One of the market’s biggest bulls is on sell-off watch.
Federated Investors’ portfolio manager Steve Chiavarone sees a 5 to 8 percent drop in stocks before summer ends. And, he thinks it may have already started.
“We’ve taken a few chips off the table,” the portfolio manager said Friday on CNBC’s “Trading Nation,” and he cited uncertainty as the overwhelming reason why.
“On average, midterm election years have pullbacks, particularly in the summer months,” Chiavarone said. “Big trade rhetoric is going to continue to be hot.”
He also suggested September’s Federal Reserve policy meeting on interest rates may become a flashpoint for Wall Street.
“We’re due for another hike so markets may have a little bit of concern about that particularly with a relatively narrow yield curve,” he noted.
But if a summer sell-off strikes, Chiavarone suggested he won’t be making any changes to his SP 500 Index year-end price-target of 3,100 — a gain of almost 9 percent from current levels. He believes the market will snap back.
“Our view is that growth is going to remain strong, inflation is going to surprise to the downside, [and] the Fed will hike less in 2019 than we expect. That’ll allow markets to melt up,” he said.
Chiavarone added he’d look to redeploy his “chips” as the fourth quarter gets closer.
Not a Scientific Survey. Results may not total 100% due to rounding.
Steve Chiavarone predicts stocks will fall 5 to 8 percent before summer ends.
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Investors in travel stocks like Caesar’s Entertainment, Wynn Resorts and Expedia took flight this week, sending the companies’ shares sharply lower. One consumer leisure stock looks good to this technician.
Morgan Stanley’s Mike Wilson, one of last year’s biggest bulls, sees major losses ahead in the stock market.
Steve Chiavarone of Federated Investors tells Sara Eisen why he’s expecting a major sell-off in the next two months.
Federated Investors’ Steve Chiavarone predicts stocks will fall 5 to 8 percent before summer ends.
The Dow Jones Industrial Average rose on Friday.
Trades to Watch
Gina Sanchez of Chantico Global says a North Korean attack, should one occur, isn’t likely to cause significant long-term market impact.
Boris Schlossberg of BK Asset Management says the ISM non-manufacturing report is key to watch ahead the jobs data released Friday.
Chad Morganlander of Washington Crossing Advisors is watching the dollar this week and expects it’ll begin to strengthen heading into the second half of the year.
Stacey Gilbert is the head of derivative strategy at Susquehanna.
Managing Director, ACG Analytics
Managing Director, Head of Technical Analysis, Evercore ISI
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.
Sara Eisen joined CNBC in December 2013 as a correspondent, focusing on the global consumer. She is co-anchor of the 10AM ET hour of CNBC’s “Squawk on the Street” (M-F, 9AM-11AM ET), broadcast from Post 9 at the New York Stock Exchange.
In March 2018, Eisen was named co-anchor of CNBC’s “Power Lunch” (M-F, 1PM-3PM ET), which broadcasts from CNBC Global Headquarters in Englewood Cliffs, N.J.
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