Tags: jeremy siegel | trump | china | trade

Jeremy Siegel: Trump Will Make China Trade Deal Before 2020

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By    |   Wednesday, 04 December 2019 04:05 PM

Investment guru Jeremy Siegel believes President Donald Trump will forge a trade deal with China by year’s end, but if not he said stocks will be a disaster.

If Trump doesn’t reach a trade deal with China and “the tariffs get put on on Dec. 15 ... I don’t know if I want to be around equities then,” the Wharton School professor of finance at the University of Pennsylvania recently told CNBC.

Wall Street gained ground on Wednesday in a broad-based rally as investor sentiment brightened after U.S. President Donald Trump said talks with China on an interim trade deal were going “very well.”

Trump’s comments supported a Bloomberg report that the world’s two largest economies were closer to agreeing how many tariffs would be rolled back in a “phase one” trade deal, Reuters explained.

“(The report) saying that White House officials are much closer to a trade agreement is what the market’s focusing on today,” said Robert Pavlik, chief investment strategist, senior portfolio manager at SlateStone Wealth LLC in New York.

Fears that a stalemate in negotiations could lead to new tariffs taking effect as scheduled on Dec. 15 have made market participants more risk averse in recent days, with the major U.S. stock averages backing off last week’s record highs.

“Between now and Dec. 15, you’ll see more tough talk and you’ll probably see the president back off tariffs,” Pavlik added. “But anything could happen.”

“If they delay (the Dec. 15 tariffs) and keep negotiating, the market could reach new highs.”

Siegel cautioned Trump’s downplaying the urgency on Tuesday to make a deal could be a negotiating tactic.

“Honestly, in my personal opinion, this is just a negotiating tactic — be really tough right before you make a deal. I still think he will make a deal this year,” he said.

Trump’s comments sparked a flight to safe assets, pushing the yield on benchmark Treasury note to the lowest level since August. Without a trade resolution between the world’s two largest economies, rates are bound to remain low and investors will gravitate towards dividend-paying stocks, Siegel predicted.

“Yields are going to stay really low with Treasuries being a hedge asset like this ... Utilities and defensive stocks, anything that gets you yield I think is going to do pretty well in 2020,” Siegel said.

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Investment guru Jeremy Siegel believes President Donald Trump will forge a trade deal with China by year’s end, but if not he said stocks will be a disaster.
jeremy siegel, trump, china, trade
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2019-05-04
Wednesday, 04 December 2019 04:05 PM
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