The Gartman Letter editor Dennis Gartman doesn't want the gold market "correction" to spook investors. » Read More
"The Gloom Boom and Doom Report" Publisher Marc Faber won't back down from his bearish call on U.S. stocks. » Read More
By: Annie Pei
There's one thing that will drive the market's next rally, says strategist Joe Zidle. » Read More
By: Annie Pei
Again Capital's John Kilduff weighs in on whether the crude rally can continue. » Read More
JPMorgan believes investors should brace for volatility.
Anastasia Amoroso, global market strategist for JPMorgan Private Bank, sees it particularly affecting the bond market.
"I would consider positioning for a pickup in volatility in the fixed income markets or maybe even a pickup in rates. If we start to price in any progress on the tax-reform front, then we may have to price in an incrementally more hawkish Fed," Amoroso said Tuesday on CNBC's "Futures Now." "Volatility in the fixed income markets has been very benign headed into this [Fed] meeting."
Volatility has been trading at historic lows. The CBOE volatility index sank to its lowest level ever on July 26. It has now traded under 10 on 56 occasions, including 38 this year.
"The market is focused on tax reform, but the market is not currently pricing in tax reform. We see that in rates," she said.
And, if rates go up, bonds generally sell-off.
Amoroso doubts the Fed will raise rates a third time this year when it meets next week. She speculates the Fed is taking a wait-and-see approach when it comes to whether the White House can successfully get a tax package through Congress.
"The window for tax reform is pretty limited because it's really between now and the end of December," Amoroso said. "As we get further into next year we start thinking about midterms," she added, referring the the 2018 elections. "You have to deliver sooner rather than later."
A striking streak in the S&P 500 Index has Ryan Detrick of LPL Financial calling for a market slip.
As of Thursday, it had been exactly 10 months since the S&P 500 saw a pullback of 3 percent, Detrick pointed out. That makes this only the second-longest streak without a 3 percent pullback that has been since 1928, beaten by an 11-month run that took place from the end of 1994 to December 1995.
That extended rally suggests stocks may be overdue for a downturn. Looking forward, Detrick concludes that the market is long overdue for shallow pullback.
"Could we keep going higher without a lot of volatility? It's possible, but we just think it's been awfully long so that a normal correction this time of the year makes a lot of sense to us here," the market strategist said last week on CNBC's "Futures Now."
At the same time, Detrick says that investors shouldn't react too nervously once that long-awaited drop takes place.
"It's just important to remember that whatever the reason may be when that inevitable correction happens, [investors should not] panic," he said. "The economy still looks good, and potentially, this bull market still has a long way to go. It's just near-term, things look dicey."
Markets were mixed on Friday, with the Dow being the only major average that moved higher for the day.
Don't expect crude to make a comeback thanks to Hurricane Harvey, says RBC global head of commodity strategy Helima Croft.
In a note released on August 28, Croft explained that while hurricanes have, in the past, disrupted the supply of oil, the current infrastructure of U.S. crude production has actually made weather events like Harvey less bullish for oil than in the past.
According to Croft, the Gulf of Mexico had previously made up about 30 percent of total U.S. crude production, while nowadays it only makes up 15 percent of the total.
In other words, Harvey isn't actually disrupting the oversupply of oil as much as some more have initially thought. U.S. crude production still remains near record highs, leading Croft to believe that the oversupply issue for crude, which has dragged down the commodity's price, will keep weighing down the commodity.
In fact, Harvey might actually be bearish for oil, given that it has taken refining capacity offline, cutting down on demand.
"We think the developments for crude, despite [Thursday's] rally, still look pretty bearish because of how many barrels are simply backing up with these refineries being offline," she said last week on CNBC's "Futures Now." "That's probably going to sort of cap whether or not WTI can break through $50 for a while, barring any sort of major outside catalysts."
If there is a bright spot for crude this year, it is actually be the situation in Libya, said the strategist. According to Croft, political unrest in Libya, which has cut down the country's crude oil production, doesn't look to be fading, and could be a "significant source of support" for the commodity going into November's OPEC meeting.
Crude did fall on Friday, but still remains near a one-week high. The commodity, however, has still tanked more than 4 percent in the past month.
