October 5, 2021

Analysts Warn - Market Not Ready for Falling Inflation?

 Wharton finance professor Jeremy Siegel, who is often known for his forecasts of his market expressed concern about the market’s ability to cope with inflation.

In his interview with CNBC, he briefly said that the U.S. is going to face some problems in the future. Inflation, in general, will be a much bigger problem than the Fed believes.

Siegel warns that there are serious risks associated with price increases. At the same time there is pressure on the Fed to speed up the tapering process and he is personally of the view that the market is not yet ready for tapering.

According to Siegel, the biggest threat facing Wall Street is the chairman of the Fed, Jerome Powell distancing himself from simple monetary policy faster than expected following the inflation spike. With this it can be expected that interest rate hikes may happen faster. Both of these things are not positive for the equity market.

Market players, on the other hand, are seen to tend to switch to bitcoin and tend to ignore gold. Yet Siegel does not think this is a bubble. A number of market players have anticipated some inflation and there is a tendency for mortgage rates to rise higher.

The market’s focus is on more indications from the Fed on inflation and ‘tapering’.