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It's time for investors to take off their rose-colored glasses, strategist Mark Eibel says.
The director of client investment strategies at Russell Investments said Thursday that despite the overall bullishness since the election, troubling signs for the U.S. market will soon be seen.
"I think it's really the honeymoon period," Eibel said on CNBC's "Futures Now.""It's the hope that we can grow at a faster pace, [but] 3 percent on an ongoing basis is a pretty high hurdle from the 1.5 to 2 percent that we've experienced."
Eibel's comments follow promises by Donald Trump to grow the U.S. economy by 3 percent. But the strategist believes demographic changes, namely the slowdown in population growth and an overvalued U.S. market will actually keep the president-elect's plans in check.
The same factors lead Eibel to suggest that investors in U.S. stocks may want to "buy the dips [and] sell the rallies" in 2017.
"As we get into the governing of the next administration, it's probably a good opportunity to continue to trim the U.S., which is overvalued relative to the rest of the world," he said. It may be better to "take opportunities within a multi-asset framework to buy some other areas that I think have been probably beaten up." He predicts that the S&P 500 could fall back to 2,150 by the end of next year — about 100 points lower than now — but he does see opportunity elsewhere.
Eibel suggests looking into the emerging markets, which he believes are actually sitting at more reasonable valuations than the U.S. market and are boasting more sustainable growth. The emerging markets are currently up almost 13 percent year to date but have struggled to make new highs since the summer, especially after plunging postelection.
This could be your final opportunity to reap big gains from the Trump rally.
PNC Asset Management chief investment strategist Bill Stone says Wall Street is overestimating earnings strength for 2017, and that's just one of the things that could nudge stock prices lower.
"We're looking for a mid-single-digit earnings growth rate next year for the S&P 500. The Street is probably roughly double or a little more than that," Stone said Tuesday on CNBC's "Futures Now."
He cites a stronger dollar and the potential for global growth to slow down for his below consensus forecast.
Stone's latest thoughts come as the Dow ended the day at a record high of 19,251.78. Since Donald Trump won the Nov. 8 presidential election, the index has now closed at all-time highs 11 times and is up more than 5 percent.
Stone is also closely watching next week's Federal Reserve policy meeting, where investors will likely see the first interest rate hike in a year and the second in a decade.
"It's a done deal that they do it," said Stone. "We think two hikes next year."
Even though the Trump rally may be in its final leg, Stone predicts financial stocks, which are up more than 15 percent since Election Day, will see more upside in coming months. He has been bullish on financials since the beginning of the year.
"I think they are in a good place because if you think about it, they have been poor performers until ... recently. The yield curve has gotten really steep and may in fact get steeper," he said. "You have the opportunity, hopefully if the economy continues to strengthen, [for] some loan growth. So, I think that has a good story."
The surprise OPEC deal last week sent crude prices surging and left some market watchers slack-jawed, including Dennis Gartman.
The agreement came after months of false starts, including a failed accord in Doha, Qatar, in April that sent markets reeling.
"Clearly we were wrong in selling crude oil short the day before the OPEC meeting," the editor and publisher of The Gartman Letter wrote Thursday. Despite being caught off guard by the move, Gartman explained to CNBC why he doesn't expect the rally, or deal, to last long.
"If you can bet on one thing in this world, bet on a mother's love, and bet on the fact that OPEC cheats," he said in a recent interview on CNBC's "Futures Now." "But it will be a month or two before we see that happening."
Oil surged above $50 for the first time since late October in the days after OPEC's agreement to cut production for the first time in nearly a decade. The move prompted crude to post its biggest weekly gain since February 2011.
Still, Gartman is skeptical that the rally can be sustained, as he believes the recent run has been nothing more than a short squeeze. Meanwhile, tensions between OPEC rivals Saudi Arabia and Iran — which was resistant to the idea of a curb on production — mean something may have to give eventually.
"I've said for a long time that i don't expect oil to get above $52," he said. "There are so many people caught on the short side of WTI and that's what you are seeing right now. That will end sometime in the coming weeks," said Gartman.
In addition to what he anticipates as a failed agreement, Gartman said the strong dollar will weigh heavily on oil and all commodities in the next year.
"The strong dollar is going to continue to be overhead resistance on commodity prices. Clearly that adds to the price of crude oil and that is bearish in the long run," he said.
