However, the fundamentals for India still look pretty good. The stocks are cheaper now, and while the market is going to find a bottom, there may be some consolidation for a while before the climb towards the previous record high resumes.
“It is the same story for India and the United States stock markets – a great performance, some need for profit-taking consolidation, and then global investors will diversify back into India and the US,” he added.Yardeni also weighed in on US stock market volatility, which has seen fluctuations after hitting a record high on February 19. He expects choppy trading to continue until mid-March, when fiscal deficit and budget negotiations wrap up. Despite short-term uncertainties, he remains bullish on long-term growth, maintaining his year-end target of 7,000 for the S&P 500.
On the US economy, Yardeni dismissed concerns of a slowdown despite weaker retail sales and consumer spending in recent months. He attributed the dip in first-quarter GDP estimates to temporary factors, including severe winter weather in January—the coldest since 1988. “I expect a rebound in retail sales and employment soon,” he said, adding that fears of a soft landing or recession will likely fade, just as they did in mid-2023.Yardeni also commented on NATO’s shifting dynamics, as the US commitment to European defence faces scrutiny. He noted that European nations may be forced to bolster their own security policies, a trend that has already driven European defence stocks higher. This shift, he added, could allow the US to slightly reduce its defence spending in the future.
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