저자: JeremySiegel · 외국인
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연준 의장 교체(워시) 우려로 인한 금리 상승 공포는 과도하며, 10년물 4.75% 수준은 경제 초크포인트가 아니라고 주장. AI 설비투자는 빅테크의 현금보유로 금리 영향이 제한적. 미국 CPI 주거비(OER) 지연으로 인플레 둔화가 과소반영되어 연준이 긴축을 오래 끌 위험. 재정 부담으로 장기적으로 금리 하락 압력. 반도체·빅테크는 실현 현금흐름 기반이라 1999년 버블과 다르다고 평가. 향후 금리 인하 시 배당주·중소형주로의 로테이션 기대.
다듬은 글
A looming leadership transition at the Federal Reserve is sparking intense anxiety over whether interest rates will choke off the technology-driven market rally. Wharton Professor Emeritus and WisdomTree Chief Economist Jeremy Siegel sat down on CNBC to unpack these fears ahead of a crucial Jackson Hole address by Kevin Warsh.
Siegel believes the fears of higher rates are completely overblown, how the bond market is diabolically testing its potential new leader, and the hidden political math that makes further rate hikes highly unlikely. Joining us now Jeremy Siegel, Professor Emeritus of Finance at University of Pennsylvania's Wharton School of Business and Chief Economist at WisdomTree.
With With age comes wisdom and I'm I'm calling you wise. We We We We both have have seen many things over our careers and we both seen much higher interest rates. So I guess I just start with I [clears throat] understand on a relative basis when things change from low levels, it's a much bigger percentage move than from higher levels.
But is it really something at this point that threatens to choke off the the AI boom because they can't finance things at at at where we are in the 10-year or the 2-year or the or the 30-year? Is there too much concern right now about it? I can't believe the Treasury saw fit to take that step. That it it That almost is like wow, we notice this and we're worried about it.
I'd ignore it at these levels. Uh first of all, it's good to see all three of you back together. Oh, that's right. Thank you. We call it a wild threesome, which I don't mean that in any bad way. But But I agree with complete I am not a fan of the best and twist. Uh I didn't think the markets were unruly or you know, needed you know, that extra liquidity and I don't think I agree with you completely, Joe.
You know, I mean, we've been at 4 and 3/4 before in the 10 year. That's not a choke point. Uh you know, I'm saying that it could not get there at some point in future, of course, but uh at a point where you have to panic in terms of financing. I mean, we as you said through through the years we you know, I would say 40 30 years ago we would say, "Oh my god, how low interest rates are right now compared to uh what we experienced." But but I think Friday 10:00, I think that's when Warsh is scheduled.
I think that's a very important event. I do think the market wants to see the Fed you know, not give forward guidance. They're willing to accept that. What what they want is what criteria are you looking at? Um are you looking at the you know, the five year five year inflation expectations? Are you looking at the Fed funds futures market?
Um you know, what what criteria are important to you? And I do think that's the right function of the Fed to reveal to the market. And if Warsh does that, I think we could get a big rally there on Friday. I think for instance, Wednesday we get the PCE report and I think that's going to be good one. Uh actually, I think it's going to come in at or even below expectations.
So, you know, I don't think there's there's really going to be much pressure. Let's face it, politically. I I don't see Warsh raising rates. Is it true Is it true Is it Is it true or just a uh urban legend that the market will by definition test every new Fed chair? And And if I if I were going to do that, if I were the market and I was diabolical, I'd keep going higher to see whether that's the way I And is that what we're seeing?
Is the market testing Kevin Warsh right now by by creeping higher? Well, I I think that the work I think if Kevin disappoints on Friday and gives a kind of, you know, bland, not informational speech, the market could begin to test again. Now, again, he always he has a chance to correct himself again in the you know, the September 16th Fed meeting, which is an important one with a with the you know, the SCP projections and all the rest, but there there could be a little test if he disappoints on on on on Friday.
So, yeah, in a way and maybe one could even say there was a tiny mini test, you know, when the when the when the 30-year, you know, poked above that 5% point. So, I think that for again, that that for this Friday speech is is something we we keep our eyes on. Hey, Jeremy, when you say if he disappoints the market, how would he disappoint the market?
