Why Roaring 2020s could turn into the Roaring 2030s: Yardeni

Investing.com -- In a note Friday, analysts at Yardeni Research predicted the "Roaring 2020s" could extend into the "Roaring 2030s," driven by robust economic and market dynamics.

The firm raised its S&P 500 year-end target twice this year, citing factors like a dovish Federal Reserve and the return of Trump-era policies. Their current target is 6,100, reflecting sustained optimism.

However, the firm wrote that "contrarian indicators are turning bearish, suggesting the new year might start with a stock market pullback," driven by tax-related portfolio rebalancing.

Even so, Yardeni emphasizes this would likely be short-lived and present a buying opportunity.

Key signals of market exuberance are said to include a Bull/Bear Ratio surge to 3.9, signaling historic levels of optimism, and the S&P 500 trading 11.2% above its 200-day moving average, which may indicate overbought conditions.

Additionally, the firm noted that Conference Board's Consumer Confidence Index reveals 56.4% of consumers expect higher stock prices, surpassing the bullish sentiment seen before the dot-com bubble.

Furthermore, they highlight that foreign investors are also showing heightened interest in U.S. equities, with a record high in foreign purchases reported for September. Yardeni says that historically, such surges have often preceded market corrections.

While labor market data, such as rising unemployment claims, suggests a stable but not overheated economy, Yardeni's research highlights that maintaining cautious optimism is crucial.

Yardeni believes these indicators do not undermine the decade's potential for prolonged economic and stock market expansion, setting the stage for a vibrant 2030s.

Yardeni suggests market participants view any short-term dip as an opportunity, reaffirming their confidence in long-term growth prospects.

Source: Investing.com