Yardeni was born in
Haifa, Israel. His father worked as an engineer and his mother as a teacher. When he was 7, his family moved to the United States, first settling in
Cleveland, Ohio, then
Campbell, California, and
New Rochelle, New York. He attended
Cornell University, and earned a PhD in economics from
Yale University. He taught at
Columbia Business School after graduation, and also had stints working for the
Federal Reserve Bank of New York,
Federal Reserve Board of Governors, and the
United States Department of the Treasury. In 1988, he predicted that the
Dow Jones Industrial Average would reach 5,000 by 1993 and in 1995, he predicted that it would reach 10,000 by the year 2000. In 1998, he was named as having done the best job of forecasting the nation's economy for last quarter of 1997 in a semiannual survey conducted by
The Wall Street Journal. In the late 1990s, Yardeni coined the "
Fed model", a disputed
theory of
equity valuation that compares the
stock market's forward
earnings yield to the
nominal interest rate on long-term
government bonds, and that the stock market – as a whole – is fairly valued, when the one-year forward-looking
I/B/E/S earnings yield equals the 10-year nominal Treasury yield; deviations suggest over-or-under valuation. He first used the term when commenting on a report on the July 1997 Humphrey-Hawkins testimony by the then-Fed Chair,
Alan Greenspan on equity valuations. In 2014, Yardeni noted that the predictive power of the Fed model stopped working almost as soon as he noted the relationship. In 1999, Yardeni predicted that the
Year 2000 problem would cause a
recession by disrupting global supply chains. In January 2000, after no major issues occurred, he admitted he had been wrong. ==Books==