'Caution is going to be the word here,' says former super bull Jeremy Siegel

Wharton School finance professor Jeremy Siegel appears to be wandering from the bull camp.

Siegel, who helped lead 2017's rally cry, told CNBC's "Trading Nation" that he isn't blaming Italy's political turmoil, the latest headline to rock the markets, for a borderline bearish forecast.

Rather, he cited risks from rising rates to trade tensions.

"The major threat of the market is higher interest rates going forward. Too many people read the FOMC minutes as being too dovish," he said Wednesday.

Siegel expects the Federal Reserve to hike rates a total of four times this year, a number Wall Street may be dangerously underestimating. As rates rise, stocks historically look less appealing to investors.

He's also viewing trade tensions with China as a "wild card" for the market.

"[President Donald Trump] feels he has to tread very, very carefully on this. It doesn't mean for sure he won't go full blast forward," Siegel said. "Caution is going to be the word here."

His thoughts came as stocks staged a comeback a day after Italy tensions rattled the market.

The Dow grabbed 306 points to close at 24,667. But it still fell short of breaking even from Tuesday's losses.

Siegel has been warning since December that 2018 wouldn't be as robust as 2017, and stocks would be flat to up 10 percent by year-end.

"This is a great year for earnings, no one argues with that. But the tax cut is front-loaded which means that the write-offs on capital equipment are going to accrue to 2018 and not nearly as much in 2019," Siegel said.

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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

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