Wharton School professor Jeremy Siegel now believes 20,000 is in reach for the Dow, after earlier calling for the index to rise to 19,000 by the end of the year.
"Is it possible that we get another 5 percent in the month of December? Most definitely. That would probably get us to Dow 20,000 and 2,300 on the S&P," Siegel said Thursday on CNBC's "Futures Now." "I don't see the market stopping where we are right here."
Since Donald Trump won the presidential election, the Dow has surged by nearly 5 percent while the S&P 500 is up more than 2 percent. In fact, the Dow has broken all-time highs seven times since the election.
"This looks like the early stages of a good equity move. Actually on Trump's appointments yesterday, if it weren't for bond yields going up, I think we would be up 200 to 300 points on the Dow," he said.
"I thought that was extremely reassuring and sets up a very good tempo and setting for the rest of this year and into the early months of the Trump administration."
Dow 20,000 would represent a further rise of about 4 percent for the index.
A massive year-end rally could be in store, according to one JPMorgan strategist.
Markets have continued to impress throughout November as the so-called Trump rally rages on. The S&P 500, Dow and Nasdaq — all sitting at record highs — are up a respective 4, 6 and 3 percent this month. And while some may speculate that the market has come too far too fast, Jack Caffrey of JPMorgan Private Bank still sees stocks heading higher into year end.
Just how much higher could they go? The answer, says the strategist, could be up to 4 percent.
"Two to 4 percent would be the next rally for the month of December," Caffrey said on Tuesday on CNBC's "Futures Now." "I think certainly going back through the entirety of the year, the more we see in December the more likely we're going to have some of that forward [momentum]." Caffrey's call comes as we enter what is seasonally one of the strongest months of the year. On average, the S&P 500 posts a return of 1.4 percent in the month of December, posting even stronger gains during a presidential election year, according to data from Bank of America Merrill Lynch.
Caffrey sees two further reasons why the Santa rally could kick into high gear: the first being that economic data has generally looked better from his point of view. Additionally, Caffrey believes that the market has pulled out of an "earnings recession" based on companies' Q3 reports.
"We have expectations, we have fundamentals and we have seasonals," said the strategist. "I think they all point us a little bit higher in the short term."
If Caffrey's predictions hold true, that means the S&P 500 could reach around 2,296 and set yet another record by the end of the year.
But of course, Caffrey points out that uncertainty around Trump's policies are still a point of discussion and something for the markets to watch. "We're not sure what the priorities are, and that's where people remain optimistically biased," he explained.
Markets continued their rise on Wednesday, with the Dow and S&P hitting another intraday record high.
In a recent interview with CNBC's "Futures Now," the Euro Pacific Capital chief said that while themarkets have rallied since Trump's election victory, the very same economic issues that got him elected will be the exact same one's he'll find himself unable to solve.
As Schiff sees it, Trump pleased voters with his promise to cut taxes and increase spending in some key areas. However, his proposed policies will hurt the economy rather than make room for improvement.
"He doesn't want to tackle, for political reasons, the real problems that are underlying the economy," Schiff told CNBC.
Namely, the fund manager predicted that Trump's economic policies will exacerbate already-existing trade and fiscal deficits, and bring about inflation that the Fed will likely be pressured to solve. This may even involve going against the idea of a rate hike, which many had pegged at a more than 90 percent chance of occurring in December.
One of Trump's signature plans involves massive public spending on roads, bridges and other U.S. infrastructure. Meanwhile, economists nearly unanimously expect a tax cut that could rival the ones signed by former president George W. Bush.
"We're going to have to do even more quantitative easing (QE)," said Schiff, explaining that the central bank will have to return to its most potent weapon: Super-easy liquidity to pump-prime the economy.
"The Fed is going to have to reverse and cut interest rates, and it's not going to create economic growth, but it is going to put pressure on inflation that is already now above what the Fed supposedly says is its supposed target," he added.
In other words, Schiff believes that even if a December rate hike does happen, it's already "too little, too late" for the economy.
According to him, the Fed will still be faced with the question of how to finance the deficits that Schiff says will emerge, especially in light of the global bond rout that took place after the election.
The combination of outcomes from Trump's policies leads him to believe that a market "crisis" is on the way, and the crash could be even bigger than the one in 2008.
Stocks continued their post-election rally, with the Dow and small-cap stocks setting new record highs last week.
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