The Flinchum File
Thoughtful Economic Analysis and Existential Opinions

The Wharton Wizard

02/28/2019

Dr. Jeremy Siegel of Wharton has long been one of Wall Street’s most respected investment strategists.  His track record is most impressive indeed.  His recent commentary reconciles a rising stock market with weakening profits.  He believes the suddenly dovish Fed is propping up the stock market in the face of those weakening profits.  Plus, he still sees no reliable indication of recession in the foreseeable future.

More interesting, he sees a 5% jump in the stock market if a deal with China is signed.  However, since 90% of that is already “baked into” the stock market, the market may well drop instead.  There is an old adage to “buy rumors and sell news” which may apply here.  What he doesn’t address is the market reaction if there is no China deal.

Since the trade war is hurting China more than U.S., the odds are that we will get a new deal – probably a good deal.  And soon!  If so, this will be the President’s greatest triumph.

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