September 16, 2015

Wells Fargo Securities Equity Strategist Gina Martin Adams discusses Fed policy her outlook for stocks. She speaks on “Bloomberg Surveillance.” (Source: Bloomberg)

Gina and our firm believe the fed rate increase could be very positive for equities, mostly due to uncertainty being removed which has been one of the focal discussions plaguing the market this year. We just need to get first fed policy tightening over with. It is not likely to have a material impact on growth, but will offer relief because going forward we will have more transparency in the fed’s policy direction.

Gina softly predicts that the S&P 500 will see double-digit returns in the next 12 months once this small increase occurs. Corporate earnings growth will set the moderate pace. Many investors forget to tie the earnings weakness this year to the 66% drop in oil prices. If we can see oil stabilize, this will give room for earnings growth no matter what. A healthy economy and a growing stock market need to release some of the uncertainties that have been dragging them down: Fears in China’s slow down, oil in a downward trend and a fed rate hike increase. To hear more on this topic, please visit this Bloomberg Surveillance link http://www.bloomberg.com/news/videos/2015-09-16/how-a-fed-rate-hike-could-be-good-for-stocks