Jeremy Siegel, a long-term bull on US equities and a professor of finance at the Wharton School of Business, said the lower-than-expected CPI data for October was encouraging and pointed out that inflation was actually far below target. Federal Reserve expectations.
Siegel said in an interview that the core CPI would indeed be negative if it were calculated through the actual house price and rental index, rather than the severely lagged statistics used by the Fed.
He noted that housing prices, commodity costs, and the transportation of goods and merchandise have also fallen across the board. Furthermore, the current wave of layoffs at large tech companies could spread to other industries next year, easing the pressure on wages.
Siegel believes the Fed will likely hike rates by 2 yards (50 basis points) in December before announcing a break. At the same time, if CPI, nonfarm employment and other reports weaken next November, the Fed will face the pressure of slowing and rising interest rates.
Additionally, Siegel expects US equities to have a chance to rise by the end of the year, but said that doesn’t mean investors need to increase their holdings in tech stocks. Instead, he prefers value stocks as well as high dividend stocks and recommends that investors own both.
Siegel recently said that while the economy may decline or slow down, the valuation of US equities has reached a strong position over the long term. If the Fed’s monetary policy turns to a rate cut by next summer,Dow JonesThe industrial average could rise by 2,000 points.
Siegel had previously estimated that in two years the stock market would be 20% to 30% higher than it is now, and the stock market is now grossly undervalued. “If you buy stocks now, you will be happy in a few years,” Siegel said.
