Tags: wharton | siegel | dow | 15000

Wharton's Siegel: Dow Will Reach 15,000 by Year End

Friday, 06 Jul 2012 07:47 AM

Wharton economist Jeremy Siegel says the Dow Jones Industrial Average will hit 15,000, and maybe even 17,000, by year's end.

“There are two major factors that are depressing our market 1,000 to 1,500 points,” Siegel tells CNBC: Europe’s economic problems and the looming “fiscal cliff” when a host of tax cuts and spending increases expire at the end of this year.

Siegel is optimistic that Congress will avoid the fiscal cliff and tackle the deficit, though he believes there is very little incentive to do so before the November elections.

Editor's Note: I Wish I Were Wrong — Economist Laments Being Right. See Interview.

“I believe there’s going to be an extension for six, nine, maybe 12 months in the Bush tax cuts for wealthy Americans, he says. “I think they'll sit down and do some serious work, and we're going to get some good reform next year.”

Siegel also says the Federal Reserve should follow the European Central Bank’s lead and drop its interest rate on reserves to zero.

“We need to do every little thing we can do to encourage the banks to lend [reserves] out, and one of those things is to not keep that deposit rate at positive levels,” Siegel says.

Editor's Note: I Wish I Were Wrong — Economist Laments Being Right. See Interview.

Reuters reports that the Fed's balance sheet—a broad gauge of its lending to the financial system—stood at $2.848 trillion on July 4, down from $2.846 trillion the previous week.

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