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Market is a bad inflation report away from correction: Jeremy Siegel


Jeremy Siegel is a long-term market bull and expects a major pullback, but it’s not tied to Covid-19 surge dangers.

He urged for a radical change in Federal Reserve policy to combat hot inflation.

“If the Fed becomes suddenly more tough, I don’t think the market will be prepared for a U turn that would result.” [chair]Jerome Powell could take it if we have another bad inflation report,” Wharton finance Professor told CNBC’s, “The Jerome Powell may take”Trading Nation“Friday. “A correction is coming.”

The consumer price index surged 6.2% in OctoberThe Labor Department earlier reported this month. This was the largest gain in over 30 years.

Siegel criticizes Fed’s inability to take anti-inflationary measures.

Siegel stated that “generally, as the Fed hasn’t made any aggressive moves at all, money is still flowing to the market.” “The Fed continues to do quantitative easing.”

He believes the Fed will have the moment to prove his point at its Dec. 14-15 policy meeting.

Siegel cautions against it if this signals an aggressive approach to manage rising prices a correction could strike.

There is only one alternative

Siegel, despite his worries is still in stock

He said, “I’m still quite fully invested, because you know there is no other.” My opinion is that bonds are getting better. worse and worse. The rate at which cash disappears is greater than 6% per annum, and it is likely to continue rising.

Siegel predicts that rising prices will continue for many years with cumulative inflation of 20%-25%.

Even if stocks are a bit bumpy, it is important to have real assets. Stocks are valuable assets. He noted. He said, “All that is long-term will retain value.”

However, it all depends upon the company.

He takes note the inflation backdrop would create headwindsTech high-flyers from the NasdaqFriday marked a record breaking day for the. It reached 16,000 on Friday, its highest level ever.

“If interest rates increase, high-priced stocks that are devaluing cash flow into the future. [are]He said that the discounting mechanism would affect them.

Siegel attributes the record-breaking strength of growth stocks to Delta fears and fallen stock prices Treasury yields. According to him, the Covid-19 spike will recede as people receive boosters.

“This has stopped the so called reopening of trade,” he stated.ValueIt has become very affordable.”

If Siegel is correct about an abrupt Fed policy shift, it would be a good thing. Wall Street getting over the shockIt quickly became apparent that you were able to get dividend stocks. financialsBy 2022

“[Financials]Siegel stated that they have sold off in recent months due to the low interest rates. They might come back.