I don’t think it’s going to be as downbeat. If you take a look at bulls and bears, there’s a lot of downbeat on the market. We wish we could get anywhere near that Let’s look in to the first quarter first half. That’s a comedown, but still not a disaster. But most of the people that I talk to … say maybe it’s 5%. How much will GDP go up? I heard on CNBC some forecaster saying it will be as low as 2-3% for this year, which would be a shock. It’s an important market of the world, and that certainly contributed to the declines we saw Do you think the situation in China is not quite as bad as the market suggests today, and that technical things are making it overshoot on the downside? We all know that they’ve handled the market really badly. Whenever something bad happens, ‘Oh my God, there’s going to be millions of shares sold on Friday,’ and ‘Get out now before the circuit breakers come in.’ It’s a mess. There also fears that there is a big lockup - they prevented insiders from selling stocks for six months. The China - a circuit breaker at 5% for a volatile market is way too small. What do you see? It’s a tough call for 2016. It is not a bad stock market performance given the decline in earnings that we The projections are that earnings in the upcoming reports aren’t going to be great either, and that we have this wrinkle, large or small, with China at the moment.
The earnings were way, way below estimates. Unexpected, both the rise of the Dow and the collapse of the energy prices. The major reason for that is we had a tremendous drop in earnings. If you add the dividend return, it’s actually a very slight positive. Siegel: One thing is interesting: The worst in what - six or seven years, and that’s a flat market? That’s not bad, right? It shows how many up-markets we have had over the last seven years, and the worst is a slight negative on the index. Let’s talk about the short term, and then we can talk about the long term.
Siegel: Although not so happy in the stock market today you see them going in 2016? We have these issues in China, suspension of trading, and a drop of 7% in the stock market there. Jeremy Siegel: Happy to be here, and happy New Happy New Year to you as well. labor markets, productivity and absent wage increases, problems in the junk bond market, and the risks of worldwide deflation and recession.Īn edited transcript of the conversation We’re speaking today with Jeremy Siegel, a Wharton finance professor, about the outlook for markets in 2016. In this interview, Siegel also discusses U.S. We’ll see if will hold – I think they will.” Don’t forget, we are not anywhere near the panic lows we were at in August. The negative sentiment we see now is getting way too bearish.
So I think my positive projection has a very good possibility of working out. “In the second half, once people see that the Fed is not going to be as aggressive as before – and outside of the oil sector - earnings are going to be fairly good. That is very disrupting – it’s not enough to spark a recession, but it does slow down growth in the first half until that capital gets redirected. Even though net lower energy prices are good for the U.S., there is capital in that industry that must move out to find other profitable projects. The other big issue is oil prices, Siegel adds: “If they break below $30, it will make the transition for energy investors more difficult. “The result is the lower yuan is going to export more deflation into the developed world, which is going to make it even harder for the central banks to hit their inflation goals, and that will lead to a much slower rise in U.S. That is one of the things spurring the stock sell-off and some of the destabilization. “The Chinese want the yuan lower but, unfortunately the government’s slow adjustment causes more people to want to get out of the yuan because they feel it will go lower. “The market is oversold at this point, but there is still worry about the Chinese currency,” Siegel continues. China knows the circuit breaker is not a good idea as it is set up, and they are going to substantially widen the band.
“The devaluation of the yuan is the most important issue driving markets in recent weeks.