Markets

RiverFront rotates some investments into international markets, strategist says

Key Points
  • RiverFront Investment Group Chief Market Strategist Kevin Nicholson noted prices rising on fuel, oil, utilities and medical commodities, while consumers spent less on entertainment.
  • Despite concerns, Nicholson is keeping positions in energy and tech, rather than fading the market.
Closing Bell Exchange: If you're not up on this market, you've made a judgement error on tax reform
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Closing Bell Exchange: If you're not up on this market, you've made a judgement error on tax reform

The market rally has left RiverFront Investment Group Chief market strategist Kevin Nicholson bullish on earnings, but not complacent. Anticipating higher rate hikes from the Federal Reserve, Nicholson said RiverFront is moving investments into Europe and Asia.

"We expect more volatility because last year, you had the fed raising rates from 0 to 1 percent -- 1.5 percent. This year you're going to cross over the 2 percent barrier. We think that's going to bring volatility to the market," Nicholson said on CNBC's "Closing Bell." "What we've done is rotated our money out of the U.S. into Europe and Asia and, you know, those markets are doing well."

Money flowed into stock-based funds during the first full week of trading in 2018. Stock funds added $24.4 billion for the week through Wednesday, making it the sixth-biggest equity inflow total ever, and the most in at least six months.

Some analysts worry the markets show sings of overheating. Nicholson said he thinks the full scope of tax reform hasn't yet been priced in.

"We are going to be a little bit more cautious going forward because sentiment has gotten so high, but we think that it can continue. We think that 2018 will see earnings revisions go up as the year goes on, because a lot of the estimates thus far haven't really baked in the full effect of the tax reforms," he said.

The S&P 500 hit an all-time high, during its best 10-day start to a year since 2003. The Dow, S&P 500 and Nasdaq posted sharp weekly gains.