Economics, Videos

Jeremy Seigel: Buy Moar Stocks

Jeremy Siegel, professor of finance at The Wharton School, discusses the “incredible strength” of the markets.

H/T Dataroma

Full Trade War

Seigel: Markets Show US And China Can’t Have A Full Trade War

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Transcript

I just finished my class here at Wharton and I inherited who's a who's afraid of the big bad Trump. Clearly the stock market is I mean you know you thought tariffs are going to torpedo it.

You know as soon as I you know we had about a 30 minute reaction after Trump imposed them and again when China retaliated and after 30 minutes of market sprung back and you knew then the underlying strength of this market.

I know that everyone was positioned short for this and all of a sudden they said ooh I better not stay there. And now you're going to be thinking about what about people chasing performance for their year end.

Is this market goes right now. No bull phase right now. All the hedge funds and everyone else who will you know were short on anticipation you know might jump on here. And you know it's possible that we could have that little bubble like we had in January with the momentum players jump down again and then we had a reaction. But at this stage while there's incredible strength.

Yes we do get that next leg. You're going to have a whole lot of people started professor talking about euphoria again.

Yeah yeah and especially. I mean you know there was good news that the Chinese is going ahead with its normal reduction of tariffs or not you know postponing that. That was of course welcomed in the market. There's word that it is going to try to avoid Monday but if not it's a 10 per cent it's not 25. So the market obviously says this is not going to go into a trade war. You know and you know the markets pretty smart when it comes down to it I often trust the market on what some of the so-called experts are saying. I mean they know what activity is going on and the Chinese reaction has been pretty muted so far compared with what a lot of people feared.

Well look you've said yourself that the market is not going to like rising rates we've got rising rates Gunlock is saying this week you know a couple of closes above 325 and you've got a problem there a game changer he says. What do you think about that.

Well you know it was a worldwide phenomenon. Every single bond market around the globe of the developed countries you know that it's a risk on shift off of the you know safety hedge assets of the Treasuries off of the dollar. That's one reason and of course that's good for US stocks as the dollar sinks down so that was that was a positive. But you know that worldwide shift you have you have to take cognizance of it. Three and a quarter even is you know in the long run not a scary position for stocks in history. But you know that goes to three and a half and for your trading you have to trade against a stream upward. Markets do that at the beginning but then it catches up at the end. But I think we're just in a very early stage of another Short Run bull run here.

Well what happens with the midterms though is it a run until the midterms and then all bets are off for it.

Well the expectation mid-term is definitely the Dems are taking over the house but they the GOP is holding the Senate. If the GOP does not hold the Senate that that's going to be a little bit difficult for the market I think. But I think you know right now the odds makers are putting two to one on the 3 to 1 on the GOP holding that so and that's something happened with the stock market going up remember the stock market is one of the factors that you know Trump loves to tweet about if it doesn't if it continues on into the.

He was tweeting about it today. Right. You know rendered by the Malaysians America or something to that.

You know what. That's one reason why I think a lot of people say you can't have a full trade war because that's going to tank what he tweets about. And that's the sad part. So you know his is one of his big things that he admires about it. I mean there's a lot of good economic news. I mean very strong across the board. There's no question but clearly the stock No.

No president is pleading the stock market. So he has to keep it high which means he has to come to some deal short of a trade war. And I think that's what the market is telling us.

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