Futures Now: Blog


  Wednesday, 11 Dec 2013 | 11:14 AM ET

The budget deal is bad news for gold: Pro

Posted By: Rich Ilczyszyn
Getty Images

Now that congressional negotiators have struck a budget agreement, one big hurdle to an early Federal Reserve taper has been cleared. And that could be bad news for gold.

Most analysts expect the Fed to start tapering its $85 billion monthly bond-buying program in the first quarter, with only 2 percent expecting a move at next week's meeting.

I'm not a contrarian by nature, but I do like the risk-reward of betting that it does taper next week, especially with a budget deal being struck. A large part of why the Fed chose not to taper in September was the high probability of a government shutdown and debt ceiling debate, but a repeat of that next year no longer looks likely.

Between that and the strong economic numbers we've been seeing, a December taper is certainly not out of the question.

(Read more: As funds get massively short, gold could spike)

»Read more
  Wednesday, 11 Dec 2013 | 8:37 AM ET

Why the top could finally be in for this commodity

Posted By: Alex Rosenberg

Natural gas has had a phenomenal run over the past five weeks, rising nearly 25 percent on the strength of colder weather forecasts. But as the commodity slips in early Wednesday trading, the huge rally could finally be coming to an end.

"Right now we have seen just frigid temperatures," said Jeff Kilburg of KKM Financial. "How long can that persist? We have seen a dramatic 'up' move here, and right now I want to be a seller and kind of capture this euphoria in the market."

Because natural gas is used for heating, cold weather and cold forecasts are a boon to nat gas. So the recent spate of frigid weather has lit a fire under the commodity.

(Read more: Think more frigid weather is ahead? Then buy this)

"NYMEX gas continued to rally as nothing has changed," wrote Stephen Schork, the energy expert who edits the widely followed Schork Report. "That is to say, prices continued to rise as temps continued to fall."

But on Wednesday, nat gas is staging only its third drop in 16 sessions. And Jim Iuorio of TJM Institutional Services says this is past due.

"I definitely think it's due for a pullback," Iuorio said Tuesday on CNBC's "Futures Now." "I'm with Jeff—I think it gets lower now. After all, it can't get much colder here."

»Read more
  Tuesday, 10 Dec 2013 | 3:17 PM ET

Gartman’s 'old man' reasoning for continued rally

Posted By: Alex Rosenberg

Dennis Gartman believes the rally in stocks will continue, and he draws upon his years of trading experience to make that determination.

"I will simply use an old man's view of the market, and say it's been moving from the lower left to the upper right," the editor and publisher of The Gartman Letter said on Tuesday's "Futures Now." "Weakness has been properly purchased and strength has been improperly sold. It will continue to go up until the trend lines are broken—and right now they are far from being broken."

Investors must continue to obey the charts, Gartman said.

"Write this down: 'It will continue to go up until it stops,' " he said. "I've only been at this 40 years, but I'm constantly amused by attempts to discern where the top shall be, or conversely, where the bottom shall be. Stocks stop going down when they stop. Stocks stop going up when they stop. That's the best you can do."

(Read more: Byron Wien: Why I've become bullish on the market)

»Read more
  Tuesday, 10 Dec 2013 | 2:58 PM ET

Gold can go much lower, says top technician at RBC

Posted By: Alex Rosenberg

Gold could pop in the next few weeks, said George Davis at RBC, but once it does, it will present a terrific shorting opportunity on the path down to $1,060.

"Eventually, we will see a retest of the $1,180 area," Davis said on Tuesday's "Futures Now." Once bullion breaks below that level—its 2013 low—"we're going to see an increase in bearish sentiment that potentially takes us down to $1,100 initially and potentially the $1,060 level."

Another 15 percent below current levels, $1,060 would be the lowest gold has traded since February 2010.

(Read more: Here's what was behind gold's wacky jobs reaction)

Davis, the chief technical analyst for fixed income and currency strategy at RBC, has nailed the call on gold this year. On Sept. 5, when gold was trading at about $1,375, he called into "Futures Now" to predict that gold would drop to $1,200. On Wednesday and Friday, gold put in lows just shy of that mark, at $1,210.

»Read more
  Monday, 9 Dec 2013 | 9:58 AM ET

As funds get massively short, gold could spike

Posted By: Alex Rosenberg

Hedge funds and money managers are now less bullish on gold than they've been since June 2007, data from the Commodity Futures Trading Commission show. And that could actually be good news for the beaten-down metal.

"This could set us up for a bit of a run to the upside if we have the catalyst," said Rich Ilczysyzn of iiTrader. "But if we don't get it, then gold could go dormant for a while."

In the week ended Dec. 3, short bets on gold increased by 4,557 to 79,631 lots, and longs slipped slightly to 106,405. That means the net long position in gold fell 16 percent to 26,774 futures and options, which is the smallest net-long position since June 2007.

The interesting corollary to this fact is that from June 2007 to March 2008, gold prices rose by 50 percent.

"I believe that the market's probably too bearish now," said Jim Iuorio of TJM Institutional Services. "And despite the fact that the fundamentals are weighing on gold, market positioning may predict a countertrend rally."

As economic data have improved, many now expect the Federal Reserve to start to bring its quantitative easing program to an end. This is likely to cause interest rates to rise, making non-interest-bearing assets like gold less attractive. Meanwhile, QE has failed to stoke the rampant inflation that many have predicted. Between rising rates and little inflation, investors have largely lost their reasons for owning gold.

