The Fed needs to make an emergency cut, says Wharton's Jeremy Siegel

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Fed가 금리를 너무 늦게 내렸다고 진단하며 긴급 75bp 인하와 9월 추가 75bp 인하를 주장. 고용지표 악화(실업률 4.3%), 인플레 2.5%로 목표 근접, Fed 자체 정상금리 2.8% 대비 현 금리는 과도하게 높다는 근거. 시장은 긴급 인하를 호재로 받아들일 것이라 봄. 단, 실제로 Fed가 움직일지는 불확실하다고 인정하며 불인하 시 시장은 나쁘게 반응할 것이라 전망.

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01. joining us now uh and um Jeremy I I would I hate you probably aren't happy to say I told you so either given uh you know what we're witnessing uh but you thought the FED uh was staying at once again for the second time staying at the party too long and too restrictive uh yeah ABS absolutely and and you know this may surprise people I'm calling for 75 basis point emergency cut in the FED funds rate with another 75 basis point cut indicated for next month at the September meeting um and and that's minimum the FED funds rate right now should be somewhere between you know three and a half and 4% let me give you very simple logic of my position here uh at the June meeting the FED has said that the long run fed funds rate when inflation reached 2% and unemployment has come up to 4.2% should be 2.8 that's the normal 2.8 is the normal Fed funds rate well on Friday we blew it across the Employment Number we're at 4.3 that even argues for a lower one now as far as inflation we're at two and a half% we've gone down 90% towards the Target on the inflation rate we've we've overshot the Target on the employment those are the two Targets explicitly mentioned by the Federal Reserve all right and how much have we moved the FED funds rate zero that makes absolutely no sense whatsoever if we Jeremy there's you know there's no way we're getting 75 and then another 75 if we do I don't want to see what what the what's happening in the stock market if if the FED is compelled to do 75 twice so you know it's not going to happen but you're saying that that they should what do you really think will have you think they'll do an inter you think they'll do an inter you know they're not going to do 75 I listen I I remember you know I remember 2000 when Greenspan did 50 and by the way the market wasn't scared the market rallied sharply it was the same thing December they should have caught they didn't cut and the market said you should have and they did an emergency cut a few weeks later the market made a strong Rally from that position listen Joe don't think that the FED knows something like oh we're afraid the FED knows something since when has the anything about the economy we don't we don't need to anyone we don't need to worry about anyone thinking that that the FED no not at all I mean look what happened three years ago I mean the the market knows so much better than the Fed so I mean they've got to respond this is listen their own stated normal Fed funds rate when we hit targets is 2.8 they're basically at the Target and there's a lag in monetary power the Taylor rule take a look at any of the rules right now there're all 150 basis points lower let's say the jpow came out and before September an emergency meeting comes out and he lowers the rate does the market rip or does the market say oh my goodness it's worse than we even thought it it it it rips it it welcomes it absolutely because it's so far behind the curve right now the FED is up in the that's why I'm saying maybe it doesn't rip maybe people say oh goodness if if they're willing to make an emergency cut today boy there's got to be something around the corner that's not going to happen today necess say in the next couple weeks I mean it could happen in I think it should I think they should say listen we're taking a look at the listen you take a look at the data it is not at all comforty I mean the the the the hiring employment part of the uh M that we got was just absolutely horrible I mean forget about the PM rules and all that that are true that are predicting recession I'm looking at the fed's own data and the fed's own written policy written policy 28 when we are at and near the target they overblue one Target and they're 90% towards the other Target period JY jimy we we there's no reason reason to think given uh how long it took to move off of zero there's no reason to think that they're going to take uh your your advice on this maybe they do but maybe not what if they don't then then uh the the S&P right now uh is only down 6% from the highs the Dow's only down 4% nasdaq's down 10 I mean what what do you how do you think the market will react if if it doesn't look like the fed's going to do anything before September I think the market will react badly very honestly um I mean you know I if if they're going to be as slow on the way down as they were on the way up which by the way was the worst policy error in 50 years then we're not in for a good time with this economy and um the mar and and the FED has to recognize I mean I I'm just restating their own written policy 2.8 normal Fed funds they haven't move one basis point they're nearly twice yep noral fed funds it