Jeremy Siegel, a long-term market bull, anticipates a serious setback that has nothing to do with the Covid-19 surge risk.
His turning point: A drastic change in the Federal Reserve to deal with hot inflation.
“If the Fed suddenly gets tough, we don’t know if the market is ready for a U-turn. [chair] Jerome Powell may take another bad inflation report, “Wharton’s finance professor said on CNBC.Trading country“On Friday.” A correction will come. “
October consumer price index soars 6.2%, The Ministry of Labor reported earlier this month. It has recorded the highest profits in over 30 years.
Siegel criticizes the Fed for being out of date in taking steps to curb inflation.
“In general, the Fed hasn’t made any positive moves, so money is still flowing into the market,” Siegel said. “The Fed is still doing quantitative easing.”
He speculates that a moment of truth will occur at the Fed’s December 14-15 policy meeting.
Siegel warns if it suggests a more aggressive approach to curbing price increases Modifications may be made..
Despite his concerns, Siegel is in stock.
“I’m still pretty fully invested, because as you know, there’s no alternative,” he said. “In my opinion, bonds are It got worse and worse.. Cash has disappeared with an inflation rate of over 6%, and I think it is rising further. “
Siegel predicts that price increases will spread over the years, with cumulative inflation reaching 20% to 25%.
“Even if the stock is a bit uneven, in this scenario you need to want to hold a real asset, and the stock is a real asset,” he said. “Everything that tries to maintain value in the long run.”
But that depends on the company.
“When interest rates rise, very high stocks that discount cash flow will flow into the future … [are] It will be affected by the discount mechanism. “
Siegel attributed record strength of growth stocks to concerns and declines in delta variants Treasury yield.. He predicts that the Covid-19 surge will subside as more people get boosters.
“It stopped the so-called reopening trade,” he said. “”worth It ’s very cheap. ”
“”[Financials] “Recently, they have been offered for sale at low interest rates,” Siegel said. “They may come back.”
The market is a bad inflation report away from the fix: Jeremy Siegel
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