Independent Financial Research & Analysis
Daily briefings, 7,500+ real-time charts, and macro insights from Dr. Ed Yardeni and his research team.
Research
Latest Research
Recent insights from our research team
Apocalypse Now! Or, TACO Now?
(1) Geopolitics. President Donald Trump said he is weighing a “massive attack” on Iran. The Pentagon is flooding the Middle East with elite troops, fighter jets, and combat medics. “I am considering a massive attack. Bigger than anything we have ever had before. I am close to making a decision. We are fully prepared for it,” the president told Israel’s Channel 12 on Thursday. The US military on Tuesday deployed a powerful B-1 long-range bomber, officials told Axios. It was the first time the US conducted a B-1 mission since fighting with Iran resumed 12 days ago, signaling a major escalation in the war. The moves come as Trump is demanding “a head for an eye” when it comes to attacking Iran, Secretary of State Marco Rubio told reporters Thursday, updating the Old Testament formula of reciprocal justice. Today's WSJ reported: "The president in recent days has grown skeptical that negotiations with Iran can produce a lasting peace, according to people familiar with the matter. A senior administration official said Trump believes that the only thing Iran understands is military force, adding that he was in 'revenge mode' against Tehran. The president, the official said, sees few good options besides continuing strikes." The price of a barrel of Brent crude oil soared today (charts). It was boosted by news that the Houthis targeted two Saudi oil tankers with ballistic missiles, cruise missiles, and drones in the Red Sea on Wednesday. Trump's "Apocalypse Now!" warning today sent the price back above $100. The S&P 500 fell only 1.2% to 7,408.30 as the war escalated today (chart). It has been fluctuating around 7,500 since May 14. It is now slightly below its 50-day moving average. The relative calm in the S&P 500 suggests that investors have learned that geopolitical crises have usually been good buying opportunities (chart). It should be so again. This time, dip buyers are likely to bet that either Iran caves or Trump does. (2) Sentiment. Our favorite bull-bear ratios are mixed (chart). They are consistent with our summer stall scenario and the sideways trend of the S&P 500 since mid-May. (3) Valuation. S&P 500 forward earnings continues to climb to record highs. So any downside in the S&P 500 will be driven by a falling S&P 500 forward P/E (chart). The recent decline in the forward P/E (and increase in the forward earnings yield) can be attributed to the rise in the 10-year bond yield, which has been rising on renewed fears that a backup in oil prices will boost inflation and force the Fed to raise the federal funds rate (FFR) (chart). (4) Investment styles. The S&P 500 equal-weight stock price index was down only 0.37% today compared to the 1.21% decline in the market-weight index (chart). The former has been outperforming the latter during the summer stall. That indicates a broadening of the stock market rally. Hard hit today were the Magnificent-7, especially Alphabet (-7.4%) and Tesla (-14.5%). Both reported soaring revenue today during Q2, but investors instead zeroed in on their AI spending. Free cash flow turned negative at both. Investors are concerned that their massive capital spending might not pay off. The MAGS ETF was down 3.0% today, while the XMAG ETF was down just 0.11% (charts). Stay Home slightly underperformed Go Global today (chart). The ratio of the two remains in a downward trend, which started in early 2025. (5) Sectors. We've recommended overweighting Energy as a hedge against a longer-than-anticipated war (chart). The stocks held up well during the MOU ceasefire. Now they are rising along with oil prices again. We continue to recommend overweighting Financials, which seem to be holding up well despite increasing odds of a Fed rate hike sooner rather than later. Industrials are also among our overweight recommendations. The S&P 500 Railroad companies are reporting very strong earnings, sending their stock prices higher, as well as the DJTA (chart). Dow Theory remains bullish. Health Care is another one of our overweight sectors. Biotech ETFs have done very well so far this year and are holding up well (chart). (6) Bonds. Bonds are not doing well as the rebound in oil prices revives concerns about higher-for-longer inflation and a more rapid tightening response by the Fed. The odds of a rate hike at next week's FOMC meeting are increasing. The FFR futures market is signaling two rate hikes over the next 6-12 months (chart). The 2-year Treasury yield suggests that the Fed should reverse last year's three rate cuts totaling 75bps (chart)! The bond yield remains in our 4.00%-5.00% "normal" range (chart). If it gets to 5.00%, there will be plenty of buyers that will keep it from going any higher, in our opinion. Interestingly, the recent increase in the 10-year Treasury yield has been attributable to the increase in the comparable TIPS yield, which has been closely tracking the NY Fed's weekly real GDP growth proxy (chart). In other words, the yield could be rising on strong economic growth expectations rather than higher inflation expectations! (8) US economy. Today's weekly unemployment insurance claims data confirmed that the labor market remains in good shape (chart). It probably contributed to today's rising bond yields. Weekly rail car loadings are back at record highs (chart). The economy is chugging along just fine.
