The "fiscal cliff" is what is driving stocks down right now, says Wharton's Jeremy Siegel. Any...

The "fiscal cliff" is what is driving stocks down right now, says Wharton's Jeremy Siegel. Any sort of deal, even one that extends tax rates slightly higher than they are now, is easily going to buy you 500 to 1000 points on the Dow. (Video)
Comments (19)
  • PalmDesertRat
    , contributor
    Comments (3766) | Send Message
    Why is the FC a problem for the market just now? The deficit/debt problem has been the elephant in the room for a long time and the market has gone up anyway.


    My guess is it's because CNBC and the other media "experts" have decided to make it an issue,therefore it's an issue.


    The Federal Debt limit is going to be breached very soon. I recall about 18 months ago when there was a major crisis promoted by the media because of the limit this time around I haven't seen much if anything,written on it.
    16 Nov 2012, 08:11 PM Reply Like
  • Freddy Hutter, TrendLines R...
    , contributor
    Comments (3689) | Send Message
    The media pundits are no more correct wrt fiscal cliff than they were about the chinese hard landing or the collapse of the eurozone. They are just yanking the audience's chain again...


    FC has been in the background for a year. The reason for the recent market index plunge is of course the disappointment with the Obama victory. TRI's measure of animal-spirits-plus had been signalling GDP as high as 4.7% in 2013Q2. I expect the outlook to wane dramatically over the coming weeks and months. As the prospect for a robust economy wanes, so also does the chance of growing revenues and guidance...


    TRI chart:
    17 Nov 2012, 12:48 AM Reply Like
  • Scrying Biotech
    , contributor
    Comments (2742) | Send Message
    "The reason for the recent market index plunge is of course the disappointment with the Obama victory."


    Exactly! We've retreated to the land of Mitt Fit Boys. Republican investors have taken all their toys off the table and won't come out to play because they didn't get their capital gains free ride. HAHAHA So sad!


    Note to Santa: Please don't send Rudolf and that Dentist wannabe out to gather them up until I've purchased a boat load of their left-overs to sell back to them.


    Merry Christmas!
    17 Nov 2012, 04:44 AM Reply Like
  • Teutonic Knight
    , contributor
    Comments (3418) | Send Message
    I would concur with this observation. The Administration, the present crop of politicians, and the general populist, are all for continuing borrowing, abundant consumption, further 'easing', liberal immigration policies, and further delaying recognizing the consequences of realities. America seems to them to be a big pie, to be cut up and chewed up until that day which is still 'far away'.
    16 Nov 2012, 08:17 PM Reply Like
  • sheeple2012
    , contributor
    Comments (203) | Send Message
    Isn't this the guy who said the Dow would be at 36,000 by now?
    16 Nov 2012, 08:31 PM Reply Like
  • william12
    , contributor
    Comments (46) | Send Message
    No, that idiot was James K. Glassman. This idiot is the one who says Dow 17000 next year.
    17 Nov 2012, 07:29 AM Reply Like
  • Ted Bear
    , contributor
    Comments (700) | Send Message
    Another pundit, with no skin in the game.


    BUT, he is correct.


    As soon as we get another 'kick the can down the road' agreement, the market is going to run.


    If for no other reason than it can't go down appreciably with the Fed pumping hundreds of billions into a deflationary system which has no use for the money other than to inflate financial assets.


    But this too shall pass. Probably by the end of 2012, or early in 2013.


    And then Mr Segal better hope his assets are well secured in things hard and precious. Cause you ain't never seen a hangover like the one that will end this party.
    16 Nov 2012, 08:58 PM Reply Like
  • kyleg17
    , contributor
    Comments (174) | Send Message
    Do we rally again on Monday? I think we do..
    16 Nov 2012, 10:48 PM Reply Like
  • Teutonic Knight
    , contributor
    Comments (3418) | Send Message


