Stocks could boom in 2021 ‘no matter who is president’


Wharton School professor Jeremy Siegel told CNBC on Monday the stock market is likely primed for strong gains next year, regardless of whether President Donald Trump or Joe Biden occupy the White House. 

Siegel, who has been mostly bullish over the years, cited a number of reasons, including the increased money supply as a result of coronavirus stimulus efforts, the prospect of an improved Covid-19 situation and more robust worker productivity.

“I think the chances are this bull market can continue in the next year, just on those factors,” Siegel said on “Squawk on the Street.” “I think the market … is looking forward to a really good 2021 no matter who is president.”

Siegel’s comments come one day ahead of the first presidential debate between the Republican incumbent Trump and the Democratic nominee Biden, during which the U.S. economy and the damage to it caused by the coronavirus pandemic are likely to be in focus.

Wall Street is increasingly watching the presidential race and its implications for the business and investment communities. Biden, vice president to Trump’s predecessor Barack Obama, has proposed raising corporate tax rate to 28% from 21%, which is where the Trump-backed GOP tax law from 2017 set the rate. It had previously been 35%. Biden also wants to hike the tax rate on long-term capital gains. 

Trump has suggested the proposed tax increases would be detrimental to the stock market, claiming it would “drop down to nothing” if those policies were implemented. Trump frequently touts the gains made in equity markets under his presidency. Even with September’s swoon, the S&P 500 was up 54% from Election Day 2016 to Friday’s close.

While some of Biden’s supporters on Wall Street readily predict the market would likely see initial declines, should he win, Democratic donor and former hedge fund manager Michael Novogratz, among others, have said that Biden’s policies would be better for the market over time. Novogratz, now a cryptocurrency investor, told CNBC earlier this month, “In the long run, if you get the country right and you get that balance right, markets will be stronger.”

Siegel said Monday that his belief in the stock market’s ability to build off its recovery from coronavirus lows is rooted in more fundamental factors. 

The finance professor cited the Federal Reserve and Congress pumping trillions into the economy, calling it a “tremendous burst of liquidity.” He said, “I’m a monetary theorist. This is what I teach and study. This is unprecedented in 75 years, since World War II.” He added, “I think there’s a lot of repressed liquidity in the market that once the vaccine and the pandemic fears fade in 2021, we’re going to see a big boost in activity.”

The long-time stock market bull also believes corporate profits could be boosted by an increase in worker productivity stemming from the pandemic, saying that “firms have shed down unneeded individuals, unproductive individuals, cut expenses.” He noted productivity increased at a 10.1% rate in the second quarter, which he said is “the biggest in 50 years.” 

Siegel said he thinks the stock market recently has been troubled by the uncertainty over future coronavirus stimulus and the election between Biden and Trump. Despite Monday’s strong rally, the major U.S. stock benchmarks have fallen back considerably in September after months of robust gains. 

The tech-heavy Nasdaq Composite entered Monday down 7.3% for the month, while the Dow Jones Industrial Average and S&P 500 had declined 4.4% and 5.8%, respectively. 

“It’s hard for me to see, without a stimulus package and with that election uncertainty, for there to be a lot of progress between now and the first week of November,” Siegel said. “I think that uncertainty is going to continue to weigh onto the markets.” 



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