Investment strategist: Why so many companies are flocking to M&A deals

Pigeons fly past the US Federal Reserve in Washington.
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As a rise in U.S. mergers and acquisitions make October a record month for deals, investment strategist Kate Warne told CNBC one reason for the swell could be expectations of an interest rate hike from the Federal Reserve.

"The reason we're seeing the flurry is the expectation that interest rates will go up and that deals will get more expensive in the future," said Warne, strategist at Edward Jones Principal in an interview on "Power Lunch" Monday.

Warne's comments came after another round of deal announcements Monday morning. General Electric said it would combine its oil and gas business with Baker Hughes, which would create the world's No. 2 oilfield services provider. And telecommunications company CenturyLink said it would buy Level 3 Communications, a deal worth about $24 billion and would put the company in a better position to compete with AT&T and Verizon.

If the Fed should raise rates, deals will come at a higher cost. Many economists believe the Fed will choose to raise rates in December. The Fed has not increased rates since last December, as policymakers assess the economy's ability to handle higher rates.

Warne added the spike in deals could also mean that corporate management is signaling it is a difficult environment to find growth.

"Certainly in the oil industry with prices down, you're not seeing that. But in other industries where there is growth, its very slow. And management is looking for a way to grow earnings," Warne said. "I'd concur that it says this is a time to be buying stocks but it also says they're struggling to get the earnings growth that's needed in order to support higher stock prices in the future."

— CNBC's Evelyn Cheng contributed to this report.