Jeremy Siegel: 2 Big Stock Risks to Watch in 2024

After inflation data came in lower than expected last week, the economist wrote, "I was a little surprised how strong the narrative came that these data virtually guarantee a soft landing. The recent data definitely indicates a dramatically increased probability of a 'landing.' But it is far from certain that the landing will be soft."

Inflation is subsiding as the economy is weakening, Siegel noted, adding that "a little weakness is not a big problem as long as it doesn't snowball into something more serious." He cited a "rather significant" increase in jobless claims, an indicator he watches closely, and noted recent data on industrial production and capacity utilization are coming in weak.

"I am not suggesting the economy is falling apart, but this recent softness bears watching very closely," Siegel said.

The economist, who doesn't expect an interest rate increase in December, said the Fed could strengthen sluggish money supply growth by lowering interest rates. "I think it's time for us to 'dis-invert' the yield curve by bringing short rates below the long-term rates," he said.

The Fed isn't even discussing a rate cut, noted Siegel, who thinks central bankers will do so at their March meeting, or possibly in January. "Inflationary expectations are under control. Commodities are under control. The Fed should not stick to a false narrative of the risks of the 1970's repeating to postpone necessary rate cuts," he said.

Photo: Lila Photo for TD Ameritrade Institutional