A trader predicts that based on historical data, a post-election recession could be on the horizon. » Read More
Last week, the S&P 500 Index came close to closing above a key level. Actually, it didn't come close.
It came very, very, very close.
The S&P 500 rose 2.7 percent over the course of the week, and hit its highest level in nearly two months after a strong February jobs report. In Friday's session, it also crossed above the key level of 2,000, which has developed importance for both psychological and historical reasons.
It didn't close above that level, however. Instead the S&P 500 closed at 1,999.99 — or more specifically, at 1,999.98722585876.
Never before has the S&P 500's closing price been that close to a number divisible by 100. Before Friday, the S&P had never seen a "99.99" close, Howard Silverblatt, senior index analyst at S&P Dow Jones Indices, told CNBC.
Silverblatt adds that there have been two closes right at a 100.00 value, but not in a while. The two dates in question are October 25th, 1979 and July 28th, 1978 — with the index closing at 100.00 each time.
Ron Paul wants to deliver a message to the market that he claims the Federal Reserve refuses to do itself.
The former U.S. Republican congressman said this week that the Fed has been propping up markets, and the U.S. economy has already entered a recession despite what central bankers might say.
"They're paid to spin it in a positive manner," the libertarian firebrand told CNBC's "Futures Now" in an interview.
He added: "You can't expect them to say anything else."
Markets in Japan are getting ready for a huge comeback, according to Stephen Parker of JPMorgan Private Bank.
Japanese stocks have been severely battered in recent months, with the Nikkei 225 index falling 15 percent this year. But Parker says the market is actually set to recoup all those losses, and finish 2016 in the green.
In past years, Japanese companies were focused on preserving jobs, he said. Now, he expects to see a "major change" in executives prioritizing shareholder returns. This will lead to companies using their accumulated cash piles to raise dividends and implement stock buybacks.
Japan "is now delivering some of the best earnings growth in the world. And if you think about a world where overall economic growth is pretty slow, you want to focus on markets where you can actually see companies do things to improve margins and deliver on earnings growth," Parker said Tuesday on CNBC's "Futures Now."
Compared to U.S. companies, Japanese firms have nearly three times as much cash as a percentage of market cap, Parker said. He added that 2016 is on a record-breaking track for Japan in terms of buybacks.
In addition, Parker expects Japanese companies to see earnings growth this year of 5 to 10 percent. Coupled with the sell-off in Japanese stocks, Parker said the current environment provides investors with a substantial buying opportunity.
"The markets are actually some of the cheapest we're seeing anywhere," he said.
According to Parker, several specific catalysts have contributed to Japan's market rout. For one, he said, investors have cashed out on profits after the Nikkei outperformed most other stock markets in 2015. Japan has also suffered from nervousness surrounding China's economic slowdown, as well as concerns over the country's monetary policy.
Parker also said investors have attributed rising Japanese stocks to a weakening yen. But even if the yen continues to strengthen, the pressure on stocks should soon abate, in his view.
"The fact that a lot of people were associating the rally in Japan with a weaker currency, I think that's an old story," he said. However, "as investors begin to look back and see what companies are delivering from an earnings perspective, that potentially is a big positive and a big tailwind for Japanese companies."
Stocks may have rebounded from their recent lows, but the option market still implies a big chance that stocks plummet anew before the year is out.
After falling as low as 1,810 two weeks ago, the S&P 500 Index bounced significantly in the prior week, closing Friday trading at 1,918. But even as stocks somewhat regained their footing, the market's fear certainly has not dissipated.
According to options market data from multiple providers, the December quarterly options expiring at the end of the year imply a 50 percent chance that the S&P 500 will touch 1,600 at some point in 2016. That would be a drop of nearly 17 percent from current levels and a full-year decline of 22 percent.
And it's not just that big moves are generally expected in this more-volatile market. The converse upside level — the highest point which traders think the S&P has at least a 50 percent chance of a touching in 2016 — is 2,110, or just 10 percent above Friday's close.
The dramatic amount of downside traders appear to be bracing for "tells you that this is sustainable fear, even going out six to twelve months," Brian Stutland of Equity Armor Investments said last week. "People clearly think that the downside could be real, and they want protection."
Anyone who believes that the global economy isn't crashing must be delirious, according to David Stockman.
The former director of the Office of Management and Budget argues that a rapidly deteriorating economic environment is going to send stocks and oil prices spiraling even lower than they already have.
"I think your traders are smoking something stronger than what I can legally buy here in Colorado," Stockman said Thursday on CNBC's "Futures Now."
The S&P 500 has fallen 6 percent year to date, and crude oil has plunged more than 17 percent. However, Stockman still sees a long way to go. He expects the S&P 500 to drop to 1,300 before making any new highs, and sees oil falling below $20.
Investors have been too optimistic about the U.S. economy because they are not factoring in global risk, said Stockman, who expects to see a recession by the end of the year.
"Everywhere trade is drying up, shipping rates are at all-time lows," he said. "There is a recession that's going to engulf the entire world economy, including the United States."
Contributing to the turmoil is the ineptitude of central banks, he said. While Stockman doesn't expect the Federal Reserve to adopt a negative interest rate policy, he said monetary policymakers have exhausted all other options.
"They should have the good graces to resign. They are lost. None of this is helping the economy," he said.
Add in the 2016 presidential election, and Stockman said the markets will find themselves in a situation similar to that of the global financial crisis.
"The out-of-control election process will feed into and create an environment that we haven't seen since the fall of 2008," he said.
Of course, this isn't the first time Stockman has been bearish. For years, he has been predicting a crash worse than 2008.
Stockman headed the White House OMB during President Ronald Reagan's first term.
Wall Street is breathing a sigh of relief as the S&P 500 has rallied nearly 5 percent from its recent low. But before investors put more money on the table, one widely followed market watcher said to "buckle up" for more volatility.
"I'm not looking for a bear market. We have further to go, but I don't think it's going to be a major downshift from present levels," said the vice chairman of Blackstone Advisory Partners. A bear market is loosely defined by a 20 percent or more decline from a recent high. The S&P 500 is currently 11 percent from its May 2015 peak. "I don't think we've seen the ultimate lows," he added.
For Wien, the market will continue to come under pressure as the earnings picture deteriorates and the oil market remains unstable. Many of the gains and losses in the equity market this year have been a result of sharp moves in the oil market.
"Oil has been the key factor [this year]," he said. "If you want the stock market to prove me wrong and continue to rally from here, you really need oil to stabilize and move up."
Wien noted that the correlation between oil and stocks did come as a bit of a surprise, as many thought the decline in oil prices would benefit the consumer and therefore boost stocks. "We did think originally that a decline in the price of oil was favorable, but now I think a rise in the price of oil indicating the whole system would be stable is the most bullish thing that could happen."
Ultimately, Wien expects the S&P 500 to close the year negative by approximately 5 to 10 percent. The index is currently trading around 1895, more than 7 percent lower than where it started 2016.
"My view is that there's still bad news out there. … We're going to reach a bottom somewhere in the first half," he added.
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