David Stockman explains why the stock and bond market could be on the verge of a collapse.» Read More
Wharton professor Jeremy Siegel has long been bullish on the market—and over the past few years, he's been dead-on.
In early 2012, he famously called for Dow 15,000 by the end of 2013, and after enduring much mockery, Siegel saw the index hit his target in May.
The bull isn't changing his stripes. As the market has risen, Siegel's targets have, too.
On the Dow, "my target is 16,000 to 17,000 for the end of this year," Siegel said on Tuesday's "Futures Now." "And I think 18,000 is definitely achievable in 2014."
Why is Siegel so unabashedly bullish? Because he believes the market is in the midst of a uniquely bullish tug of war.
On one side is the Federal Reserve's quantitative easing program, which is pushing down bond yields. On the other is an economy that Siegel believes will accelerate in the second half of the year.
Corn and soybean futures have dropped precipitously this year, and both are trading near 52-week lows. This as cool weather and ample rain have led the USDA to predict a record-setting year for the corn and soybean harvest. But the view from the sky is telling a different story.
When Chip Flory of Pro Farmer recently flew over fields in Iowa and Minnesota to get the 30,000-foot view on this year's harvest—or to be more specific, the 1,000-foot view out of a "tiny little single prop plane"—he was a bit distressed by what he found.
First of all, many fields had "holes" or "washed out spots," where flooding had taken a toll. In addition, Flory saw many field that had gone totally unplanted, which occurs when farmers cannot get their crops planted by a given date (they will then file insurance claims).
The problem is that we have to wait until the middle of August to get preliminary data on these "prevented planted acres" from the USDA's Farm Services Agency. And at that point, the market could be surprised by how many of these unplanted acres are out there.
(Read more: Seed giants try tochange image of GMO crops)
"I don't want to say the USDA's getting it wrong, because the USDA has a process they go through," Flory told CNBC.com. "But it's early enough that they just don't have all the data and all the observations that they need to accurately assess everything that's going on out here in northern Iowa and southern Minnesota. As time goes on, and the USDA see how the crop matures, they will obviously be collecting all the data they need."
So if there is a disconnect between what traders and analysts expect out of supply, and what the harvest actually gives, that could be because the crop is so "late" this year—meaning that it hasn't matured as much as it normally would by early August.
"We're at a stage in development that is, in the worst cases, a month behind where it should be," Flory said. "Some of the corn and soybeans are three weeks behind, some are two, but very, very little of it is on time."
Flory blames both a "late planting," and "cooler-than-normal temperatures and cloudy conditions," which slow down the maturation of the crop.
(Read more: Why the crop crunch won't cut your food bill)
The irony is that the problems Flory points out are largely due to the opposite of what plagued crops in 2012. "We had too much rain," he said. "Most droughts are broken by a flood, and the drought of 2012 was broken with a flood in April and May in a wide area of the Corn Belt."
Crude oil has gone my way over the past few days. But now I've changed my tune on how to trade black gold.
If you watch "Futures Now" or read the blog, you know that last week I was a seller of crude oil. I sold crude futures at $108.20, with a target of $105.00 on the downside. But even though we did see a healthy drop, I have since covered my short position and am now long.
Why have I switched sides?
The bulls continue to dominate this market.
Equities enjoyed strong trading into the close on Friday, as the market reached new all-time highs. However, heading into the Monday morning open, we have seen a very small range in the S&P futures.
This week is light on U.S. data, and traders will look to ride the momentum from Friday's bad-news-is-good-news payrolls number. The unemployment rate dropped, but fewer jobs were created than was expected, and this will help investors feel more comfortable that the Fed will maintain its backstop.
Although a tapering of quantitative easing is certainly coming, Friday's disappointing number makes it less likely that it will come in September.
(Read more: July jobs data more gravity than 'escape velocity')
Want to know where gold is going next? Then you better keep a close eye on Friday's close.
Gold started Friday morning much lower. Sentiment in the gold market was bearish, after ADP, GDP, jobless claims and ISM manufacturing numbers all beat expectations within the past 48 hours.
That left all eyes on the July jobs data, which bucked the bullish trend and missed expectations. While economists had expected to see a 184,000 increase in nonfarm payrolls, the number came in at 162,000. Gold had been hugging $1,284 to $1,285.60, the prior lows, but rallied nearly $35 off of the disappointing news.
(Read more: July jobs data more gravity than 'escape velocity')
The market got some pretty good data Thursday. But I still see some serious red flags for the U.S. economy.
On Thursday morning, we saw a lower-than-expected continuing jobless claims number showing that fewer people applied for new unemployment benefits in the week ending July 27 than in any week since early 2008. In addition, China's official Manufacturing Purchasing Managers' Index rose to 50.3 for July, above the 49.9 that economists expected.
