Newsmax Finance Insider and market strategist Ed Yardeni warns that the next recession will likely come two years into Donald Trump's presidency.
Yardeni told CNBC that leading up to the election, Trump's proposed policies appeared to be pro-growth, and that investors largely dismissed anti-trade rhetoric that surrounded Trump's agenda on the campaign trail. Now that Trump is president, Yardeni said, there's a lot of uncertainty about that, and the market will have to "digest its gains."
Earnings could push the market higher, Yardeni said, adding that it's all about the valuation of earnings, which should grow by 6 percent, CNBC reported.
"What we really need, though, is some more clarity about where this administration intends to take fiscal policy and trade policy, most importantly trade policy. If we can sort of overcome the fears of protectionism and find that what Trump really wants to do is get fair trade, which is still free trade, and isn't really intending to have protectionism, I think the market goes higher," Yardeni said.
Yardeni’s recession prediction is based upon a five-decade analysis of economic recoveries. He said that since 1965, the past five cycles of economic expansion have averaged 65 months — about 5½ years. The current expansion began in November 2013, and will find its end 65 months later, in March 2019, CNBC explained.
"The question we've addressed is whether the next recession is likely to happen sooner or later than this benchmark, given what we know currently. Since we too were in the slower-growth-for-longer camp prior to Election Day, March 2019 seemed like a reasonably distant time for the start of the next recession. Keep in mind, we first presented this benchmark on March 24, 2015. So far, so good," he wrote in a note published Monday on Newsmax Finance.
Yardeni, who after Election Day raised his real GDP growth rate for this year from 2.5 percent to 3 percent, wrote that if Trump's policies stimulate a spurt of short-term growth, the next recession could actually occur sooner. But for now, he is keeping his eye on 2019, CNBC reported.
As his first few days in office prove, Trump will be a demanding leader who applies the best of his negotiating skills to push for U.S. growth, as bestselling author David Horowitz recently predicted to TheStreet.com.
Trump won’t be an ideological purist like Republicans who support free trade but don't fight for fair trade, Horowitz said.
“We've had an anti-business president now for eight years who doesn't take a hard-nosed attitude towards these deals. Trump is going to get better deals for us, which is still free trade.”
Horowitz's new book "The Big Agenda: President Trump's Plan to Save America," released just this week, reveals Trump's "first 100 days strategy" to roll back Obama's legislative and executive record.
Horowitz's new book is the first book about the Trump presidency and has soared to the top of the Amazon bestseller charts, becoming the No.1-selling book on the web.
Trump will also lead the way in making infrastructure spending to boost the U.S. economy, Horowitz said.
“If the economy grows as it will under Trump, there's going to be a lot more money to spend,” he said.
"Big Agenda: President Trump's Plan to Save America" is available at bookstores everywhere – or get your copy on Amazon – Click Here Now
(Newsmax wire services contributed to this report).
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