Markets

Wharton's Jeremy Siegel calls for fiscal stimulus and Fed cut, says 'We need leadership at the top'

Key Points
  • Wharton's Jeremy Siegel said the U.S. needs help from fiscal and monetary policy to support the economy. 
  • Stocks dropped sharply Monday morning as the virus continued to spread around the country and a global price war over oil sent energy names plunging.
  • "We need leadership at the top. We need a plan. It seems scattershot," Siegel said.
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Outbreak, volatility requires leadership 'at the top': Wharton's Jeremy Siegel

Wharton School professor Jeremy Siegel criticized President Donald Trump's response to the coronavirus outbreak, saying the U.S. needs stronger leadership and stimulus from the government and Federal Reserve to backstop the economy.

"The president has not started this well. We need leadership at the top," Siegel said Monday on CNBC's "Squawk on the Street." 

Stocks dropped sharply as the virus continued to spread around the country and a global price war over oil sent energy names plunging. Trading was briefly halted after the market opened because the S&P 500 fell 7%, triggering a circuit breaker

"We need a plan. It seems scattershot," Siegel said.

There are more than 560 cases of the virus in the U.S., according to Johns Hopkins University, a number that is expected to rise as testing increases across the country. The outbreak has led to a flurry of school closures and companies implementing work-from-home plans, raising concerns about a slowdown in consumer spending. 

"Kits, testing, unemployment compensation, people who stay home to be tested should not ... lose their income. This requires emergency action," Siegel said. 

He also said that the Federal Reserve should cut its benchmark interest rate by another 50 basis points at its meeting next week. The central bank already did an emergency 50 basis point reduction March 3

Siegel said that help from the Fed would have a "marginal" impact overall but could bring relief to small businesses. 

"There's trillions of dollars of loans of these small businesses, based on the prime rate, based on the Libor, and they'll all go down. It'll help the cash flow. The cash flow is going to be critical," Siegel said.