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This could be your final opportunity to reap big gains from the Trump rally.
PNC Asset Management chief investment strategist Bill Stone says Wall Street is overestimating earnings strength for 2017, and that's just one of the things that could nudge stock prices lower.
"We're looking for a mid-single-digit earnings growth rate next year for the S&P 500. The Street is probably roughly double or a little more than that," Stone said Tuesday on CNBC's "Futures Now."
He cites a stronger dollar and the potential for global growth to slow down for his below consensus forecast.
Stone's latest thoughts come as the Dow ended the day at a record high of 19,251.78. Since Donald Trump won the Nov. 8 presidential election, the index has now closed at all-time highs 11 times and is up more than 5 percent.
Stone is also closely watching next week's Federal Reserve policy meeting, where investors will likely see the first interest rate hike in a year and the second in a decade.
"It's a done deal that they do it," said Stone. "We think two hikes next year."
Even though the Trump rally may be in its final leg, Stone predicts financial stocks, which are up more than 15 percent since Election Day, will see more upside in coming months. He has been bullish on financials since the beginning of the year.
"I think they are in a good place because if you think about it, they have been poor performers until ... recently. The yield curve has gotten really steep and may in fact get steeper," he said. "You have the opportunity, hopefully if the economy continues to strengthen, [for] some loan growth. So, I think that has a good story."
The surprise OPEC deal last week sent crude prices surging and left some market watchers slack-jawed, including Dennis Gartman.
The agreement came after months of false starts, including a failed accord in Doha, Qatar, in April that sent markets reeling.
"Clearly we were wrong in selling crude oil short the day before the OPEC meeting," the editor and publisher of The Gartman Letter wrote Thursday. Despite being caught off guard by the move, Gartman explained to CNBC why he doesn't expect the rally, or deal, to last long.
"If you can bet on one thing in this world, bet on a mother's love, and bet on the fact that OPEC cheats," he said in a recent interview on CNBC's "Futures Now." "But it will be a month or two before we see that happening."
Oil surged above $50 for the first time since late October in the days after OPEC's agreement to cut production for the first time in nearly a decade. The move prompted crude to post its biggest weekly gain since February 2011.
Still, Gartman is skeptical that the rally can be sustained, as he believes the recent run has been nothing more than a short squeeze. Meanwhile, tensions between OPEC rivals Saudi Arabia and Iran — which was resistant to the idea of a curb on production — mean something may have to give eventually.
"I've said for a long time that i don't expect oil to get above $52," he said. "There are so many people caught on the short side of WTI and that's what you are seeing right now. That will end sometime in the coming weeks," said Gartman.
In addition to what he anticipates as a failed agreement, Gartman said the strong dollar will weigh heavily on oil and all commodities in the next year.
"The strong dollar is going to continue to be overhead resistance on commodity prices. Clearly that adds to the price of crude oil and that is bearish in the long run," he said.
Wharton School professor Jeremy Siegel now believes 20,000 is in reach for the Dow, after earlier calling for the index to rise to 19,000 by the end of the year.
"Is it possible that we get another 5 percent in the month of December? Most definitely. That would probably get us to Dow 20,000 and 2,300 on the S&P," Siegel said Thursday on CNBC's "Futures Now." "I don't see the market stopping where we are right here."
Since Donald Trump won the presidential election, the Dow has surged by nearly 5 percent while the S&P 500 is up more than 2 percent. In fact, the Dow has broken all-time highs seven times since the election.
"This looks like the early stages of a good equity move. Actually on Trump's appointments yesterday, if it weren't for bond yields going up, I think we would be up 200 to 300 points on the Dow," he said.
"I thought that was extremely reassuring and sets up a very good tempo and setting for the rest of this year and into the early months of the Trump administration."
Dow 20,000 would represent a further rise of about 4 percent for the index.
A massive year-end rally could be in store, according to one JPMorgan strategist.
Markets have continued to impress throughout November as the so-called Trump rally rages on. The S&P 500, Dow and Nasdaq — all sitting at record highs — are up a respective 4, 6 and 3 percent this month. And while some may speculate that the market has come too far too fast, Jack Caffrey of JPMorgan Private Bank still sees stocks heading higher into year end.
