Futures Now: Blog


  Tuesday, 3 Feb 2015 | 2:33 PM ET

Oil expert: This is a ‘dead cat bounce’

Posted By: Alex Rosenberg

Crude oil surged 7 percent on Tuesday, taking the commodity more than $10 per barrel above the multiyear lows hit last week. But oil expert Stephen Schork believes that the incredible plunging commodity hasn't bottomed just yet.

"I do think this is a dead cat bounce," the editor of the widely read Schork Report said Tuesday on CNBC's "Futures Now." "I do expect another leg lower."

He said oil prices have been supported by the United Steelworks strike at oil products refineries, which has the potential to tamp down American energy production, and thus is bullish for oil products. Schork argues that oil has rallied in sympathy with the fundamentally sound bounce in gasoline and other products, but that the story is actually quite bearish for crude, as "1.6 million barrels a day of crude oil demand has just gone missing from the market."

"The bottom line here is, we do not have enough demand, and the demand is going to be weak for the next two to three months, and we have too much supply," he said.

Read MoreStocks rally on oil; Dow, S&P up more than 1%

»Read more
  Sunday, 1 Feb 2015 | 4:39 PM ET

Strong or weak economy? Markets and data disagree

Posted By: Alex Rosenberg

Markets are throwing off some very negative signals about the U.S. economy. However, with economic data remaining relatively strong, the overhanging question is whether investors will begin to take those bad signs to heart.

Crude oil, typically taken as a barometer of industrial and consumer demand, continues its incredible plunge. The critical commodity has lost some 60 percent of its value in the past seven months, falling to levels not seen since the depths of the financial crisis in 2009.

Meanwhile, Treasury yields plumb new lows, with the 10-year yield falling below 1.7 percent on Friday even as the Federal Reserve looks to hike short-term rates. Across the Atlantic, German 10-year notes are yielding about 0.3 percent, and the Swiss 10-year yield is actually negative.

"If Rip Van Winkle were to wake up today and see where oil is and where bond yields are...he would be very tempted to say that we must be in a recession," said Nicholas Colas, chief market strategist at Convergex.

But of course, the U.S. is not in a recession. Even though Friday's gross domestic product (GDP) number showing annualized growth of 2.6 percent in the fourth quarter was a bit of a disappointment, full-year growth came in at 2.4 percent.

Separately, the employment numbers have been even better, which is set to be confirmed on Friday, when the Bureau of Labor Statistics is expected to report the 12th straight month of 200,000-plus gains in nonfarm payrolls.

»Read more
  Thursday, 29 Jan 2015 | 4:24 PM ET

Reagan’s OMB head: Wealth inequality is a problem

Posted By: Alex Rosenberg

It might be hard to imagine President Ronald Reagan agreeing with President Barack Obama's take on wealth inequality. But Reagan's first director of the Office of Management and Budget, David Stockman, says that the disparity in household wealth is a major problem that ought to be addressed. He just has very different ideas about how to deal with it.

Stockman's specific concern is gains in the stock market, which he say have contributed massively to wealth inequality. Since he maintains that stocks have been propped up by the actions of the Federal Reserve, he has a problem with the money that Americans have made from rising stocks.

Profits off of stocks are "totally ill-gotten gains," Stockman said Thursday on CNBC's "Futures Now."

Read MoreBill Gross: Fed tightening won't be too painful

"This is a massive windfall to the 5 percent or 1 percent" wealthiest American households, he said. "This prosperity we've had in the top 5 percent—and that's where most of the consumption growth has been—is entirely a function of artificially ballooning stock prices and other risk assets."

Meanwhile, "the 'Main Street' households in America are not doing well. Their incomes are not growing."

»Read more
  Thursday, 29 Jan 2015 | 7:30 AM ET

Strong dollar creates ‘tremendous systemic risk’

Posted By: Alex Rosenberg

Even though the dollar has surged and the U.S. economy is outperforming the rest of the world, investors need to be concerned, says Societe Generale head of U.S. macro strategy Lawrence McDonald.

