Stocks, Bonds & Gold In 2026

Episode Overview

• The discussion begins with an analysis of the current "Santa Claus rally," emphasizing that strong corporate earnings are the primary driver of the market's performance, outweighing earlier analyst concerns.
• A major shift in the competitive landscape for the "Magnificent Seven" is explored, arguing that AI has forced them from separate "kingdoms" into a costly and direct "AI arms race."
• The podcast presents a long-term bullish "Roaring 2020s" thesis, with specific price targets for the S&P 500 (7700 by 2027) and gold (10,000 by 2029).
• The speaker provides historical context, arguing that the protectionist Smoot-Hawley tariff—not the 1929 crash—caused the Great Depression, and contrasts this with today's "rebalancing" of globalization.

Key Concepts

• Earnings as the Primary Driver: The core thesis is that corporate earnings fundamentally drive the stock market, and analyst sentiment has shifted from cautious to bullish over the year.
• The AI Arms Race: The "Magnificent Seven" are no longer quasi-monopolies but are now engaged in direct, high-stakes competition fueled by AI development, raising questions about their future return on investment.
• "Roaring 2020s" Forecasts: The S&P 500 is projected to reach 7700 by 2027 (based on $350 EPS and a 22 P/E ratio) and 10,000 by the end of the decade.
• Gold's Bullish Outlook: Gold is also forecasted to potentially reach $10,000 an ounce by 2029 and is seen as an important portfolio diversifier that has historically performed well when equities are flat.
• Historical Context on Depressions: The argument is made that the Great Depression was primarily caused by the 1930 Smoot-Hawley tariff and the subsequent collapse of global trade, not the 1929 market crash itself.
• Rebalancing vs. Deglobalization: The current global economic environment is described not as a collapse of globalization, but as a "rebalancing" of trade relationships, which is a less severe threat than the protectionism of the 1930s.

Quotes

• At 2:09 - "What's driving the market is earnings in our opinion." - Yardeni states his core investment thesis, emphasizing that corporate earnings are the fundamental driver of market performance.
• At 5:02 - "What's changed over the past several weeks is the perception that AI is actually forcing them to compete with each other. There's a sort of an AI arms race, as it's been called." - He explains how the rise of AI has created a new, intense competitive dynamic among the largest technology firms.
• At 15:37 - "350 times a PE of 22 and you get 7700, which is where we think the S&P 500 is going to go." - He explains the calculation behind his S&P 500 price target, based on his 2027 earnings forecast.
• At 16:04 - "Now Gold, I got a problem. I haven't been bullish enough." - He candidly admits that his previous bullish forecasts for gold have been surpassed by the market's actual performance.
• At 34:59 - "I think what caused the Great Depression is the Smoot-Hawley tariff that was passed in May 1930... the big deal is Smoot-Hawley was passed, and that's when the great crash really started." - He argues that the protectionist tariff, not the 1929 stock market event, was the primary cause of the Great Depression.
• At 35:54 - "We haven't really gotten deglobalization. We've got a rebalancing of globalization." - He contrasts the current economic environment with the 1930s, suggesting that while trade dynamics are shifting, they are not collapsing in the same way.

Takeaways

• Focus on corporate earnings growth as the most reliable indicator of market direction, rather than being swayed by temporary shifts in analyst sentiment or macro-level concerns.
• Re-evaluate the Magnificent Seven not as individual monopolies but as a competitive cohort, scrutinizing their capital expenditures on AI and the potential impact on future profitability.
• Consider gold as a strategic long-term diversifier that can perform well alongside equities in a bull market, not just as a traditional safe-haven asset during downturns.