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Ever wondered what makes the stock market tick when global trade talks teeter on the edge? In a riveting episode of Financial Sense Newshour, Dr. Ed Yardeni, President and Chief Investment Strategist at Yardeni Research, unpacks the US-China trade deal, economic resilience, and surprising opportunities like gold. His insights, drawn from decades as an economist and market strategist, offer a roadmap for navigating today’s volatile markets. Let’s dive into the key takeaways from his conversation, blending practical advice with a clear-eyed view of what’s driving the economy.

The Economy’s Resilience Shines Through

Despite a 20% market drop earlier in 2025, Yardeni remains optimistic about the US economy. He lowered his recession odds from 35% to 25% after the trade deal, citing the economy’s ability to bounce back. “I continue to believe that the economy would demonstrate its resilience,” he notes. A minor first-quarter contraction didn’t derail growth, thanks to robust consumer spending and capital investment. The trade deal also eased fears of shortages, with China resuming Boeing orders and potentially relaxing rare earth metal exports.

“Put it all together, and the outlook for the economy has improved substantially.”

A V-Shaped Market Recovery

Yardeni’s bold call in April, predicted a tariff postponement would trigger a V-shaped stock market recovery—and he was spot-on. The S&P 500 rebounded sharply after the April 9 tariff delay, reinforcing his bull market stance since October 2022. “We had the beginnings of a sharp reversal of the correction,” he says, emphasizing it was a correction, not a bear market. He’s targeting 6,500 for the S&P 500 by year-end, driven by strong earnings forecasts, overweighting tech, communication services, industrials, and financials—sectors he believes are poised for continued growth. “The stock market vigilantes reminded the President that tariffs are very bad for the stock market,” Yardeni stated, with Trump likely to be more attuned to this reality as mid-term elections come into focus.

The Roaring 2020s Are Back

Yardeni’s long-standing “roaring 2020s” thesis, inspired by the 1920s, faced a test with the tariff scare. He draws a sharp contrast to the Smoot-Hawley Tariff of 1930, which fueled the Great Depression. “Everybody knows how bad the Great Depression was and the role that tariffs had,” he says, crediting “stock market vigilantes” and soaring bond yields for forcing a policy shift. If the Trump administration successfully pivots from tariffs to pro-growth policies like tax cuts, deregulation, and the continued build out of American infrastructure, this would be a strong positive for the US bull market, Yardeni contends.

“The stock market certainly is signaling that the roaring 2020s idea is very much back in play.”

Gold’s Surprising Allure

In a twist, Yardeni, no gold bug, sees upside for the shiny metal, targeting $4,000 by year-end and $5,000 by 2026. Why? Central banks in countries like China, Russia, and Iran are stockpiling gold to diversify away from dollars, fearing asset freezes in geopolitical spats. “Somebody just keeps buying this shiny metal. I think it’s these central banks,” he observes. Even with a recent $100 pullback, gold holds steady, undeterred by calming geopolitics.

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Source (posted with permission)

Checks and Balances Save the Day

A recurring theme in Yardeni’s analysis is the power of checks and balances. Legal challenges questioning the administration’s tariff authority, coupled with market pressure, forced a retreat. “There’s a good chance that some of these courts will rule that Trump exercised unconstitutional powers,” he predicts. This dynamic, rooted in American exceptionalism, ensures no single policy can derail the economy unchecked. For investors, this underscores the importance of staying nimble and informed.

What’s Your Next Move?

Yardeni’s insights weave a narrative of resilience—markets rebound, economies endure, and smart policy pivots can keep the roaring 2020s alive. Whether it’s riding the bull market, eyeing gold, or tracking trade talks, the key is staying proactive. Visit yardeniquicktakes.com for Yardeni’s macro-driven market analysis. What’s your strategy to thrive in this dynamic market—will you bet on growth, hedge with gold, or both?

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