Tags: China | Trump Administration | jeremy siegel | china | trade | deal | s&p 500

Jeremy Siegel: China Trade Deal Will Make S&P 500 'Pop' 10%

By    |   Thursday, 14 November 2019 04:39 PM

Investment guru Jeremy Siegel predicts the S&P 500 will get a double-digit lift from a “settlement” in the U.S.-China trade war.

“If Trump can deliver on a trade deal, I think you’ll have a global bull market,” the Wharton School professor told CNBC.

“Otherwise, we’re just going to be muddling along, because valuations are pretty full at this particular juncture, until we get some push on earnings,” he said.

The benchmark S&P 500 posted a slim gain to end with a record closing high on Thursday. TheS&P 500 gained 2.59 points, or 0.08%, to 3,096.63, Reuters reported.

“The traders are looking for a trade deal,” Siegel said.

The absence of a significant resolution to the trade dispute — which has weighed on global growth — would be a “disappointment,” Siegel said.

And 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," CNBC.com explained.

“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.”

For its part, China pressed Washington on Thursday to roll back punitive tariffs in a tentative trade deal, the Associated Press reported.

A tariff cut is an “important condition” for the agreement that is part of talks on ending a costly trade war, said Commerce Ministry spokesman Gao Feng.

Beijing said last week American negotiators agreed to roll back penalties imposed in September on $112 billion of Chinese imports if an agreement goes ahead. President Donald Trump dismissed that a day later, jolting global financial markets.

Trump postponed a planned tariff hike on $250 billion of Chinese goods after announcing the “Phase 1” agreement Oct. 12. Negotiators have been working on the details of the agreement since then.

Details of the Oct. 12 agreement have not yet been released. But it doesn’t address basic disputes about trade, Chinese industrial subsidies and technology policy.

Economists say a final settlement is unlikely this year. Some have expressed skepticism the two sides can complete the “Phase 1” deal.

Also Thursday, Asian stock markets fell after The Wall Street Journal reported Chinese negotiators were reluctant to commit to a financial figure for purchases of American farm goods.

Trump said Beijing would buy up to $50 billion worth, but Chinese officials never have confirmed that.

Meanwhile, Trump continued to applaud as the U.S. stock market continues to set records, predicting the current bull market will set even more historical highs in the future.

“Hit New Stock Market record again yesterday, the 20th time this year, with GREAT potential for the future,” he tweeted Thursday.

“USA is where the action is. Companies and jobs are coming back like never before!”

Stocks have recently run to all-time highs, with the Dow and the S&P 500 posting record closing levels on Wednesday, helped by the Federal Reserve’s interest rate cuts, third-quarter earnings topping low expectations and signs the economy may be bottoming.

Material from Bloomberg and Reuters has been used in this report.

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Investment guru Jeremy Siegel predicts the S&P 500 will get a double-digit lift from a “settlement” in the U.S.-China trade war.
jeremy siegel, china, trade, deal, s&p 500
Thursday, 14 November 2019 04:39 PM
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