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As the market hits record highs, the S&P 500 is also setting another, quieter record. As the final fourth-quarter earnings trickle in, S&P 500 companies have reported record aggregate earnings per share of $28.78.
And since earnings are anticipated to improve from here, the market's forward price-earnings ratio still remains below its 15-year average, despite the record-high prices.
The S&P 500 is currently trading at a forward price-per-earnings ratio of about 15.4, which is above both the five-year average of 13.2 and the 10-year average of 13.8. But over the past 15 years, the market's average P/E ratio is 16.0, according to FactSet.
"With the forward P/E still below the 15-year average and not close to the higher P/E ratios recorded in the early years of this period, one could argue that the index may still be undervalued," John Butters, senior earnings analyst at FactSet, wrote in a recent note.
For 2014, analysts expect to see earning growth of 8.8 percent. Now, it is true that analyst estimates tend to be almost strangely optimistic, especially several months out. But the stock market is still generally thought to be a leading indicator for the direction of the economy. If the actual earnings growth is close to the growth anticipated, then the stock market may not be too expensive at all.
(Read more: Either analysts are wrong, or stocks will go crazy)
As investors cheer the good news for job growth that came with the February employment report, they may be overlooking a troublesome dynamic: A tightening jobs market, in combination with rising commodity costs, could stir inflation, cutting into corporate profits and forcing the Federal Reserve to become more hawkish.
On Friday, the nonfarm payrolls measure showed an increase of 175,000 jobs in February, well above the weather-dampened expectations. And though the unemployment rate ticked up to 6.7 percent from 6.6, the broadest measure of unemployment, the U-6, dropped slightly from 12.7 percent to 12.6 percent—the lowest reading since it was at that level in November 2008.
(Read more: Chart: What's the real unemployment rate?)
Since the U-6 counts all unemployed workers, plus marginally attached workers and workers employed part-time for economic reasons, it could be a better measure of the remaining supply in the labor market. The decrease in the U-6 could thus indicate that the "slack" in the labor force—which allows companies to hire more workers without paying more—is decreasing. Once the slack is gone, wage inflation tends to follow.
"Measuring slack is not an easy thing, but an unemployment rate of 6.7 tells you there's a lot less slack than there used to be," said Peter Boockvar, chief market analyst at the Lindsey Group. "The idea that all of the people who dropped out of the labor market will magically come back just doesn't make sense—particularly for the low-end worker who is now enjoying a lot of government benefits. Therefore, the labor market is getting tighter than the Fed thinks."
As a result, "the inflation trend is going to start moving higher. It's not a single event that will happen—it's a process. But it's definitely worth watching," he said.
(Read more: Jobs report signals higher interest rates ahead)
The other factor that could contribute to this trend is the recent rise in commodity prices. The CRB commodity index, a broad measure of prices, has risen some 10 percent this year. It's at its highest level in over a year, due to tough agriculture conditions and winter weather issues that have sharply increased the prices of many commodities. More recently, the crisis in Ukraine seems to have boosted prices of commodities such as wheat and corn.
"Increasing commodity prices will drive a rise in inflation," predicted Kathy Lien, managing director of FX strategy at BK Asset Management. "It's a natural reaction to the recent growth as well as the geopolitical uncertainly that is happening in the global economy."
The S&P 500 touched a fresh all-time high on Thursday, for the third session in a row. But Russ Koesterich, BlackRock global chief investment strategist, warns that if the recent spate of weakness in economic data continues much longer, bulls will need to shift their outlook on the market.
"There definitely has been a disconnect, and I think what's helped the market move higher is that investors are giving the economy a free pass, and the assumption is that it's all about the weather," Koesterich said on Thursday's episode of "Futures Now."
"You're seeing some of the weakest economic prints we've seen in quite some time. And yeah, people aren't going to worry about it, at least not yet, because they're attributing all of that to bad weather in January and February. The challenge is, [if] we get into the spring and we're still printing this low, that's when investors will take notice."
(Read more: US factory orders drop adds to slowdown concern)
In other words, if the weather turns out to be merely a convenient excuse, then that excuse can only stretch so far.
"If you get into April, and assuming March weather is close to the historical norm, then you can't blame it on the winter," Koesterich said. If "it becomes apparent that this rebound is not happening, then people are going to have to take a second look at this market."
Payrolls have been the highest-profile concern thus far, with December and January job growth numbers coming in well below expectations. But Friday's jobs report may not provide much clarity. After all, some of the raw employment data were gathered during a stormy period, meaning that weather could take the blame once again.
(Read more: Siegel: I'm a bull, but these two things worry me)
The bad news for U.S. consumers is that food prices could soon surge alongside them. And since meat prices are especially sensitive to price changes in grains, that could be where companies and consumers feel the impact most sharply.
