-
Jeremy Siegel says the US stock market is strong and home prices are strong.
-
“Wharton’s Wizard” investors see stocks and houses as valuable hedges against inflation.
-
A soft labor market means the Fed won’t raise interest rates until December.
Jeremy Siegel says the stock market is on solid footing, and the housing market is currently driving up mortgage rates.
“Stocks are here to stay,” said a retired finance professor known as the “Wharton Wizard” on “Behind the Market.” Podcast on friday. The measurement S&P 500 The index is up about 18% this year, technology is heavy. Nasdaq Composite It has increased by 34 percent.
Siegel believes stocks are in good shape because inflation concerns are receding, so the Federal Reserve will not have to raise interest rates as sharply as many fear.
Referring to the next two meetings of the central bank, he said, “the possibility that the Fed will lift in September is now small, and in fact the increase in November will be in doubt.”
The author of “Stocks for the Long Run” also noted that the S&P 500’s profit forecast for next year has risen more than last month.
“That means a stronger economy, better profits, a better outlook for productivity,” he said, adding that stocks would have rallied strongly on Friday had it not been for a jump in the 10-year Treasury yield.
As for the housing market, Siegel said he was surprised to see prices rise 0.7% in June. According to the Case-Shiller National Home Price Index. Mortgage rates have risen in response to federal rate hikes, making homes much cheaper, and Preventing sellers from listing their home Because they hate to give up on loans that are locked in at very low rates. However, this year, strong demand and lack of supply has caused prices to rise.
Siegel, senior economist at WisdomTree, said one reason both stocks and housing have stopped pushing this year is that investors see rising prices as a hedge.
“Housing and stocks are the best long-term hedges against inflation, and that’s what people want,” Siegel said. On the other hand, investors are penalizing bonds for not being able to protect against certain risks or, in real terms, offer attractive returns, he said.
The veteran economist explains why the latest jobs report, which showed rising unemployment, is good news for markets.
“It’s not as tight as a drum anymore, people are coming in,” he said of the labor market, which is the main cause of U.S. inflation, which could drive up prices. He also highlighted the latest. JOLTS dataFurther evidence of slowing demand for workers came in the number of job openings in July.
Signs of a softer labor market could prompt the Fed to wait until December to raise rates and turn the economy around again, he said.
Inflation rose to 9.1% last spring, prompting the Fed to raise interest rates from zero to above 5%. Higher rates can reduce price growth by saving costs and making borrowing more expensive. But they dampen demand, destroy asset prices, and can send economies into recession.
Read the main article Business Insider
