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  Wednesday, 14 Feb 2018 | 8:59 AM ET

The most important chart that everyone on Wall Street needs to see, according to analyst Acampora

Posted ByKeris Lahiff

The big, bad bond rout blew away Wall Street's gains last week.

But, history shows this won't be a lasting trend, says long-time technician Ralph Acampora.

"I want everybody to sit back, relax and let's look at this history," Acampora told CNBC's "Futures Now" on Tuesday.

He picked out a chart that he says proves the case.

Bond yields saw a sharp increase in recent weeks, but Acampora says this is simply the next phase in the classic cycle. Bond yields rose from the late '40s into the 1980s, before entering a secular downtrend from the early '80s to today. During that time, the stock market went through both bullish and bearish cycles.

"Stare at the lower left-hand corner of that chart carefully," said Acampora. "Look at the years between 1948 and 1962. Guess what — rates started turning up. Look at the chart up above it, market went up. In other words, you can have rising stock prices with rising interest rates."

The problem for stock markets is when bond yields break above 5 percent, he said. Yields topped that level in mid-1966. From that point until the end of 1980, bond yields spiked to above 10 percent. Over that same time frame, the S&P 500 encountered a series of troughs, including a sharp sell-off in 1974. At that point, riskier assets such as stocks were less competitive against the safer returns of a high-yield Treasury bond.

"Where the secular bull market ended … in the mid-'60s, interest rates went above 5 percent," said Acampora. "That's the death knell."

The 5 percent level on yields is still far off. The yield on the 10-year Treasury bond has not been above 5 percent since mid-2007. From that point, yields quickly fell through to the end of the decade, exacerbated by a series of interest rate cuts from the Federal Reserve. By comparison, yields have held under 3 percent for the past four years. Yields on 10-year Treasurys climbed as high as 2.9 percent on Monday, a level not seen since mid-January 2014.

Even though high yields are not a long-term concern to Acampora, day-to-day activity should create some volatility on stock markets, as we saw last week. Yields spiked earlier this month after stronger wage growth in the monthly jobs report set off concerns over inflation and how fast the Fed might raise rates. That triggered a sell-off in equities in which the Dow plummeted more than 1,000 points in two separate sessions.

"There'll be a lot of volatility," added Acampora. "But, the secular bull market is alive and well. I think you've got years left even with rising rates."

The yield on U.S. 10-year Treasury bonds traded just above 2.8 percent mark on Wednesday, a level it has hovered around since spiking above it at the beginning of the month.

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  Wednesday, 14 Feb 2018 | 7:01 AM ET

It's not just bitcoin — 'this is the everything bubble,' warns crypto bear Peter Boockvar

Bitcoin's price slump could signal another stock market shock is coming, according to Bleakley Financial Group's Peter Boockvar.

"If bitcoin resumes its decline here, I think that equity investors should pay attention. It's a sign that maybe risk aversion is creeping into the markets again," the firm's chief investment officer said Tuesday on CNBC's "Futures Now."

Not only is the bitcoin crash still fresh, Boockvar predicts central banks abandoning easy money policies will further eat away at risk appetites.

"This is the everything bubble generated by seven years of zero interest rates and negative interest rates overseas and massive amounts of money printing. It shows up in the asset price inflation in many different places," he said.

Bitcoin prices skyrocketed between Thanksgiving and mid-December — surging to a record $19,843. By January, prices were crashing. A few weeks later on Feb. 2, the stock market began its historic plunge.

"That was almost a precursor to a peak in euphoria for equities and the subsequent decline," said Boockvar, a CNBC contributor who has been predicting an epic crash will hit bitcoin.

"Since the price of bitcoin is still well above where this parabola has started, I still think there is a lot of downside."

»Read more
  Sunday, 11 Feb 2018 | 5:00 PM ET

Market 'whiplash' could last weeks, Invesco top market watcher warns

The market turmoil may have a lot more life left in it, and just when it seems like it's calming down — another jolt could be right behind it.

That's the scenario Invesco's Kristina Hooper sees unfolding. She predicts a plunge of this magnitude could happen multiple times in the next 10 months.

"I would expect whiplash to continue. The negative animal spirits that are in the market today don't look like they're abating," the firm's chief global market strategist said Thursday on CNBC's "Futures Now." "We could see this kind of tumultuous environment continue for days and perhaps weeks."

Market sentiment vastly changed on Feb. 2 after the government reported wages grew 2.9 percent during the past year. Hooper and others say the data sparked alarm bells over rising inflation and drove 10-Year Treasury yields to 2.85 percent.

