Ed Yardeni Says This Sell-Off Can't Go On Much Longer

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Market bull Ed Yardeni believes that the recent market sell-off can't continue for much longer.

Market bull Ed Yardeni believes that the recent market sell-off can't continue for much longer, according to CNBC.

“I don’t expect more than a garden variety correction, which would be a 10-15% drop,” he said. Yardeni stated that based on his metrics the sell-off started on September 3, one day after the S&P 500 and Nasdaq hit all-time highs. As of Friday's close, the S&P 500 and Nasdaq are off 9 and 9.5 percent, respectively.

He attributes the majority of the sell-off to over-inflated values in the tech sector. “We’re still seeing that,” said Yardeni. “And then, of course, we’ve got the renewed concerns about the pandemic and when we’re finally going to get a [coronavirus] vaccine. So, it’s not as though the election is going to fix everything.”

He believes that the presidential election result will help set the case for a rally towards the end of the year. Furthermore, his year-end S&P 500 target is 3,500 and his mid 2021 target is 3,800. The post-presidential election environment, easy-money policies, economic growth, and coronavirus vaccine optimism as positive catalysts. “It’s a continuation of the bull market that started way back in 2009, and it’s just been plagued with all of these panic attacks,” he said. “I have been counting them. This is number 67.”

“There’s always going to be some churning around from maybe overvalued areas of the market to cheaper areas,” he said. “That will bring the market back.” Yardeni believes the economy will continue to recover into 2021 too. “It’s definitely going to slow down here, and it may be more of a Nike-swoosh [instead of V-shaped],” Yardeni said. “But I don’t see a double-dip. I don’t see a W. I think the economy will continue to do remarkably well in the face of all these challenges as long as we don’t lock everything down.”

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