I think if he kind of, you know, if he gives no criteria about what he's looking at and just said, you know, we have great discussions and we have a, you know, an interesting food fight and we'll let the market I think what's going to be important will will he comment on Bessant and the intervention in you know, the the 30-year.
As we all know, he's been a big fan of let's let the market speak and now are we going to get, you know, he there's been a lot of question about it what is his been his reaction? What is his true reaction to Scott Bessant? Were they communicating? Was this a surprise? Now, I you know, I'm not sure whether he's going to include that or not.
And if I remember, there's no Q&A after the Jackson Hole speech. So, but that would be probably number one question that they would ask. But they should be prepared to answer that question. I want the pure rates. Well, you know, am I going to get the pure rates if the Fed is changing its, you know, maturity structure at this particular point.
But I think what the market really wants is, you know, you you you're not raising rates, you voted against it, fine, there's just a what what criteria are you looking at? And there's a whole number that can justify it and they would feel on safer grounds. This is the criteria we look at and you look at we can be following this.
The discussion began with host Joe Kernen challenging the dominant anxiety-fueled narrative that currently grips Wall Street. Kernen raised a fundamental question about whether the market's obsession with interest rates is actually detached from corporate reality. Specifically, he pointed out that while shifting from near-zero interest rates to current levels looks terrifying on a percentage basis, rates on the 10-year, 20-year, and 30-year Treasury bonds are still historically moderate.
Kernen pushed Siegel on whether these rates are actually high enough to choke off the massive capital expenditure boom driving the artificial intelligence revolution, or if investors are simply overreacting to routine fiscal maneuvers. Siegel's response was an immediate validation of Kernen's skepticism.
He flatly rejected the idea that a 10-year Treasury yield hovering around 4 and 3/4% is a macroeconomic choke point. Drawing on his perspective as an economic historian, Siegel reminded the panel that three or four decades ago any professional investor would have viewed sub-5% interest rates as an incredibly cheap cost of capital.
He argued that the multi-billion-dollar infrastructure investments required for the AI buildout are driven by long-term secular trends and massive corporate cash reserves, not marginal short-term borrowing costs, which means these tech giants are essentially running their own internal capital markets.
Think about it. When Microsoft or Alphabet decides to spend $50 billion on data centers, they do not need to secure a commercial loan or issue high-yield debt. They are sitting on massive cash reserves that are actually earning 5% interest in short-term money markets right now. In a strange twist of economic irony, the Fed's aggressive rate hikes have actually increased the interest income of the very technology giants that nervous investors feared would be crushed by higher borrowing costs.
The productivity gains from their AI investments far outweigh a 1 or 2% difference in interest rates, meaning the capital expenditure boom is structurally insulated from the Fed's monetary tightening. This led the conversation directly to the biggest wild card currently hanging over the financial markets.
The looming leadership transition at the Federal Reserve. Host Joe Kernan shifted the focus to the upcoming Jackson Hole Economic Symposium, where former Fed Governor Kevin Warsh was scheduled to deliver a highly anticipated address. Kernan pressed Siegel on how the bond market is likely to react to the growing prospect of Warsh replacing Jay Powell as Fed Chair when Powell's term expires.
The bond market has been in a state of constant flux with long-term yields creeping higher, and Kernan wanted to know if this volatility was a direct response to the political uncertainty surrounding the Central Bank's future. Siegel's analysis of Warsh was incredibly nuanced and touched on some of the deepest mechanics of modern fixed income markets.
He pointed out that the bond market is already starting to price in what he termed a Warsh premium. Warsh has historically been viewed as a monetary hawk, or at least someone who is deeply skeptical of quantitative easing and the Fed's massive balance sheet expansion. If Warsh takes the reins, some market participants fear he will keep interest rates higher for longer to wash out any lingering inflationary pressures.