"[It] really opened up a Pandora's box of other concerns," she said. "We're looking through a very different prism at the same data, the same market events and extrapolating something far more negative."

She's also observing anxiety over potentially adverse consequences from tax reform and a new budget. To pay for it, the government could issue a lot more debt in the next year.

"That's I think what is really gripping the markets with concern right now," she said.

Despite her less-than-rosy forecast, Hooper still believes stocks could end the year about 10 percent higher. But getting there will be "lumpy and bumpy."

"Investors need to be prepared for more volatility," Hooper said.

»Read more
  Saturday, 10 Feb 2018 | 4:09 PM ET

Gold hasn't acted like a safe-haven in Wall Street's turmoil, but here's why it may revert to form

Posted ByKeris Lahiff

All that glitters certainly wasn't gold this week, with the traditionally safe-haven asset sinking amid Wall Street's massive sell-off.

But one longtime gold watcher says now could be the time to buy — if you are a patient investor.

"Give it a little bit of time," Mike Dudas, partner at Vertical Research, told CNBC's "Futures Now" this week. "We've just come off a tumultuous last four or five days in the equity markets and everything's getting re-based."

The inverse relationship between stocks and gold should reestablish itself as volatility returns and erratic moves become more commonplace, predicted Dudas. The Cboe Volatility Index (VIX), which measures market volatility, spiked on Monday to its highest settlement since 2011. Three months earlier, the index had settled at an all-time low.

"As things settle down and we get much more volatility in the marketplace, I think gold is going to find a bid," he said. "With the advent of the short-vol trade being busted, more equity volatility, bond markets moving higher with inflation expectations increasing, I think that's very important."

In the near term, Dudas forecasted an upside target of $1,355 an ounce for gold. He maintained a year-end price target of $1,400. Such a level implies 6 percent upside from current levels.

Gold prices declined by nearly 2 percent in the month so far, failing to find buyers already fleeing sharp sell-offs in the stock market. As the Dow Jones Industrial Average slumped more than 1,000 points on Monday and Thursday, gold prices saw moves of less than 1 percent.

»Read more
  Wednesday, 7 Feb 2018 | 8:30 AM ET

The quicker the Band-Aid is ripped off the market, the quicker we recover, says market watcher

Posted ByKeris Lahiff

Wall Street investors have whiplash after what has been three wild sessions for the market.

The Dow sold off 666 points on Friday, suffered its worst point drop in history on Monday, and then saw a stunning point swing on Tuesday in a session that ended 567 points higher.

Despite the rally, Sam Stovall, chief investment strategist at CFRA, says investors should welcome another sell-off.

"Like ripping off a Band-Aid, the faster we go to the downside, the quicker we see a bottom and the quicker we get back to recovery," Stovall told CNBC's "Futures Now" on Tuesday.

Traditionally, corrections, defined as a 10 percent pullback from a 52-week high, find their bottom within a 90-day period.

But this isn't your traditional market. The S&P 500 fell into a pullback, marked by a decline of more 5 percent from its 52-week high, in just one session on Monday. The speed of its decline suggests to Stovall that a predicted correction could find its bottom 10 days earlier than normal.

That correction is a high possibility for Stovall. He expects an overall decline of 13 to 16 percent from the top reached on Jan. 26.

On a fundamental basis, Stovall points to the rule of 20, which measures the price/earnings ratio with inflation, put the stock market as overvalued by at least 13 percent. Then, on a technical level, he noted the S&P 500 was trading 14 percent higher than the 200-day moving average at its peak.

"We probably do need to experience more," he said. "If we don't, then I think we're just biding our time and we're delaying the eventual correction."

The likelihood of a correction grows as the midterm elections draw near. The second and third quarters of a midterm year are typically the worst performers of the 16-quarter presidential cycle. Votes for all seats in the House and a third of the Senate will be cast in November, a cause for uncertainty in the preceding months.

The S&P 500 is currently in a pullback, but has not yet reached a correction. By Tuesday's close, the benchmark index was down nearly 8 percent from its 52-week high hit roughly a week and a half ago. The Dow is closer to correction, having fallen 8.5 percent from its highs.

"It's healthy and it's way overdue," said Stovall. "I don't think this correction is over just yet."

Stovall has a 12-month target of 2,800 on the S&P 500, a level that implies a nearly 5 percent increase for the year. He is not as bullish as some others on the Street. Keith Parker at UBS has the highest price target at 3,150, while the median target sits at 3,000.

