Operator: Hello, everyone. Thank you for joining the WisdomTree weekly call with Professor Siegel. Please visit our website, wisdomtree.com, for additional insights, including the recordings of these calls. Today, Professor Siegel will provide a quick 15-minute update, and then we will open the lines for your questions. Please note that this call is being recorded. If you need assistance, dial star zero, and an operator will be happy to assist you. With that, I will hand the line to Professor Siegel.

Professor Siegel: Well, thank you very much. Just exactly at 4:00 PM, a headline scrolled across Bloomberg that the S&P has wiped out its entire loss of the year. This has been the fastest bearer bond market in history, seemingly confounding a lot of people, but not our listeners here. If you've been on the calls for the last two months, you know why this is happening. I got a call on Friday, after the market was rallied, after the employment report, and they said, "Dr. Siegel, we need you on again. You've been the best forecaster in 2020." Well, listen. I've been around long enough to be humbled. Never toot your horn on that. But the important thing is that it's good economics behind this.

Let me just repeat the economics behind this very briefly. I know there's always a few newcomers to the call. The flood of liquidity provided by the Fed was unprecedented, and far in excess to the financial crisis. I've never seen anything like it in ... I won't say in history, but it is coming close. That liquidity has to find a home. And that home is going to be, in the short run, and in the medium run, equities. And as I predict inflation next year, with all that debt, and all that money. A huge build-up of purchasing power in the hands of Americans.

By the way, I'm not taking a victory lap on that employment report. People said, "Aren't you thrilled about that?" I'm not, really. I mean, I don't care. All that is rear-view-mirror stuff. The important thing is to look at the liquidity in the Fed, and the developments on the virus front. Don't forget, a person is unemployed when he or she says, "I am actively looking for work. Not that I'm not working, but I am now actively look ... I could have been furloughed, but I'm living off of a pretty good stipend now, so right now, I'm not actively looking for work. I'm not unemployed." I just want people to know what that statistic means. There's been a lot of debate about what it means, and people are parsing it through, I don't really even care, any of that.

Yeah, did feel a little bit better than one would expect, but again, it's backward looking. It's not really understanding, it's not dealing with the dynamics going forward. All those huge pessimists ... I know Miller was on with a mea culpa this morning. I don't know, I was so bearish, implying that he's never been more wrong in his life. We had David Tepper, great investor, also totally wrong. Did Buffet sell his airlines? Should you have done that?

Well, again, it's, why were they wrong? And again, we have to say that the chapter isn't totally over yet. Nonetheless, it's because again, they didn't look at the monetary statistics, which are so powerful in driving it. Mohammed El-Erian, who was also very pessimistic and very doubtful of that, finally caved in and said, "Well, the Fed is providing a put on the market, and that put is ..." He said, "distorting the market." That's not true. It's not distorting the market. It's just a huge amount of liquidity that's been added.

As I said, the bill for COVID-19, the three trillion dollars of the CARES Act and the Fed stimulus, will eventually be paid by the bond holder. Did you see what happened to the ten-year on Friday? Over 90 days, again, extremely low. This is the beginning. Again, the 40-year bull market in bonds is over. On the virus front, yeah, it's simmering around ... The virus, actually interesting, worldwide cases going up, but deaths going down. This is true in many countries and many states. And there's basically three reasons for that.

So, you talk about new cases, but the deaths are going down. First of all, there's always a little bit of lag that's involved, but also the fact ... There's several things. First of all, it already swept through some of the most vulnerable communities in the elderly and the nursing homes. And those mortality rates were very, very high. So people who are getting it are not as sick.

Secondly, more people are getting tested. Well, more people getting tested, you're going to have more people that obviously will test positive for the virus. And third is, we know how to treat them better. Even with very limited therapeutics now, in the sense of new therapeutic, being the only one, they know how to take precautions now. They may have already reduced the fatality rate by 50%, just in understanding how to treat people that are sick. All these advances without a vaccine or effective therapeutics, which then are already in stage two and stage three, coming up. Again, we all saw videos in Vegas, of the re-openings of the casino and the crowds. And it'd be very interesting whether there is a spike of cases. What I would love to do, and I don't understand why the airline and CDC is not doing that is, everyone that is traveling in airlines, and we do know that airline traffic is up from abysmally low to terribly low levels. From down 95% to down 88%. Why don't we track all these people? How many are actually catching it? Or has wearing masks been effective?

Nothing will gain confidence more than a study that shows with people that are flying are not getting sick. Or people that are going to the casinos are not getting sick at any greater number. I would like to see that definitely into that.

