Infrastructure Capital Advisors sees earnings-driven equity gains as fed rate hikes peak

Infrastructure Capital Advisors CEO Jay Hatfield joined Steve Darling from to discuss his outlook for U.S. markets, Federal Reserve policy, interest rates, inflation, housing and the prospects for both equities and fixed income. Hatfield said Infrastructure Capital Advisors remains constructive on the bond market and believes investors may be pricing in too much additional tightening from the Federal Reserve. He argued that the Fed’s first rate increase was “completely irrational” and said the firm currently expects no more than one additional increase. On inflation, Hatfield pointed to the decline in core CPI and highlighted what he sees as continued deflationary trends within housing and shelter. He argued that the housing sector is already experiencing recessionary conditions, creating an important counterweight to inflation pressures elsewhere in the economy. At the same time, Hatfield said continued spending by hyperscale technology companies is helping offset weakness in other areas. He suggested that this combination could result in slower overall U.S. economic growth rather than a significantly deeper downturn. Hatfield also examined the relationship between Treasury yields and equity valuations. Infrastructure Capital Advisors has reduced the valuation multiple used in its market outlook from 23 to 20, reflecting the impact of higher interest rates and bond yields on equity valuations. Despite that lower multiple, the firm has increased its S&P 500 target by 300 points, with earnings growth providing the primary justification for the more constructive equity outlook. he firm also remains positive on fixed income. Hatfield said Infrastructure Capital Advisors is actively purchasing U.S. Treasuries through its macro hedge fund, reflecting its view that the recent rise in bond yields may have gone too far if inflation continues to moderate and the Federal Reserve becomes less aggressive. Upcoming economic data will be important in determining whether that view plays out. Hatfield expects incoming CPI figures, corporate earnings and labour-market data to provide important signals about the trajectory of inflation, economic growth and monetary policy. #proactiveinvestors #QVOL #ETFInvesting #Nasdaq #GrowthStocks #JayHatfield #FederalReserve #Fed #InterestRates #Inflation #CPI #TreasuryYields #Bonds #FixedIncome #S&P500 #Equities #StockMarket #USMarkets #Investing #Housing #EconomicGrowth #MarketOutlook #Earnings