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Katherine Ross: Are we in a bubble about to burst as the S&P lingers towards all-time highs? With me to break down the markets and the implications going forward is TheStreet's reporter Jacob Sonenshine and Stephen Cucchiaro, chief investment officer at 3EDGE asset management. Jacob, you've been in the thick of earnings season, the fed and the trade. What's propelling markets right now?

Jacob Sonenshine: So three things are propelling markets right now. Earnings have come in really nicely about 80% of S and P 500 companies that have reported third quarter earnings have beaten. The guidance has not consistently been there, but the market has focused on the earnings that have come in. Expectations were pretty low. So that's a nice little boon to the market. Second thing is the phase one, quote unquote, trade agreement, investors think will happen. That's not everything, but you'd get tariffs taken off the table for December and potentially some of them rolled back in 2020. So that's nice. And then the third thing is interest rates have continued to stay low and the fed has been accommodated. So those three things are going to, you know, combined for for stocks moving on, you know, a little bit higher.

Katherine Ross: Stephen, you know, and I want to quote here that US equities are currently as overvalued as they were prior to the bursting of the tech stock bubble in the early 2000s and in the neighborhood of being as overvalued as they were prior to the stock market crash of 1929. So I have to ask, is now the time to cut and run as an investor?

Steve Cucchiaro: Well, we all know that overvalued markets can become even more overvalued before they correct, but this is not the time to chase the most overvalued sector of the market, which are US large cap growth stocks. This is the time for an equity investor to rotate into more fairly or undervalued securities like international equity markets or value stocks, which could do well in a reflation. Further if one wanted to be even more defensive, bonds might not be the hedge that they'd been in the past with interest rates so low in the possibility of principal depreciation. So I would recommend gold as a possible hedge.

Katherine Ross: I haven't had someone mentioned gold in a while. All right. Thank you, Stephen, Jacob. And for all the latest news, head on over to TheStreet.com.

Let's take a look at the market. 

Jacob Sonenshine, reporter for TheStreet, and Stephen Cucciaro, CIO of 3Edge Asset Management, sat down with TheStreet to take a look at the markets and to explain why Cucciaro has warned investors that U.S. equities are oversold. 

"So three things are propelling markets right now. Earnings have come in really nicely about 80% of S and P 500 companies that have reported third-quarter earnings have beaten. The guidance has not consistently been there, but the market has focused on the earnings that have come in. Expectations were pretty low. So that's a nice little boon to the market. Second thing is phase one, quote unquote, trade agreement, investors think will happen. That's not everything, but you'd get tariffs taken off the table for December and potentially some of them rolled back in 2020. So that's nice. And then the third thing is interest rates have continued to stay low and the fed has been accommodated. So those three things are going to, you know, combined for stocks moving on, you know, a little bit higher," said Sonenshine.

Watch the full video above for Cucciaro's full answer.