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  Wednesday, 7 Feb 2018 | 7:20 AM ET

A relationship is budding between bitcoin and gold, RBC analyst finds

The potential correlation between bitcoin and stocks may be extending to another area of the market.

RBC Capital Markets' Chris Louney has detected a fledgling relationship between bitcoin prices and gold flows.

The revelation came in a recent research note. He admits it was challenging at first to find ties since bitcoin is considered an emerging asset.

"It's very hard to really put your hands around a tangible correlation between bitcoin prices and gold prices for most of the history," the firm's commodities analyst said Tuesday on CNBC's "Futures Now."

But then something changed.

"Towards the end of last year, we started to notice that correlation turned at least mildly negative," Louney said.

It coincided with bitcoin's record breakout to nearly $20,000 in December. That's when he also noticed Google search trends for the word "bitcoin" also surged.

"When we saw interest in bitcoin peak as measured by Google trends, that's really when we saw this marginal negative relationship between gold and bitcoin develop," he said.

Despite bitcoin's January crash, Louney said, he hasn't detected any changes to the relationship since the December peak. But he believes the correlation could eventually grow as bitcoin and cryptocurrency technology matures.

»Read more
  Sunday, 4 Feb 2018 | 5:00 PM ET

The manager of a $2.5 billion fund warns that a 10% correction could actually feel like 25%

If the latest stock market selloff stings more than the ones that came before it, there may be a reason for it.

Mayflower Advisors' Larry Glazer says it's been so long since the last meaningful correction, the next one will play havoc with investors' heads.

His comments came as the Dow saw its biggest weekly decline in more than two years. On Friday, it tumbled by 666 points or 2.5 percent. The index closed the week down 1,095 points.

"When you get that 10 percent correction for investors, which is really just a day in the park... it's going to feel like 20 or 25 percent," the portfolio manager said recently on CNBC's "Futures Now."

A textbook correction, defined as 10 percent or more, hasn't been seen since August 2015.

If a 10 percent pullback were to hit the Dow right now, it would wipe out about 2552 points more, based on Friday's close. Two years ago, a sell-off of the same magnitude would have cost the Dow nearly 1000 points less.

Glazer says he's been fielding plenty of investor questions about rising volatility and recent market losses in the past few days.

"We had investors saying to us 'Is this it? Is this the big one?' So, investors are not conditioned," he added.

»Read more
  Sunday, 4 Feb 2018 | 10:19 AM ET

Look out below: The US dollar's dive may get even steeper, even with interest rates surging

Posted ByKeris Lahiff

It's not just stocks that are falling — the greenback is also taking it on the chin.

Despite a selloff in the stocks, the U.S. dollar, traditionally a haven in times of turmoil, is hovering near multi-year lows. It could see even more downside this year for two major reasons: Europe and China. The DXY U.S. dollar index ended January with losses of 3 percent, its worst drop in nearly 2 years, and its third straight month in negative territory.

For all the stimulus from tax cuts, the growth in the U.S. economy is still on par with Europe's. As the global economy continues to grow, it will only put more pressure on the greenback, one respected currency expert explained to CNBC recently.

"The dollar weakness has a lot to do with the fact that we have strength in the global economy," Jens Nordvig, founder of Exante Data, told CNBC's "Futures Now" this week.

The U.S. is expected to print a growth rate of 2.7 percent in the first quarter as tax cuts begin to work their way through the economy. Yet Europe has already seen GDP of 2.5% "without any fiscal stimulus," Nordvig said.

The euro has gained ground against the U.S. dollar in the year to date, a trend Nordvig expected to continue. After recent moves, Nordvig sees risks for the euro/dollar exchange rate as skewed to the upside, and believes a move in the currency as high as 1.28 is realistic. Europe's single currency closed on Friday trading near $1.24.

Nordvig added that "dips should be used to add long exposure."

The eurozone's currency picked up gains through January and hit 1.25 against the U.S. dollar on Jan. 25, a level not seen since the end of 2014. The currency rose nearly 4 percent in January, its biggest one-month move since March 2016.

The single currency had rallied that month after European Central Bank President Mario Draghi said he did not expect to cut interest rates any further, marking the final time the ECB cut its rates this cycle.

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  Wednesday, 31 Jan 2018 | 10:00 AM ET

Oil market on brink of correction, warns the man who called the 2015 crude collapse

If the man who called the 2015 crude collapse is right, the oil market could be the next area to see a sharp pullback.

Oil, which is seeing its best start to a year since 2006, has entered a danger zone, according to Tom Kloza of the Oil Price Information Service.

