Jay Hatfield, founder and CEO of Infrastructure Capital Advisors (InfraCap), told Full Signal with Phil Rosen he expects the S&P 500 to reach 8,250 by year end, a call near the top of Wall Street forecasts.
His case rests on a 20 times earnings multiple, a Fed he says is misreading inflation data, and four stock picks he describes as out of favor.
How Hatfield gets to an 8,250 S&P 500 target
I sat down with Hatfield on Full Signal to ask why his year-end target sits above most of his peers. He said it equals 20 times next year's earnings, down from the 23 times his firm used when it started the year at 8,000.
He said the lower multiple reflects what his firm did not see coming, namely a Middle East war, $100 oil and 5% interest rates. "We stupidly were not forecasting a war in the Middle East," Hatfield said.
By his math, every 25 basis points on the 10-year Treasury yield equates to one point on the S&P 500 multiple. He estimates the equilibrium multiple at about 22 times if rates settle in the low 4% range, which is why he calls 20 times conservative.
Hatfield also pushed back on strategists who haircut earnings forecasts. He cited consensus S&P 500 earnings estimates of about $415 for next year, up from about $350 when estimates began, and asked why those strategists never show the company-level models behind their cuts.
What could break the call
Hatfield named oil well above $100, a Fed rate hike and a 10-year yield near 5.5% as the main risks, though he said none is his base case. At 5.5%, he said, the multiple math would take roughly three points off his target multiple.
When we spoke, Hatfield put the odds of a Fed hike near 50/50, and his own call was that the Fed would hold. The Fed has since raised rates, which we covered in Kevin Warsh raised interest rates as President Trump demanded the opposite, so that piece of his outlook did not play out.
Why Hatfield thinks the Fed is misreading inflation
Hatfield called the Fed "fatally flawed," pointing to what he sees as an arbitrary 2% target, distorted inflation indexes and weak forecasting. "They can't forecast, they look at the wrong index and they have the wrong target," he said.
He said core CPI fell from 2.9% to 2.5% over three months, with a 1.6% annualized pace. In his view, "the data looks spectacular when you look at the right data set."
On Fed Chair Kevin Warsh, Hatfield said he believes Warsh is talking tough to keep a hawkish committee in line. He stressed that this is his firm's read and not inside knowledge.
Hatfield's four stock picks
Hatfield framed each of his picks as a name hedge funds have been shorting or ignoring. He called Marvell Technology "the pick of the year, if not the pick of the decade," with a $300 target built on $12 of fiscal 2029 earnings at 25 times.
He said KKR trades around 14 times earnings and argued that its locked-up capital deserves a premium to the 15 times he cited for Goldman Sachs and Morgan Stanley. On Oracle, he said the stock trades around 15 times earnings and that the market is too focused on free cash flow. "Free cash flow is free until it's not," Hatfield said.
His fourth pick was Lockheed Martin, which he called a "super boring stock" with a 0.3 beta. He pointed to missile demand and a large backlog as the case.
The QVOL covered-call income fund
Hatfield also discussed InfraCap's QVOL, the InfraCap NASDAQ Option Income ETF, which he said yields over 12% and gets nearly all of that income from covered calls. He said the fund screens for growth at reasonable prices and writes individual calls using technical and fundamental analysis.
His pitch is that careful stock selection tilts the odds.
"You can stack the deck in your favor," he said.
Tune in to the full conversation with Jay Hatfield on YouTube, Spotify and Apple Podcasts.
For more on how markets are handling the Fed's rate path, read Investors have already moved on from the Fed's first rate hike in 3 years, and subscribe to the free Opening Bell Daily newsletter for a daily briefing on stocks, macro and Wall Street.
This article is informational only and is not investment advice. Views, forecasts and price targets are Jay Hatfield's, not Opening Bell Daily's, and reflect the time of the interview, so market levels and the Fed outlook may have changed. Hatfield's firm, Infrastructure Capital Advisors, manages QVOL, which is discussed above.