"The dollar is creating tremendous systematic risk," McDonald said Tuesday on CNBC's "Futures Now."

One issue is created from crude oil, given that crude oil prices are inversely related to U.S. dollars, since as the value of the dollar increases, it takes fewer of those dollar to buy a barrel of oil.

"As the dollar goes higher, it drives oil lower. Russia is now junk [in its credit rating], but it's not just Russia. If you look at the corporate debt market, and the number of companies that are tied to Russia's fate, you just have a situation where there's tremendous systemic risk that's tied to oil."

On Wednesday, crude oil closed at a fresh six-year low, which appeared to weigh heavily on equities.

Read More Crude oil bottom seen at $40: CNBC Fed survey

»Read more
  Monday, 26 Jan 2015 | 8:31 AM ET

Sticker shock! Stock valuations at 10-year high

Posted By: Alex Rosenberg

It may not feel like it, but stocks are actually more expensive than they've been since 2005. Still, most investors say that shouldn't be a huge cause for concern.

The S&P 500's price-to-earnings ratio, which compares the price of the S&P to analyst projections of what S&P companies will earn over the next 12 months, has risen to 16.6, according to FactSet. Not only is that above historical norms, but it is the highest that metric has been since March of 2005.

What's unusual is that stocks have gotten more expensive in terms of valuation, even as the market itself has been relatively stagnant: The S&P has logged only mild losses on the year through Friday's close.

Read MorePower play: S&P targets 2,200

That's because earnings estimates have fallen dramatically of late. In fact, from the end of the year until now, analysts have decreased their estimate for what S&P 500 companies will earn over the next year by nearly $3, or 2.2 percent. So even as the price/earnings (P/E) equation's numerator has stagnated, earnings have fallen.

Unsurprisingly, much of the decline in earnings expectations comes from energy sector analysts, who are still reeling over oil's 50 percent plunge from its 2014 highs. From the end of the year, earnings per share estimates for the energy sector have swooned 27 percent.

Since share prices haven't fallen nearly as much, the overall impact is that the P/E for the energy sector has risen to 22.4, FactSet senior earnings analyst John Butters finds—the highest for any sector in the S&P.

The cuts have indeed come fast and furious. For instance, when Credit Suisse downgraded Exxon Mobil on Friday morning, it slashed its 2015 EPS estimate for the oil giant from $5.04 to $2.82.

Still, the stock is down just 13 percent over the past six months, which gives a flavor of the dynamic in the energy sector that has sent valuations way higher.

»Read more
  Friday, 23 Jan 2015 | 11:08 AM ET

Why European easing could disappoint the gold bugs

Posted By: Alex Rosenberg

Investors often think of stimulative central bank policies as boosters for gold. But the European Central Bank's newly announced 60 billion euro ($67 billion) per month quantitative easing policy could be a bit different, traders argue.

The reason the Federal Reserve's late QE program was thought to be helpful for gold was that it would hurt the value of the U.S. dollar by creating inflation. It would consequently take more dollars to buy gold; in other words prices would go higher.

The massive inflation predicted by some gold lovers never did arrive, but it is true that the U.S. enjoys higher inflation than much of the world, with core inflation measures running between 1.5 percent and 2 percent.

Similar thinking could lead to gold buying on the ECB QE program—after all, more money is being created and pumped into the system, which should stoke inflation. However, the money created is not dollars, but euros. Consequently, the dollar has risen sharply against the euro, which should hurt gold, all other things equal.

And in fact, while gold initially rose to a five-month high shortly after the European QE announcement, it has subsequently retraced much of those gains, as the U.S. dollar has continued on its path higher.

Read MoreCurrency expert: Euro going 'well below parity'

»Read more
  Thursday, 22 Jan 2015 | 3:33 PM ET

Currency expert: Euro going ‘well below parity’

Posted By: Alex Rosenberg

The euro plunged to an 11-year low on Thursday, after the European Central Bank announced that it would begin a 60-euro monthly asset purchasing program. But it could still have a ways to fall.

