Historic rally could unwind due to trade and Brexit risks, market watcher Victoria Fernandez warns

The Federal Reserve appears to be taking a more dovish approach to the markets, but Victoria Fernandez suggests it's not enough to keep the markets stabilized.

As long as geopolitical risks dominate the headlines, the chief market strategist at Crossmark Global Investments contends they'll exacerbate global slowdown fears which could undermine 2019's historic rally.

"We obviously have some uncertainties, right? And, the biggest two things on that list are going to be Brexit and the U.S.-China trade relations," Fernandez told CNBC's "Trading Nation" on Wednesday.

Despite her view that stocks are vulnerable to a pullback, she largely believes the U.S. economy is strong enough to withstand these obstacles — including one more Fed interest rate hike. However, it looks like another move higher is off the table this year. The central bank announced Wednesday that it plans to keep rates unchanged.

'Surprised that they went down to zero'

"I am surprised that they went down to zero on that. To me, that's more dovish than what we were expecting for the rest of the year," Fernandez said. "That could change. We know it's not written in stone. But that is a surprise to me."

Fernandez is responsible for $5 billion in assets under management, and her typical time horizon for clients is about 12 months for equities. Her asset allocation right now is 60 percent U.S. stocks and 40 percent Europe.

"On the equities side, we're finding places we can take advantage of movements in the market," Fernandez said. "As long as we have some tail winds to keep pushing us, that works to our advantage. If we have a big pullback, that's going to change our outlook a little bit," Fernandez said.

Since the December low, the S&P 500 has soared more than 20 percent.


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 CNBC and 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