The real economic indicators are holding at a moderate rate, says Wharton's Jeremy Siegel

Published: Sep 12, 2024 Duration: 00:04:31 Category: News & Politics

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WEIGHING ON GLOBAL GROWTH DEMAND AND GOLD RUNNING TO YET ANOTHER RECORD HIGH, AS ALL THE ASSET MARKETS POSITION FOR THE FED NEXT WEEK. IT TAKES US TO OUR TALK OF THE TAPE DOES THE MARKET HAVE IT RIGHT THAT THE FED CAN GO BIG WITH THE FIRST EASING MOVE? STOCKS ARE NOT FAR FROM ALL-TIME HIGHS. WOULD SUCH A MOVE BE RIGHT ON TIME OR A BIT TOO LATE LET'S CAN WHARTON BUSINESS SCHOOL PROFESSOR JEREMY SIEGEL I WANT YOU TO LISTEN TO WHAT JOHN PAULSON SAID IN A RARE INTERVIEW THIS MORNING ABOUT WHAT HE THINKING THE FED SHOULD DO. >> PERSONALLY, I THINK THE FED IS A LITTLE BEHIND THE CURVE RATES ARE 5.25-PLUS, AND INFLATION IS DOWN TO THE 2.5% RATE, SO WE HAVE ALMOST 3% REAL INTEREST I THINK THEY HAVE SEEN ENOUGH DATA THAT THEY CAN START BRINGING RATES DOWN, AND MORE AGGRESSIVE WOULD BE BETTER I WOULD BE FOR A 50 BASE-POINT CUT RATHER THAN 25. >> PROFESSOR, WHAT IS YOUR TAKE ON THAT AND THE FED'S CALCULATION? >> I AGREE 100%, BUT I DON'T THINK THEY WILL. I THINK IT WILL HAVE TO BE A REALLY BAD RETAIL SALES REPORT EARLY NEXT WEEK FOR THEM TO DO 50 I AGREE, AS YOU KNOW, I'VE BEEN FOR THESE AGGRESSIVE CUTS, BUT THE DELIBERATENESS OF JAY POWELL IS 25 BASIS POINTS YOU KNOW, MIKE, ONE INTERESTING THING, IT IS ALMOST INCREDIBLE, THE FED FUNDS FUTURES THAT REFLECTS THE JUNE MEETING NEXT YEAR, JUNE 2025, IS NOW TRADING AT 3%. >> YEAH. >> I MEAN, THAT IS ACTUALLY MORE THAN NINE CUTS UNDER THE CURRENT LEVEL. I THINK THERE'S RISK PREMIUM IN THERE. I'VE DONE TAKING OUT SOME OF THAT RISK PREMIUM, SO I ESTIMATE THAT SEVEN CUTS. WHAT IS INTERESTING ABOUT THAT, IS THERE ARE EXACTLY SEVEN MORE MEETINGS BETWEEN NEXT WEEK AND THE JUNE MEETING OF 2025 SO, ACTUALLY A 25 BASIS-POINT CUT IN EACH AND EVERY MEETING WOULD ACTUALLY, YOU KNOW, BRING US DOWN TO AROUND 3 1/2, 3 3/4 I'VE SAID THAT'S WHERE THE FUNDS RATE SHOULD BE >> WHAT'S INTERESTING ABOUT ALL OF THAT IS, ONE, AS YOU SAY, THE MARKET WILL SOMETIMES OVER-EXTRAPOLATE OR BUILD IN A WHAT-IF PREMIUM INTO THE FED FUNDS FUTURE THE OTHER PIECE OF IT, AND THIS IS IN THE LAST DAY OR TWO, WHERE YOU HAD THIS "WALL STREET JOURNAL" ARTICLE AND "F.T." ARTICLE LEAN TO GET THAT POINT, WHERE THEY COULD SEE THE CASE FOR A HALF PERCENTAGE POINT MOVE LAST WEEK. LORETTA MESTER HAS SAID AS MUCH AS BILL DUDLEY IT SEEMED THAT THE MARKET WAS WILLING TO TRADE HIGHER ON THAT, IN PART BECAUSE IT SEEMED TO LAY THE GROUNDWORK FOR HALF A POINT NOT BEING IN RESPONSE, IN OTHER WORDS, WE COULD HAVE IT ALL. DOES THAT MAKE ANY SENSE >> YEAH, IT DOES, BUT I KNOW LORETTO VERY WELL, UM, NOTICE THAT PHRASE "COULD" A CASE COULD BE MADE. SHE WAS QUITE HAWKISH DURING THOSE EARLY PHASES OF FED INCREASES, SO THAT'S CERTAINLY THAT MAKES NEWS, BUT I THINK THERE'S A LOT OF COULD BE MADING I THINK AUSTAN GOOLSBEE IS DEFINITELY MAKING THE CASE OF LET'S BE MORE AGGRESSIVE THERE WOULD BE A SIDE ON THAT, BUT I DON'T THINK THE PPI AND CPI WERE JUST THAT GOOD ENOUGH AGAIN, IT WOULD HAVE BEEN TO A REALLY HORRIBLE REPORT DON'T FORGET, THE REAL INDICATORS ARE HOLDING IN AT A MODERATE ECONOMIC. I SAY, LET'S GET DOWN TO WHERE WE SHOULD BE AS FAST AS POSSIBLE, BUT THE REAL -- BUT I WHAT I

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