Just how much higher could they go? The answer, says the strategist, could be up to 4 percent.
"Two to 4 percent would be the next rally for the month of December," Caffrey said on Tuesday on CNBC's "Futures Now." "I think certainly going back through the entirety of the year, the more we see in December the more likely we're going to have some of that forward [momentum]." Caffrey's call comes as we enter what is seasonally one of the strongest months of the year. On average, the S&P 500 posts a return of 1.4 percent in the month of December, posting even stronger gains during a presidential election year, according to data from Bank of America Merrill Lynch.
Caffrey sees two further reasons why the Santa rally could kick into high gear: the first being that economic data has generally looked better from his point of view. Additionally, Caffrey believes that the market has pulled out of an "earnings recession" based on companies' Q3 reports.
"We have expectations, we have fundamentals and we have seasonals," said the strategist. "I think they all point us a little bit higher in the short term."
If Caffrey's predictions hold true, that means the S&P 500 could reach around 2,296 and set yet another record by the end of the year.
But of course, Caffrey points out that uncertainty around Trump's policies are still a point of discussion and something for the markets to watch. "We're not sure what the priorities are, and that's where people remain optimistically biased," he explained.
Markets continued their rise on Wednesday, with the Dow and S&P hitting another intraday record high.
In a recent interview with CNBC's "Futures Now," the Euro Pacific Capital chief said that while themarkets have rallied since Trump's election victory, the very same economic issues that got him elected will be the exact same one's he'll find himself unable to solve.
As Schiff sees it, Trump pleased voters with his promise to cut taxes and increase spending in some key areas. However, his proposed policies will hurt the economy rather than make room for improvement.
"He doesn't want to tackle, for political reasons, the real problems that are underlying the economy," Schiff told CNBC.
Namely, the fund manager predicted that Trump's economic policies will exacerbate already-existing trade and fiscal deficits, and bring about inflation that the Fed will likely be pressured to solve. This may even involve going against the idea of a rate hike, which many had pegged at a more than 90 percent chance of occurring in December.
One of Trump's signature plans involves massive public spending on roads, bridges and other U.S. infrastructure. Meanwhile, economists nearly unanimously expect a tax cut that could rival the ones signed by former president George W. Bush.
"We're going to have to do even more quantitative easing (QE)," said Schiff, explaining that the central bank will have to return to its most potent weapon: Super-easy liquidity to pump-prime the economy.
"The Fed is going to have to reverse and cut interest rates, and it's not going to create economic growth, but it is going to put pressure on inflation that is already now above what the Fed supposedly says is its supposed target," he added.
In other words, Schiff believes that even if a December rate hike does happen, it's already "too little, too late" for the economy.
According to him, the Fed will still be faced with the question of how to finance the deficits that Schiff says will emerge, especially in light of the global bond rout that took place after the election.
The combination of outcomes from Trump's policies leads him to believe that a market "crisis" is on the way, and the crash could be even bigger than the one in 2008.
Stocks continued their post-election rally, with the Dow and small-cap stocks setting new record highs last week.
Next week's OPEC meeting could send oil back to $50, but investors may want to curb their enthusiasm.
In a note from RBC Capital Markets on Tuesday, head of commodity strategy Helima Croft wrote that OPEC would "stick the landing" at its Nov. 30 meeting and finally draw a long-awaited agreement. The main player will be the world's largest oil producer, Saudi Arabia, as Croft believes that the Saudis now have incentive to agree to production cuts.
"I think the burden is going to be heavier on Saudi Arabia [because they have] key policy priorities, they want the IPO of Saudi Aramco," Croft said Tuesday on CNBC's "Futures Now."
Saudi officials have been pushing for a 2018 IPO listing for Saudi Aramco, the world's biggest oil company. Croft believes the Saudis need oil to return to $50 to stay on track for the listing. She said Saudi officials have already began talks to cut production by 1.1 million barrels to boost crude prices.
U.S. benchmark West Texas Intermediate crude was at $47.65 a barrel on Wednesday morning. But while oil may just return to $50, which is seen as an important technical level for investors, Croft thinks that Saudi concerns about the U.S. will clip the wings for any higher rally.
