The Wharton School professor said the trade war is more important to the stock market than potential Federal Reserve decisions.
The stock market's record run recently has been fueled, in part, by an improving outlook toward a resolution in the long-running trade dispute between the world's two largest economies. The S&P, for example, is up 4.09% over the last month.with China, which has yet to be officially signed.
At the moment, Siegel said, the most important factor for the stock market is the trade war, not any potential action from the Federal Reserve. The central bank has"I think the Fed has been taken out of the equation," Siegel said, noting recession fears also have started to subside.Despite at the Economic Club of New York, Siegel said interest rates have "gotten to where they're going to be."The absence of a significant resolution to the trade dispute — which hasAnd at present valuations, with stocks selling at about 19 times this year's S&P operating earnings, the market has little wiggle room for a major let-down, the professor argued.
"It isn't cheap. Now, it's not expensive for the interest rate level that we're at. But it doesn't give a lot of room for some big disappointment," he said. "An escalation of any trade tensions would really bring a sell-off." On the other hand, Siegel said, "If Trump can deliver on a trade deal, I think you'll have a global bull market."
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