The stock market is going to hit new highs as earnings continue to strengthen and the economy continues to do pretty well, Wall Street veteran Jeffrey Saut told CNBC on Monday.
U.S. equities traded higher Monday, with the Dow Jones industrial average surging 300 points as trade tensions eased.
"A lot of people have been influenced by the rockiness, if you will, of the and the Dow. Meanwhile the underlying Russell 2000 and more importantly the Value Line Geometric Index, which is a much boarder-based index, are trading out to new all-time highs," said Saut, chief investment strategist at Raymond James.
"This is a whole new leg up for the equity markets," he told "Power Lunch."
Concerns about a possible trade war with China have been weighing on the markets. However, on Sunday Treasury Secretary Steven Mnuchin said the prospect of a trade war was "on hold" after an agreement to suspend tariff threats.
Saut, though, is looking at earnings, which are continuing to come in better than expected.
And he's not concerned about a strengthening U.S. dollar, which tends to hit multinational corporations. In fact, he called it a "double hit" for foreign investors.
"Not only are they getting rising stock prices but they are getting a currency trade as well," said Saut, who correctly predicted the market sell-off in February.
Jack Ablin, chief investment officer at Cresset Wealth Advisors, is adopting more of a wait-and-see attitude.
While stocks were cheered by the trade news, he pointed out that it is temporary.
"This is a bit of a false hope," Ablin said on "Power Lunch."
"I don't think that this is necessarily a percipience of a new leg up unless of course this news falls into place," he added.
On Monday, top Trump economic advisor Larry Kudlow told CNBC the U.S. would not rule out tariffs on China as a "negotiating" or "enforcement" tool, despite the progress being made in trade talks.
Ablin believes it all rests on what happens with the U.S. negotiations with North Korea. If they are a success then perhaps the trade agreement will continue as planned, he said.
President Donald Trump and North Korean leader Kim Jong Un are expected to meet on June 12 in Singapore. However, Kim has threatened to pull out of the high-level talks.
"If for some reason it doesn't happen or North Korea falls apart … we're back to the trade war with China again," he said. "It's still fluid."
Plus, he thinks if the U.S. backed away from a trade dispute from China "for real," then we would hear Commerce Secretary Wilbur Ross and trade advisor Peter Navarro "flapping their arms and stamping their feet and that's not what we're hearing right now."
How to trade it
Ablin would stick with small-cap stocks both domestically and internationally, which he said are best positioned to handle rising interest rates and trade war risks. He'd stay away from big, global companies.
Saut likes the energy sector.
— CNBC's AJ Vielma contributed to this report.