According to the Wharton School’s Jeremy Siegel, the markets are reaching new highs, and the Dow Jones Industrial Average reaching the 22,000 mark may not be too far away.
Siegel stated that if U.S. President Donald Trump follows the “Republican agenda” then the Dow Jones Industrial Average Hitting 22,000 is not impossibility. That is almost an 8 percent rise from the current levels of the Dow.
Siegel said on Monday: If trump does ”lower taxes, lower regulations, that’s another 10 percent on this market, I say, quite easily.”
Taking down the Dodd-Frank Wall Street Reform and Consumer Protection Act, which increased regulation within the financial services industry in the wake of the financial crisis, has been a tenet of Trump's platform. Investors quickly headed to the financial sector after the election because of the rising interest rate and the anticipated loosening of regulation.
Donald Trump has also promised to cut corporate taxes, which would be a welcome change for American equities.
But if Trump will lean more heavily towards protectionism, inciting a currency war or trade ware, then “it’s a very different picture,” said Siegel. He said that even though the chances of such a thing from happening is slim that remains the biggest risk to the markets’ rally.
Siegel has made similar predictions in the past. In July 2015, he predicted that the Dow Jones Industrial Average could hit 20,000 by the end of that year. He reiterated his prediction in the Dow hitting 20,000 when it didn’t by November and said it’ll happen in the following year. The Dow hit the 20,000 mark on the 25th of January 2017.