Jeremy Siegel believes President Trump will forge a trade deal with China by year’s end, if not he said stocks may on not be a disaster.
If President Trump doesn’t reach a trade deal with China and “the tariffs get put on on Dec. 15 … I don’t know if I want to be around equities then,” the Wharton School professor of finance at the University of Pennsylvania said.
Wall Street gained ground Wednesday in a broad-based rally as investor sentiment brightened after President Trump said talks with China on an interim trade deal were going “very well.”
President Trump’s comments supported a report that the world’s 2 largest economies were closer to agreeing how many tariffs would be rolled back in a “Phase 1” trade deal, Reuters explained.
“The report saying that White House officials are much closer to a trade agreement is what the market’s focusing on today,” said the chief investment strategist, senior portfolio manager at SlateStone Wealth LLC in New York.
Fears that a stalemate in negotiations could lead to new tariffs taking effect as scheduled on 15 December have made market participants more risk averse in recent days, with the major US stock averages backing off last week’s record highs.
“If they delay, and keep negotiating, the market could reach new highs.”
Professor Siegel cautioned President Trump’s downplaying the urgency on Tuesday to make a deal could be a negotiating tactic.
“Honestly, in my personal opinion, this is just a negotiating tactic — be really tough right before you make a deal. I still think he will make a deal this year,” he said.
President Trump’s comments sparked a flight to safe assets, pushing the yield on benchmark Treasury note to the lowest level since August. Without a trade resolution between the world’s 2 largest economies, rates are bound to remain low and investors will gravitate towards dividend-paying stocks, Professor Siegel predicted.
“Yields are going to stay really low with Treasuries being a hedge asset like this … Utilities and defensive stocks, anything that gets you yield I think is going to do pretty well in 2020,” Professor Siegel said.
Wednesday, the major US stock market indexes finished at: DJIA +146.97 at 27649.69, NAS Comp +46.03 at 8566.67, S&P 500 +19.56 at 3112.76
Volume: Trade on the NYSE came in at 934-M/shares exchanged
- NAS Comp +29.1% YTD
- S&P 500 +24.2% YTD
- Russell 2000 +19.7% YTD
- DJIA +18.5% YTD
HeffX-LTN’s overall technical analysis for the major US stock market indexes is Bullish to Very Bullish in here.
Looking Ahead: Investors will receive the Trade Balance report for October, the Factory Orders report for October, and the weekly Initial and Continuing Claims report Thursday.
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