Jeremy Siegel: Powell’s ‘Balanced’ Approach Supports Stocks

“Of course, Powell’s recent speeches say everything is on the table, all the time. He has to say the Fed is data dependent, but the data today doesn’t indicate another rate hike.”

Powell last week said the Fed wouldn’t hesitate to implement another interest rate hike if needed but would keep moving carefully, as Bloomberg reported, “allowing us to address both the risk of being misled by a few good months of data and the risk of overtightening.”

Earnings have been coming in well, other than energy stocks, although there’ve been some warnings for the fourth quarter, Siegel noted. 

Noting the 10-year Treasury fell off 5% highs to 4.5%-4.6%, Siegel wrote that “earnings and lower rates are helping support the relief rally.”

Consumer sentiment continues to weaken, according to surveys, and it’s a data point that the Fed chair watches, “but clearly, he will be watching most closely the actual inflation reports that we will receive this week,” Siegel wrote.

Two key inflation data releases will occur when the Fed holds its next meeting on Dec. 13, he noted.

“Now we look to the inflation data to see if Powell can remain balanced with an eye towards lowering rates next year as inflation moderates and the economy slows off strong growth,” the economist said.

Photo: Lila Photo for TD Ameritrade Institutional