Siegel said company earnings "are such a persuasive story on valuation for the market. Honestly, if you ask me what’s keeping the market down, I’m increasingly believing what [Federal ReserveChairman Ben] Bernanke called…the fiscal cliff that’s coming at year end, with $500 billion worth of taxes and spending hits. I think that’s really keeping a lid on the market."
That "cliff" came as a result of the U.S. Congress' inability to bridge the yawning budget deficit last year. Siegel said that if all the mandated cuts across the board were to happen "we’ll have a recession by 2013, and that’s not in the interest of (President Barack Obama) or the administration at all."
Being bullish, however, "I don’t think there’s much of a chance that will all go into effect," Siegel said.
He predicted that "we’re going to get some extension and next year let the Congress and the president, whoever that might be, handle it."