Thoughtful Money with Adam Taggart "We're Now In The Middle Of A Market Correction" Admits Longtime Wall Street Bull | Ed Yardeni
Mar 31, 2026
Ed Yardeni, economist and president of Yardeni Research, explains why his long-standing bullish view has flipped after the Iran war. He outlines rising recession and bear market odds, scenarios from quick fixes to stagflation, and how oil, PE compression, and forward earnings signal a 10–15% correction. He also covers energy export shifts, private credit risks, and practical strategies for volatile markets.
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Recession Odds Raised After Iran Conflict
- Ed Yardeni raised his recession odds from 20% to 35% after the Iran war outbreak due to elevated geopolitical risk.
- He still assigns a 60% base-case 'Roaring 2020s' scenario, leaving 5% for a melt-up and acknowledging a meaningful stagflation risk like the 1970s.
Current Drop Is Mostly PE Compression Not Earnings
- The S&P forward PE fell ~16% this year while market decline is ~8%, implying forward earnings (E) rose ~8%.
- That shows recent downside has been a multiple compression not an earnings collapse, keeping room for further repricing if E falls.
Use Multiple Scenarios And Update Probabilities
- Yardeni still uses a multi-scenario framework: base case, better, and worse, assigning subjective probabilities rather than a single forecast.
- He emphasizes quickly updating probabilities as facts change, illustrated by his post-war odds adjustment.