Independent Financial Research & Analysis
Daily briefings, 7,300+ real-time charts, and macro insights from Dr. Ed Yardeni and his research team.
Research
Latest Research
Recent insights from our research team
Mindboggling: Quantum Computing + AI + Resilient Economy
The Department of Commerce signed letters of intent to invest $2 billion in federal incentives under the CHIPS and Science Act across nine quantum computing and hardware companies. Rather than issuing traditional research grants, the Trump administration is taking minority equity stakes in these companies in exchange for the capital, continuing a broader policy shift toward direct government ownership in strategically critical sectors (similar to previous moves with Intel and rare-earth mining). Publicly traded quantum stocks experienced immediate and intense price surges today following the announcement (chart). This is government-financed exuberance about the future of quantum computing. The question is whether it is rational or irrational exuberance. We are in the rational exuberance camp. Just imagine the combination of quantum computing and AI. This is all consistent with our Buzz Lightyear Theory: "To Infinity and Beyond." Then again, exuberance may be turning a wee bit irrational. S&P 500 consensus expected long-term earnings growth (LTEG) soared to 21.9% during the week of May 21 (chart). That's the highest reading on record, except during the pandemic period. On the other hand, our two favorite Bull-Bear Ratios remain relatively subdued, suggesting that a serious stock market pullback isn't likely for now (chart). Furthermore, our friend Michael Brush reports: "Last week, the week ending May 15, actual insiders purchased an enormous $224 million worth of stock. Granted, insider buying bounces around quite a bit week to week. But this is so high above the pre-war weekly average of $86 million, it is a meaningfully bullish signal." The latest batch of economic indicators confirms our forecast that economic growth will improve during Q2, following weather-related lackluster growth during the previous two quarters: (1) GDP indicators. The Citigroup Economic Surprise Index is solidly in positive territory (chart). That's because recent economic indicators have been stronger than expected. The New York Fed's weekly economic index is showing that real GDP is growing 3.0% y/y as of the week of May 15 (chart). The latest Atlanta Fed GDPNow estimate for Q2-2026 is 4.3% q/q saar (chart). Capital spending is leading the way. Consumer spending is up solidly at 2.9%. (2) Labor market. Initial jobless claims fell to 209,000 for the week ending May 16, with the four-week moving average dropping to 202,500, its lowest level since January 2024. Continuing claims ticked up slightly to 1,782,000, but the four-week moving average fell to 1,773,000, its lowest since January 2020, indicating it has become easier for unemployed workers to find new jobs (chart). The moderation in initial jobless claims suggests the unemployment rate likely fell in May (chart). (3) Flash PMIs. The S&P Global M-PMI rose to 55.3 in May from 54.5 in April, its highest reading since May 2022, marking continuous improvement since last August. Output rose at the fastest pace in just over four years, payrolls posted their largest increase in 11 months, input costs posted their largest monthly increase since June 2022, and selling prices posted their highest level since September 2022. The S&P Global NM-PMI eased from 51.0 in April to 50.9 in May, with energy cost increases pushing service costs to a one-year high, selling price inflation accelerating to a 10-month high, service exports falling at the sharpest rate in six years, and sector jobs cut at the second-fastest pace since May 2020. (4) Regional business surveys. The average of the three available Fed business surveys moderated in May but remained close to a 4-year high, confirming the strong reading in the S&P Global Manufacturing M-PMI and suggesting that the ISM M-PMI will also point to a strong manufacturing sector in May. (5) Consumer spending. The Bank of America consumer checkpoint survey offered a constructive read. Headline card spending rose 4.8% y/y in April, the strongest monthly growth in three years, and even stripping out the gasoline price boost, spending still rose 4.0% y/y, confirming solid underlying demand. Restaurant and travel transactions both increased y/y, suggesting that spending on discretionary services is growing. Meanwhile, Target reported 4.4% customer traffic growth and comparable sales up 5.6% for Q1-2026, its strongest since early 2022. Target's new CEO, Michael Fiddelke, observed that the company saw "broad-based consumer strength." Walmart posted solid 7.3% y/y revenue growth, but its stock fell over 7% on weak guidance, with its CFO noting that higher-income households are spending confidently, while lower-income households are "navigating financial distress."
On Health Care, Housing & Space
The S&P 500 Health Care sector index has performed woefully so far this year, down 5%. Jackie looks at the many reasons it’s been under the weather and what may revive it next year. … Also: Toll Brothers' April quarter earnings confirmed that high-end home buyers still have the means to buy. Are other home buyers becoming less sensitive to affordability issues and more accepting of higher interest rates? Analysts are counting on it. ... And: SpaceX isn’t the only company with its head in the stars. The race to space is on as makers of satellites and other space equipment, both established companies and upstarts, compete to develop the final frontier.
