Stock-market guru Jeremy Siegel, professor of finance at the University of Pennsylvania, is looking for 10 percent earnings growth next year.
And it will all be because of the Federal Reserve.
"I actually think we're not going to get four rate increases next year," the Wharton School professor told CNBC
"I think we're going to get two or three. I don't think we're going to get interest rates that are going to go up all the way back to the pre-crisis level," he said. "I think we're going to stay at low interest rates, and that's why I think valuations can stay on the high side."
The Fed raised rates for the first time in nearly 10 years on Dec. 16, but maintained that the path toward normalization would be a "gradual" one, CNBC reported.
Other experts do agree with Siegel that Fed actions will guide the stock market in 2016.
“Analysts believe much of how the stock market reacts to higher interest rates in 2016 will likely depend on how the Fed communicates future rate hikes,” Fox Business Network
“It’s one of Wall Street’s oldest clichés but its truth is undeniable: markets (ie., investors) hate uncertainty. So conventional wisdom holds that the more skillful Fed officials are at telegraphing their upcoming rate hikes, the less volatile markets will be once those hikes are announced.”
“Modern central banking is as much an exercise in effective communication as it is economic analysis. Something simple like ‘We’re going to raise rates’ is fairly straightforward, even if it took the Fed the better part of a year to get it across to capital markets,” said Nicholas Colas, chief market strategist at Convergex, a global brokerage company based in New York, in a recent research note.
“Now, they must set the stage for future hikes. Threading that needle will take time and (the Fed’s December) meeting is still early days for this effort,” Colas added.
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