But Siegel offered a brilliant counterintuitive take on this. He argued that the bond market's reaction to Warsh is actually more complex than a simple hawk versus dove calculation. In fact, Siegel believes that if Warsh is officially nominated, long-term Treasury yields might actually fall, not rise.
Why would a hawkish Fed chair lead to lower long-term interest rates? It sounds entirely backward at first, but Siegel explained that long-term bond yields are heavily driven by long-term inflation expectations and an inflation risk premium. If bond investors trust that a new Fed chair will ruthlessly defend the purchasing power of the dollar and refuse to monetize government debt, they will not demand a high inflation premium to hold 30-year bonds.
A credible inflation fighter at the helm can soothe the long end of the curve, even if short-term rates remain elevated. My take on this is that Siegel is highlighting a fundamental truth about fixed-income markets that equity investors constantly miss. The bond market does not fear a hawk. It fears an untrustworthy Fed.
If the market believes the central bank has lost its grip on inflation, investors will dump long-term bonds, sending yields spiking. This is exactly what we saw during the worst of the recent inflationary cycle. A transition to a leader with established hawkish credentials could actually steepen or normalize the yield curve in a healthy way, lowering the cost of long-term borrowing for corporations and home buyers alike.
It is a delicate game of confidence, and right now, the bond market is testing the potential new leader to see if he has the stomach to stand up to fiscal pressures. Before we go deeper, if this is worth your time, like the video and subscribe to the channel. This paradox of bond yields and political pressure brings us directly to the actual fiscal math of the Fed transition, which Kernan brought up next in the conversation.
Kernan asked about the sheer volume of government debt and whether the central bank is truly free to make monetary policy in a vacuum. With trillions of dollars in national debt needing to be refinanced, Kernan wanted to know if any Fed chair, even a committed hawk like Warsh, can actually afford to keep interest rates high without triggering a sovereign debt crisis.
Siegel's response got straight to the brutal arithmetic of the national budget. He pointed out that the federal government is currently refinancing billions of dollars of older, low-interest debt into new bonds yielding over 4%. This is ballooning the federal deficit purely through interest expense, creating a feedback loop where the government must issue even more debt just to pay the interest on its existing obligations.
Siegel argued that this fiscal pressure is a silent, powerful force that will inevitably pull interest rates lower regardless of who is sitting in the chairman's seat. No central bank can operate completely insulated from the fiscal reality of the nation it serves. I went back through the Treasury's refunding estimates, and the numbers are staggering.
We are rapidly approaching a point where annual interest payments on the national debt will surpass the national defense budget. This is the real reason the Fed is under immense, unspoken pressure to lower the cost of capital. It is not just about helping home buyers or supporting regional banks. It is about preventing the federal government's interest bill from consuming the entire tax revenue base.
When fiscal policy is this loose, monetary policy eventually has to bend. Even the most independent central banker must acknowledge that keeping rates too high for too long risks breaking the government's own balance sheet. This tension between monetary restriction and fiscal survival naturally led to a debate on whether inflation is truly dead or if the Fed is still fighting a ghost.
Kernan pushed Siegel on the risk of cutting rates too early. He asked if the Fed risks repeating the catastrophic policy errors of the late 1970s, where premature rate cuts allowed inflation to roar back in a second, far more destructive wave that took over a decade to tame. Siegel was ready for this objection, and he mounted a fierce defense of his long-held view that the inflation threat has already been neutralized.
He argued that the only reason the official consumer price index shows persistent, sticky inflation is because of a massive statistical flaw in how the government measures housing costs. Siegel explained that shelter inflation, which makes up over a third of the total CPI index, relies heavily on a metric called owners' equivalent rent.
This metric lags real-world market rents by as much as 12 months because of how infrequently households move and how the data is collected. If you look at current real-time market data, rent growth is flat to negative across most of the country. This is where Siegel's argument is most compelling. I look at real-time housing platforms constantly, and the data from companies like Zillow and Redfin have been showing a dramatic cooling in asking rents for nearly a year.
Yet, the official government data is only now starting to reflect this slowdown. By relying on lagging metrics, the Fed is effectively driving a car by looking solely through the rearview mirror. They risk keeping monetary policy restrictive for too long to fight an inflation threat that has already left the building.
