Jeremy Siegel, a long-term bull in U.S. stocks and a professor of finance at the Wharton School of Business, said on Monday (21st) that he predicts that the Federal Reserve (Fed) will finally admit that inflation has slowed down, and that next year (2023) will be the performance of U.S. stocks. A strong year.
Siegel expects U.S. stocks to surge at least 15% next year and as much as 20%, which would lift the S&P 500 from its current level to its early-year high of 4,740.
“I think basically 90% of the inflation is gone, the indicators that the government relies on are heavily lagging, and actually inflation, especially the housing market, is coming down at a fairly rapid pace,” Siegel said.
Siegel expects the Fed to move away from its aggressive rate hike path soon and will only raise rates by 2 yards (50 basis points) at its December meeting. However, investors will pay more attention to Fed Chairman Jerome Powell’s statement. According to Siegel, the statement would be a really strong hint that the Fed is on the verge of pausing rate hikes.
Siegel also said: “They really need to stop and see, what is actually going to happen. That will really trigger a big rebound. We have seen good signs of inflation, and I think most of the interest rate increases have passed, enough to trigger The stock market bounced back in December. If it didn’t then, it would come in January.”
However, Goldman Sachs analysts pointed out in a recent report that the bank believes that the bear market in US stocks will continue until 2023. “U.S. stocks haven’t met the conditions that typically coincide with stock market lows. A sustained recovery in equities requires peak interest rates and lower P/E ratios.”
Carl Icahn, a well-known rich man and activist investor, previously said that the current US stock market is still in a bear market, and the rebound in US stocks is just a bear market rebound, and the US economic recession is still coming.
