At the end of March, the coronavirus market trough will “certainly be the lowest” during the crisis, Wharton School professor Jeremy Siegel told CNBC on Friday.
In fact, Siegel said that the massive response from the Federal Reserve’s monetary policy, as well as further progress on treatments and possible vaccines for Covid-19, could really increase stocks next year.
“I think 2021 could be a boom year. With the liquidity the Fed is adding, unprecedented. It could be a very good year,” said Siegel on “Squawk Box”.
The S&P 500 hit its last low of 2191 on March 23, but has since rallied sharply on the back of vigorous Fed action and growing investor confidence that economic restrictions are intended to slow the spread Covid-19 could be relaxed sooner. provided that. At the close of Thursday, the S&P 500 has gained more than 30% of its weak virus.
Siegel, a long-time bull, said he thought the only way the stock market could re-test the March 23 background was if there was a more serious coronavirus outbreak in the fall and closings to large scale had to be implemented again.
“I don’t think it will happen. I think it’s a low probability event,” he said, while acknowledging that the “second wave” of the 1918 Spanish flu was far more deadly than the initial epidemic.
Siegel’s comments came on Friday morning shortly after the government said a record 20.5 million non-farm jobs were lost in April, pushing the unemployment rate up to 14.7% on last month due to the economic cessation of the pandemic.
However, Professor de Wharton has said that he is focusing more on data relating to the spread of the virus, rather than retrospective economic reports, as he offers a forward-looking vision of how the economy could recover.
There are more than 1.2 million confirmed cases of Covid-19 in the United States, according to data from Johns Hopkins University on Friday morning, nearly a third of all infections worldwide since the start of the epidemic in China last year. At least 75,670 people have died in the United States worldwide, the death toll has reached at least 270,279.
“When I get up in the morning, in fact, I check all the viral data, the trends in the virus, the trends in therapeutic developments, vaccines,” said Siegel. “It tells me more about what’s going to happen in the future than getting a historical report on the tragedy of this virus on our economy.”
David Kelly, global chief strategist at J.P. Morgan Asset Management, told CNBC on Friday that expectations for a quick economic fix are too high. “I think the stock market will probably see an additional correction here. I think there are too many people betting on a V-shaped recovery in the US economy,” said Kelly, which means a rapid slowdown and a fast rebound.
“We think it’s a U-shaped recession,” said Kelly on “Squawk on the Street”. “I think the unemployment rate will go up a bit more in the next few months before it starts to go down, then it goes down very slowly. I think we have to get into 2021 before we see a significant recovery, and I don’t think not that this is integrated into the stock market.