Ed Yardeni says economies are recovering ‘pretty well’ from ‘lockdown recession’

The worst of the hit from the coronavirus pandemic appears to be over and markets could see a rebound in revenues from here, market veteran Ed Yardeni told CNBC on Tuesday.

“We do have weekly indicators that are pointing in the direction of a rebound in revenues,” he told CNBC’s “Street Signs Asia.” “We think that the second quarter was the bottom for both revenue and earnings.”

The president of Yardeni Research pointed to indicators like retail sales as well as new and existing home sales which have been “very strong.”

Last week, retail giants Walmart, Target, Lowe’s and Home Depot reported tremendous sales gains, blowing away Wall Street estimates.

Yardeni said: “All in all, we’re still seeing that economies are recovering pretty well from what was basically a lockdown recession.”

In a note early this week, Citi Private Bank pointed to the effectiveness of government stimulus in “countering the deepest impacts of the COVID recession.”

“The generally good health of the world economy pre-COVID and rapid fiscal action by governments fueled a rebound in global activity that has been extremely sharp, V-shaped in fact,” strategists wrote.

They added that it seemed to be “business as usual” when it comes to spending, for large segments of the population, attributing the spending boom to what they called “substitution effects.” For instance, people spend on improving their homes instead of saving, or online shopping instead of in-store retail.

These “substitution effects” have been so “robust,” they said, that they have caused supply chain disruptions and inventory depletions.

“At current production rates, retail inventories will continue dropping through the third quarter. We believe this will restrain US GDP through year-end, but it will be a driver of a future recovery in industrial activity and trade,” Citi Private Bank wrote. “We have pent-up demand during a pandemic.”