Wharton finance professor Jeremy Siegel says corporate earnings could jump at least 10%, and that could push up stocks by 10% to 15% in the last two quarters of 2106.
"If we get a good second half of the year earnings-wise, then I think the market could be up 10% to 15%, " Siegel said Friday on CNBC.
On Monday, he discussed why he is bullish on earnings in an interview with Bloomberg TV, noting that he sees the chance of a recession in the U.S. as highly unlikely.
"The … 2015 earnings were crushed as a result of what happened by the energy sector," explained Siegel, "and we've had a recovery… It's very rare for [a whole] sector to be negative, and it is supposed to flip back to positive, though not very robust."
"We are expected to see a 10% to 15% increase in S&P operating earnings" later this year, he said.
As for the current ratio of equity prices to earnings, "We are really seeing, I would say, more like 17-18 times this year's earnings," Siegel explained. (Observers who say the P/E ratio is at 20 are using 2015 earnings figures, according to the finance professor.)
"In a low-yield environment, when the dividend yield of the S&P is north of 2% and in Europe is 3% to 4%, and even emerging markets have a good dividend yield, my thesis is that people will be moving into stocks for income," since the bond market may not provide sufficient income for portfolios over the next decade, Siegel said.
Investors, he adds, are looking long term at high-quality, dividend-paying stocks as "the place to go."
With the 10-year Treasury yield at historic lows, there's "really no hope for yield in the fixed income market," according to Siegel. But equities "need an earnings rebound to really get … going."
Brexit Impact
In an interview last week with Knowlege@Wharton, the school's online business analysis journal, Siegel shared his views on Brexit and what investors should do in response.