Market strategist and economist Ed Yardeni says recent concerns about rising interest rates, wages and deficits are “overshadowed by more powerful long-term forces,” according to a recent article in Financial Advisor that shares comments from his keynote speech at an FA conference late last year. Here are some highlights:

• The era of globalization which was ushered in at the end of the Cold War in 1989 led to Increased competition among producers and caused downward pressure on goods and prices.
• Yardeni believes that America is “in the midst of an era when technology is transforming the economy in very different ways than it did in the 1990s.” He said there is “no business I can think of that doesn’t face the threat of being disrupted by a rival using technology.”
• While Yardeni said he would like to be a disciple of supply-side economics, he can’t buy into the 3% or 4% GDP growth projected by President Trump. Although the recent tax cut and increases in government spending will provide stimulus for a few years (and possible GDP growth of 3% of 3.5%), Yardeni asserted that it will trigger Americans to “just start buying more imports, so money will leave the country.”
• Investors, Yardeni said, need to “moderate their expectations for equities” after enjoying such a long bull market, but he remains optimistic that the S&P 500 should be able to deliver 7% annual gains between now and 2025. This is possible even given moderate economic growth (2.35% over the last five year) because, he points out, “the economy is not the stock market, and those companies admitted to the S&P 500 represent an elite group of businesses that are bigger and stronger than most U.S. firms.”