Market guru and Wharton professor Jeremy Siegel says strong economic growth will keep pushing stocks higher and lead the Federal Reserve to raise interest rates in the first half of next year.
Productivity soared 9.5 percent in the third quarter, and that’s great news for corporate profits and the economy, the economist told Bloomberg.
“I know that substitutes for jobs in the short run, but I actually think job creation is going to turn positive in January.”
As a result, the economy will grow 4 to 5 percent in the first half of next year, Siegel predicts.
Meanwhile, rising profits will send stocks up another 10 percent this year, he says.
“I think there are a lot of legs to this bull market. . . Profits are coming in extremely well in the third quarter.”
The booming economy, along with rising bond yields and a weak dollar, will push the Fed to hike rates in the first half of next year, Siegel maintains.
That’s earlier than most analysts expect.
Fed officials “are going to basically say we’ve got to increase that rate because of the strength in the economy and to preserve the bond market and the dollar,” he says.
Not everyone is so bullish on the economy and stocks.
Investment strategist Gary Shilling told Forbes that consumer sector weakness will hamper the economy and stocks may drop back to their March lows.
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