Markets sell-off, oil hits fresh low, what's next?

Traders work on the floor of the New York Stock Exchange.
Lucas Jackson | Reuters
Traders work on the floor of the New York Stock Exchange.

Markets lower this week. Oil also lower, breaking below $36 to hit a fresh 2009 low.

This ahead of next week's anticipation of a fed rate hike.

Cramer: Risky stocks to sell ahead of a rate hike

Two market watchers with opinions on the latest market moves ahead of the fed.

Jeff Knight is Global Head of Investment Solutions and Asset Allocation with Columbia Threadneedle Investments.

Knight's overall view has been one of caution.

Knight says as indicators continue to call for caution he is positioned accordingly as we head into 2016. "We are watching Fed policy, Chinese currency developments and credit markets carefully, and so far they have not given an all-clear."

Once that happens, Knight believes that the biggest losers from the progression of turbulence could "lead the way in a recovery, namely commodities, emerging markets, riskier bonds, etc."

Knight has been adding to these "out-of-favor assets" at the margin.

Knight says he has reduced risk by downgrading U.S. small-caps and reducing exposure to EAFE from overweight to neutral.

Christopher Wolfe is head of the Chief Investment Office with Merrill Lynch.

Wolfe says today's sell-off is fear of cascade of effects post a fed hike next week.

Wolfe says recent news is a live example of liquidity issues in High Yield.

Wolfe also says corporate guidance is muted, revenue growth for 2016 is muted and fundamental support is "a ways away."

Wolfe also says "Fed lift-off strengthens the case for China easing."

With rising volatility in 2016, Wolfe favors high quality, strong balance sheets and rising dividends.

He expects the oil share war to continue and will keep oil below $40 throughout 2016.

As for sectors to favor, Wolfe likes, consumer, tech and healthcare.

He also says there is deep value in energy but this may be a second half 2016 story.