Call it the perfect nonstorm. Mild weather forecasts, a supply surplus and a general energy market swoon are crushing nat gas on Monday.» Read More
Bond yields will continue to rise, but don't say that the Fed has lost control. Actually, this is Chairman Bernanke's gift to his successor as he heads toward the exit.
After printing 2.88 percent on Monday, 10-year yields have drifted back down to 2.82 percent. Very soon, taper talk will morph into actual tapering, and Treasury markets will have to get used to less Federal Reserve sponsorship.
(Read more: For bond investors, it feels a lot like 1994)
Egypt, Libya, Syria, Iran and Iraq. These countries stand at the forefront of all the problems going on in the Middle East.
Iran, Libya and Iraq represent almost 5 million barrels of oil production a day. Throw in the fact that Egypt sits on the Suez Canal, through which about 4 million barrels a day move, and you can see why oil has held up so well, even though equities have been soft for a week.
After all, if the canal is closed, that oil will have to go around the Horn of Africa, adding many dollars and much time to the cost of delivery.
(Read more: Egypt risk premium built-in, limiting oil's gain)
Crank up Ace of Base, because the recent spike in the 10-year Treasury yield is reminding some investors of another banner year for yields: 1994.
Early in that memorable year, the 10-year yield rose by nearly 2 percentage points in three months (climbing from 5.6 percent to 7.5 percent). In 2013, bond yields have already risen 123 basis points (or 1.23 percentage points) since May 1, so a complete replication of that 1994 180-basis-point move would bring the 10-year yield above 3.4 percent.
Why look back that far? Because the recent rise in yields is without recent precedent. Setting aside 1996, 1994 marks the last time that the 10-year yield rose as much in 79 trading sessions as it did this year.
Another parallel comes in what was behind the rise in yields. Then and now, all eyes were on the Federal Reserve. However, while this year's rise has largely been driven by concerns about what the Fed might do, 1994's yield rally was driven by what the Fed actually did.
Back in 1994, concerns about inflation led the Fed to raise short-term interest rates. But the Fed's 1994 move seemed to take the market by utter surprise. In the present day, even if the Fed does choose to taper down its quantitative easing program in September, the move will have been widely expected.
"I think the situation today is somewhat different, as communication between the Fed and the market is fairly robust," said Lawrence McDonald, senior director at Newedge. "The Fed isn't going to repeat that mistake again."
Michael Block of Rhino Trading Partners similarly views Ben Bernanke's Fed as much more cautious than Alan Greenspan's. "The question is, what has the Fed's learning curve been since then? I'd argue that it's been very large," Block said. This time around, "they're going to stem the bleeding."
The reason that Fed signaling makes such a big difference is that the signaling itself becomes a policy tool. "Back then, there was no communication," Block said. But as he appraises the current situation, "My theory is that the Fed started talking about tapering because they wanted to avoid an overdone situation in credit and housing, and I think the Fed succeeded in doing that."
(Read more: Will US yield spike derail tapering plans?)
All eyes are on the Federal Reserve minutes that we'll see on Wednesday.
In the Monday morning session, equities are quietly trading in a lower range after suffering a selloff last week. The September S&P e-mini futures reached a low of 1,649 Sunday night, and are hugging that level early on Monday. We are still eyeing 1,347.50 as a level of solid support and will look to buy a fresh new low at that level. Still, if that new price is reached, buyers will want to see the market bounce off it, and not just sit there.
(Read more: Here's where the correction will stop)
As I mentioned, this week's biggest economic news will come on Wednesday, when we will get the minutes from the FOMC meeting that was held at the end of July. Traders will be looking to these notes in hopes of getting a better idea of what to expect from September's meeting.
The stock market doesn't like change. I can sympathize, as I don't really like change either.
Stocks are currently going through a transition from historically low interest rates to higher rates, because of the prospect of less Federal Reserve interference. Consequently, the stock market is shifting from buoyancy caused in part by attractive yield comparisons with government bonds to a period in which investors will have to rely on prospective growth.
(Read more: Rocky September is ahead, warns BlackRock strategist)
Gold enjoyed an incredible intraday spike on Thursday, shooting $30 higher in just 25 minutes. The quick move carried the metal above $1,350 for the first time since June.
And if one of Wall Street's top technicians is right, the move is just getting started.
On Thursday's "Futures Now," MacNeil Curry, the head of global technical strategy at Bank of America Merrill Lynch, said that there is probably "further upside" in gold. In fact, he's "looking for a move up to the $1,410, potentially $1,450 area."
