One RBC strategist sees tough times ahead for oil. » Read More
By: Amanda Diaz
President-elect Trump's policies will help the U.S. economy, but they won't be enough to save stocks long term, Faber said. » Read More
Earnings and the future of quantitative easing: the market's two biggest concerns. But they're one and the same to Doug Kass, president of Seabreeze Partners Management.
"I see a false economic dawn in the U.S. and around the world," Kass said on CNBC's "Futures Now," adding that the markets and economic data have been boosted by the Federal Reserve's monetary policies. "The bottom line is that interest rates are a very important raw material in the U.S. economy. As they rise, it affects everything—profits, capital spending, hiring."
Rolling back QE will have serious ramifications, he said, and for him there's no question that it's coming. "I think tapering is a given, probably in September," he said.
In the meantime, the earnings picture looks negative to Kass, because easing has obscured the truth about how weak corporate profits are.
"I don't expect earnings to meet consensus expectations," he said. "The singer Robert Palmer was 'Addicted to Love.' Unfortunately, our corporations, our consumer and even are government are addicted to lower interest rates."
Looking for a fundamental reason to own gold? Keep looking.
Simply put, the fundamentals do not look good for the metal. Inflation is tame, interest rates have risen and stocks remain buoyant. Gold has lost more than 30 percent of its value over the last nine months, which has washed out many of the weaker hands.
(Read More: Gold's Jobs Nightmare)
Crude has had an incredible run over the past two weeks. But I'd think twice before hopping aboard this speeding train.
At today's highs, August crude oil futures was up more than 12 percent in two and a half weeks. It would be easy to attribute this rally to tensions in Egypt, but that would tell only part of the story. Both crude and S&P futures began their move on June 24, and although the move in stocks hasn't been as dramatic, it's reasonable to assume that part of crude's move is due to a prevailing risk-on mentality.
(Vote in our poll: Has Oil Hit its High for the Year?)
Gold bugs are doing their best to defend $1,200.
Gold retested $1,200 on Friday, trading down nearly $50 from the highs following a much-better-than-expected employment report. We are not seeing the weakness follow through in this session, as the market has stabilized and is retesting the $1,233 retracement level, which will now serve as resistance. A close above $1,233 on Monday will signal a likely consolidation back toward $1254.60 to $1,255.70 this week.
Friday's jobs report led the U.S. dollar to soar to new swing highs, putting pressure on commodities priced in dollars, which we saw clearly in the metals. On Monday morning, the dollar was slightly in the red, which was giving the metals a breather.
(Read More: Gold's Jobs Nightmare)
The economy just got some great news, and gold hates it.
The U.S. economy added 195,000 jobs in June, easily besting the 165,000 consensus estimate. As soon as it heard the news, gold tanked $26, dropping to the lowest level in a week. But why?
"Gold hates any good U.S. data at this stage," said Kathy Lien of BK Asset Management, "because any kind of good news is driving the dollar sharply higher, and gold is just being punished as a result."
(Read More: Job Growth Posts Large Gain in June; Rate Holds)
For Lien, the Federal Reserve's tapering plans remain the market's main focus. And she believes that today's number "overall reinforces the idea that the data is good enough to taper in September."
(Read More: Why Fed May Hike Sooner Than You Think)
That is certainly what the bond market seems to imply. Yields are rising as traders expect that the Fed is now getting the economic signals it needs to exit the bond market shortly. And as yields rise, gold looks like a worse and worse investment, because its zero percent yield looks increasingly meager when compared to the yield of Treasury notes.
(Read More: Why Higher US Yields Should Cheer Investors)
As George Gero, gold analyst at RBC, wrote in a note: "Bond yields jumped higher," which makes for "strong dollar and weak metals."
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