Jeremy Siegel: The Impact Of The Election On The Markets

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Jeremy Siegel and Bill Stone discuss the effect of Trump’s election on the markets

The U.S. stock market rebounded by midday the day after the U.S. presidential election — a quick reversal that erased an overnight 800-point plunge by Dow futures as investors were initially spooked by a surprise Donald Trump win. “The risk markets hate uncertainty,” said Wharton finance professor Jeremy Siegel. But then investors took the broader perspective that Republicans are vastly more capital friendly than Democrats and changed course. He noted that Wall Street also has learned lessons from Brexit — in which the markets recovered after the initial shock of the vote to exit. It taught investors not to overreact to the surprise election news, he says.

According to Siegel, if the financial markets continue to be calm over the next few weeks, the Fed will likely be on track for a December rate hike. But he saw higher long-term interest rates arriving as Trump talks about big infrastructure spending and tax cuts that could fuel huge deficits. Siegel agreed with some projections that the Dow Jones Industrial Average could hit 25,000 or higher in about five years. His own projection pegs gains at an annual return of 6% to 6.5%, or 5% after inflation. Siegel, and PNC’s chief investment strategist Bill Stone, joined the [email protected] show, which airs on the Wharton Business Radio on Sirius XM Channel 111, to discuss the effect of Trump’s election on the markets.

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An edited transcript of the conversation will be posted soon.

Article by [email protected]