SOTS 2nd Hour: Jeremy Siegel, Crypto’s Newest Lobbying Effort, Outlook for Pharam M&A 12/24/25

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Carl Quintanilla (0:45)

Good Wednesday morning. Welcome to Squawk on the Street. I'm Carl Quintanilla with Melissa Lee here at Post 9 of the New York Stock Exchange. Sara and David are off today. Got a shortened Christmas Eve trading session with markets in the green. Dow is up almost 90 points. NASDAQ trying to get out of the red. Most sectors are positive. A little bit of weakness in communication services, consumer discretionary. Treasury is well behaved on an area where, man, rate volatility has come way down. Ten years still in that range, around 415 In a few moments, Wharton professor Jeremy Siegel joins us with what he says are two potential roadblocks that might slow the market rally. Moody's Mark Zandi will give us his reaction to jobless claims today. Pretty good and why he believes economic growth right now is fragile. Plus, a deal in the pharma space. Sanofi buying vaccine maker Dynavax. We'll talk about whether we could see more deals in that space in the new year. Let's begin, though, with this morning's initial jobless claims number. Better than expected, 214,000 for what this all means for stocks. Let's bring in Jeremy Siegel, wisdom tree, chief economist and Wharton School professor of finance. Jeremy, great to see you. Happy holidays.

Jeremy Siegel (1:50)

Thank you.

Carl Quintanilla (1:50)

The labor market still doesn't give you too many things to worry about in claims, although yesterday people were looking at conference board job differential and what that might mean for, I don't know, the prospect of a jobless expansion, let's say.

Jeremy Siegel (2:05)

Yeah, the sweet spot for jobless claims, you know, is between 200,000 and 240,000. We have just been there virtually every week, which is really, you know, shows, you know, not an overheating labor market to say the least, but one that is certainly not deteriorating and, you know, setting us up for potentially good 2026

Carl Quintanilla (2:29)

Do you think a more dovish rate environment can unwind some of the job loss that might come from technology?

Jeremy Siegel (2:37)

Yeah. I mean, I, you know, I think we should be in the low threes on the Fed funds rate. I mean, we really had a good inflation report and I don't think it's as distorted as a lot of people had had feared that the housing component is going to actually contribute a downward pressure for, I think, many, many months on the service part of the CPI over the next year. And that's going to keep it in line. Once the Trump bump of those tariffs, which I think we're mostly through maybe a little bit more in the next month or so goes through, you know, I think we would be on the low 2s on the CPI enough for the Fed to get the rate down further.

Melissa Lee (3:25)

Fed policy, though, Professor Siegel, isn't in a vacuum. You also have the backdrop of a fiscal stimulus in the form of changes to tax policy, which could benefit individuals in the form of bigger refunds, lower tax rates, as well as corporations. So how do you balance the two in terms of, on the one side, you have things that could actually spur growth, spur some inflation. And on the other side, you've got also the Fed that could lower rates.

Jeremy Siegel (3:50)

Yeah. And as Carl mentioned at the top, you know, we still have two little bumps we have to go through before those tailwinds you just mentioned take place. I mean, we do have a Supreme Court ruling likely in a few weeks about the legality of the terror. Now, my recommendation is basically, the Supreme Court should do is say to Trump, hey, you need approval of Congress. We'll give you six months to get it, rather than just saying it's illegal, give refunds. I think that would be real disruptive. So, we're going to have to see how that proceeds. And then, hey, let's not forget, there may be another government shutdown on January 30th, something nobody wants, and few are talking about now. If we get through those two bumps, those tailwinds that you talked about are certainly operative over the next year.