He added, “As we saw, the Chinese retail sales were somewhat disappointing. The industrial production is strong, but that’s also disappointing, because that much means that they are just continuing to deal with their weak economy by pushing their manufacturing sector, and a lot of that goes into exports, which creates deflationary gluts around the world. So, I think to the extent that global investors are looking at where to invest, India obviously looks better than China.”
Read Here | Manulife Investment sees scope for overseas flows to return to IndiaYardeni also commented on Moody’s recent downgrade of the US credit rating from AAA to AA1. He called it a “non-event,” saying it was expected.
He sees no real surprise in the downgrade, as Moody’s is the third major credit rating agency to take this step, following Standard & Poor’s in 2011 and Fitch Ratings in 2023.
The downgrade reflects concerns about the large US federal deficit and growing national debt—issues that are already well known.
Despite this, Yardeni points out that the bond market remains stable. Bond yields are around 4.50%, which he views as the new normal, suggesting that the downgrade is unlikely to have a major impact on market behaviour.Yardeni recently revised his S&P 500 target upward from 6,000 to 6,500, following signs of de-escalation in the US-China trade tensions.
He added, “The earnings picture is starting to look a little bit tired in the United States. And so what we have seen here is sort of a valuation led melt up that is kind of bringing us back to where we were at the beginning of this year, with more concerns about the trade war, more concerns about at least the temporary inflation surge. So that’s where we are right now.”
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