CVC Marathon's Richards Says Stocks Can Absorb 25 Bps Fed Rate Hike

Summary

Bruce Richards of CVC Marathon argues the Fed will likely raise rates if CPI and PPI come in above 3%, but equity markets can absorb a 25-basis-point hike. He cites strong earnings, revenue growth, a resilient consumer, and firm GDP growth as supportive. He also notes economic strength is picking up in Europe and globally.

• Richards expects a Fed rate hike if CPI/PPI prints above 3%.
• He says the majority of FOMC voters likely favor raising rates.
• Equities can continue to look through a 25-basis-point hike.
• Quarterly earnings grew 30% year over year with higher forward revisions.
• Revenue growth near 9% reflects a strong economy.
• Atlanta Fed projects 4.7% real GDP growth this quarter.
• Consumer strength seen in 162,000 jobs plus upward revisions.
• Economy is also picking up in Europe and globally.