Stocks are back in a bull market as global economic outlook is improving, says market veteran Ed Yardeni

• Stocks are back in a new bull market thanks to an improving global economy, according to Ed Yardeni.
• He pointed to factors like lower natural gas prices and China's reopening, which could boost stocks.

Stocks are back in a bull market as the global economic outlook is improving, according to market veteran Ed Yardeni.

"I think we made a low on October 12 in the market. I think that was the end of the bear market. And I think we're back in a bull market. Not straight up, a lot of volatility, but I think the markets are telling us the world economy is improving," Yardeni said in an interview on Wednesday with Bloomberg.

His comments come after a brutal year for stocks in 2022, with the market battered by rising inflation and aggressive rate hikes by the Federal Reserve. The US central bank raised interest rates 425-basis-points last year to rein in high prices, leading the S&P 500 to sink 20% and economists to warn of an incoming recession.

Those losses were partly exacerbated by a weak global economic outlook, Yardeni said, pointing to volatility in areas in Europe and China. European inflation hit a multi-decade high amid soaring energy prices, leading BlackRock to warn of a severe recession to come for the Eurozone. China's economy was also majorly hampered by its COVID-19 lockdowns.

But that's changing as the outlook in Europe and China improves. Goldman Sachs no longer sees a recession battering Europe, largely due to plummeting European gas prices and cooling inflation. China is also set to reopen its economy after over two years of lockdowns – which could quickly spur growth in the global economy, even if there's a potential short-term COVID-19 outbreak, Yardeni said.

Yardeni has previously said he saw the US avoiding a recession in 2023, as the economy will be bolstered by a hot labor market and strong consumer demand in 2023. Inflation has also cooled significantly, with expectations for December prices to clock in at 6.5%. That could lead the Fed to pull back on its rate hikes soon, according to market bulls like Fundstrat's Tom Lee, who saw stocks rallying 20% by the end of the year.