The inflation threat has passed but unemployment is set to jump, Jeremy Siegel said.
The US economy can still avoid a recession with the Fed’s help, the Wharton professor argued.
Siegel suggested the stock market has bottomed already and could jump 15% next year.
The inflation threat has faded, unemployment is set to spike, and the US economy can still escape a recession, Jeremy Siegel said in a flurry of interviews and commentary released this week.
The Wharton finance professor and author of “Stocks for the Long Run” slammed the Federal Reserve for hiking rates too aggressively in response to surging prices. Moreover, he suggested the US stock market has already bottomed, and could surge as much as 15% next year.
1. “It’s negative now, it will be negative next month, and it’s actually been negative for the last two months.” (Siegel was referring to the core Consumer Price Index, which excludes volatile food and energy prices. He noted it would be negative if it included current instead of backward-looking housing data.)
2. “Inflation is, as I said a month ago, over.”
3. “We really could see a rapid softening of of the labor market as they realize that they don’t have to hoard labor anymore.” (Siegel was arguing that employers hired excess labor during the pandemic because they were worried about worker shortages, but as those fears wane and productivity rises, they might slash headcount.)
4. “Employment has yet to soften notably, but I think the jobs data is likely to deteriorate meaningfully and quickly.”
5. “They’re going to be exactly wrong in the opposite direction. They were way too loose before, the funds rate had to rise a lot. And now they’re way too tight.” (Siegel was warning the Fed has overreacted to inflation and raised interest rates by too much.)
6. “I think the first rate cut might take place closer to mid-year, and it might then be quite rapid as the labor market really does loosen up and inflation goes down. I actually venture that we might see a 2-handle on the Fed funds rate by next December. I think just like the surprise on the upside, we might be seeing a surprise on the downside.” (Siegel was suggesting the Fed could lower its benchmark rate from over 4% today to below 3% by the end of next year.)
7. “I think we’ve seen the low, either in June or October. Even a mild recession would not cause earnings to go down enough to cause a new low in the stock market.”
8. “When the Fed gets it — and they will get it next year — I think we’ve got a good 10%, 15% rally going for the stock market.”
9. “People say that this is the most anticipated recession ever. When too many people forecast something, often that drives the market below its fundamental values. A lot of bad news is now factored into prices. The surprises are more likely on the upside than the downside.”
10. “I’ve never seen so much bearishness. That excess of bearishness means this a good opportunity for investors.”
11. “There is a chance we can avoid the worst of a recession — but that requires the Fed to recognize the disinflationary forces I see everywhere.”
12. “We’re not going to have a strong job market, but we might have stronger GDP and we might have stronger margins, and we may not have a recession.” (Siegel was suggesting that fewer but more productive workers could buttress economic growth and corporate profit margins against inflation, helping the US to avoid a recession.)
Read more: The godfather of the inverted yield curve breaks down why his famous recession indicator with a perfect track record won’t be accurate this time around
Read the original article on Business Insider
Buyers and sellers hesitate even as median home prices slowed to their first single-digit increase in almost a year.
Investors have become concerned of late about a recession they feel is all but inevitable given the determinedly hawkish stances of major monetary authorities
Dr. Ashish Jha, the White House coronavirus response coordinator, said Americans seem “confused” about whether they need an updated COVID-19 vaccine booster, urging people to get another shot if it’s been six months since their last one. Jha told ABC’s “This Week” co-anchor Martha Raddatz that people are still “learning about the new COVID vaccine,”…
MyPillow CEO Mike Lindell’s Twitter account has been restored after almost two years of being permanently suspended over his unfounded claims of widespread voter fraud in the 2020 presidential election. “I’m back!! Thank you @elonmusk and by the way MELT DOWN THE ELECTRONIC VOTING MACHINES AND TURN THEM INTO PRISON BARS!” Lindell tweeted on Friday. …
The Tesla CEO and others worry that aggressively raising interest rates has helped create an untenable situation in car financing.
ESPN reported the terms of Frank Reich's contract in a story. The Indianapolis Colts fired him as coach in November.
Another Russian breakthrough failed due to the skilful actions of National Guard special forces in the area of urban-type settlement of Velyka Novosilka, Donetsk Oblast. Source: Press service of the National Guard of Ukraine Details: The occupiers suffered great losses in personnel and equipment.
A Henry County jury has sentenced a Henry County man to decades in prison after he was found guilty of shooting a man in the back of the head at a basketball court.
The elections are over; a governor and senator have been re-elected. It’s now time to focus on the revolution that is being driven by radical judicial activism taking place under our noses.
(Bloomberg) — Federal Reserve Chair Jerome Powell has a new North Star to guide his fight against inflation, and it will put American paychecks at the heart of monetary policy next year.Most Read from BloombergMusk Polls Twitter to Quit as Chief, Voters Leaning Toward YesTruth Is Reasserting Itself Over Trump’s LiesTrump Gets a 45-Day Extension to Provide Details on His Wealth to VotersHarry and Meghan Aren't Doing Themselves Any FavorsArgentina’s World Cup Title Caps Qatar’s Surreal Tournament
A man remains jailed in Georgia after police say he kidnapped a woman from South Carolina and held her captive for months in a motel while he raped her, beat her and forced her to perform work.
Thieves get away with multiple vehicles Saturday morning after crashing a car through a Portage Park dealership
A Pahrump homeowner shot a home invader Thursday night, hitting him twice in the chest. Authorities said the suspect was a parole violator and faces home invasion and burglary charges.
We posed the same questions about holiday gatherings to three California doctors. Here’s what they said.
Eagles star running back Miles Sanders didn't get his first carry against Chicago until the 6:25 mark of the first half and social media responded accordingly
Colorado wants to tell people what to think. Lorie Smith just wants to be left alone. That poses a key question for the U.S. Supreme Court.
Daly held off on surgery so that he and John II could attempt to defend their title.
STORY: Bhutto while addressing a press conference at the United Nations on Friday (December 16) called Modi the "butcher of Gujarat" which paved the way for BJP workers to stage a protest in front of the Pakistan High Commission in New Delhi."We want Bilawal Bhutto to be punished for his comments," said a protester in northern Jammu city.Protesters in Jammu and central Bhopal city burned the Pakistani flag and effigies with Bhutto's photographs pasted on them.Bhutto's remarks come after Indian Foreign Minister Subrahmanyam Jaishankar said on Thursday (December 15) that Pakistan is the "epicenter of terrorism".Arch-rivals Pakistan and India have fought three wars since 1947, when British colonial ended and the two independent nations were created in a blood-drenched process known as partition.
Italy will scrap part of its plans to facilitate cash payments for goods and services after criticism from European Union authorities, Economy Minister Giancarlo Giorgetti said on Sunday. In its draft 2023 budget the government had proposed changing the current system in which sellers risk fines if they refuse to accept card payments, by saying no penalties would be imposed for transactions below 60 euros ($63.49). The move drew criticism from the European Commission, which said it was not consistent with previous EU recommendations to Italy to boost tax compliance, and Giorgetti told parliament late on Sunday that the government had backtracked.
Danelli manned the kit for The Rascals from 1965-71 and for Van Zandt's Disciples Of Soul during the early 1980s.
source