If midterms weren't on the horizon, the Fed would raise rates, says Wharton Professor Jeremy Siegel

Summary

Jeremy Siegel interprets the August jobs report as a non-inflationary supply response that gives the Fed room to hike, but argues the Fed will likely delay until after the midterms due to political pressure. He flags Iran as an oil-price wild card and says a credible Fed hike could lower long-term rates and ultimately boost stocks. He expects an initial negative then positive stock market reaction if the Fed moves.

• August jobs report viewed as good and non-inflationary with labor supply growth and controlled wages.
• Fed has room to raise rates but may delay until after midterms due to political pressure.
• Iran missile escalation risk could push oil higher.
• Strong Fed move could lower long-term rates by restoring inflation-fighting credibility.
• Market expected to dip initially but then rally on a September hike.
• CPI and PPI next week are key data for the Fed path.