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Byron Wien, one of the most respected voices on the market, has a bullish outlook for 2014 but sees the rally taking a serious breather as euphoria turns to disappointment.
"What's going to cause it is that everybody's on one side of the boat here," said Wien, vice chairman at Blackstone Advisory Partners. "Almost everybody's made good money—maybe not 30 percent last year—but everybody was up ... and people are generally feeling pretty positive. There's almost a euphoric mood."
Wien said it won't take much to turn this manic high into a manic low.
(Read more: Why earnings might actually start to mean something)
"When investor sentiment is as positive as this, [the market is] usually vulnerable to any kind of a disappointment," he said. "There could be some earnings disappointment in the fourth quarter. And the geopolitical situation is still, in my mind, pretty unsettled. So you never know what it's going to be. But you do know that when sentiment is euphoric, the market is vulnerable."
The fire hose of earning reports gets turned on this week, with fourth quarter reports coming from six Dow components and 26 S&P 500 companies. And with the Federal Reserve looking to take a less active role in 2014, the results could start to matter much more to stock prices than they did over the course of 2013.
"Last week was noteworthy in the markets' response to earnings, in the context of a potentially less friendly Fed, which will lower the tolerance level for any hiccups in company performance," Lindsey Group chief market analyst Peter Boockvar wrote in a Monday note. "Those that missed were punished, such as Bed Bath & Beyond and Alcoa, but those that delivered were rewarded, such asMicron and Macy's. That seems perfectly logical, but we know misses in 2013 were mostly glossed over."
(Read more: US stocks little changed with earnings in view)
Investors are eagerly awaiting Friday's jobs report, which will shed light on how many Americans were hired in the month of December. And while most economists expect the unemployment rate to stay put at 7 percent, Societe Generale's chief U.S. economist, Aneta Markowska, expects the unemployment rate to drop below 7 percent for the first time since November 2008.
Markowska expects to see 225,000 on the nonfarm payrolls number, "but I think the interesting story will be the unemployment rate. We're looking for a 6-handle—6.9—so quite an important milestone," Markowska said on Thursday's episode of "Futures Now."
(Read more: Jobs report could show things are looking up)
The economist sees the unemployment rate continuing to drop throughout the year, which could pose a policy issue for the Federal Reserve.
As recently as in its December statement, the Federal Open Market Committee "reaffirmed its expectation that the current exceptionally low target range for the federal funds rate of 0 to ¼ percent will be appropriate at least as long as the unemployment rate remains above 6½ percent."
Coffee futures have risen some 20 cents per pound since early November—a 19 percent rise that nearly puts the commodity in technical bull market territory. But that doesn't mean the price of your morning latte is about to skyrocket.
First of all, November's $1.01 marked a seven-year low for coffee futures. Coffee has been under pressure due to high levels of production out of the world's largest coffee grower, Brazil. But supply is expected to be lower in 2014, particularly due to recent inclement weather.
December 2013 was "an extremely wet month" for many parts of Brazil, the NASA Earth Observatory reported. And rain can damage coffee plants, reducing output and consequently boosting price.
"We have seen quite a turbulent move to the upside, and that's because of some forecast changes," said futures trader Jeff Kilburg of KKM Financial.
"We saw forecaster Volcafe tone down their optimistic estimates. A lot of folks have been thinking about 60 million bags [of supply], but what we saw in December down in Brazil is a substantial amount of rain, potentially damaging the product. Therefore we are seeing the forecast drop down to 51 million bags, and that really put a sense of urgency into folks coming in and buying it."
At this point, short-term price action is expected to depend on expectations of 2014 supply. But the broader story behind the long decline in prices—which have dropped from $3 in mid-2011—is that producers are finally growing enough coffee to match demand.
"Demand for coffee has expanded dramatically for four or five years, and it's taken a while for global supply to catch up," explained Jonathan Feeney, food and beverage analyst at Janney Montgomery Scott. "Well, now it has."
Feeney pins the increase in demand on the growing middle classes in emerging markets as well as on consumption in the U.S. that continues to increase. But even as the price has plunged over the past three years, consumers have rarely seen lower prices.
(Read more: Starbucks makes its latte cheaper—and more mobile)
"Consumer prices have underpaced the drop, which is of course a boon to companies like J.M. Smucker that produce coffee," Feeney said.
Still, a lot goes into the price of a cup of coffee, or a bag of roasted coffee, besides the beans themselves. That's why coffee that trades on the futures market for $1.20 per pound is sold in Starbucks for $12 per pound, or by specialty coffee roasters like Blue Bottle for as much as $26 per pound.
"What you're paying for is the brand, the quality of the roasting and the selection of the beans," Feeney explained. "There's also a pretty healthy profit margin."
(Read more: Woman eats only Starbucks items for a year)
Commodities were not exactly the place to be in 2013. While the S&P 500 rose nearly 30 percent, the S&P GSCI Commodity Index dropped 3.5 percent. But in 2014, some investors are playing for that trade to turn around.
"I do think there are some reasons why you could be somewhat optimistic about the possibilities for commodities in 2014," said James Paulsen, of Wells Capital Management, who expects the asset class to outperform stocks and bonds in 2014.
"First of all, they got crushed over the last year and a half, and we kind of revalued the commodity market. So I think there's good value here for the first time."
On Tuesday's episode of "Futures Now," Paulsen said that his positive expectations for economic growth undergird his bullish commodity stance.
"The biggest problem commodities have had over the past year and a half or so is that there's been spotty growth in the world—contraction in Europe and Japan, a slowdown in the emerging world, a slug here in the United States at 2 percent," Paulsen said.
"You look now and that's a very different environment. We have the most synchronized global growth outlook here going into 2014 that we've ever had. There's positive and accelerating growth nearly everywhere. I can't help but think that's good for commodity demand."
What makes Paulsen's thesis so interesting is that his take on the global economy is fairly the opposite view of that held by many commodity bulls.
Gina Martin Adams of Wells Fargo was Wall Street's biggest bear in 2013, predicting that the S&P 500 would close the year at 1,440 even as the market skyrocketed. In 2014, she once again has the most bearish target on the Street, predicting that the S&P will close out the year at 1,850—pretty much exactly where the index finished 2013.
But that doesn't mean she expects the stock market to just stay put over the coming months.
"You can easily make the case for stocks to jump 300 points this year, as well as to fall 300 points this year," Adams said on Tuesday's episode of "Futures Now." "I think the story this year will be one of greater volatility, simply because we are in this environment of chance in monetary policy, and it can go in either direction."
Adams, institutional equity strategist at Wells Fargo, says her call for 2013 was hamstrung by a misreading of the Federal Reserve.
"We had anticipated that by the second half of 2013, the Fed would start to incrementally remove, or at least taper back on, some of their quantitative easing programs," Adams granted. "So what we missed for the most part was that the Fed kept the party going all the way through the end of 2013, contrary to our expectations."
For 2014, "the way we back into our 1,850 price target is by saying that this Fed is going to be very, very hesitant and kind of keep the reins the best they can on financial market activity," so while the market multiple will contract as it typically does when the Fed makes policy more restrictive, "we're going to have a below-average contraction in the multiple," Adams said.
At the same time, inflated expectations could prove the market's Achilles' heel.
"In 2013, everyone was suggesting that growth would be kind of stagnant, and that set us up for a period of time in which growth could exceed expectations. I think the opposite is the case this year," Adams said. "Growth probably will incrementally improve in 2014. At this point, we seem to have priced in much better growth expectations, and that's the risk."
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