Wharton’s Jeremy Siegel: September jobs report was ‘a wonderful report’ for Fed Chairman Warsh

THOSE ARE GOING TO BE VERY STRONG, UP ALMOST 30% YEAR OVER YEAR. SO I THINK THIS COULD BE THE START OF THE SANTA CLAUS RALLY THAT WE'VE ALL BEEN HOPING FOR. >> AND JEREMY SIEGEL IS PROFESSOR EMERITUS OF FINANCE AT UNIVERSITY OF PENNSYLVANIA'S WHARTON SCHOOL OF BUSINESS, CHIEF ECONOMIST AT WISDOMTREE. DOES THE JOBS REPORT ON FRIDAY MAKE YOU OPTIMISTIC OR PESSIMISTIC? >> GOOD MORNING. ANDREW. I THINK THAT IT WAS JUST A WONDERFUL REPORT FOR KEVIN WARSH, A GOLDILOCKS REPORT. AND LET ME TELL YOU WHY. IT WAS WEAK ON THE HEADLINE STATISTICS. YOU KNOW, WE HAD A FEW BASIS POINTS UP ON THE UNEMPLOYMENT RATE THAT ROUNDED IT UP ONE TENTH, AND IT WAS WEAK ON THE PAYROLLS. BUT BELOW THE SURFACE, THERE WAS A LOT OF STRENGTH. I MEAN, THAT THAT INCREASE IN THE PARTICIPATION RATE, WHICH, YOU KNOW, HAD BEEN CLIMBING FOR A LONG TIME, WE ACTUALLY HAD AN INCREASE IN THE WORK WEEK, WHICH HAD ALSO BEEN DECLINING. SO THE HEADLINE NUMBERS GIVES WARSH COVER TO HOLD ON OCTOBER. YOU KNOW, IT'S SIX DAYS BEFORE THE MIDTERM. I DON'T THINK HE WANTS TO RAISE HE WANTS TO BE, QUOTE, NEUTRAL THEN. AND THAT I THINK GAVE HIM THE GREEN LIGHT TO DO SO. >> IN TERMS OF BETWEEN NOW AND CHRISTMAS. AND YOU LOOK AT SORT OF WHERE WHERE THINGS ARE, WE'VE GOT THIS BIG ANTHROPIC IPO EXPECTED NOW FOR THE MIDDLE OF NOVEMBER. YOU LOOK AT THIS AS A A BIG UP MARKET. YOU SEE THIS AS A FLAT MARKET. WHAT DOES IT LOOK LIKE TO YOU. >> WELL I'VE BEEN VERY IMPRESSED. DESPITE THE TREMENDOUS RISE IN INTEREST RATES THAT THE MARKET HAS HELD UP. AND I THINK THE RISE IN INTEREST RATES IS NOT BECAUSE OF INFLATION AND NOT REALLY BECAUSE OF THE DEFICIT. I THINK IT'S BECAUSE OF INCREASED GROWTH EXPECTATIONS. AND, YOU KNOW, THAT IS WHY STOCKS ARE HOLDING UP. SO, YOU KNOW, IF WE CAN, YOU KNOW, KEEP OIL 90 OR BELOW. AND, YOU KNOW, I'VE BEEN WARNING THAT IRAN IS WANTS TO STIR THINGS UP BEFORE THE MIDTERMS AND MAY LAUNCH SOME ATTACKS THERE. BUT IF WE CAN KEEP OIL, YOU KNOW, DOWN BELOW 90, YOU KNOW, I THINK I THINK THIS RALLY CAN CONTINUE INTO THE FOURTH QUARTER BECAUSE A THIRD QUARTER EARNINGS YEAR OVER YEAR ARE GOING TO BE CERTAINLY EXTREMELY GOOD. >> WHEN YOU LOOK THOUGH AT INTEREST RATES, WHAT IS YOUR PREDICTION FOR WHERE THEY ARE. CALL IT AT CHRISTMAS AT THIS RATE. >> WELL I YOU KNOW I KNOW TOM LEE WAS ON EARLIER THINKS THAT MAYBE GOING DOWN TO FOUR AND THREE QUARTERS, CERTAINLY THAT CAN HAPPEN. BUT I, YOU KNOW, LOOKING WORLDWIDE, IT IS REALLY FASCINATING. EVERY SINGLE MAJOR DEVELOPED MARKET HAS HAD DRAMATIC RISES IN INTEREST RATES. AND