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And always great to have a chance to speak with Jeremy Siegel, Wharton Emeritus Professor
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in Finance and also is Chief Economist at WisdomTree. Jeremy, great to have you back
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with us. Thanks for a couple of moments. Thank you very much, Dan. You know, it's interesting,
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since the last time we talked to you, we have seen the markets rise. The Dow has gone above
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50,000. The conflict in Iran has continued and inflation is heating up. How do you view all
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that is going on at the moment? Yeah, it's a little confusing in many ways. I think there's
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two things. The biggest question is how can the stock market keep on rising to all-time highs,
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given what's going on with oil and everything out there? Well, I think, as we mentioned a
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month ago, thank goodness we are so much less dependent on oil than we used to be.
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Natural gas is our biggest source of electricity and energy, and that has not gone up in price.
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And we are exporters of oil. Yes, on the pump, we do have that problem, but it is not overwhelming. That having been said, you know, we take a look and we see,
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you know, Brent, well, now it's at 107. Yeah. It was 111 earlier. I think maybe,
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you know, there's rumors flying around, you know, deal, now deal. You know, the experts I talked to
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said if the straight remains closed, it'll just keep on kind of marching up. But no one really
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wants to kind of, I mean, you know, because anytime there's an announcement of some sort of deal,
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it would fall. So people are really, traders are afraid to push it up that much, given all the,
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you know, the volatility on the top. I was actually quite disappointed in the summit between
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President Xi and President Trump. I was hoping that Trump would extract some sort of
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a promise from, or not promise, but certainly attempt by China to intervene diplomatically with Iran. They have a lot of influence on Iran. I mean, all they did was,
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you know, said, we believe in open straits, and that had been said before. I didn't think the
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deals were particularly good. In fact, Boeing dropped on the day after they made a deal.
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It was a little disappointing in the numbers. And I thought the threats that she made on Taiwan
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were a little bit unsettling. So I didn't get it. I got a negative feel on the summit. And I think
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that Friday's drop that we saw was related to that. But it is interesting that when we've seen
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the gains over the last several weeks, really, they have been fueled by the AI stocks.
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Oh, there's no question. I mean, it was the chips. I mean, what happened was, I think the
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turning point, when Intel blew out the, you know, the top off its, you know, earnings, and actually
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said, we had marked down chips that we thought were worthless, and now are worth something.
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You know, a lot of people at the street worried that they were being, you know, that they were being under-depreciated. And my goodness, the chips that came back from the dead,
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that sparked the chip mania, which I think has gone a little bit too far. I think that's a kind
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of froth there. But it just shows a huge demand for AI. And yeah, and AI has fueled 80% of the
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gains that we've seen, you know, over the last four weeks in the market. So chips and the AI
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demand are still roost without question in this equity market. I mean, the other big thing going
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on is the bond rate. I mean, puncturing and hitting 460. It's going to be a real June 17th,
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the first meeting of, you know, that Kevin Warsh has. Wow. I would like to be in that room,
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but we'll hear about it. There's not going to be a drop in, I mean, unless something really
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gets settled completely with Iran and, you know, Albright dropped back to 70 or so. You know,
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there can be no drop. In fact, the big argument, will there be a bias now towards tightening and
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away from the easing bias that, of course, we had three dissents, as you know, a couple of
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weeks ago by the FOMC. Give us your thoughts on Kevin Warsh. And obviously he, as you just alluded
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to, he's stepping right into a lot at the beginning. But when you look at Kevin Warsh
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at taking over this role, what do you expect from him as a leader? Well, I think he's an excellent
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choice. I actually think he was the best of all, you know, the men that were bandied around by
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Trump. You know, he took a long time picking on and there were four or five candidates.
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And I thought he was the best he has. First of all, he's been on the Fed for a long time.
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He's very well regarded. He knows the institutional history and all the rest. It is really a big
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question of what he's going to do. I mean, you know, there's all this talk about he wants to
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maybe change the whole question with the dot plots. OK, that's fine. How many pressers are
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going to have afterwards? OK, that's fine. The balance sheet is a more complicated question.
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But all those are totally subsidiary to what is the Fed funds rate. That's the big kahuna here.
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That's what really matters. And of course, that's what Trump wants down. But none of the evidence
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that we're getting right now, because it's not just the oil price going up, the strength of
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the economy is still there. I mean, we're seeing no deterioration whatsoever in consumer spending,
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in the labor markets. Now, I'm not saying gangbusters, but no deterioration in whatsoever.
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GDP this quarter looks like it's quite high. Well, and if you want to talk about the labor market,
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you and I have talked in the past about just look at the weekly claims and those weekly claims keep
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right holding in that range of about. And I talked about that range, 200 to 240.
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We're hitting the bottom. We went below it to a 50 year low, and I think we're 210 now.
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So I mean, as long as stays in lower part of that, in fact, as long as it stays in the range,
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it's OK. Lower part of the range means there's no deterioration whatsoever.
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So then is what do you think are the chances that we would see a rate increase because of what's going on? I mean, that I don't think you're going to see
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a rainy, no change in June. Big argument is going to be on what's called the bias
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of the Fed. Are they more now likely to tighten or likely to loosen or stay the same? That's where
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the arguments are going to be. I don't expect anything change in June. But what June is going
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to do is set the tone for the July and future meetings. So that's going to be what's important
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to look at. Let me finish up by asking you kind of what your thoughts are on Chair Powell as he
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leaves kind of his legacy as he heads out. Well, not really heading out the door,
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staying as a Fed governor, but, you know, leaving the role of Fed chair. I think it's very mixed. Yes, he made a brave stand for independence. A lot of people applaud
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that. I think he failed miserably as I, you know, harp on 2000 to 2002 was among the worst Fed
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policy I've ever seen. The increase in the money supply was the greatest in 150 years.
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In a two year period, he handed all the money to Trump and Biden, especially the Biden
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expand fiscal stimulus from COVID was way excessive. And instead of standing against it,
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he didn't. So I really blame him for that. He landed on his feet afterwards.
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He's a very good, responsible person, didn't have monetary background, which I think
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contributed to his mistakes in his early years. And then, of course, it all became embroiled about,
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you know, should I stand against Trump, Trump trying to remove him and all that.
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And, you know, he's called a hero by those people that, you know, stood up to Trump. But
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the monetary policy was was mixed, bad at the beginning, much better at the end.
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Mixed legacy. And one word will always be attached to Chair Powell, and that's transitory.
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That word is going to stick with him forever. Yeah, I mean, you know, it was a terrible mistake.
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And when you saw the money supply increasing at those rates, I was on I was on the airways,
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you know, three weeks after four weeks after COVID looking at the data, I say, ain't no
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chance that this is transitory. This is going to make a permanent price change. And by the way,
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that price change, you know, you talk about, you know, how important it was. It really probably
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did in Biden on the presidency. I mean, so it was a very bad mistake that cost the Democrats a lot,
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you know, a lot. And and really the whole legacy of the Fed, they don't want to make that mistake
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again. Although, you know, his, you know, history suggests as time goes on, people forget mistakes
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that they had made earlier. Yes, they do. Jeremy, always great to talk with you. Thanks very much
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for your time. Thank you very much. You got it. Jeremy Siegel, Wharton Emeritus Professor in
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Finance and Chief Economist at WisdomTree.