More Money Means Lower Food Prices!!

Food prices poised to drop sharply: Yardeni

TORONTO — Market strategist Ed Yardeni, who made a name for himself with accurate calls on the U.S. stock market's bull runs of recent decades, says that soaring food prices won't last because farmers are rushing to plant more crops and agricultural productivity is increasing with new investment.

Just bull runs? Why is that sounding an alarm bell?

“There's so much capital now that's going to pour into agriculture that I think food prices are going to come down sharply,” Mr. Yardeni said at a presentation Wednesday morning sponsored by Thomson Reuters Academy.

So much more money pours into something and it automatically leads to sharply lower prices? Good to know. Quick, someone get the government to give me a trillion dollars. I want to do my part to help. I promise to pour it into lots of things. I think I'll start with rice just for kicks and giggles. I wonder if Costco accepts rather large third-party government checks?

And U.S. consumers are likely to surprise economists with their spending even in the midst of a huge downturn in housing prices..

I think it is safe to say we're being surprised. In fact, that might have something to do with why the government is sending out tax rebate checks to reduce the suspense. Just a hunch.

“You know how we Americans are,” Mr. Yardeni said. “When we're happy we spend money, and when we're depressed, we spend more.”

And what do we do if we are Greatly Depressed? Spend even more?

I never heard of him. I was curious just how much of a name he made for himself. Maybe you will be too. The first one is a must read. It plays out like a comedy sketch, lol.

January 24, 2000
Hypester Yardeni is Y2KO'd

I'm not going to blame anyone. The data were what were available at the time. I'm not making any excuses. The three summarizing words are "I was wrong."

November 3, 2000
False Assumptions about the Market's Future

To be sure, Buffett is a long-time skeptic about the stock market's high valuations. But Edward Yardeni, an economist and New Economy booster at Deutsche Bank Alex. Brown, essentially agrees with the legendary investor. Yardeni believes nominal GDP will average a 6% growth rate over the next 10 years (4% or 5% GDP growth and 2% or 1% inflation) and that corporate earnings won't do much better than that. However, he does think the earnings and stock prices of the S&P 500 could increase at a 10% pace, thanks to the growing dominance of high-tech companies in that index. Still, that pales next to the S&P 500's 26% average annual gain from 1995 through 1999.

The S&P 500 index closed at 1427 on November 3, 2000.
The S&P 500 index closed today at 1409.

Warren Buffett: 1
Edward Yardeni: 0

How very stagflationary. It seems the #1 "false assumption" was the 10% pace. Maybe that's just me though.