Editor’s Note: Well… we’ll be traveling today. It’s already chaos in my house as we start preparing for Thanksgiving. The editorial schedule of Capital Wave Report will take a break tomorrow morning and resume when markets open on Friday. In addition, I will be live on TheoTrade this morning at 8:45 ET for a premarket warmup... Good morning: When Ed Yardeni’s commentary arrives in my inbox… I stop what I’m doing. I’ve long considered him a must-read in this broad financial world… Back in 2020, he compared the 1920s to… the 2020s… and, in commentary with The Compound, projected that we could see earnings levels by 2030 that would justify the S&P 500 at 10,000…  Hoo boy… Of course, if you had told me when the S&P 500 was at 2,500 in 2017 that we’d be pressing 7,000 just eight years later, I’d have suggested it’d be insane… But the shift in Treasury policies and Federal Reserve support - massive surges in liquidity - then… risk assets become attractive. Add the fuel of passive flows… then he’s probably correct in that best-case scenario. The challenge ahead will be the refinancing of post-COVID era loans at higher interest rates - but even more monetary support appears on the horizon. I think I might be viewing 10,000 a little more pessimistically because of what it says about the financial system itself. At some point, the Fed’s balance sheet will balloon again… QE feels permanent, and even amid the Fed’s current tightening cycle, we’re still running extremely loose financial conditions…
Suppose all roads point to more monetary inflation, more fiscal support, and greater emphasis on short-duration Treasury Bill issuance to support America’s ballooning debt. In that case, 10,000 is definitely in the cards. Debt is exponential in a refinancing world… It doesn’t shock me if equity markets follow suit… Let’s get to the market commentary…... Continue reading this post for free in the Substack app
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