"Why I don't think they're aiming for $60, $70, or even $80 right now is they want a muted recovery," said Croft. The Saudis "keep talking about $50 oil because I think they are concerned that if this rises too fast, you'll get U.S. production roaring back."
Crude has climbed almost 5 percent in the past week, but the rally came as production in the U.S. jumped. While oil surged more than 4 percent on Monday, the commodity slightly reversed its gains on Tuesday over supply concerns and worries that OPEC still won't strike an agreement to limit production.
Nevertheless, Croft believes the oil cartel will find some middle ground next Wednesday. With Saudi Arabia taking the "lion's share" of production cuts, other oil producers like Iran and Iraq could also be pressured to follow suit.
Crude is currently up almost 30 percent year to date, though the commodity has struggled to break too much beyond $50 this year.
It's the most wonderful time of the year —for stocks, that is.
All major U.S. indices are sitting near all-time highs, and one technician thinks there's even more room to run. The dynamic inspired by President-elect Donald Trump and the aftermath of the U.K.'s vote to quit the European Union appear to be converging, which may be good news for investors.
All told, it suggests the traditional "Santa Claus" rally that investors see around the holidays could easily become the 'Santa Trump' surge instead.
"We have an overlay of the post-election rally with the post-Brexit rally in the S&P and it is a pretty good fit," explained Bank of America's top technician Stephen Suttmeier on CNBC's "Futures Now" in a recent interview. "The market is going up at about the same pace as it did after that big risk-off move going into Brexit."
Indeed, in the eight days following Brexit and the U.S. presidential election, the S&P 500 Index gained 3 and 2 percent, respectively. The Chief Equity Technical Strategist for Bank of America Merrill Lynch went on to detail that the similarities in movement in both instances went beyond price action.
For Suttmeier, the key underlying indicator that accompanied both drops was fear in the market. The strategist compared the VIX, otherwise known as the market's "fear gage" and the VXV against U.S. equities.
The VXV/VIX ratio shows expectations of volatility three months out, versus expectations for volatility in the near term. Measurements above 1.2 indicate an overbought market while a reading of 1.0 or below indicated an oversold market, which indicates fear in the market on a tactical basis.
Heading into both the election and Brexit, "investors were fearful. But, take a look at what's going on right now: You have a lot of stocks going to new 52-week highs ahead of the averages. Same thing happened right after Brexit."
Suttmeier also noted the importance of seasonality when making the bull case for stocks. He explained that Brexit occurred in the midst of the second-best three-month period of the year.
"We're now starting the best three-month and six-month period," said the technician, discussing November through January and November through April, which are historically strong periods for the market.
"Seasonality supports the case for a rally. There is a little resistance on the S&P around 2,180 to 2,194, but I do think we can surpass that and trend up into the 2,200 to 2,230 range," he added.
Suttmeier also noted that he and his team have yet to see diminished market breadth despite the recent rally.
"Pay attention to the breakout that we just had last week," noted Suttmeier. "The downtrend line from August is a support level that comes in roughly around 2,150. I think we're embarking on a seasonal rally with some pretty interesting groups leading like financials and semiconductors, which look fantastic."
He added: "We have a lot of good cyclical strength in this market. Until we see internal deterioration in the market, meaning a less broad-based rally, we have to stick with the gains. We have to stick with the view that we're going to rally."
History shows the only place for interest rates to go from here is higher — according to veteran technical analyst Louise Yamada.
Looking at a chart of U.S. interest rates over the last two centuries, Yamada pointed to a bottoming formation that has been in place for the last several years.
"We've been looking at the process that we think has been taking place over the last six to eight years in our interest rates, and we think now that the 2012 low probably is going to prove to be the low just the way 1946 proved to be the low in the last cycle," the head of Louise Yamada Technical Research Advisors said Thursday on CNBC's "Futures Now."
"I think it would be very healthy [to raise rates]," explained Yamada. "We are definitely watching 3 percent because that's going to be the ultimate level at which we can definitively say that rates have reversed." That 3 percent also corresponds with the 1980 downtrend on Yamada's chart.
