Has Christmas Come Early For Investors?

If Santa Claus decides to “socially distance” and take off Christmas this year, Jeremy Siegel is ready to fill in.

A widely-respected and well-known professor and author, Siegel has long advocated for investing in stocks for the long run.

He’s now here to bring Christmas cheer to investors. And he’s doing so early.

Here’s what he recently said:

Christmas is coming early for investors.

Now let’s break down why he said it.

In an interview with CNBC, there were four key factors that were cited as catalysts for the market over the next few years.

First, there’s the transition to President-elect Joe Biden.

President Donald Trump has delayed the transition due to his unfounded belief that there was widespread fraud with the US election process. This transition resistance has ended, giving the market more certainty. In addition, Biden is seen as a moderate. With Congress also likely to remain divided, it’s improbable that major reforms can get through (particularly as it relates to tax increases). Siegel believes the current makeup of the US government is the best possible outcome that investors could hope for.

Second, there’s the nomination of a market-friendly Treasury Secretary in Janet Yellen.

Yellen, a former Chair of the Federal Reserve, has a reputation for pragmatism, with her near-term focus most likely to be on fixing the economy. That could potentially translate to a better harmony between the fiscal and monetary strategies. Also, there’s less fear over additional banking regulations. A great relationship between the Fed and the US Treasury bodes well for the stock market and the US economy in general.

Third, there’s the ongoing expectation for another large fiscal stimulus package.

Building on what I just noted about Yellen, it’s believed that another Washington stimulus package is almost certain now. It’s not a matter of if. It’s about when and how much. This additional flow of money should end up buoying the US economy and the the stock market from a number of angles. We could be looking at additional consumer spending power, greater consumer confidence, increasing earnings, liquidity, modest inflation, more demand for equity, and reduced risk of a large recession in 2021. Siegel notes that M1 money supply has increased 44% since March – the kind of jump the US hasn’t seen since WWII.

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