Jeremy siegel the market is cheap on a long-term basis – articles – advisor perspectives gastroenteritis


The simple reason we don’t have a lot of investment is because there’s not much in which to invest. Firms are supplying all of the goods that people demand. You invest because you need more capacity to do that. We have enough capacity. And there’s enough R&D in the economy. There’s a huge amount of venture capital and private equity. gas refrigerator not cooling One of the reasons for low investment is that we are in-between major technologies now. We’re gearing up on artificial intelligence, robotics and autonomous driving, but it isn’t making a strong impact yet. Peanuts are being spent on it now in comparison to what we spent when we wired the world for the internet. Hundreds of billions of dollars invested that made superb gains in productivity in the 1990s. There’s little investment now because there’s no little value to create.

I could not support left wing Democrats such as Bernie Sanders. I think Elizabeth Warren did herself in with her genetic testing. gas oil mix ratio chart She’s down in the polls. She’s anti-corporate and anti-business. Some people talk about Kamala Harris from California. Some people say she’s extreme. Others say no, she’s not. Some like Amy Klobuchar from Minnesota, who is more moderate.

Just like the Republicans have the trouble on their right, Democrats have the trouble on their left. If we have an extreme left candidate against an extreme right candidate, then you don’t know what happens. Someone in the middle would likely beat Trump, but you don’t know whether he or she could get nominated. Now the odds are definitely that Trump will win the GOP nomination. But it’s not a given; things happen.

Trump is going to cave in on most of his earlier demands. He will get something, but the market is not expecting a trade war with China. It doesn’t mean it won’t happen. rahal e gas card But look at how he came to agreement with Canada. He was really tough a week before the deadline of the NAFTA negotiations and then conceded almost everything a week later.

By the way, if the probability of a recession increases, we may not even get rates that high. We are nearer the top of the cycle. If there’s a resolution of the trade situation a and we keep on creating 200,000 to 250,000 jobs, then we’re going to press against labor supply and the Fed is going to have to be more aggressive. Then we could see a higher rate.

In that case A rate of 3.5% or 3.6% is not out of the question. But I do not have to deviate much in my forecast. We might see 3.25% as the high if we’ve got the current slowdown continues. This doesn’t necessarily mean a recession. kd 7 electricity socks We had a slowdown in 2016 that did not turn into a recession. We had the same stock market decline – actually and ever larger bigger reaction and we bounced back. Of course, then we had oil collapsing all the way down to $28 a barrel.

One of the big fears surrounding the fixed-income markets is in corporate bonds. Corporations have issued a significant amount of debt in the post-crisis period, particularly in BBB-rated bonds (the lowest investment-grade rating). Analysts repeatedly comment that the covenants on those bonds are “lighter” than historically was the case. Yet spreads, in both the investment-grade and high-yield markets, remain fairly tight. What is your outlook for corporate bonds?

My response is, "I don’t think 2008-2009 was an ‘average’ recession. I think it was a one-in-70-year recession." We saved the financials and that’s why we didn’t have a depression. That type of a shock was a perfect storm of very unlikely events that just cannot happen today. We just don’t have the debt build ups in crucial financial institutions to lead to anything like what we experienced a decade ago.

Building in a probability of another crash that big and then downgrading everything doesn’t make sense to me. I’m not sure corporations are any more fragile than they ever were before the financial crisis. It’s harder to get the same ratings that you had before. It looks like they’ve downgraded debt, but what they’ve really done is changed their criteria for what they consider AAA, AA, etc. ratings

Absolutely. We see a really big discrepancy between valuations outside the United States and within. Europe is at a 12- or 13 price-earnings ratios. gas bubble in eye The emerging markets are 10 to 11. The latter have been beat up so much that I think three to five years hence, investors who take diversified positions in emerging markets are going to be strong outperformers.