Global equity markets have grown increasingly resilient to political uncertainty and tariff rhetoric under Donald Trump, with investors focusing more on economic fundamentals and earnings momentum, according to Ed Yardeni of Yardeni Research.
Speaking to ET Now, Yardeni said markets have learned to treat Trump’s aggressive trade and geopolitical posturing as a negotiating tactic rather than a definitive policy outcome.
Tariffs, NATO stance ease market fears
Yardeni noted that while Trump has maintained a tough stance on issues such as Greenland and trade, his softer tone toward NATO partners and decision to delay tariff actions have reassured investors.
“The markets were relieved to hear that military force was off the table and that tariffs could be postponed. This uncertainty remains unresolved, but it is not a serious obstacle for stocks to keep advancing,” he said, even as Denmark declined to endorse the proposed framework.
Politics should not derail investment decisions
Yardeni said long-term investors should avoid letting political volatility interfere with sound investment strategy.
Live Events
“The US economy and stock market have done remarkably well despite Washington. The real strength lies in economic resilience and the ability of businesses and workers to adapt,” he said.
He highlighted the absence of a meaningful recession since the global financial crisis, aside from the brief pandemic-led downturn in 2020, adding that economic shocks have repeatedly failed to derail growth.Earnings to fuel market “melt-up”
Yardeni expects a strong earnings cycle to continue driving equity gains, rather than valuation expansion.
He forecast record fourth-quarter 2025 earnings for the S&P 500, with per-share earnings projected at around $310 in 2026, up from roughly $275 a year earlier. This earnings momentum, he said, supports expectations of double-digit market returns in 2026.
Bond market pushing back against the Fed
On interest rates, Yardeni said the bond market has resisted the US Federal Reserve’s easing cycle, reflecting confidence in economic strength and persistent inflation.
Despite rate cuts by the Federal Reserve, the US 10-year yield remains elevated. Yardeni expects yields to trade between 4.25% and 4.75%, a range he described as historically normal.
“The bond market is signalling that the economy is strong and inflation is closer to 3% than 2%,” he said.
Long-term bullish outlook intact
Looking ahead, Yardeni said Trump-driven volatility may continue to influence short-term market moves, but earnings growth will remain the dominant driver.
He reiterated his long-term bullish view, projecting that sustained earnings growth could eventually push the S&P 500 toward 10,000 by the end of the decade, reinforcing his long-held view of the “roaring 2020s.”