Brown Brothers Harriman global head of currency strategy Marc Chandler predicts that the euro, which fell as low as 1.1362 on Thursday after trading near 1.4000 in May, is heading below 1.0. That widely watched level is the point at which it will just take a single U.S. dollar to purchase a euro, a condition known in the currency markets as "parity."

"The divergence between the ECB, the [Bank of Japan] easing policy more, and the Federal Reserve—even if you don't fully accept my view that the Fed raises rates in the middle of this year, no matter how you slice it, the Federal Reserve will raise rates well before the ECB and the BOJ—I think that this pushes the euro well below parity next year," he said Thursday on CNBC's "Futures Now."

"I think about where the euro fell to back in the early part of 2000, 2001, we were down below 0.9. And I think that that's where we should be thinking that we're headed again," Chandler added.

In fact, Chandler maintains that even though the dollar has already made a huge move, "we're still in the early stages of a multiyear dollar bull market."

Read MoreDraghi pushes Europe bond yields, euro to new lows

»Read more
  Tuesday, 20 Jan 2015 | 2:25 PM ET

Marc Faber berates central banks for 'fraud'

Posted By: Alex Rosenberg

For those familiar with the work of Marc Faber, it shouldn't be surprising that his best trade idea is on the short side. But what is interesting is precisely what Faber is looking to short.

"I think people will wake up finally and say, if they can short central banks, that is the trade of the century," Faber said Tuesday on CNBC's "Futures Now."

Eventually, the editor of the Gloom, Boom & Doom Report continued, "The central banks will be exposed for all the fraud they commit."

Faber holds that the actions of the central banks have enriched the already-wealthy at the expensive of the middle class and poor, because their stimulative policies have boosted financial assets and not the real economy.

Additionally, Faber said that central bank actions are highly unpredictable—a contention that gained more heft in the prior week, when the Swiss National Bank shocked the world and rocked currencies by removing the Swiss franc peg against the euro.

"You never know—that's the problem with central banks," he said. "They're professors who never worked a day in their lives."

Read MoreStorm clouds gather over US economy: Can the miracle last?

»Read more
  Thursday, 15 Jan 2015 | 3:36 PM ET

Why 2015 will be the year for gold: Top analyst

Posted By: Amanda Diaz

Suddenly, gold is getting its groove back.

After two straight years of losses, gold is off to its best start to year since 2008. And, according to one well known analyst, 2015 could have gold bugs smiling.

In an interview with CNBC.com's Futures Now, Sterne Agee's precious metals and mining analyst Michael Dudas said that gold should continue to benefit from central banks' efforts to devalue their currencies. Gold prices rose more than 2 percent Thursday to a four-month high after the Swiss National Bank shocked the world and said it would abandon its euro currency peg. The precious metal is now up more than 6 percent year to date.

Read MoreGold rallies to a 4-month high

»Read more
  Thursday, 15 Jan 2015 | 2:52 PM ET

Why oil is in more trouble than you think

Posted By: Alex Rosenberg

Crude oil just can't catch a break.

After rising more than 6 percent on the day, the battered commodity promptly sold off, falling 9 percent in five hours. And IHS Vice Chairman Daniel Yergin says it could get even worse for crude.

"There's still this downward pressure that's there. And the kind of thing that's hovering over it, and it affected things today, is the continuing concerns about economic prospects," Yergin said Thursday on CNBC's "Futures Now."

He says that OPEC's decision not to reduce output targets was partially aimed at stimulating demand, but the global economy hasn't quite cooperated.

India, Indonesia and Mexico are all looking to reduce oil subsidies, which would raise prices there, Yergin pointed out. Meanwhile, Europe's economy is in dire shape. And "Chinese oil demand is so [strongly] linked to construction and infrastructure, and that's weakening."

Read MoreCopper collapses on global growth concerns

»Read more

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