He said investors are surprised by the fact that bund yields had been leading U.S. Treasurys during the recent violent selloff even though bunds have been leading for about 18 months. "Until you get the Fed in play, they're still being led by Europeans," Kotick said. Treasury yields rose in tandem with bund yields Tuesday, with the U.S. 10-year holding above 2.40 percent in the afternoon.
Some of the same factors affecting German stocks, however, will certainly affect U.S. stocks.
"Unless you think Greece is going to end in hugs, which I don't think it is, Europe will continue to dominate during the summer. The only thing I'll put in as a footnote is 'Keep an eye on emerging markets.' They got a triple whammy," he said.
Kotick said emerging market currencies and rates are under pressure, as they struggle against rising commodities prices, the stronger dollar, and higher yields in both Europe and the U.S.
"They're a laggard until they're aggressive. If they get aggressive, they go from being reactive to generally causing some fear ... I'm not looking for them to crash. I'm not looking for them to get aggressive. However this is a credit trade. If yields continue to sell off, there's likely to be some capital flows out of emerging markets, back into the United States."
As for U.S. stocks, he expects the S&P 500, at around 2,080 on Tuesday, to reach 2,170 to 2,200 by year-end. "I just think before you get up there, you're going to have a dip first," said Kotick.
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He said risks for stocks include the Fed, higher interest rates and Greece. "I think EM and some of these other triggers might be the catalyst" for a selloff, Kotick said.
Chandler said even though U.S. stocks aren't following the DAX tick by tick, the correlation is still fairly strong. "In 2010, 2011, 2012, we stayed between 60 and 80 percent (correlation). We fell below 40 percent this year ... and now we're coming back up. ... The correlation had broken down to multiyear lows. We're returning to more normal levels," he said.
Equities markets have different idiosyncrasies and regulations, and that makes the U.S. stock market less likely to follow German stocks, he said.
"You have one big capital market. The bond market is a better measure of how integrated the global markets are," he said.
"We're an equity market culture and they're not," said Chandler. "Because of historical divergences, equity markets are not typically as integrated as bond markets."