There is a common sense that the Fed will be bound to cut rates this year, but when and how many times are the key points that economists are arguing about.
Jeremy Siegel, Wharton School professor of finance argues that the Fed will not be in a rush to lower rates. He is very positive on the market based on the earnings of the markets, thinking that it is still “Goldilocks” although now selling for 20 times earnings; investors could set up for gains, but not as high as last year; also expecting a 5-10% gain on S&P500 for 2024.
Siegel does not think the Fed is in a rush to lower rates, because the economy is so strong, the Fed may reinforce the notion of “higher for longer”, that may disappoint the Street somewhat.
Siegel says he much rather has a stronger economy and better earnings than the Fed rapidly lowering rates because they will see a recession. He does not think the bull market will depend on the Fed’s lowering rates quickly. He argues that the rates maybe lower for longer, maybe that will dampen the market a bit, but 10% is a very good return.
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