game we can live with that meanwhile I think the big story has been how inflation's come down I mean it's been only the past couple of months that the consensus really has become that we can't have Immaculate disinflation even Fed chair Po in his press conference seemed to indicate that you know what we we may actually get it and everybody let out a collective cheer and you still hear that cheer today Ed your Denny of your Denny research merry Christmas happy New Year have a wonderful wonderful end of the year and thank you so much
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