- Inflation picked up as early as June, which means stocks are in an “ideal environment,” Jeremy Siegel said.
- The market guru pointed to resilience in the economy despite the Fed’s aggressive efforts.
According to Wharton professor Jeremy Siegel, June’s inflation figures were about right.
Prices rose 3% last month, according to the June Consumer Price Index report. That’s well below the 41-year record above 9% set last summer and a sign that the Fed’s tightening efforts are working to cool the economy.
“We got a Goldilocks report,” Siegel said in an interview with Bloomberg on Thursday. “Really, the war on inflation has been won and there’s no reason to turn the screws and have a recession for a point or two.”
Meanwhile, the labor market cooled but remained relatively strong amid the Fed’s tightening efforts, with the US adding 209,000 jobs in June. That resistance doesn’t mean a recession-free scenario is assured, though other experts say the strong data points to a growing possibility of a soft-landing, which bodes well for equities.
“The real economy is really hanging in there, which is impressive. It’s a perfect environment for stocks,” Siegel added.
Stocks rose 2% this week as investors expect the Fed to pause or dial back interest rates soon after the release of the June inflation report. Central bankers have raised rates from zero to 5% since March of last year, which has caused the S&P 500 to drop 20% in 2022.
While a shallow recession could end the rally, Siegel said he sees investor FOMO fueling stocks in the short term.