Bitcoin is 'first sign of greed since Great Recession,' says Federated's Chiavarone

There's a mountain of greed manifesting itself in the market, according to Federated Investors portfolio manager Steve Chiavarone.

But he says you won't find it in stocks — it's in cryptocurrencies.

"It's the first sign of greed since the Great Recession," Chiavarone said this week on CNBC's "Trading Nation." "It's indicative of rising risk appetites which will drive equity markets higher almost regardless of what happens with bitcoin."

Bitcoin is such a contentious emerging asset, Chiavarone recently felt compelled to publish a market memo on it, because he was fielding so many questions from clients and advisors.

"Investors wanted to be on the roller coaster in the '90s. They wanted high returns. They didn't mind volatility," Chiavarone said.

"The Great Recession put the fear in a lot of folks and they wanted to go on the merry-go-round Folks really want to get on that risk trade," he added.

Chiavarone, who is a bull on the actual blockchain technology, believes there's a good chance bitcoin will suffer the same fate as — one of the biggest dotcom bubble busts of the high-flying 90s, before tech stocks crashed.

Bitcoin bear, stock market bull

However, that doesn't mean a monster crypto drop would send the stock market into a tailspin.

According to Chiavarone, stocks are on solid ground. He cites the impact from President Donald Trump's tax reform package and strong economic fundamentals.

"When you look at pick-up in economic growth, the full impact of the tax reform boost, [and] the earnings number, you've got to pull your target up to match it," Chiavarone said. "A lot of strategists falling over themselves to try to figure out what that right earnings number is."

Chiavarone predicts the S&P 500 Index will end the year around 3100 — a 10 percent jump from current levels.

Vote to see results
Total Votes:

Not a Scientific Survey. Results may not total 100% due to rounding.


Trades to Watch

Trader Bios


Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

Read more