Wharton’s Siegel Defends Dow 15,000 Prediction

Wharton School economics professor Jeremy Siegel said it beforeand he said it again on CNBC Wednesday: The Dow Jones Industrial Average will hit 15,000by the end of next year.

New York Stock Exchange Traders
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New York Stock Exchange Traders

"Take a look at earnings," he said on "Squawk Box." "Even before Apple last night, earnings are up 10 percent year-over-year. Expectations were all down to 2 percent."

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."