Wharton’s Jeremy Siegel on what's driving the market rally

Market & Economic Outlook - The market is closely watching CPI data [1] - The market believes it can tolerate tariffs of 10-12%, potentially 30% on China, resulting in an average of 15% tariffs [5] - The market anticipates that the positives from AI revolution, Trump deregulation, and tax cut extensions will offset the impact of tariffs [6] - A 30% across-the-board tariff is considered quite damaging [6] Trade & Tariffs - The absence of reciprocal tariffs seen earlier in April is a key factor [4] - The market does not anticipate the implementation of 30% tariffs [4] - Trump's flexibility, as demonstrated by the Nvidia news, suggests potential extensions for tariffs [5] Fiscal Policy & Tax Cuts - The extension of tax cuts and 100% expensing are viewed favorably [9] - The current fiscal situation is largely in line with expectations from Trump's campaign promises [10] - Failure to revert to Obama-era tax levels contributes to a $3 trillion 10-year deficit [11] Monetary Policy & Federal Reserve - The drama at the Fed is unprecedented [6] - There is a view that the Fed should cut rates [11] - Fed independence is considered extremely important [12] - Dissent within the Federal Open Market Committee (FOMC) is minimal [13][14] Technological Innovation - AI is seen as a solution for firms facing higher prices due to tariffs [7] - AI is still on the march [7] - Nvidia news is spurring the NASDAQ to new all-time highs [8]