The bull market is showing signs of getting too frothy, and long-time bull Jim Paulsen wants investors to be prepared.
"Almost every recovery in postwar history has ended after some period of overheat conditions. I think this one is going to end that way, too," Leuthold Group's chief investment strategist said Thursday on CNBC's "Futures Now."
Paulsen expects inflation will become a bigger and bigger focus. Plus, he said bond yields will trend higher — hence changing the market's character.
"Investors cannot ride the same winners to the end of this bull market," Paulsen wrote in a note to CNBC. "I think these shifts away from old leadership — like large caps, consumer sectors and bond-like stocks — is already starting to happen but will accelerate as inflation and yields start to move higher."
He has a solution. Paulsen is telling investors to ride the rest of the bull market by buying "overheat economy" sectors.
"I would prefer to look at the industrials, materials, energy, technology and then the financials on the idea that yields are probably going to eventually head higher," he said. "I like overseas markets — both developed and emerging better than here."
Paulsen also likes oil stocks, a beaten down area of the market.
"Everyone has given up on them by a long shot. And yet, what are we doing? We're dropping the dollar by 10 percent which has already lifted industrial commodity prices a lot. If the DXY breaks below 90, look for oil to jump up towards $60. I think the dollar is going to be the bailout that might start a trend back towards energy stocks again," he said.
Despite his urge for investors to adjust their portfolios by making some contrarian plays, Paulsen is confident there are many years left before the next recession.
As long as inflation stays around current levels, Paulsen predicts the S&P 500 could gain another 5 percent before the end of the year. It would take the index to 2,600.
"I'm going to stick with this stock market, and stay bullish, and try to avoid the urge to prematurely exit," Paulsen said.
Technician Louise Yamada says there's one chart showing that gold's shining rally is far from over.
Gold has surged 14 percent this year, and on Tuesday settled at an 11-month high of $1,318.90. This brought the precious metal decisively above the $1,300 level where it topped out several times before.
Yamada's chart of gold dating back to 2013 shows with the $1,300 mark broken, "the next level is about $1,380."
Yamada, of Louise Yamada Technical Research Advisors, added Tuesday on CNBC's "Futures Now" that "$1,400, however, would be key resistance because that goes all the way back to 2014, which would be about a four-year base."
The rise for gold has come as North Korea concerns have spurred demand for safe haven assets, and as the dollar index has fallen to a 2½-year low. Gold tends to enjoy an inverse relationship to the U.S. currency.
If gold continues to rise, stocks could be in trouble.
"Gold and equities move inversely, so if gold continues up here it's probably possible that we move more into a corrective trend in equities as gold rallies up," she said. "There's a lot here that suggest that equities are looking a little fragile under the surface, and it would be logical that you would see equities pull back a little or consolidate."
Gold has surged more than 12 percent this year, and Exante Data founder Jens Nordvig says there are three main macroeconomic trends that are behind the rally.
"I would say it's the low-yield environment, the trend of the dollar and strong growth in emerging markets [that are driving gold]," he said Thursday on CNBC's "Futures Now."
"Those three things together are some of the things that have underpinned the gold rally, and they're still here."
Low bond yields generally lessen the opportunity cost of holding gold, as gold yields nothing and therefore investors are less tempted to pour into bonds than they are into the yellow metal. With U.S. Treasury yields near June lows, the drop in bond yields has partly accounted for gold's recently rally that began in early July.
Of course, gold's advance has also been due in part to the decline in the dollar. The yellow metal and greenback have an inverse relationship, and while gold has rallied, the dollar has dropped about 9 percent from the start of the year. What's more, Nordvig also believes the "dollar retracement" this year might still continue. And so while it's "just uncertain right now to take a long dollar position," gold may be where investors want to look if the greenback continues to fall.
Aside from those three economic factors, Nordvig mentions that tensions in Washington could also contribute to another rally for gold.
"There's the government shutdown risk and then there's the debt ceiling risk," he said. "There's been an elevated risk since Trump started to talk about it in more casual terms at his speech earlier this week."
"That's definitely something that's holding the market back, and it's something that could potentially give a boost to gold while dragging the dollar down," Nordvig added.
Gold did climb above $1,300 on Friday, hitting a one-week high before dropping back below that key technical level.
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