Greg Fleming, president and CEO of fast growing Rockefeller Capital Management, believes the current conditions for the stock market, buoyed by strong economic growth as the COVID-19 pandemic recedes and unprecedented federal government spending, couldn't get much better.
Fleming made his comments in an interview yesterday on CNBC in discussing the potential for the Federal Reserve to raise interest rates before Federal Reserve Chair Jerome Powell spoke in a hearing before a U.S. House of Representatives panel.
"The market backdrop is really as good as it gets," Fleming said in the interview. "You’ve got accelerated growth across a large swath of the economy. That’s going to be true also outside the U.S. increasingly going forward."
"Vaccines have helped quell the pandemic," Fleming said. "That’s on one side. On the other side, you have unprecedented, extraordinary measures on both fiscal policy by the federal government, and talk of more, as well as the federal reserve doing things in terms the size of their balance sheet and the zero-rate policy that we have never seen before, either."
"So, I think the market backdrop for the remainder of this year and into 2022 stays very positive," he added.
Fleming also made clear his concerns, particularly if the Fed increases interest rates in a move to tame inflation. That could result in the federal government spending 10% or more of its budget on servicing the debt, a potentially dangerous level.
"If interest rates were to go up by 200 to 300 basis points, the interest on the federal debt would be greater than 10% of the budget," Fleming said, and result in pressure on fiscal policy.
Powell on Tuesday threw cold water on the fear of an immediate spike on interest rates and reaffirmed the U.S. central bank's intent to encourage a "broad and inclusive" recovery of the job market, and not to raise interest rates too quickly based only on the fear of coming inflation, according to a news report from Reuters.
"We will not raise interest rates pre-emptively because we fear the possible onset of inflation. We will wait for evidence of actual inflation or other imbalances," Powell said in the hearing.
A veteran of Wall Street management, Fleming worked at Merrill Lynch from 1993 to 2009, eventually becoming president, up until it was bought by Bank of America in the deepest days of the credit crisis. A year later he went to work for Morgan Stanley and was head of wealth and asset management before leaving in 2016, two years before the launch of Rockefeller Capital.
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