    Of course, the selloff from Nov. 7th is actually quite mild. Besides, we now have the Plunge Prevention Team (PVT), uncle ben, and irrational exuberance all in place, all the time.
    16 Nov 2012, 11:08 PM Reply Like
  • ittybittymonkey
    , contributor
    Comments (83) | Send Message
    and according to Siegel's logic, the reason that America is buying less from McDonalds and Walmart is also because of the "fiscal cliff"... in primitive societies, the sins of the village were attached to a goat and driven into the desert. Luckily we are advanced so we have exogenous events and fancy talkers to convince the bull frogs in the stock pot that Sandy and the Fiscal Cliff are our scapegoats. The problem with that scenario is that top line erosion is driving the show right now... Meanwhile the frogs continue to croak happily in what they believe to be a hot tub...
    16 Nov 2012, 11:22 PM Reply Like
  • kyleg17
    , contributor
    Comments (174) | Send Message
    You never know though.. It could be another selloff week. I think that Obama could hold his ground for another week before he eventually caves in.
    17 Nov 2012, 12:46 AM Reply Like
  • barakg
    , contributor
    Comments (53) | Send Message
    siegek is the author of "stocks for the long run", which makes him permabullish by definition. he needs to explain why 30 yr treasuries has been beating stocks for the period from 1982. off course all the pundits that blame the fiscal cliff are ignoring the fact that we just had yoy declines in both revenues and earnings, and that future earnings estimates are reeling in fast. i believe the fiscal cliff is hurting the economy by delaying capex investments and hurts the market because capital gain and dividend taxes are almost certain to rise, but that is only a small part of the problem.
    17 Nov 2012, 01:47 AM Reply Like
  • anonymous#12
    , contributor
    Comments (545) | Send Message
    At least is a refreshing point of view. The incessant doom views from guys like Roubini, Schiff, Rosenberg are just getting to the point that I feel sorry for them. You know....being wrong for three consecutive years....


    I'm still waiting for the hyperinflation....just a matter of time...right??
    17 Nov 2012, 07:48 AM Reply Like
  • assetman07
    , contributor
    Comments (78) | Send Message
    Really? A refreshing point of view?


    Jeremy Siegel is talking is book. And his book is Wisdom Tree, his equity-based ETF business.


    Ironically, the best path for his other book "Stocks for the Long Run" is to just let the Fiscal Cliff to happen, and let the stock market reset to the new reality.


    Siegel seems to clearly be on the side of kicking the can down the road in order to capture short term gains.
    17 Nov 2012, 12:25 PM Reply Like
  • june1234
    , contributor
    Comments (4352) | Send Message
    Refreshing? Ive been listening to that refreshing point of view for 4 yrs now and here we are., markets up 25% over same period of time when US GDP growth has shrunk; makes a lot of sense.
    Roubini did see the 08 crash coming. Like someone said you cant fight the fed but sooner or later the fed can't fight reality. And the same people who got caught with their pants down in 08 wont this time. A bad story is a bad story no matter how much lipstick you put on it and repeat it over and over again
    17 Nov 2012, 08:18 PM Reply Like
  • TAS
    , contributor
    Comments (3799) | Send Message
    And what constantly drives Jeremy Siegel down?


    Is he bogged down in his unlimited self esteem?
    17 Nov 2012, 08:35 AM Reply Like
  • chinacola
    , contributor
    Comments (12) | Send Message
    It is the same old same old. Kick the can down the road again. The fiscal cliff will be "solved" according to the politicians and both sides with claim victory but once again the biggest loser is the American
    taxpayer not the 47% receiving a check or debit EBT card. Work hard pay more; work harder pay even more. Wealth of Nations should be required reading for every politician; one thing is for sure Obama never read it.
    17 Nov 2012, 08:54 AM Reply Like
  • assetman07
    , contributor
    Comments (78) | Send Message
    Does anyone really know the origins of the Fiscal Cliff and why it became about?


    The so-called Fiscal Cliff is a automatic mechanism introduced during the last 'Grand Bargain' between the status quo D's and R's. Last time, the D's and R's agreed to increase spending, but keep taxes low (embrace deficit spending)-- with the caveat that they would put in this automatic mechanism to force a balanced budget if the 2 sides couldn't agree on a budget.


    Avoiding the Fiscal Cliff is essentially a way for Congress to bypass dealing with automatic deficit reduction.


    These guys shouldn't be seen as 'heroes' for solving anything-- they're simply trying to find more creative ways of kicking the can down the road.


    You know, like those fellers in Europe are doing.
    17 Nov 2012, 12:36 PM Reply Like
  • Jake Huneycutt
    , contributor
    Comments (1422) | Send Message
    If anything, the market is dramatically underestimating the impact of the fiscal cliff. As it's been noted in one recent article, the fiscal cliff is very similar to the series of tax increases that lead to the Recession of 1937.


    The investing masses are still largely ignorant of how big of an impact money supply has on markets, and the fiscal cliff is a very quick contraction in rate of money supply growth. Long-term, we need this contraction in the rate of money growth, but to have it happen overnight is going to have more than a minor impact on the economy.


    It will actually be much more useful to achieve this sort of contraction via spending cuts, as well, since that would lower the overall tax burden. That is to say, it would shift more money back to the private sector, which is still capital starved right now. But the fiscal cliff is about 5 dollars of tax increases for every dollar of spending cuts, so it will only result in a minor increase in overall government spending (the true tax burden) and a major increase of money being redistributed back to the Federal government, and away from the private sector.
    17 Nov 2012, 12:40 PM Reply Like
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