If markets can get through January bumps, it looks like positive 2026: Wharton's Siegel

Joe Kernen (Co-anchor of Squawk Box) 00:00.040

Anthony, it's now Jeremy Siegel, Professor Emeritus of Finance at the University of Pennsylvania's Wharton School of Business and Chief Economist at Wisdom Tree. And once again, it's good to see you happy New Year. Happy holidays, Jeremy.

Jeremy Siegel (Professor Emeritus of Finance) 00:16.200

Thank you, Joe. Been a good time to be pro uh US economy for the past year. Once again, first Yeah. stock market with the best economy in the world I mean, third and fourth GDP numbers, I mean, we don't We're just getting the the fourth the St. Louis Fed came out with a 3%

Jeremy Siegel (Professor Emeritus of Finance) 00:34.560

estimate two days before Christmas. Of course, we had that plus 4% for the third quarter. And even with a negative first quarter, that would make 2025 faster growth than the last year of the Biden administration, even with all the chaos with the tariffs.

Joe Kernen (Co-anchor of Squawk Box) 00:53.040

These uh that is the economic backdrop obviously, but I was really referring to what 19 18% 18 we may hit 7,000 before the end of the of the year on the S&P. It's possible. I'm not saying we will. But the third the third or fourth really good year, third at least.

Jeremy Siegel (Professor Emeritus of Finance) 01:12.880

Yeah. And next year, I think I mean I know it's been predicted for a long time because the streak of the Meg 7 is is really quite unprecedented. But you know next year, I think we I think S&P which is very weighted towards of course the Tech and Mag 7. Might be less than double

Jeremy Siegel (Professor Emeritus of Finance) 01:35.000

digits. 5 to 10 still good. Then that the you know the non Mag 7 could be 10 to 15 with a Mag 7 finally positive but uh in the uh low single digits. Now of course uh it's it's very difficult to make one year estimates but that Yeah uh that would be uh a a turnaround certainly

Jeremy Siegel (Professor Emeritus of Finance) 01:56.840

from the last 3 years but still leading to a very good market in 2026. So, it's I think a lot of of good headwinds I mean good tailwinds pushing forward. We have bumps. We have three bumps in January. We have of course another potential government shutdown. We have the Supreme

Jeremy Siegel (Professor Emeritus of Finance) 02:18.480

Court perhaps going to announce on what it's decided on tariffs and we have perhaps finally the announcement from Donald Trump about who our next Fed chairman is going to be. These are very important issues to get through you know in addition to what is GDP and what are earnings

Jeremy Siegel (Professor Emeritus of Finance) 02:37.800

and what are margins and we might all get those in January. So it might certainly one of them the shutdown has to be either solved or extended in that month and the other two look like they're likely to be announced. So we need to get through some some bumps as I say but if we

Jeremy Siegel (Professor Emeritus of Finance) 02:57.920

can get through those successfully Uh, it still looks like a positive year for me. Right.

Joe Kernen (Co-anchor of Squawk Box) 03:03.600

The A lot of times the default uh forecast at beginning of the year is that 78% long-term average for for the S&P. We hear that a lot and usually it either does a lot more or or maybe even a down year. Very I don't know if people ever forecast a negative year. I don't I don't

Joe Kernen (Co-anchor of Squawk Box) 03:22.480

can't remember the last time someone did that Well,

Jeremy Siegel (Professor Emeritus of Finance) 03:24.640

a few do. I mean, you know, when when you take a real out-of-consensus forecast, you're either uh you know, wrong or you become a hero and you could decide Exactly. Hey, I'm going to I'm going to shoot for the stars here. So so we we do some have a few times when people do take

Jeremy Siegel (Professor Emeritus of Finance) 03:39.600

those out of consensus Gary forecasts.

Joe Kernen (Co-anchor of Squawk Box) 03:43.680

We We've had some people on say, "All right, multiple stay where they are." So we're just going to purely do the S&P advance based on uh earnings per share growth for the next 12 months. What what do you think we can do there? Double digits?

Jeremy Siegel (Professor Emeritus of Finance) 03:59.280

You uh Uh, I think in that case, you know, could we get 8 to 10% you know, certainly um with the Mag 7 slowing down as we see every year it's slower but still in in in the high teens or low 20s uh but we see you know we see PE compression because they're over 30. I mean let's

Jeremy Siegel (Professor Emeritus of Finance) 04:25.040

take Tesla's side which is like 200 um Yeah the others are uh You know, I, you know, 30 for companies that are growing 20% a year even with a decelerating growth is not what I call a bubble. So, I'm not going to predict that, you know, it's going to last forever. I'm not going

Jeremy Siegel (Professor Emeritus of Finance) 04:42.400

to predict there won't be disappointments of Mag 7, but I've been saying all along that those have been calling this a bubble or saying this is, you know, 2000 have have not really been looking at the the facts behind the figures.