Corn futures for May delivery hit a six-month high on Wednesday before retreating. Similarly, wheat futures slipped on Wednesday but stayed near three-month highs. So while prices have calmed alongside the situation in Ukraine, the Russian presence in Crimea has appeared to keep a bid under the prices for these two Ukrainian exports.
The strength is "a combination of the Ukraine situation, which is worrisome, and the massive amounts of fund money looking for the home of highest net return," said Jim Bower, the president of commodity trading company Bower Trading.
"Funds are making a big push into commodities here, especially wheat. Funds were heavily short, and they decided, 'Maybe we don't need that position anymore.' That forced them to short cover. And now they may start to go long."
(Read more: Dennis Gartman: If you buy one thing, buy this)
Ukraine is the world's sixth-largest wheat exporter, and fourth-largest corn exporter. So far, shipments have not been disrupted. But the concern is that if the situation deteriorates, they will be.
"Ukraine is a major exporter, and Russia-Ukraine is one of just four or three exporting regions in the world," said Jonathan Feeney, food and beverage analyst at Janney Montgomery Scott. "When any of those regions feels political tension, and perhaps an inability to complete foreign trade, the market's going to feel it."
If the recent rise is sustained, Feeney expects to see it reflected in food costs in about six months' time.
"Between hedging and the time it takes to source, six months is a good estimate," Feeney said. "Of course, you have to see what the weighted average is going to be over the next to two to three months. I don't think [food companies] yet have the cover to say, 'OK, let's take the price increase to retail. So we'll wait and see.' "
(Read more: Ukraine turmoil: Is this the worst-hit commodity?)
Jeremy Siegel is one of the most famous market bulls, and he reiterated his positive take on Tuesday with a call for the Dow Jones Industrial Average to rise to 18,000. But he also mentioned two things that worry him right now: a potential lack of slack in the labor force, and commodity prices.
(Read more: We're only in the bull market's 4th inning: Siegel)
Siegel, a Wharton professor of finance, said on Tuesday's episode of "Futures Now" that a sharp rise in commodity costs could change his take entirely.
"If I saw commodities really increasing in price—I mean, we've had a little bump in oil, we know why we had that yesterday, with the threat of war, and shutoffs of supply, and embargoes against Russia—but anything that sparks any inflation at all" is a serious concern, Siegel said.
(Read more: Ukraine tensions boost oil but resistance is strong)
"The commodity prices have been holding up better than I would think given the slowness in the economy. But if that started flaring up, not only is taper going to be maintained—it could be accelerated by the Fed," Siegel said.
The issue is that the Federal Reserve's quantitative easing program, and its ultralow federal funds rate, both depend on low inflation. If rising energy prices suddenly spur inflation, then the Fed could be forced to pull back, potentially causing interest rates to spike and thus hurting the market.
"If we see some of these commodity prices rise up the way we did yesterday to continue to rise up," then the Fed is "going to be geared" to cut back on quantitative easing and increase the federal funds rate.
For that reason, rising commodity prices "would be a concern for me," Siegel said.
There are bulls, and then there's Jeremy Siegel.
On Tuesday's episode of "Futures Now," the Wharton finance professor didn't just argue that stocks are cheap. He proclaimed that the Dow Jones industrial average will rise to his "fair market value" estimation of 18,000—10 percent above current levels—as companies continue to perform better and better.
"It could get there by the year-end, it could get there sooner, it might be later," Siegel said. "But I certainly don't think that we're in the ninth inning of the bull market yet."
In fact, it's not even time for the seventh inning stretch.
"I'm a bull, and I can't believe what S&P is putting out for earnings estimates in 2014," he said. "Operating earnings 2013 over 2012 were up 10.6 percent; S&P reported earnings were up 16 percent from last year. They're expecting reported earnings to be up 20 percent this year. We didn't have a real good economy last year, and we got 16 percent earnings growth.
"If any of these earnings estimates pan out—and they are bullish—hey, we're in about the fourth or fifth inning of this bull market," Siegel added. "This could be ... much more than 18,000 on the Dow.
As investors attempt to make sense of a fast-moving situation in Ukraine, gold was rising 2 percent on Monday, and touching $1,350 per troy ounce for the first time since October.
Russia has dispatched troops to Ukraine's Crimean Peninsula, in an apparent violation of Ukraine's sovereignty that has put the United States and other nations in a tough geopolitical situation with few easy outs. The situation has led to a decline in the Dow and S&P 500, and put a strong bid under the gold market.
(Read more: Russian markets hit as Putin tightens grip on Crimea)
"Gold is moving on global risks related to the invasion of Ukraine," said Jim Iuorio of TJM Institutional Services. "At this point, it seems that gold is pricing in a Russian occupation of Crimea. Any move higher in gold would be dependent on an escalation of the conflict."
Gold is traditionally viewed as a safe-haven asset that rises in value in times of turmoil. So as fear creeps into the market and the geopolitical landscape, it is natural to see gold move higher.
