Tags: Mario Gabelli | fed | rates | invest

Mario Gabelli: Fed Rate Hike Is 'Long Overdue'

Mario Gabelli: Fed Rate Hike Is 'Long Overdue'
(Dollar Photo Club)

By    |   Monday, 16 November 2015 07:00 AM

Billionaire value investor Mario Gabelli said the Federal Reserve should have raised interest rates a long time ago and the market is prepared for such a reality.

"It's long overdue," Gabelli, chief executive officer of Gamco Investors Inc., told CNBC.

"The rates are going up, and the market's adjusting to it," he said. "Will it help the market if it's quick? ... It might.”

He also said he added to his Macy's position on Wednesday, as the company's stock tanked on mixed earnings and weak guidance. Macy's stock recently traded near $40, which he said was his target price.

"We thought the decline was overdone," he said. "But there are changes in the way people buy clothes. When I was growing up, if I needed a tuxedo, I'd rent it ... but this is also seasonal and cyclical."

Other prominent officials also can't wait for a rate hike.

Bank of America Corp. Chief Executive Officer Brian Moynihan doesn't fear a Federal Reserve rate hike.

“It’s a strong economy,” Moynihan said in an interview with Bloomberg Television’s David Westin. “Unemployment levels are down, and wage growth is picking up. That’s all good. Now the question is, what can derail that. And that’s what we have to pay attention to,” he said.

The Fed hasn't hoisted its benchmark rate in nearly 10 years, and it's been near zero since the 2008 financial crisis. Moynihan was asked what a rate hike would do for his business.

"We disclosed that basically it's $4.5 billion round numbers [in revenue] for every 100 basis points increase in rates, parallel rate rise," he said, "[W]hen you have half a trillion dollars in zero interest deposits that are always zero interest and have hit a floor, and when you have loans repriced or rates going up, it's a good thing for a bank. And this has been a very tough environment," he said.

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Billionaire value investor Mario Gabelli said the Federal Reserve should have raised interest rates a long time ago and the market is prepared for such a reality.
Mario Gabelli, fed, rates, invest
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2015-00-16
Monday, 16 November 2015 07:00 AM
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