Newsmax Finance Insider Ed Yardeni cautions investors to calm down and don’t get overly excited about Monday’s stock selloff and Chinese economic data.
He told
CNBC's "Fast Money: Halftime Report" on Monday that he didn't want to refer to China as a factor in the markets' downturn.
"I don't want to mention China because I just don't think the news out of there was all that earthshaking," said Yardeni, one of Wall Street's biggest bulls and president and chief investment strategist at Yardeni Research.
Global equity markets fell sharply on Monday, while gold and bonds rose, after a 7 percent slide in Chinese shares sparked by weak economic data rekindled worries over global growth on the first day of trading in 2016. The S&P 500 and Nasdaq posted their worst start to a year since 2001, while it was the worst for the Dow since 2008.
The global selloff began after China's central bank Monday lowered its guidance rate and factory activity contracted for a 10th straight month in December, at a sharper pace than in November.
But Yardeni cautioned not to become too rattled by China's data.
"We know that their purchasing managers manufacturing index has been below 50. If you look at the official number, what's interesting is there's an output component that's been consistently above 50 since 2009. It's been the employment component that's been dragging it down ... I'm not at all impressed by the apparent weakness in the PMI."
Experts theorized that in the last two trading days of 2015, investors were waiting on a Santa Claus rally that never came.
Yardeni explained Monday’s plunge as the market being angry about the absence of St. Nick.
"I think this is the humbug sell-off," he said. "We didn't get our Santa Claus rally so we're mad."
Rising tensions in the Middle East also increased demand for safe-haven assets. Crude prices rose above $38 a barrel at one point as some speculated a breakdown in diplomatic ties between Saudi Arabia and Iran could result in reduced oil supplies. But crude later retreated on worries that the weak Chinese data could portend slower worldwide growth, which also hurt Wall Street and sent key stock indexes more than 1 percent lower.
Despite the ongoing Mideast geopolitical conflict, Yardeni said activity surrounding oil could be stimulative.
"People around the world are spending $2 trillion less on crude oil and that's got to be stimulative," he said. "Not only does it have to be stimulative, but you can actually see it in the data. Global oil demand is growing very rapidly. The problem is the supply, but that's not a problem. I mean, it is a problem for the oil producers, but I think it's going to be very stimulative."
Meanwhile, Monday's selloff had more to do with geopolitical concerns than China's economy, which has been slowing but does not show signs of a hard landing as some fear, said Jeffrey Kleintop, Chief Global Investment Strategist at Charles Schwab in Boston.
Monday's plunge was "probably more about drama than data, since the data has actually been holding up OK," he told the
AP. "Over the last year, we've seen a number of these sharp daily moves in the markets tied to geopolitics that only lasted a day," he said.
But investors are justified to worry about global growth as the factory numbers may not fully indicate how quickly China has been slowing down, said Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vermont.
Dr. Ed Yardeni is the President of Yardeni Research, Inc., a provider of independent global investment strategy research. To read more of his blogs,
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