Fed Minutes Should Please Bond Vigilantes
On Monday, we made a few headlines in the financial press with our out-of-consensus prediction that the FOMC would adopt a tightening bias at the June meeting of the Fed's policymaking committee. That would be followed by a 25-bps hike in the federal funds rate (FFR) at the July FOMC meeting. Today, the minutes of the April FOMC meeting showed that the vote to maintain an easing bias was close. There was considerable support for dropping it and adopting a tightening bias. Changing to a neutral stance wasn't seriously discussed. Treasury bond yields fell this morning before the minutes were released in the afternoon. The 2-year yield edged down to 4.04%, still signaling that a 25bps cut in the FFR is likely soon (chart). The 10-year yield fell back below 4.60%, an important level from a technical perspective (chart). The pullback in yields was triggered by a slide in oil prices, with Brent crude dropping more than 5% to $105 per barrel (chart). The selling pressure on crude reflects escalating market optimism surrounding the US-Iran peace negotiations, which reports suggest have entered the "final stages," alongside comments from President Donald Trump indicating he expects the conflict to wrap up quickly. Also helping to calm the Bond Vigilantes was April's FOMC minutes, which were unexpectedly hawkish. If the Fed is going to be more vigilant about the latest inflation problem, then the Bond Vigilantes can be less so. The ongoing closure of the Strait of Hormuz and the latest batch of strong economic indicators suggest that upside risks to inflation now outweigh the downside risks to employment. The April minutes show that the FOMC was turning more hawkish, even though the easing bias was maintained. Here's more: (1) The FOMC was already close to shifting to a tightening bias in April. The minutes reveal a committee that was split over whether to retain an easing bias. Most strikingly, "many participants indicated that they would have preferred removing the language from the post-meeting statement that suggested an easing bias." Three voting members, Hammack, Kashkari, and Logan, formally dissented not on the no-rate-change decision but specifically because they "did not support inclusion of an easing bias in the statement at this time." Three additional members "would have preferred to provide a more two-sided characterization" of future rate decisions, Fed language for a stance that treats hikes and cuts as equally probable. The easing bias made it into the published statement by a narrow majority, not by a consensus. (2) The FOMC explicitly discussed potentially having to hike rates. The minutes state that "a majority of participants highlighted that some policy firming would likely become appropriate if inflation were to continue to run persistently above 2 percent." Furthermore, "the vast majority of participants noted an increased risk that inflation would take longer to return to 2 percent than previously expected." Several participants also flagged the risk that elevated inflation could begin to entrench itself in wage- and price-setting decisions, the precondition for hiking interest rates in response to a supply shock. (3) Rate cuts are off the table. One lone dissenter, Governor Miran, voted for a 25-bps cut, but the minutes make clear that his view found no support. The dominant discussion was not when to cut, but how long to hold the FFR and whether to tighten. Participants "generally judged that continued elevated inflation readings, together with uncertainty related to the Middle East conflict, could necessitate maintaining the current policy stance for longer than previously anticipated." (4) The FOMC is willing to do whatever it takes. The minutes project a committee acutely concerned about its credibility and willing to tighten if inflation persists above the 2% target. Participants explicitly discussed the nightmare scenario in which sustained elevated energy prices, combined with tariff effects, could lift the anchor on inflationary expectations. Fed members characterized inflation persistence as "a salient risk" that is "skewed to the upside." We are sticking to our call that the Fed will shift from the easing bias in April to a tightening bias at the June FOMC meeting, followed by an FFR hike in July. The Bond Vigilantes can take comfort in the fact that the FOMC has become more vigilant about the current inflation problem.
Archive
Our Research Library
19 years of daily research, charts, and analysis
Topics
QuickTakes Topics
Timely commentary covering the most important market themes
Charts
Find Any Chart in Seconds
Search across 7,346+ real-time charts with instant visual previews
SOUTHERN COMPANY: FORWARD LTEG, STRG & STEG
CONOCOPHILLIPS: FORWARD PROFIT MARGIN*
LOWE'S: STOCK PRICE (LOW)
MORGAN STANLEY: FORWARD P/E
Sample charts from our collection of 7,346+ visualizations
Tools
Research Tools
Interactive dashboards for tracking economic conditions and market trends
Beige Book Monitor
Fed economic conditions across 12 districts with traffic-light signals.
FOMC Policy Meter
Dovish-to-hawkish policy stance tracker across FOMC meetings.
FOMC Minutes Monitor
Hawk/dove signal extraction across 10 economic themes.
FOMC SEP Monitor
Fed projections and dot plot distributions across meetings.
Private Credit Monitor
Auto-updating chronology of the private credit liquidity crisis.
Release Calendar
Major publications from the Fed, ECB, IMF, and 12 global institutions.
Try Yardeni Research free for four weeks.
Full access to everything we publish. No credit card, no obligation.