(Read more: China PMI could mark end of negative data surprises)
On the other hand, growth in U.S. gross domestic product is at 1.7 percent, mortgage applications are at a two-year low because of rising interest rates, and earnings have been mixed at best. I believe this is a market driven primarily by Federal Reserve policy.
As gold has gotten crushed this year, hedge funds have backed out of the trade, according to Anthony Scaramucci. And the managing partner of SkyBridge Capital, often viewed as one of the most-connected people on Wall Street, believes there will be no reason for them to get back in anytime soon.
"Guys like [John] Paulson are always going to have a steady position in gold," Scaramucci said. "It's a very good diversifier for their overall aggregate personal net worth. But in general, most of the hedge funds have backed out of this trade."
Scaramucci believes that "when they write the history of this period," financial historians will remark that "gold should've worked, it could've worked, it would've worked, but it didn't work in this environment."
He then went on to list the four reasons why it won't get any easier to own gold.
1. Central bankers are exercising caution
Scaramucci notes that investors often hold gold to hedge against an inflationary catastrophe. The problem? The inflationary wolf is not exactly knocking at the door.
"There's a lot of very wealthy people that are going to own gold as a defensive hedge for what they're fearing is that whole Weimar Republic thing, where either the Europeans or the United States aggressively prints money, where the multiplier effect kicks in on the banking side, and you get this out-of-control inflation," Scaramucci said, referring to hyperinflation that occurred under the German democratic system in place between 1919 and 1933.
But Scaramucci says these gold bugs just aren't doing their research. "If you read the minutes from the Federal Reserve, or if you look at the essays that Ben Bernanke just recently published, you will discover that your central bankers, particularly in the United States, understand this issue very well. And that's one of the main reasons that gold has not worked in this environment."
The Fed minutes make clear that the Fed is keeping a close eye on inflation, and is keeping risk factors in mind. For instance, the latest Fed meeting minutes, from the July 18-19 meeting, note: "Although the staff saw the outlook for inflation as uncertain, the risks were viewed as balance and not particularly high."
Round integers like 1,700 on the S&P 500 are well and good, but savvy traders have their minds on another number: 2.75 percent
That was the high for the 10-year yield this year, and traders say yields are bound to go back to that level. The one overhanging question is how stocks will react when they see that number.
"If we start to push up to new highs on the 10-year yield so that's the 2.75 level—I think you'd probably see a bit of anxiety creep back into the marketplace," Bank of America Merrill Lynch's head of global technical strategy, MacNeil Curry, told "Futures Now" on Tuesday.
And Curry sees yields getting back to that level in the short term, and then some. "In the next couple of weeks to two months or so I think we've got a push coming up to the 2.85, 2.95 zone," he said.
(Read more: US Treasurys widen losses after data hints at less stimulus)
Jim Iuorio, the managing director of TJM Institutional Services and a CNBC contributor, thinks the old highs for the 10-year yield are in the cards, but he says that's because of expectations about what Federal Reserve Chairman Ben Bernanke might be thinking.
"The chairman wants to control volatility by sending rates up to a higher level, but he wants to control the rate at which they go higher. The spike up to 2.75 that happened three weeks ago alarmed him," Iuorio said. "Now the market thinks he's ready to start opening the door a little further. So we're headed back to those old highs."
(Read more: Why I'm selling bonds ahead of the Fed)
Is the stock market in a bubble? If not, it's awfully close to one, Robert Shiller argues.
"We have been in an up market since 2009, and it's been quite dramatic," he said on Tuesday's "Futures Now." And as the market rose, "it brought more and more people to regret that they didn't get in in 2009," he added. "So yes, it does have aspects of a bubble."
But what is a bubble, exactly? In the second edition of his book "Irrational Exuberance," the economist defines "speculative bubble" as "a situation in which news of price increases spurs investor enthusiasm, which spreads by psychological contagion from person to person, in the process amplifying stories that might justify the price increase."
A professor of finance at Yale, Shiller believes that this could accurately describe the current state of things. With its precipitous rise, the market has "certainly generated stories that are optimistic," he said.
Bond yields are destined to go higher—the only real question is how quickly.
It's been 15 days since the 10-year yield printed its 2.75 percent high. At that point in time, it was clear that Chairman Ben Bernanke was alarmed by the volatility and dramatic price action caused by the mere mention of the taper. After an aggressive, Fed-wide backpedal, they've been able to contain volatility and engineer stability.
My belief is that the Fed doesn't want long-term rates to go much lower than current levels, for fear that it could put us right back where we were a couple months ago, and create the potential for market shocks. So on Wednesday, I believe we will get mild taper talk which will move the market in the direction of the July 5th high in yields.
(Read more: Wall Street pros: Fall taper priced in...sort of)
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