Trump's 'Humongous' Tax Refunds Could Spook Markets, Risk Rattling Bond Yields, Warns Ed Yardeni - SPDR S&P 500 (ARCA:SPY)

Core Viewpoint - Ed Yardeni predicts that the "Roaring 2020s" stock market rally will continue through 2026, but he warns that aggressive fiscal stimulus from the Trump administration poses significant risks to the economic outlook [1][3]. Group 1: Economic Outlook and Market Predictions - Yardeni highlights a potential conflict between government spending and the bond market, noting that massive taxpayer refunds could lead to increased liquidity that may upset "bond vigilantes" [2]. - He forecasts the S&P 500 to reach 7,700 by 2026, representing a 10% increase from current levels, driven by an AI-driven productivity boom that will enhance corporate earnings [3][4]. Group 2: Socioeconomic Divide - Yardeni describes a "Chick-fil-A Economy," where Baby Boomers are financially secure and spending freely, while younger generations face challenges such as housing affordability [5]. - He believes that Trump's policies are aimed at addressing the dissatisfaction among the "have-nots," although this may lead to volatility in the bond market [6]. Group 3: Market Performance - Year-to-date, the S&P 500 has increased by 17.67%, while the Nasdaq Composite and Dow Jones have gained 21.75% and 14.32%, respectively [7]. - Despite these gains, the SPDR S&P 500 ETF Trust (SPY) and Invesco QQQ Trust ETF (QQQ) closed lower recently, with SPY down 0.36% and QQQ down 0.48% [7].