Evercore ISI’s Julian Emanuel doesn’t think we’ve seen the bottom yet in the bear market, pointing to more volatility in September. The strategist believes investors may be overly optimistic following July’s rally in which risk-on sentiment returned to Wall Street. He pointed to slowing growth, as well as troubling signs in bond yields, that could mean more trouble for the equity markets. “The falling yield story has likely run its course and that too, is a headwind for stocks, but the options market is telling you that people just aren’t really concerned about too much,” Emanuel said on CNBC’s ” Squawk on the Street .” “And that to us is much more typical of sort of late cycle August coming into September, which tends to be a dangerous month, type of behavior,” he added. Emanuel believes the Federal Reserve will continue to maintain its hawkish stance, despite some recent signs that inflation may be ticking down, and cautioned investors to stay on guard. “The Fed has really made it clear that the last thing that they want to do is get into a position where for some reason, they have to cut rates subsequently in 2023, simply because the inflation problem may not have been cured,” he said. “So there is more work to be done in terms of hiking before we sound more of an all clear, particularly for the equity markets.” The strategist advised investors to continue buying low, selling high and holding on to cash so they can take advantage of equity markets should they again retest June lows. “As the market runs higher, you want to trim some of your position,” Emanuel said. “So again, you can be in a better position to buy weakness when it materializes.”