Think about the real-world danger of this lag. If the central bank keeps interest rates at restrictive levels to fight a statistical shadow, they risk triggering an unnecessary economic slowdown that could have been easily avoided. For a market that has priced in a perfect soft landing, a policy error of this magnitude is the single greatest threat to investor portfolios.
This risk of a policy error brought the discussion to its most critical point for equity investors. The valuation of the stock market and whether the technology-led rally is sustainable. Curran pushed back on Siegel's optimism, asking if the massive run-up in technology stocks fueled by the artificial intelligence craze has left the market highly vulnerable to any minor economic shock, regardless of what the Fed does with interest rates.
Siegel provided a fascinating historical comparison, drawing on his extensive research into the late 1990s tech bubble. He made a sharp, clear distinction between the current market environment and the dot-com mania. In 1999, technology companies were trading at astronomical multiples of 100 times earnings, or in many cases, had no earnings at all.
Today, the giant technology companies leading the S&P 500 are highly profitable businesses with massive free cash flows. They are trading at multiples of 30 to 35 times forward earnings. While that is certainly not cheap, Siegel argued it is entirely justified by their explosive growth rates and dominant market positions.
My take is that the comparison to 1999 is completely over done. When you look at a leader like Nvidia, the earnings growth has actually outpaced the stock price growth for much of the rally. This is a fundamental difference. In the dot-com era, investors were buying promises, eyeballs, and hypothetical business models.
Today, they are buying actual realized cash flows. While there is certainly some speculative froth in smaller, hyped-up names, the core of the market rally is built on a solid foundation of corporate profitability. But does that mean there is no risk? Of course not. The risk is a temporary earnings pause or a localized valuation correction, not a systemic collapse.
If the Fed begins to ease monetary policy, the discount rate applied to these future cash flows will drop, which structurally supports these valuations even if earnings growth moderate slightly. With the macro picture established, the conversation turned to the practical question on every investor's mind.
How should you position your portfolio right now? Kernan asked Siegel where investors should look for opportunity if the tech giants are already fully valued and the Fed is on the cusp of a rate cutting cycle. Siegel advocated for a significant rotation in asset allocation. He argued that a high interest rate environment has artificially depressed the valuations of dividend paying stocks, mid-caps, and small caps.
For the past 2 years, investors have been hiding in cash and short-term Treasury bills earning 5%, completely ignoring high-quality, cash-flowing companies in traditional sectors. As the Fed cuts rates and cash yields fall, trillions of dollars sitting in money market funds will look for a new home.
Siegel expects this capital to flood back into the broader market, driving a powerful rotation. I think this rotation thesis is highly probable, but it requires patience. We have already seen early signs of this rotation during brief market dips where small caps and value stocks suddenly catch a massive bid.
The key is to find companies with strong balance sheets that can survive a slightly longer period of elevated rates if the Fed drags its feet. Dividend aristocrats and high-quality mid-caps look incredibly attractive here because they offer a yield cushion today and capital appreciation potential tomorrow.
Are you still holding too much cash? If so, you might be missing the early stages of one of the largest capital migrations in market history. As those money market yields shrink, the opportunity cost of sitting on the sidelines will become too high to ignore. As the interview drew to a close, Siegel left the panel with a final provocative thought on the true nature of market risk.
He warned that the primary risk is not inflation or high rates, but rather a loss of confidence in the Fed's ability to communicate its path forward. If the Fed sends mixed signals, it will create unnecessary volatility that could freeze corporate capital expenditure. Where I land on this is that the transition to a potential new Fed chair like Kevin Warsh represents both a challenge and an opportunity.
A new leader can reset the policy framework and bring fresh credibility, but the transition period itself will test investors' nerves. The key is to look past the short-term noise of Fed speakers and focus on the structural drivers of the economy, productivity, corporate earnings, and the inevitable downward pressure of the national debt on interest rates.
Thanks for hanging out with me on this one. If you think someone else should see it, send it their way, ee you next time.
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