Scared of a Fed rate hike? Don’t be, strategist says

A Federal Reserve rate hike may seem more likely with July's job report crushing estimates and the stock market rising to a record high, but some strategists believe that investors have little to fear from the central bank.

Boris Schlossberg, managing director of FX strategy at BK Asset Management, sees stock prices actually rising even in the event of a Fed rate hike. While a higher fed funds rate generally translates into higher bond yields, "there's good evidence that both rates and equities can rise in a positive growing environment," Schlossberg said Friday on CNBC's "Trading Nation." "So if we have strong growth, if we can get up to 2.5 or 3 percent growth and rates take up, it doesn't necessarily mean that equities are going to go down."

"They're going to go up because of the anticipation that profits and growth are going to go up going into 2017," he added.

Phillip Streible, senior market strategist at RJO Futures, is also bullish on equities and believes that investors will see stocks climb regardless of a rate hike.

"I still think that if we get bad news, the Fed doesn't raise rates, equities grind higher," he said on "Trading Nation." "If we do get great news out there, foreign capital is going to chase that good news and I think equities grind higher."

But there are strategists who err on the side of caution, one of them being Rhino Trading's chief strategist, Michael Block. While the Fed is "running out of excuses" for another rate hike stall, Block actually sees multiple factors that could stop stocks in their tracks, especially with jobs, despite July's positive numbers. While the economy added 255,000 positions last month, way over the 180,000 that had been predicted, Block believes that the jobs outlook isn't as optimistic as last Friday's numbers seem to show.

"The question is, are jobs and subsequently housing, hitting a wall? I would say we're close," he wrote Monday to CNBC. "The rate of change in jobs growth is slowing, and that could ding anything."

"Monetary policy creates a backdrop for higher asset prices, but it doesn't solve the structural challenges in the jobs market," he added.

All eyes will be on Fed Chair Janet Yellen near the end of August when she speaks at the Jackson Hole, Wyoming, conference, with anticipation still building to see if the central bank holds off on raising interest rates yet again.


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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Brian Sullivan

Brian Sullivan is co-anchor of CNBC's "Power Lunch" (M-F,1PM-3PM ET), one of the network's longest running programs, as well as the host of the daily investing program "Trading Nation." He is also a frequent guest on MSNBC's "Morning Joe" and other NBC properties.

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