"We are looking at the formation of the higher low, and the 10-year note would have to put in place a slightly higher high to define the real technical evidence of the reversal," she added.
Ultimately, Yamada said that higher rates will boost equity prices in the near term, as past cycles have signaled a boom in stocks and the economy.
"The early stage of a bull market can be accompanied by the initial rising rate cycle," she said. "It isn't until you get to about 5 percent that you start having problems."
The S&P 500 closed Thursday within a fraction of its all-time high.
In the aftermath of a harrowing election cycle, JPMorgan is urging investors to avoid making moves based on emotion and politics as the so-called Trump rally takes a breather.
"We are seeing a bit of a pause. There was a very sharp reaction after the election," JPMorgan's Stephen Parker said Tuesday on CNBC's "Futures Now." "What you're generally seeing is a rotation from the playbook of the last couple of years that was all about a low-yield, low-inflation monetary policy driven world to a world where you're looking at higher rates and higher inflation."
The head of thematic equity solutions for JPMorgan Private Bank went on explain that with these developments in mind, investors should look to pro-cyclical parts of the market like banks and health care. And, while gains for those sectors have taken a pause in recent sessions, Parker maintains that outlook is still positive. Thanks to strong earnings potential and subsiding fears that these sectors will be heavily regulated under President-elect Donald Trump, Parker says it's now time for Wall Street to focus on the big picture.
"In times like this, where politics and macro uncertainty have driven major market swings, the most important thing for clients to remember is to stick to a long-term plan," Parker said in a note to CNBC. "Emotional investing at a time like this can be very detrimental to returns."
Parker noted that, on the Monday after Brexit, there was nearly $10 billion in outflows from global equity funds, one of the largest redemptions in the last decade. And, since then, stocks are up nearly 10 percent.
With this in mind, Parked urged investors to capitalize through buying the dips.
"Long-term investors could be getting a good opportunity to add on weakness," Parker concluded when discussing a strategy for the next 12 to 18 months. "While dollar strength could be a headwind, emerging market central banks and economies are much better positioned to deal with what we believe will be a modestly stronger dollar, thanks to prudent policy action and the recovery in commodity markets."
Given this, Parker believes that, if interest rates move higher because of improving growth and global reflation, that emerging markets should be well positioned to benefit. He noted that emerging market valuations have underperformed U.S. equities by over 100 percent from 2010 to 2015 and therefore look attractive with better growth prospects that could serve as the catalyst to reverse recent trends.
There's a key technical level which could disrupt the market rally sparked by Donald Trump's win, according to a widely followed market watcher.
"If you look at the long-term chart of the S&P [500 Index] futures, this week we actually saw a test of the long-term support trend line back to 2009. That only happened after-hours and in overnight action,"said NorthmanTrader founder Sven Henrich recently on CNBC's "Futures Now."
However, he added "that confirms this trend line. It's a very steep trend line. It's an important trend line."
Henrich estimated there's 100 percent chance that this line will be breached — it's just a matter of time.
"We just tested this trend line this week, hence the bounce made sense. Should we break below this week's lows then markets will get severely tested," said Henrich,
Henrich argues investors are seeing 'quite the panic sector rotation' right now. And, it's been helping to drive the Dow to all-time highs. He's also forecasting volatility levels are bound to increase significantly going into next year.
"While we see this massive rally in the last week, we need to be keeping in mind that on the short-term chart, we actually have broken the February trend line that would support from February into Brexit," said Henrich.
"We broke it in September and now we are re-testing it from the underside. Until we break above that, this rally is still very suspect," he added.
There's another element to the market which concerns him. Henrich predicts FANG stocks, otherwise known as Facebook, Amazon, Netflix and the former-Google, are positioned to see a lot of trouble because they are too stretched.
His observation comes amid growing speculation that President-elect Trump's policies could hurt technology companies.
"If you look at the Nasdaq 100 Index which made new all-time highs this summer, it was really just a few stocks that have been driving this," said Henrich.
"Ten stocks in the Nasdaq 100 comprise of 50 percent of the market cap, and these stocks are now selling off here... Since they are very high weighted in cap, that could cause some damage on the indices."
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