Siegel: Trump can't blame Fed's Powell for a bad market if things go awry with China's Xi on trade

President Donald Trump can't blame Jerome Powell for a bad stock market now that the Federal Reserve chairman has appeared to walk back his comments on interest rate hikes, Wharton School finance professor Jeremy Siegel told CNBC on Friday.

The pressure is on Trump "more than ever" to reach a trade agreement with China as he meets Saturday with Chinese President Xi Jinping at the G-20 summit in Buenos Aires, Argentina, Siegel said. "[Trump] "doesn't want to be the cause of a bear market in 2019."

Wall Street doesn't expect the U.S. to reach a breakthrough agreement with China and neither does Siegel. But analysts hope the Trump-Xi talks prove positive in preventing the U.S.-China trade war from escalating further.

In the latest trade moves, the United States levied 10 percent duties on $200 billion worth of goods from China, prompting Beijing to put tariffs on $60 billion worth of U.S. goods. Trump is expected to hike those U.S. tariffs from 10 percent to 25 percent on Jan. 1. The president has also threatened to put tariffs on the rest of Chinese imports.

Stocks were mixed Friday ahead of Saturday's Trump-Xi meeting. However, the Dow and S&P 500 were on pace to post weekly gains after Powell said Wednesday that rates are "just below" neutral, perhaps indicting that concerns about a more aggressive path higher for rates may no longer be warranted. Powell's Oct. 3 comments that rates were a long way from neutral slammed the market last month with rampant rate fears.

Trump had been critical of the Fed's policies on rates in recent months, and blamed the central bank under Powell for the stock market's declines and General Motors' plan to cut product at several U.S. plants.

The market ultimately expects a resolution on trade, Siegel said on CNBC Friday, adding that a deal with China is already about 80 to 90 percent baked in to the market. "Any adverse developments ... would be a great disappointment," he said.

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