Name: Yardeni Sees Increased Risk of a Sharp Selloff Due to Iran War
Uploaded: 2026-03-11T21:32:06.000Z
Duration: 9 min 26 s
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Joining us now is Ed Yardeni of Yardeni Research, who raised the probability earlier this week of a market meltdown to 35% for the rest of the year.

Does that 35% change at all with what we heard from the President yesterday?

Because while the President seems as though he's ready to declare a mission accomplished or that victory is at hand, I mean, I don't know that the Iranians are acting that way.

I mean, Iran has been at war with us for 47 years and it doesn't look like they're ready to give us unconditional surrender, which was another demand of the president.

And yet it's, we're not even close to that.

So why is the market so willing to take one sentence, you know, one news cycle and sell oil off rather than saying, look, war makes its own momentum and there are two or three or 12 sides here and we're going to continue to bid up this price?

I mean, every, everybody's a military expert.

And I'll be, I'll turn more optimistic when I see a few tankers go through the Strait of Hormuz without getting shot at.

And until that happens, I think there's still a significant risk.

You still have, though, your long term bull call in place, right?

I don't think this is going to last for four months.

I kind of agree that it could last for weeks.

I think even the Iranians are strangling themselves because they can't get their oil out and they can't get whatever they import in.

So at some point there's going to have to be a cease fire, but

it's not going to be an unconditional surrender by the Iranians, as far as I can tell at this point.

I mean, again, I'm no military expert, but

I know that military historians have said that it's very hard to win a war just by dropping bombs from the air.

And we're certainly not ready to put boots on the ground.

You know, the problem with this enemy is it's a terrorist state that has been beheaded, but

they've got these terrorist subsidiaries that operate within Iran to keep their people at bay and also around the region.

So again, I'd like to see that the drones stop.

If the drones, the suicide drones coming out of Iran don't stop, then obviously they can pick and choose their targets in the Strait and trying to escort them is going to be a dangerous mission.

You also wrote over the weekend, I know you still have your bullish long term outlook, but

you can't roll out a bear market and even a recession.

What does that scenario look like where we get the bear market in a recession?

Well, I think we've all been kind of amazed by the resilience of the stock market here.

It looked pretty bad Sunday night when the price of oil was going up to about $120 a barrel.

And when you looked at futures markets, things were trading down.

But it turned out the P500 actually closed up.

So I think there's still a lot of buying on the dips, there's still a lot of wishful thinking and I am hopeful that this thing will be done sooner rather than later.

But I need to see some evidence that that's the case.

And that just doesn't seem to be the case.

So I think we're still looking at it something like a 10 to 15% correction, bear market to be 20% or more.

And I think we can't rule that simply because we have a history where we've seen that oil shocks tend to cause recessions, tend to cause bear markets.

Now we did have 2022 where we had the bear market, but no recession.

I don't think this is going to be the 1970s all over again, but

it's sure starting to look somewhat like it.

What do you expect the Fed to do and where do you see rates going?

Because even if we have a growth slowdown, we're looking at inflation that's still far above the Fed's target and could rise even further.

Well, you know, the Fed is between Iran and a hard place.

I mean, you know, they've got the hard places.

The labor market looks pretty weak and if inflation wasn't a problem, they probably lower rates.

But now you've got a mess with their dual mandate from the war because the war is push is pushing up energy prices, it is pushing up gasoline prices with a lag.

We need a lot of fertilizer for the planting season and apparently a lot of the material comes through the strait.

So there is this concern about inflation picking up instead of continuing to come down closer to 2%.

And I think even if Kevin Wash is nominated, is, is approved and becomes the next Fed chair, I can't see that he's going to be able to convince anybody to lower interest rates.

His nomination is going to be really interesting.

That Hearing of talking about that, knowing that a president might pull it, I want to get a ticket for that one.

The other thing, by the way, you've been so excellent on surveillance, talking about AI derangement syndrome.

But one of the weird things about last week was software.

IGV, the biggest ETF that tracks it, was up more than 7%.

That flips when we get the president speaking yesterday.

Does something about the fog of war and need for safety push us back towards tech?

Or is that something different happening there?

Well, it's an interesting notion because back at the beginning of December, I actually recommended underweighting the Magnificent Seven.

But I guess it's kind of back to the pandemic environment where the Magnificent Seven were just about the only companies that did well because they had their moats, they had their defined businesses.

I've made the analogy with Game of Thrones.

It's like having seven kingdoms with their moats that used to kind of leave each other alone, but

it's going to force them into a arms race.

And so I think tech, you got to do it selectively.

And I have no problems with buying things on dips here.

I. I have this quaint notion that corrections in bear markets are actually buying opportunities.

So I have really no, no problem with picking things that are taking a dive.

I know some people view that as trying to catch a knife, but

when people start using that expression, that usually is the time to buy, to try to catch that knife.

I wonder about gold, because we saw it sell off on days when I thought people should be piling in, should be piling gold as a hedge.

And you've made some really prescient calls on gold.

You were early to this incredible rally that we watched.

I mean, well, is it, Is it, is it, is it now a speculative asset rather than store of wealth?

Still, I think it's turning out to be a good competitor for bitcoin, for example.

No, I think it's just consolidating around $5,000 an ounce.

Younger me reporting on Bitcoin at $600 had heard someone say gold could be a good competitor to bitcoin.

Well, that's been the case for the past year or so.

But no, I'm still using 6000 by the end of the year and I'm still using 10,000 by the end of the decade.

So, okay, 10,000 by the end of the decade.

Is this thing still the hedge for the market at the moment when you want to find somewhere that's nice and cozy to hide?