Wharton School and WisdomTree economist Jeremy Siegel expects the bull market to endure, with investors shifting assets.
"I continue to view this as a durable bull market, albeit one that rotates as credit reprices and the Fed moves into an easing cycle," Siegel wrote in his weekly market commentary, published Monday.
"For portfolio positioning, I favor staying overweight equities versus duration-heavy bonds, leaning into quality cash-flow generators in tech and profitable cyclicals that benefit from falling real rates. With private credit under a cloud, listed financials with transparent balance sheets should command a higher relative bid," he said.
Many households, especially in the lower-income range, feel stretched, as evidenced by rising delinquencies in subprime-adjacent categories, according to the economist. However, "the tech and AI complex is insulated from these near-term income pressures," he noted.
Last week's bitcoin volatility reinforced Siegel's view that the cryptocurrency isn't yet a reliable short-run diversifier, he said. "That doesn’t preclude attractive long-run prospects for the crypto ecosystem, but in the current regime it hasn’t earned the 'safety' label. Gold, by contrast, held in better, and some may be speculating of tokenized “digital-gold” and even chatter about gold-backed stable=coin instruments."
Siegel expects the Federal Reserve to make a 0.25% interest rate cut later this month.
"My base path: 25 now, followed by a cut in December and a couple of additional quarter-point cuts over the next few meetings as the committee validates cooling pressures while keeping optionality if growth stabilizes," he wrote.
The Wharton finance professor emeritus also said he doesn't consider recent private credit problems a sign of systemwide danger. "Big banks’ earnings were standouts and strong, and public markets look increasingly attractive as investors rethink opaque lending structures. Spreads will widen in pockets, and some subprime segments will struggle, but this is a recalibration in credit — not a replay of 2008."
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