Could an early Fed rate hike be good for stocks?
2 portfolio managers say the market would welcome an increase before the expected time frame of next summer.
As the great interest rate debate rages inside the Federal Reserve, two senior portfolio managers told CNBC on Monday that any accelerated start to normalizing monetary policy would actually be good for stocks.
Perhaps counterintuitively, the market would welcome a rate hike before the expected time frame of next summer.
"When the Fed eventually begins to raise the [federal] funds rate next year, that in our view is not the death knell of this rally," Federated Chief Equity Strategist Phil Orlando said in a "Squawk Box" interview. "The market is going to appreciate the fact that [that] . . . must mean the economy is starting to normalize for the first time in seven or eight years.
"That's good news for equity investors," Orlando added -- a sentiment echoed by Nuveen Asset Management's Bob Doll.
An earlier-than-expected Fed rate move would signal "the economy and earnings are getting better a little faster than previously thought," Doll said."Equities are going higher as long as the economy and earnings are growing."
He sees the economy growing 3 percent for the year. Orlando said he's focusing on second half GDP growth of 3.5 percent.
On Friday, stocks pushed higher as Fed Chair Janet Yellen expressed a dovish view on policy during her address to the central bank's Jackson Hole symposium. But she also said the Fed was getting closer to meeting its objectives, while outlining both sides of the economic debate on labor slack.
As the Fed gears up on rates, it's continuing to wind down the latest round of bond buying. At last month's meeting, policymakers reduced purchases by $10 billion to $25 billion a month, with a path to ending this quantitative easing altogether in October.
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it's ridiculous how the rates have been held down so long for so long WHILE the banks and corporations are flush with cash.
Why Yes, Mr Belvedere......Yes, it could.
In the history of the FED has a rate increase ever been good for the market? Why would this time be any different?
For that matter when has the FED ever been right? All they seem to be able to do now is feed bubbles...
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