(Read more: Here's what was behind gold's wacky jobs reaction)

On the other hand, gold sentiment may have gotten so depressed, and gold positioning so bearish, that the upside now outweighs the downside.

"We've got some large customers that are actually starting to look at this and saying 'I'll buy it here, and put a stop below the yearly low,'" Ilczyszyn said. "The thought now is, 'We might as well just put some on down here.'"

»Read more
  Friday, 6 Dec 2013 | 9:58 AM ET

Here's what was behind gold’s wacky jobs reaction

Posted By: Alex Rosenberg

After the Bureau of Labor Statistics announced that 203,000 jobs were added in November, and the unemployment rate fell to 7 percent, gold didn't seem to know what to make of the news. After initially diving to $1,210, the metal quickly added $20 in about 10 minutes, and consequently hit a morning high of $1,245 at 9:03 a.m EST before cooling off.

Traders said that rather than representing a disagreement on what the better-than-expected jobs number will ultimately mean for gold, the action can mostly be pegged on a lack of liquidity.

»Read more
  Thursday, 5 Dec 2013 | 4:40 PM ET

Is QE behind the rally? Siegel and Wien debate

Posted By: Alex Rosenberg

Byron Wien and Jeremy Siegel both say stocks are headed higher. But while Wien says that the Federal Reserve's quantitative easing policies have been a big part of the market's bull run, Siegel believes that the effect of the Fed has been badly overstated.

"I think a large part of the appreciation in the market this year is a result of Federal Reserve monetary accommodation," said Wien, the vice chair of Blackstone Advisory Partners. "That's what drove the market. It drove stock prices higher, and it kept interest rates low."

(Read more: Byron Wien: Why I've become bullish on the market)

But Siegel, professor of finance at the Wharton School and one of the best-known market bulls, takes issue with that characterization.

"I have to disagree with you here," Siegel directly told Wien on Thursday's episode of "Futures Now." "I think that one of the biggest myths on Wall Street is that it's QE that's driving the market."

"I'm looking at the earnings and the interest rate and saying, 'I can certainly justify these prices without having to resort to QE,' " Siegel continued.

(Read more: You're wrong—QE has not boosted stocks: McKinsey)

Because he doesn't think the Fed's $85 billion-per-month bond-buying program has been the main driver behind stocks, he doesn't think that a reduction, or tapering, of that program will have a traumatic impact on the market.

»Read more
  Thursday, 5 Dec 2013 | 1:54 PM ET

Byron Wien: Why I’ve become bullish on the market

Posted By: Alex Rosenberg

Byron Wien is changing his tune. In January, he predicted that 2013 would be a tough year for stocks—but now he says that the market has further to run.

"If the economy keeps on growing at a 2 percent or better rate, if earnings do improve, maybe even being disappointing but still improving, and if valuations aren't excessive—and they're not—stocks can go higher next year," Wien, the vice chairman of Blackstone Advisory Partners, said on Thursday's "Futures Now."

This is in stark contrast to his call for what the market would do this year. In his famed series of yearly predictions, Wien said that 2013 would be a tough year for the market.

"A profit margin squeeze and limited revenue growth cause 2013 earnings for the Standard & Poor's 500 to decline before $100, disappointing investors," Wien predicted in early January. "The S&P 500 trades below 1,300."

(Read more: BlackRock bond guru: Now I prefer stocks to bonds)

Wien says that he got part of that call mostly right.

"While the S&P is going to earn probably $105, earnings were disappointing this year," Wien maintained. "They didn't expand as much as people thought, even though the economy bumbled along."

»Read more
  Wednesday, 4 Dec 2013 | 2:58 PM ET

Yes, you should buy this dip: Trader

Posted By: Anthony Grisanti

The S&P 500 is down four days in a row, but that's no reason to get scared. I'm buying this dip in stocks, because at this point, it's finally become more than a Fed-driven market. On the whole, economic data are improving, and two data points coming in the next two days should confirm the recent bout of economic strength.

On Friday we get the single most important economic number in the November employment report. ADP said that 215,000 jobs were added by the private sector, which is a good number, and we'll see if the official data agree.

(Read more: Traders await this week's 'hugely critical' number)

Thursday's GDP data are also projected to be strong, with most economists expecting to learn that GDP grew more than 3 percent in the third quarter. That's decent economic growth.

»Read more
  Wednesday, 4 Dec 2013 | 9:53 AM ET

Beware the curse of the new Fed chair?

Posted By: Alex Rosenberg
Janet Yellen
Andrew Harrer | Bloomberg | Getty Images
Janet Yellen

Markets may be excited by the idea of a Federal Reserve led by Janet Yellen, but if history is any indication, stocks could be in for a rough patch as she begins her tenure. Over the past 25 years, a distinct and disturbing trend has emerged—one that has been deemed the "curse of the new Federal Reserve chair."

"Newly installed U.S. central bank heads since 1970 see S&P 500 returns that are, on average, negative over the first three years of their tenure," writes out ConvergEx's chief market strategist, Nicholas Colas, in a Wednesday note. "You could have safely sat out the first three years of Volcker, Greenspan, and Bernanke's respective tenures and made all/even more of the market's return in the remainder of their time on the job."

To be sure, the performance over the start of Chairman Paul Volcker's, Chairman Alan Greenspan's and Chairman Ben Bernanke's terms tells a decidedly gloomy story. On average, the S&P was flat over the first month of the last three Fed chairs' time in office, and dropped about 10 percent in the first three years.

»Read more

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