ALL OF THAT HAS BEEN REAL INTEREST RATES. YOU KNOW, MY MEASURES OF INFLATIONARY EXPECTATIONS LONG TERM ARE NOT UP AT ALL. SO, YOU KNOW, REAL RATES ARE DRIVEN BY A LOT OF FORCES. BUT ONE OF THEM IS ECONOMIC GROWTH WORLDWIDE. SO, YOU KNOW, MY FEELING IS, IS THAT WE MAY BE IN THE 5% PLUS RANGE TOWARD THE REST OF THE YEAR. >> AND WHY DO YOU THINK IT HASN'T SLOWED THINGS? BECAUSE THERE IS A CONVERSATION I KEEP HEARING, ESPECIALLY AMONG FOLKS EITHER IN PRIVATE EQUITY LAND, OBVIOUSLY, THAT HAVE EXTRAORDINARY AMOUNTS OF DEBT TO SUPPORT THOSE INSTITUTIONS. THERE ARE A NUMBER OF BIG PUBLICLY TRADED COMPANIES THAT ALSO OFTENTIMES LOOK LIKE PRIVATE EQUITY STYLE COMPANIES. AND THEN, OF COURSE, THE DATA CENTER BUILD OUT ITSELF, OFTENTIMES BEING FINANCED BY DEBT. >> WELL, I MEAN, AND YOU'VE NAMED WHY. I MEAN, THOSE ARE SO STRONG AND CREATING SO MUCH EARNINGS FOR THE PROVIDERS AND, AND THE HYPERSCALERS AND ALL THE REST. AND YEAH, THE REST OF THE MARKET, YOU KNOW, HAS NOT BEEN DOING WELL. THIS HAS BEEN, YOU KNOW, AN AI OR AN S I IF YOU NOW WANT TO CALL IT TYPE OF RALLY. I MEAN, ALL THAT BROADENING THAT WE SAW IN THE FIRST HALF OF THE YEAR, I WAS, I GUESS, SORT OF HIT ITS HIGH, WHAT WE CALL THE LEOPOLD LOW WITH ASCHENBRENNER SITUATIONAL AWARENESS FUND THAT IS VIRTUALLY DISAPPEARED. I MEAN, WE'RE NOT BACK TO THE ALL TIME RELATIVE HIGHS THAT AI STOCKS AND MAG-7 STOCKS HIT LAST OCTOBER AND NOVEMBER. BUT WE'RE A GOOD WAY BACK. AND BECAUSE THEY PROVIDED THE STRENGTH, WHICH MEANS THAT THEY'RE KEEPING THE INTEREST RATES UP. THEY'RE PROVIDING THE EARNINGS. AND IT IS A SQUEEZE ON LOOK AT HOUSING AND ANYTHING THAT'S INTEREST SENSITIVE AND ANYTHING THAT DOESN'T HAVE THE MARGINS LIKE THE 4050 PERCENTS THAT THAT THE HYPERSCALERS HAVE, YOU KNOW, MORE DOWN TO THE EIGHT, NINE, TEN PERCENTS THAT'S GOING TO SQUEEZE THOSE SECTORS. BUT, YOU KNOW, THEY'RE, THEY'RE, THEY'RE JUST ONE PART OF THE WHOLE STOCK MARKET. >> YOU'RE AN INDEX GUY. IF YOU WERE BUYING AN INDEX RIGHT NOW, WOULD YOU BUY A BROAD INDEX OR WOULD YOU BUY A VERY NARROW ONE? AND IF SO, WHICH ONE? >> YEAH, I'M ALL FOR THE BROAD INDEXES. AND DESPITE THE TROUBLE IN EUROPE, YOU KNOW, I MEAN, THEY THEY HAVE A 1514PE RATIO, WHICH MEANS THEY DON'T REALLY HAVE TO GROW FAST TO GIVE YOU A RETURN. I MEAN, JAPAN HAS DONE EXTREMELY WELL THIS YEAR. AND LOOK AT TOPIX. THAT'S AT A 16PE RATIO. I KNOW STOCKS ARE LOW AND THEY HAVE NOT BEEN DOING WELL BECAUSE I THINK THEY ARE GOING TO BE THEY ARE BEING SQUEEZED BY THOSE HIGHER INTEREST RATES AND THE HIGHER OIL PRICES. SO THEY'RE THEY HAVE A RELATIVE DISADVANTAGE. BUT IN THE LONG RUN, YOU KNOW, I STILL