Jeremy Siegel, a Wharton professor and frequent commentator on markets, caused a stir on Monday when he called for an urgent 75 basis point interest rate cut as markets collapsed. He then doubled down on his position by calling for another 75 basis point cut in September “at a minimum.”
Skip ahead a few days and he had changed his mind.
“I no longer think that’s necessary, of course. But I want (Powell) to get it down to 4% as quickly as possible,” Siegel says. He told CNBC,“Would it be bad? No. But would it be necessary? No, not at this time.”
The market is pricing in a 55% chance of a 50bp level on September 18 and a 45% chance of a 25bp level with 104bps priced in through the end of the year.
So what’s the lesson here?
The main reason is that the panic that people on TV like Siegel, Bill Ackman, or Jim Cramer are experiencing is often a buy signal, or at least a sign that cool heads are no longer in control. It also highlights what might happen if things go wrong in the economy one day and the Fed’s plan works.
This article was written on www.forexlive.com.
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