He presented the three reasons behind that prediction
Reason One: Downtrend was overstretched
Technicians tend to preach "Follow the trend." But sometimes they take a page from Blood, Sweat & Tears and sing "What goes up, most come down"—or vice versa. Simply put, gold fell too far, too fast.
"If you go back and look at what we did in mid-June, the trend was so overextended," Curry said. "This trend had gotten way too stretched, like a rubber band, and now we're snapping back."
(Read more: Here's what gold bulls need to see)
With four-straight winning sessions, gold appears to be turning around. But keep watching the chart closely, because bullion isn't in the clear yet.
Gold finished on the high side of its range on Friday, allowing the market to carry slight momentum into the new week. After closing at $1,312 on Friday, gold has been up more than $20 at one point in Monday's session, reaching a high of $1,333 as it stretched above major resistance at $1,325.
(Read more: Gold climbs for 4th day, SPDR holdings rise)
It is a common expression on Wall Street: "Sell in May and go away." But BlackRock Chief Investment Strategist Russ Koesterich says that this year, the month for investors to avoid might be September.
On Tuesday's "Futures Now," he presented four big reasons why next month could bring a great deal of volatility.
Reason one: The calendar screams "Sell!"
First, Koesterich says that when you buy in September, seasonal trends are against you.
"We don't pay a lot of attention to the calendar, but it is worth it in September," he said. "September is the only month of the year that, statistically, has a very significant bias. And unfortunately, that bias is negative."
(Read more: Three reasons the market is peaking: Doug Kass)
While the market rose in September 2012, in general, the market has only risen in September about 40 percent of the time, according to Koesterich. Compare that to the 60 percent of the time that the market tends to rise in the other 11 months.
Still, Rich Ilczyszyn of iiTrader says that buying in September is generally a good call. "The market tends to drift higher toward the end of the year," he explained.
Reason two: Fed anxiety will increase
When asked for the most important day for the rest of the year most traders point to Sept. 18. That's when the Federal Open Market Committee will release its next statement, which will be followed by a press conference. On that day, the big question of whether the Fed will begin "tapering" down its asset purchases in September will finally be answered.
That gives Koesterich another reason to be concerned. "In the U.S., we have the Fed taper, and the volatility likely to surround that announcement," he said.
And this strategist believes that tapering is somewhat of a foregone conclusion. "The Fed is likely to start in the fall, and the only question is how much?" Kosterich said. "Are we going to see a more aggressive taper, or a taper-light? In my mind, that's the question that investors are going to start to focus on."
(Read more: Marc Faber: Look out! A 1987-style crash is coming)
Doug Kass hasn't exactly been dead-on with his market calls this year. In fact, Kass has been bearish all year, while the S&P has climbed 19 percent. But this bear isn't backing down just yet.
"Combine the likelihood that we're at the upper range for price-to-earnings multiples, we have political issues that are profoundly important, and we have some deterioration in the technicals," and Kass believes he has all the reason in the world to be short the market right now.
The president of Seabreeze Partners Management laid out each potential catalyst in depth on Tuesday's "Futures Now."
Reason one: Multiples will contract
When asked what he missed about the market's rise this year, Kass pointed at one factor: Multiple expansion.
"Frankly, we have to realize that most investors and strategists and talking heads on CNBC have made very little change in their economic forecasts, and forecasts for earnings, for this year and the next," Kass said. "What's happened is that valuations have gone up from 14 times at the beginning of the year to over 16 times now."
In other words, it's not so much that earnings have greatly improved, but rather that investors have been willing to pay more and more for those largely flat earnings.
"If we look at the 35 percent increase in the S&P since the beginning of 2011, 90 percent of that gain came from multiple expansion," Kass said.
A price-to-earnings multiple of 16 may not be far above the five-decade average of 15.2. But Kass still believes that given the current state of the market, it is inappropriate for multiples to be elevated.
"Given the structural global economic issues—disequilibrium in the U.S. jobs market, continuing leverage, et cetera—and the fact that all this is contributing to tepid economic growth, a discount to the average over the last five decades of 15.2 is probably more appropriate," he said.
(Read more: Why I'm buying into the market right now)
If stocks have any interest in correcting, they sure aren't acting like it.
After a 9 percent rally that took a break in late July, the market has been in a consolidation pattern, as it gathers steam for another move higher.
The fundamental argument for higher prices remains intact: We have an economy that's showing mild improvement, coupled with a Federal Reserve that has convinced markets that there is nothing to worry about. The Fed has been able to engineer a low-volatility environment across many asset classes, and although it could end badly, the Fed continues to be successful at persuading investors to take more risk.
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