Wharton professor Jeremy Siegel says the current stock rally has room to run, notwithstanding the underlying headwinds of a pandemic and a weak economy. This according to a recent article in Forbes.

The article reports that an “undaunted Siegel believes that stocks will roar anew in coming years” due to low rates—which means that Treasury bonds and corporate debt “don’t have much more running room for yield declines.” The article cites recent comments by Siegel that stocks will eclipse bonds going forward and that “post-virus” conditions will be favorable: “As the economy opens up, as therapeutics and/or vaccines get developed that reduce that fear, you will see the so-called cyclical economy sensitive stocks do better clearly.” Siegel added that Americans are sitting on more savings as evidenced by a 20% increase in the money supply: “All this is suppressed purchasing power.”

Siegel expects stocks to outperform all other asset classes, although at a lower rate of 5% to 6%. The government’s stimulus response to the pandemic, he says, will lead to a temporary uptick in inflation (to slightly above 3%), but argues that this shouldn’t concern stock investors as he sees equities as “really good as a moderate inflation hedge.”