Despite the new burst of market volatility, long-time bull Edward Yardeni sees a return to all-time highs this year.
And, he believes U.S. multinational companies, which are directly exposed to the trade war, will ultimately help provide the market boost.
“I think it moves higher partly because there’s a recognition that even companies that do business with China are going to find ways to deal with this escalating trade tension like moving some of their supply chains to other countries,” said the Yardeni Research president Friday on CNBC’s “Trading Nation. “
It’s an outlook that hasn’t appeared to be resonating on Wall Street.
Market volatility resumed Friday on reports of a stalemate between the U.S. and China on a resolution, and the major indexes ended the week in the red.
For the first time in almost three years, the Dow saw its fourth negative week in a row. The blue chip index is now more than 4% below its record high, hit on Oct. 3, 2018.
The S&P 500 isn’t performing much better. It’s off 3% from its all-time high, posted on May 1. However, it’s not deterring Yardeni’s optimism.
“This trade escalation is probably going to be more of a negative for China than it is for the United States,” said Yardeni. “They desperately need a deal much more so than we do.”
Yardeni, known for spending decades on Wall Street running investment strategy for firms such as Prudential and Deutsche Bank, contends the U.S. market doesn’t need an official resolution to secure fresh record highs. He cites a strong economy as a major reason why the U.S. will weather the trade war storm no matter what happens.
“This may last longer than was anticipated,” he said. “I think a deal will be struck and probably by the end of this summer, if not before then.”
He expects the market’s wild swings to continue. However, he still predicts the S&P 500 will end the year at 3,100, and his 2020 forecast takes the index to 3,500, a 22% gain from Friday’s close.
Yardeni particularly likes cyclical groups such as industrials and technology in this environment.