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These two 'boogeymen' no longer haunt the Fed

  • Last year, things holding back the Fed were Brexit and the U.S. election, Bespoke's Paul Hickey says.
  • Most secondary indicators of labor market strength have shown solid growth, he says.

Despite Friday's weak jobs report, the U.S. economy is strong enough for the Federal Reserve to raise interest rate next week, Paul Hickey told CNBC on Wednesday.

"Last year one of the things holding back the Fed was Brexit and the upcoming [U.S.] election, and those boogeymen around the corner aren't really here right now," the co-founder of Bespoke Investment Group said on "Squawk Box."

The Fed meets next Tuesday and Wednesday, and market expectations for a rate hike are at 93.5 percent, according to the CME Group's FedWatch tool. Expectations for a September rate hike stand at 71.1 percent.

The high expectations come despite Friday's jobs report, which showed a sharp decline in job creation and weak wage growth in May.

Hickey said the Labor Department's closely watched employment report should be given the "benefit of the doubt." Most secondary indicators of labor market strength like ISM surveys on manufacturing and services have shown solid growth, he noted.

On the markets, Hickey said stocks are a little expensive but he still likes them. He said analysts have seen in the past year a "stair-step pattern," where the markets rally and then the market trades sideways.

"During the sideway period, everyone gets concerned. 'The rally is over. We're going to sell off. There's no catalyst.' ... In the last two weeks, we've seen the market move to new highs," he said.

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