We've talked about this before, but it is something that does have to be considered. We are less than five months away from the national elections, presidential. The pollings for the Republicans are looking the worst ever. What is concerning, and I've talked about this many times, is, it's not just the presidency, which is also in the betting markets, the worst ever, for the ... Well, the worst 10 years for the Republicans. But the senate. The Democrat contenders are pulling extremely strongly. Even correcting for biases. And for the first time since I've been looking at the betting markets right now, it's 56% that senate will be taken over by the Republicans. Excuse me, by the Democrats, excuse me, 47.

Now, that's still very close to a flip, 56-47. It doesn't add up because of how they compute it. But just to give you an example, before COVID, it was 70-30. And even times when Trump was pulling even lower than now, the senate was still 70-30 Republicans. One has to consider that if the presidency and the senate go Democratic, of course then the house will of course go Democratic then. There will be huge changes.

The Biden's tax plan. Look at it. It's pretty punishing for high-income, and for a lot of capital. And let me tell you something as someone who watches this very, very closely. If there's a split 50-50 in the senate and Biden wins, so then they get the tie-breaking vote, I will guarantee you that the Democratic Biden tax plan will be enacted. All they need, a 50-50, will enact their complete program if they want. Now, there will be some compromises on certain angles, but they will push it through just as the Republicans pushed it through. They don't need any big majority whatsoever. They need 50, the Democrats need three-seat gain only. And they're leading in five on a net gain. What does this mean?

Well, look at the tax plan. Now, before you all get scared and say, "Oh, my God, what happened?" Let me just tell you that the stimulus that's provided by the Fed and others is more powerful than the Democratic tax plan at trying to stamp out the gains on equities. The biggest is that Biden wants to increase the corporate tax rate to 28%. Now, that's still lower than 35, but up from 21, and take out a lot of the other benefits that were thrown in. It amounts to 1.4 trillion dollars over a 10-year period of profits, wiped out by the tax plan.

And we're not even talking about taking away all privileges for millionaires or higher. On any capital gain, if that would be the case, it would be the first time in history, long term capital gains would not have a preference of lower rate. And all favorable rates on dividends, again, over a million. So upper middle-income will still get a break. The very rich won't get a break. I won't go through all the other taxes on the very rich, but I will also say that the Democrats, if they have just 50 votes, can do it completely. Completely.

The only good thing for those people here in New York and the high states, you'll probably get your state and local taxes. Although they're going to be limiting also ... Deductions will be limited to a 28% limit, at least on this form.

Now, again, there's going to be juggling around, but don't think that with a 50-50, oh yeah, there won't be really much done. With a 50-50, there'll be a lot done. If the Republicans have 51, nothing will be done. This is an all or nothing on a one-senator difference. I just want you to keep in mind that as we go into the November elections, which are less than five months away at the present time, again, I've heard some people saying, "Oh, that's not factored in, and there are the bears," and all that.

Again, the stimulus provided in my sense, will continue even through that. But when election day comes, if the Dems prevail in the senate, you're going to get a hit. You're going to get a hit, and it's a rational hit. You could get a 5% drop, 5, 6% drop. But the stimulus will still be provided. And the lobbyist will come in. Biden will go with the basic plan, but there'll be some loopholes that will be gotten in that will make it a little bit better. Basically, that plan could really completely go through on the election. That is a risk going forward. Probably a greater risk to the market than a flare up of the virus, which now everyone says, even if it flares up, we're going to try to control it domestically, we just won't have the lockdown that we had before. If we have a flare-up of the virus, we'll even throw more money at the economy. And again, more money at the economy is basically going to be okay for equities going forward.

So, I'm still bullish on equities, I still think this rally has a way to go. Obviously, the ... Once the S&P hits an all-time high, as we know, the NASDAQ. The Democrats are saying, "Look, the rich are even profiting more as the rest of the people are unemployed and in financial distress." And that will just gain the momentum to the rich, which could be a reality. But again, economics and liquidity will actually be a major factor that will, I think, definitely still drive equities. We also saw a big increase in Europe. Emerging markets is improving and Europe is improving. Europe is down 10% in dowers, 9% in dowers, and of course the S&P is now flat in the US.

So, it caught up dramatically from where it was. As I mentioned, the major themes that I have is that the economy will continue to improve, this is going to be basically good for equities, but we will have inflation in 2021. We got to watch out for long-term bond prices rising, particularly treasury bonds. They're going to be the most valuable, because they're the ones that were driven down the most as hedges. They're the favorite hedge asset for so many investors.