"Gold and the S&P have been trading in tandem for 10 to 12 weeks, and it kind of doesn't make sense to me that they've been trading like that," said Mihir Dange, a gold options trader with Grafite Capital. "Now you have a situation that heightens geopolitical risk, and it's creating this divergence between stocks and gold once again. Sometime you need some kind of an event to shake things up, and this could be it."
The Ukraine situation certainly appears to have spurred heavy interest in gold among investors. BullionVault, which bills itself as the world's largest online gold market, reports that on Sunday, there was more buying and selling of the gold in its vaults than on any Sunday since August.
Dennis Gartman's favorite commodity pick right now isn't gold, crude oil or copper. In fact, it's something much more edible.
"Corn looks like it's made its lows," Gartman said on Thursday's episode of "Futures Now." "If you have to buy something, go buy some corn."
(Read more: Dennis Gartman: 'I was wrong')
It's been a long road down for corn futures, which hit a high of $8.49 per bushel in August 2012, and got close to $4.00 in January 2014. But the grain has bounced off of that low, adding 12 percent in the following month and a half.
In fact, on the very day corn hit its intraday low, it jumped 5 percent higher on the USDA corn production forecast, in which the agency cut its forecast of 2013 corn production from 13.989 billion bushels to 13.925 billion bushels.
Federal Reserve Chair Janet Yellen is set to appear before the Senate Banking Committee on Thursday, in the delayed second day of her monetary policy testimony. And though no major bombshells are expected, subtle nuances could speak volumes to a market hungry to learn what the Fed will do next.
Yellen testified before the House Financial Services Committee on Feb. 11, and had been slated to appear before the Senate Banking Committee on the 13th. But a snowstorm intervened, pushing the second day of her testimony two weeks into the future.
That means that Yellen, inquiring senators and market professionals alike have been granted the benefit of having seen the Federal Open Market Committee's January meeting minutes as well as some additional economic data, between the two sessions.
"The odds have gone up for something interesting to happen in day two," said Carl Riccadonna, Deutsche Bank senior U.S. economist. "This is particularly the case because we've seen the meeting minutes, and those minutes showed internal debate about what to do with the fed funds rate thresholds."
One of the Federal Reserve's key tools is the federal funds rate, which is the Fed-targeted rate at which banks lend to each other. In its January statement, the FOMC stated once again that it would keep that rate "exceptionally low ... for as long as the unemployment rate remains above 6-1/2 percent" and inflation remains low.
But now that the unemployment rate dropped to 6.6 percent in January, just a hair's breadth away from that long-watched 6.5 level, the Fed might look to change its guidance.
The problem is that the Fed is currently divided on how, exactly, to go about that.
(Read more: Kudlow: Janet Yellen's problem)
"Participants agreed that, with the unemployment rate approaching 6-1/2 percent, it would soon be appropriate for the Committee to change its forward guidance," according to the recently released minutes of the January meeting. "A range of views was expressed about the form that such forward guidance might take."
Suggestions included shifting from quantitative guidance to qualitative guidance, or including additional factors in the threshold. Other possibilities are reducing the threshold unemployment rate, or going ahead and raising the federal funds rate "relatively soon," as some hawks suggested.
"The key focus on Thursday will be any and all comments around forward guidance," Riccadonna said. "She doesn't want to commit to something, as that may upset other committee members. But she could talk about the pros and cons of different options, which would be a way of showing her hand in terms of what she favors."
It's called "the widow maker" for a reason.
Natural gas futures for March delivery fell some 8 percent on Tuesday, after an extremely volatile Monday session that saw the commodity lose 17 percent in eight hours.
These two days of serious losses came after a gut-wrenching rally that saw nat gas rise from $4.81 per million British thermal units to above $6 in four sessions.
But even as the March futures plunged on Tuesday, the April futures clung onto a modest gain for much of the session. This is because the March contract expires Wednesday, so even as traders rushed to exit positions, some looked to the April contract as they continued to make bullish bets on the fuel.
For traders who speculate on the futures of natural gas or any other commodity, it is imperative to exit a long position in order to avoid receiving the physical commodity (or "taking delivery").
"Rather than just bailing out of their longs in March, [some traders] still have faith that this market's going higher, so what they're doing is selling March, buying April," said Anthony Grisanti of GRZ Energy on Tuesday's episode of "Futures Now." "So that's why you see the March contract lower today, and the April contract up a bit, because the money is still flowing to natural gas right now, looking for higher numbers."
Indeed, while about 60,000 March contracts traded on Tuesday, some 175,000 of the April contracts traded.
Yet while the contract rollover explains the move, it doesn't quite explain its magnitude.
"This volatility is unprecedented for this market," Grisanti said. "This is completely abnormal for these markets. Usually you'll see 3-, 4-, 5-cent—not a $1.50 move, which is what we've seen."
(Read more: Natural gas could rise to $8: Energy expert)
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