Stocks rose Monday amid expectations that the Senate will vote to extend tax cuts. Keith McCullough, CEO of Hedgeye Risk Management and CNBC contributor, shared his outlook.
“You’re going to have to arm wrestle with stocks and volatility,” McCullough told CNBC. “Once we get through year end, there’s going to be a 3 to 7 percent downside move in the next three months—so 1,157 [on the S&P 500] is a trendline support.”
McCullough warned investors that in the next 3 to 6 months, economic growth will slow and inflation will accelerate. In addition, he noted that bond risks in the U.S. look similar to the European sovereign debt risks at the beginning of last year.
McCullough said he is bullish on the dollar and commodities such as corn. Meanwhile, he advised investors to stay away from U.S. equities and the euro.
“We think Italy will be a potential catastrophe in the next 3 to 6 months—EWI is the ETF on that side,” he cautioned. “And we’re going to stay short U.S. treasurys on the short end of the curve—SHY is the ETF for that.”
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More Market Intelligence:
- If Yields Hit this Level, Watch Out for Inflation: Charts
- Will Good News Convince Main Street to Buy Stocks?
- Art Cashin: Santa Claus Rally and the Next S&P Resistance Level
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CNBC Data Pages:
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CNBC Slideshows:
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Monday's Top Dow Gainers (As of Mid-Morning):
Chevron
Verizon
Walt Disney
Caterpillar
Merck
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Disclosures:
No immediate information was available for McCullough or his firm.
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