He’s a Wall Street bear who sees more monster market moves coming — with the majority of them leaving stocks deep in the red.
The Bleakley Advisory Group’s Peter Boockvar warns there’s more trouble brewing, because the era of easy money is ending, thanks to global central banks hiking borrowing costs.
And as fears intensify over a trade war, Boockvar expects a solution to the tariff issue will eventually come at the expense of rising rates.
“We could get that resumption of higher interest rates which would then concern the markets, and then retest the [S&P 500 Index] 2500-ish type lows,” the firm’s chief investment officer told CNBC’s “Futures Now” last week.
“We’re late cycle in the market. We’re late cycle in the economy, and you have an intensification in a tightening of monetary policy,” he said.
Boockvar, a CNBC contributor, blamed the end of quantitative easing in the United States and Europe for increasing sell-off risks.
“We’re a step closer to them wanting to take away negative interest rates. But there are still trillions of dollars of global bonds that have negative yielding rates,” he added. “So, it’s this rate environment that I think is becoming more of a headwind. That really is my main concern.”
He doesn’t believe the situation will abate any time soon. Boockvar contended the 10-Year Treasury yield will push back toward 3 percent — preventing the S&P 500 from cracking above its Jan. 26 record high anytime soon.
In bond markets, a “2.70 percent [on 10-Year yield] led to a 10 percent correction in the stock market. So 3 percent, just because it is a round number, I think is something that garners people’s attention just as 2.70 percent did,” he said.
“I just think we’re very sensitive to changes in interest rates because we became so accustomed to this artificially low level of rates,” Boockvar added.
And, he has little faith that even a strong first-quarter earnings season, which is just days away, could entice buyers into stocks, because good results are already priced into the market.
As stocks were plummeting on Friday, Boockvar told CNBC that “unfortunately, we are at the whims of the tariff talk right now where any tweet or comment can either quicken the move to the lows or reverse it, all by Monday afternoon. What’s clear is the market is losing patience with this trade situation at the same time the Fed is tightening policy and QT is ramping up.”
Boockvar’s has been taking a cautious approach in order to navigate this contentious environment.
“I am pretty diversified with clients,” Boockvar said — adding that he’s very bullish on gold and silver as downside protection against further stock market sell-offs.