"I am not optimistic enough yet! The majority bull of the US stock market Yardeni said it's not 'fear of missing out' (FOMO) but 'fear of earnings missing out' (FEMO). The current upward trend is based on earnings rather than a bubble."

Long-term bullish on the US stock market, Wall Street famous strategist and Yardeni Research president Ed Yardeni recently stated that, despite being viewed as a "super bull" by the market, looking back, his optimism towards this round of US stock market rally is still not enough. In an interview, Yardeni stated that the continuous record highs in the US stock market are not driven by blind chasing by investors, but by corporate profit growth far exceeding expectations. He said, "I was already quite optimistic, but it turns out that I was not optimistic enough." Yardeni: Market is not driven by FOMO but by "FEMO" In recent years, "FOMO" (fear of missing out) has often been used to describe the market sentiment of investors chasing after rising prices recklessly. But Yardeni believes that the current market should be called "FEMO" (Fabulous Earnings Momentum). In his view, this bull market is not relying on continuously expanding valuations, but driven by continuous corporate profit growth. He said, "Compared to an upswing driven by valuations, I prefer to see an upswing driven by profit growth." Yardeni pointed out that the overall valuation level of the S&P 500 index is not significantly out of control. "The market valuation is about 21 times, while corporate profits continue to exceed market expectations." According to current Wall Street analysts' forecasts, the earnings of S&P 500 index component stocks are expected to grow by about 20% over the next seven quarters. He believes that this profit-driven rally is healthier and more sustainable compared to a rally purely driven by market sentiment. Resilience of American consumers exceeds market expectations When discussing why the US economy has been able to sustain corporate profit growth, Yardeni specifically mentioned the strong performance of American consumers. Despite facing challenges such as high inflation, high interest rates, and significant fluctuations in international oil prices in recent years, consumer spending has remained resilient. "You cannot underestimate the resilience of the US economy and American consumers." Yardeni stated that even when gasoline prices briefly rose to $4 to $5 per gallon, overall consumer spending in the US continued to grow. He believes that a significant reason behind this is that the baby boomer generation in the US has accumulated a substantial amount of wealth. Data shows that the current net assets held by the retiring and soon-to-retire baby boomer generation in the US amount to around $89 trillion. Yardeni pointed out that this group has strong spending power and wealth cushion, so the impact on the overall economy is relatively limited when faced with inflation and rising interest rates. Aggressive Fed rate hikes failed to trigger a recession Yardeni also reviewed a series of major challenges that the US economy has faced in recent years. From near-zero interest rates to a 5.5% aggressive rate hiking cycle, and escalating political risks in the Middle East, the US economy has not experienced the recession that the market was widely concerned about. In 2022, the rapid tightening of monetary policy by the Federal Reserve temporarily triggered a bear market in the US stock market. However, the US economy eventually successfully achieved a "soft landing," and a recession did not occur. "That bear market didn't last long, it was actually a very good buying opportunity." He believes that the profitability of US companies, the resilience of the labor market, and consumer spending performance have collectively supported the economic expansion. Adhering to the "Roaring 2020s" forecast In fact, Yardeni has been one of the most steadfast supporters of the "Roaring 2020s" theory. As early as August 2020, he proposed that the US economy and capital markets are expected to witness a period of economic prosperity similar to that of the 1920s in the coming decade. Today, despite facing multiple challenges such as the pandemic, high inflation, rate hiking cycle, and political conflicts, Yardeni still maintains this long-term forecast. Yardeni expects that by the end of 2029, the S&P 500 index could reach 10,000 points. This goal implies that there is still significant upside potential for US stocks in the coming years. SpaceX's record-breaking IPO seen as a positive signal In addition to the fundamentals of earnings growth, Yardeni also views the recent record-breaking IPO of SpaceX (SPCX.US) as an important signal of market health. Last week, SpaceX completed the largest initial public offering (IPO) in the history of the US capital markets, raising $75 billion. Yardeni believes that this indicates that current market liquidity remains abundant, and investor risk appetite remains strong. Market participants believe that against the backdrop of continued AI investment frenzy, strong corporate earnings growth, and improved financing environment in the capital markets, Yardeni's views once again reflect the high confidence of some Wall Street bullish institutions in the long-term prospects of the US economy and stock market. However, some institutions caution that the current S&P 500 index is already near historical highs, and future market performance will continue to be influenced by factors such as interest rate trends, inflation changes, and global political risks. But for Yardeni, the key variable determining whether this bull market can continue is the continuous growth of corporate earnings. "As long as profit expectations continue to rise, there is still room for further upside in this rally."