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This brings us to our main topic. There are big potholes ahead on the path of the actions. Welcome to our guest today , , Jeremy Siegel. Welcome back. Nice to see you. Good to see you, Scott. So, what do you think about what happened here ? You know, oil is up in price, yields are rising, 10-year bonds are 4.90.
Is this what is affecting the situation today? Well, I'll tell you, I wouldn't want to be Kevin Warsh next week. The situation is a stalemate: if you do it, it's bad, if you don't do it, it's also bad. If he raises rates, which I think the market demands, President Trump will throw a tantrum. I mean, he said, " If you don't lower the stakes, I'm going to throw a tantrum." So if he raises rates, and if he doesn't—you see that...Listen, we've always said that the market tests new Fed chairs.
And I think this is a test for Kevin Warsh. Market, 10- year bonds are approaching five . Futures are signaling the need for an increase. I think he would really like to wait until the midterm elections are over. And try to maintain some trust from Trump. But this is a very, very difficult situation.
What is he going to do? What do you think he will do? Oh, I don't even know. I'm just on the verge of making a decision. You know, I think he will dare to take this step. And will raise the stakes. Because if he doesn't raise the stakes, I think there could be four, five or even six "no" votes, which would be unprecedented.
Now, let's say this, tomorrow we will get data on the Consumer Price Index (CPI). This may bring them some relief. There are still a few days until new data arrives. Waller drew a line in the sand, saying, "Well, if it 's 0.2, I might say leave the bets alone." " If it's 0.3, then maybe we'll have to raise the stakes." But, you know, if you look at the commodity indices, of course, at what's happening with oil, and most importantly, the bond market, they say: we just need to raise rates.
And so, I think, this is the main conclusion. Okay, if you're right and they do it, how will the market react? I think the market will shake out first and you will see a sell-off. And if, as I expect, long-term bonds react positively, they say: " Okay, the Fed is serious about fighting inflation." We will see a recovery in the stock market.
So, I think it will be a kind of cold shower. Oho. But we needed it, so let's get this over with . You know, 25-50 basis points on short-term instruments, if they do it now and again in October—it's not the end of the world, and it would send a signal to the market that the Fed is still serious about fighting inflation.
Perhaps this will make the " bond lynchers" stop or convince them to calm down. And... I think so. Otherwise they will scream at the top of their voices. Yes, I believe there are good reasons for this. That's why next week is generating so much interest, and it's really unclear what will happen. I look at most notes from Wall Street strategists or respected observers: Scott Rubner of Citadel says he is most convinced right now that the month's peaks have already been reached.
We have seasonal weakness, a stock buyback closing period in the middle of the month, option expiration in the third week, and then the end of the quarter, and all of this is risk transfer, and, I might add, not in the best direction. These are, of course, my words, not his. Do you think so too ? Should we be careful now?
Yes, we know what September is. Look at oil prices continuing to rise, diesel fuel is rising even higher, as we know, to record highs, gasoline futures are signaling a potential increase of another 20-30 cents. This is not very good for consumer sentiment. Looking ahead, lateral movement is probably the best we can expect over the next few weeks.
Of course, a new reporting cycle begins at the end of the quarter, and we'll see what that leads to. But until then , with rising oil prices, it's hard to expect any, you know, really significant growth in the stock market.
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