Kloza, the firm's global head of energy analysis, made the call on CNBC's "Futures Now" on Tuesday just as Wall Street was coping with the stock market's worst day since last August.

"There's some collateral damage from the stock market right now. I don't believe this is the bloodletting that's due because of the tremendous speculative bubble and the money on the crude oil side," Kloza said. "That will come at a later date."

That day could be just weeks away, due to changing demand dynamics and "swelling" global markets, he added.

"All of the demand growth, all of it, is overseas. It's not in the United States," he said. "My sense is that global markets give back some of these very, very robust financial gains."

Brent oil has soared 97 percent and WTI crude prices are up nearly 90 percent over the past two years. Right now, Brent is trading around $68 a barrel and WTI is bouncing around $64.

Kloza is looking for an average Brent price of $59 a barrel this year and a WTI range of $54 to $56, a substantial decrease from current levels.

In a note to CNBC, Kloza wrote he "wouldn't be surprised to see prices move below these numbers when there is some fear among the fickle financial funds that drove prices to exuberant highs. But a $15-$20 bbl drop doesn't compare to some historical declines ($111 bbl drop from the high in 2008) and the more than 50 percent drop of 2014-2015."

The downward trend may spell bad news for Wall Street, but lower crude prices typically suggest cheaper prices at the gasoline pumps. But not in this case, warns Kloza. He's detecting a paradox emerging in the energy market.

"Just when the bubble for crude oil is deflating, you're going to see an increasing bubble for gasoline," Kloza said. "And, we're facing probably the highest second quarter gasoline prices for the American consumer that we've seen since 2014."

»Read more
  Wednesday, 31 Jan 2018 | 7:48 AM ET

Big market swings are something you’re going to have to get used to, says Wells Fargo

Posted ByKeris Lahiff

The nearly 400-point tumble in the Dow is something we haven't seen in a while.

Rather than panic, investors would be wise to roll with the punches, says Scott Wren, senior global equity strategist at Wells Fargo. These days, big swings are bound to become more common.

"You've got to get used to this — maybe not 400-point days but certainly half percent days, 100- to 200-point days, up and down," Wren told CNBC's "Futures Now" on Tuesday.

Wall Street had been spoiled with low volatility and upward-trending days for months before this week's two-day selloff. The CBOE market volatility index hit an all-time low in November and, even now, sits at its lowest level since August.

Tuesday's 363-point skid followed Monday's 145-point drop — a two-day decline of 508 points. That amounted to a two-day slide of 2.03 percent, the Dow's worst back-to-back performance since Sept. 8-9, 2016, when it fell 2.38 percent. The S&P 500 on Tuesday suffered its worst intraday plunge since May, when news broke that President Donald Trump asked then-FBI director James Comey to stop investigating Michael Flynn, his short-lived national security adviser.

In this kind of market, moves such as these should give retail investors reason to buy, Wren said.

"It's nothing but an opportunity," said Wren. "Retail investors should welcome this, they should have a plan. They don't need to wait until the market is off 5 percent to figure out what they want to do."

A pullback was in the cards after a breakneck pace of record highs to begin the year. The S&P 500 has risen 6 percent in the year to date and is on track for its 10th straight month of gains. At these levels, this would be the best January since 1997.

January's gains only pushed the S&P 500 further into overbought territory. The S&P's relative strength index ended last week at 90, its highest level on record. Its price-to-earnings ratio hit 18.44 times forward earnings this week, its highest level since May 2002.

Even with the potential for pullbacks, Wren remains bullish on the equities market this year. Wells Fargo has a 2,800 to 2,900 price target on the S&P 500, wrapping the S&P 500's current levels as of the Tuesday close. The target suggested 4.5 percent to 8.5 percent upside from where the S&P 500 started the year.

Expected economic expansion and the passage of tax reform pushed Wren to increase his S&P 500 earnings forecast to $152 a share this year from a previous target of $138 a share. This year's target is up from $129 a share in 2017.

For this stage of the cycle, Wren recommends the industrials, consumer discretionary and financials sectors to his clients, sectors that are "very sensitive to the economy" and will "continue to benefit from an ongoing expansion."

"We want them to be assertive, we do not want them getting defensive," he said. "We want them leaning toward economically sensitive sectors."

The three sectors Wren recommends are among the top performers on Wall Street this year. The consumer discretionary sector is the best performer on the S&P 500, gaining 10 percent in 2018, while the financials sector is up 6 percent and industrial sector 5 percent.

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