Market strategist Ed Yardeni is increasingly convinced the bull market that began in the depths of the pandemic in the spring of 2020 has legs. He is raising the odds from 50% to 55% that the “Roaring Twenties” scenario he envisioned in those dark days can continue for the rest of the decade.

“Stock investors are also thrilled by the regime change to a more pro-business administration promoting tax cuts and deregulation,” he wrote in a note to clients yesterday. “Concerns about tariffs and bigger federal deficits haven’t weighed on the stock markets so far, though they seem to be weighing on the bond market.”

Like many on Wall Street, Yardeni is raising his earnings per share estimates for the S&P 500 from $275 to $285 for 2025 and from $300 to $320 for 2026. “These estimates assume Trump will quickly lower the corporate tax rate from 21%  to 15%,” he wrote.

Other assumptions embedded in his predictions are that the profit margins on the S&P 500 will expand from 13.9% at present to 14.9% over the next two years. In addition to the tax cuts, Yardeni expects deregulation and faster productivity to contribute to surging corporate profits.

For the near term, he sees the S&P 500’s year-end target hitting 6,100 for 2024, 7,000 for 2025, and 8,000 for 2026. “We are now targeting 10,000 by the end of the decade,” he wrote. That would represent a 66.6% increase over the next five years.

What could possibly go wrong? Yardeni acknowledges valuations are “historically high,” though those conditions tend to be the case “when investors believe that earnings can grow faster for longer because a recession is less likely for the forseeable future.”

Yardeni doesn’t rule out the possibility of a recession, though he is quick to note the economy managed to avoid a downturn between 2022 and 2024 at a time when the Fed was engaged in the “significant tightening of monetary policy.”

In addition to raising the odds on his “Roaring Twenties” scenario from 50% to 55%, he lowered the odds on a 1990’s-style “meltup” from 25% to 20% and also reduced the chances of a 1970’s style geopolitical or domestic debt crisis from 30% to 20%.