Wharton's Jeremy Siegel Sees Three Policy Risks In January That Could ‘Materially’ Move Markets

• Firstly, Siegel stated that the possibility of another U.S. government shutdown is non-trivial, according to betting markets.
• The second risk on the economist’s mind this month is the announcement of the next Federal Reserve Chair.
• He added that the third risk this month is the Supreme Court’s ruling on tariffs, which is expected to be made this month.

Jeremy Siegel, professor emeritus of finance at the University of Pennsylvania’s Wharton School of Business, on Tuesday warned of three upcoming policy risks in January that could “materially” move the markets this month.

“The immediate focus, however, shifts from macro fundamentals to January policy risk. Three events could materially move markets this month,” the economist said.

Firstly, Siegel stated that the possibility of another U.S. government shutdown is non-trivial, according to betting markets, but added that policymakers understand how damaging it could be for confidence.

The second risk on Siegel’s mind this month is the announcement of the next Federal Reserve Chair. White House National Economic Council Director Kevin Hassett and ex-Fed official Kevin Warsh are among the frontrunners for the position.

“While I do not view any of the candidates as a problem, I see a Hassett appointment as putting modest upward pressure on long-term rates for perceptions of greater alignment with White House preferences for easier policy,” he said.

The economist added that the third risk this month is the Supreme Court’s ruling on tariffs, which is likely in January.

Constructive Outlook On 2026

Siegel maintained that he remains constructive on the outlook for the equity markets and the U.S. economy in 2026.

The economist said that even as markets debate who will monetize the gains from increased productivity from the advent of artificial intelligence (AI) technology, investments in the sector remain robust. He added that productivity acceleration has benefited equity markets historically, even amid a change in the market leaders.

He also added that the neutral policy rate is in the low-3% range, saying that the Fed should cut rates further. However, according to the CME FedWatch tool, the probability that the Federal Open Market Committee (FOMC) will keep rates unchanged at its January meeting has risen to 83.9%, from 65.4% a month ago.

Trump On Tariff Collections

On Monday, President Donald Trump stated that the U.S. will soon receive more than $600 billion in tariffs. He called the upcoming Supreme Court’s tariff decision “one of the most important ever” in the apex court’s history.

While a date for the Supreme Court ruling on tariffs is not known yet, Treasury Secretary Scott Bessent stated in a Fox Business interview last month that he expects the ruling to come in January.

Meanwhile, U.S. equities were mixed in Tuesday’s pre-market trade. At the time of writing, the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 index, was down by 0.05%, the Invesco QQQ Trust ETF (QQQ) gained 0.09%, while the SPDR Dow Jones Industrial Average ETF Trust (DIA) declined 0.17%. Retail sentiment around the S&P 500 ETF on Stocktwits was in the ‘bullish’ territory.

The iShares 7-10 Year Treasury Bond ETF (IEF) was down 0.13% at the time of writing.

Also See: Tesla Sales In Germany Nearly Halve In 2025

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