On AI, Consumer Credit & Parkinson’s Treatments
Demand for Chinese companies’ open-weight AI models—with free downloadable components for users to customize—is soaring. But US AI providers also offer open-weight models. Jackie discusses the crowded open-weight AI market, where customer demand may not determine the winners as much as government interventions do. … Also: Credit-card company managements were quite pleased with consumer spending and card payment behavior during Q2. A look at the good things they had to say about the health of the consumer. … And: Our new intern Aleksandra Zelatis explains the significance of a potential breakthrough treatment for Parkinson’s disease and how AI helped speed its development.
Choke Points & Other Concerns Causing The Stock Market's Summer Stall
At the start of last month, we predicted a June swoon in the S&P 500. Now it's looking more like a summer stall as the index has been marking time around 7,500 since May 14. We still expect the index to reach 8,250 by year-end. A resilient economy and strong earnings remain powerful tailwinds, but these bullish factors are widely recognized. On the other hand, numerous risks remain. So more choppiness this summer is likely before the rally resumes. Currently topping the worry list is the Middle East conflict. The resumption of the war following a short ceasefire has boosted oil prices again and revived inflation fears. Houthi threats to shipping through the Bab el-Mandeb Strait pushed oil prices higher again today. Bond yields have been rising on increasing odds that the next Fed rate hike will occur sooner rather than later as a result of the inflationary consequences of rising energy prices. AI is another concern. Moonshot's Kimi K3 has revived "DeepSeek 2.0" fears about whether hyperscalers' massive AI capital spending will deliver sufficient returns. Adding to AI jitters, OpenAI disclosed that two of its models escaped a sandbox and hacked AI startup Hugging Face in what it called an "unprecedented cyber incident."Tariffs are back on the worry list. The administration plans 50% tariffs on various Canadian goods and aims to replace the expiring Section 122 tariffs with new duties of roughly 10.0%-12.5% on about 60 countries. The risk is that another round of tariff increases will put more upward pressure on goods prices. These concerns are already showing up across financial markets and key economic indicators: (1) Energy commodities. Brent crude oil has rebounded sharply from its June lows near $72 per barrel to roughly $95 this evening (chart). The futures curve is in backwardation, with future contracts priced progressively lower. In other words, the market expects prices to ease over the next 12 months but remain elevated. Meanwhile, the SPR is near a multi-decade low (chart). Earlier in the conflict, the reduction in crude oil reserves helped cap the oil price spike and speed its reversal once the MOU between the US and Iran was signed. Strategic reserves have been reduced significantly around the world. US gasoline inventories have also plunged to multi-year lows (chart). The sharp drawdown, right in the middle of driving season, is now putting upward pressure on gasoline prices. Offsetting some of these risks, the US economy is far less energy-intensive than in past decades, making it less vulnerable to oil price shocks (chart). We continue to recommend overweighting Energy stocks. Energy ETFs rebounded today and may be set to rise to record highs (chart). They are certainly a good hedge against further disruption to oil shipments in the key choke points of the Middle East. In S&P 500 Energy, Oil & Gas Refining & Marketing has been the best-performing industry in the sector so far this year (chart). (2) Bonds. The 10-year Treasury bond yield is back up to 4.63% (chart). The move reflects concerns about the inflationary consequences of the rebound in oil prices. The upward pressure on bond yields is another reason to expect a summer stall in the stock market. The 2-year Treasury note yield continues to rise above the federal funds rate (FFR) (chart). This signals that the market expects the Fed to hike the FFR soon. The odds of a rate hike are currently 35% for July and 55% for September. That makes sense to us. (3) Gold. The price of an ounce of gold has found support at the $4,000 level, which has held up well despite the recent strength in the dollar (charts). The World Gold Council has reported strong institutional demand, with a historic 45% of central banks expecting to increase their gold holdings over the next 12 months. We've been bullish on gold since it rose above $2,000 on central bank buying. We still are. (4) Yen. The yen rounds out the worry list. It has slumped below 163 yen per dollar (charts). That's the weakest reading since 1986, despite reports from Bloomberg that the BOJ will accelerate rate hikes. Japan faces several pressures at once. Higher oil prices are inflating Japan's energy import bill; the weak yen boosts that cost, and rising US Treasury yields keep the rate gap wide, encouraging carry trades. Fiscal concerns over how the government will fund large spending plans further sap confidence.
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 7,507+ real-time charts with instant visual previews
ORACLE: FORWARD PROFIT MARGIN
WELLS FARGO: FORWARD LTEG, STRG & STEG
S&P 500 UTILITIES SECTOR & INDUSTRIES: ANNUAL EARNING GROWTH FORECAST
LOWE'S: FORWARD P/E
Sample charts from our collection of 7,507+ 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.
FOMC Statements
Every FOMC policy statement since 1997 — full text, rates, and voting records.
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.