Wharton's Jeremy Siegel: Expect there to be one rate cut unless retail sales are weak

Federal Reserve (The Fed) Policy & Interest Rates - The market is closely watching the upcoming Fed meeting for signals about future interest rate cuts, particularly the dot plot which will indicate intentions for the next three meetings [3] - The market anticipates at least one rate cut, unless weak retail sales data emerges before the Fed meeting [3] - There is potential for dissenting opinions within the Fed, with some members possibly advocating for no cut or a 50 basis points cut [4] - The current Fed funds rate should ideally be about 100 basis points below the 10-year Treasury yield, suggesting a target rate just over 3% [7] - Three rate cuts of 25 basis points each over the next three meetings would bring the rate down 75 basis points, moving closer to the 35% range [8] Market Trends & Investment Strategy - AI and AI-related stocks are expected to remain strong through year-end, potentially driven by fund managers seeking to improve year-to-date performance [10][11] - If the market anticipates three rate cuts this year and more next year, small-cap stocks, which are highly sensitive to interest rate expectations, are likely to perform well [11] - Concerns about stagflation, driven by weaker economic sentiment and higher inflation expectations, are present but may not be as significant as mainstream media hype suggests [11][12][13] - The market may react positively to indications of more aggressive rate cuts (e.g., 50 basis points), suggesting a shift towards a more dovish stance [6]