Posts by Jeff Macke
- Jeff Macke at Breakout7 hrs ago
Activist investing has come a long way since Gordon Gekko was explaining the merits of greed to shareholders of the fictional Teldar Paper in 1987. Then it was all about “greenmail” and hot tips but today activist investing is characterized by billionaire investors lecturing CEOs on the art of creating shareholder value.
In the attached clip Jason Trennert of Strategas says the activist investing trend is still picking up steam. “Activist strategies within the hedge fund complex have been among the best performing. As a result they’re attracting enough capital so that it really matters.”
- Jeff Macke at Breakout11 hrs ago
With less than two hours to go in the trading session on Tuesday it looked like we might be watching the death throes of the five-year old bull market. The S&P500 (^GSPC) was down over 1%, the Nasdaq (^IXIC) was collapsing below support at 4,000 and there seemed as if the last of the dip buyers had finally run out of cash.
Just when all seemed lost the market staged one of the snapback reversals that have been the defining characteristic of 2014 thus far. Cynics would suggest there was something artificial (read: “rigged”) about the start of the rally but that didn’t make it less impressive. Paul Schatz of Heritage Capital says yesterday wasn’t the bottom for stocks in the big picture but says the trading set-up clearly favors the bulls.
“It’s a trading bottom,” opines Schatz in the attached video. “To me it’s pretty clear: if you close below the lows of the reversal day you’re clearly wrong and you get out but I think there’s enough indication to at least warrant a trading rally.”
- Jeff Macke at Breakout13 hrs ago
Hope springs eternal as stocks came roaring back from steep mid-day losses yesterday. Is the worst behind us? Maybe, but I doubt it. Picking exact lows and peaks is a sucker's game. Your job is to manage your emotions and look for opportunities. Here are three things you need to know and a strategy to handle the pain:
1. The selling will probably get worse. So far the fact that the tech and social media stocks have been pole-axed without taking the broader market with them is impressive, but it probably won't last. Selloffs don't end until the idea of a "rotation" is replaced with panic. We aren't there yet. Running away from a tech selloff by getting long shares of a bank stock is like running away from an oncoming train. The S&P500 is every bit as at risk as the Nasdaq, like it or not.
2. For the S&P 500 (^GSPC), Purple Crayon Support doesn't come in until about 1,740. That's about 3.6% lower and where we bottomed in February.
- Jeff Macke at Breakout1 day ago
On December 9th of last year the U.S. Treasury sold its final 31.1 million shares of General Motors (GM) stock, coming just a year after Treasury announced plans to exit its 500 million share position in the once bankrupt car company. According to a timeline created by NPR, the Treasury department sold out less than one month before GM executives linked a faulty ignition switch to 31 crashes and at least 13 fatalities.
Treasury’s decision to dump its entire stake in GM allowed it to avoid $262 million in potential losses.
Nine days later in New York former SAC trader Michael Steinberg was convicted on multiple counts of insider trading shares of Dell. Steinberg will be sentenced later this month and is facing up to 85 years in prison. Steinberg’s crime was trading based on a chain of evidence including ex-employees and an analyst with a different firm who reportedly had close ties to the company.
- Jeff Macke at Breakout2 days ago
Earnings season only started last week but according to John Butters of FactSet much of the suspense is already ruined, at least in terms of what we expect to hear from particular sectors. In the attached clip, Butters says that the ten major sectors will be split evenly between winners and losers but the spread between the have and have nots will be huge.
“Your top performers are going to be the telecom services sector with growth of about 24.5% and the utility sector with growth of about 6.7%. They’re really the two standouts when it comes to growth this quarter.”
- Jeff Macke at Breakout2 days ago
Selloffs come in phases. As we’ve been tracking ad nauseum, the slow-building group-effort to the give this stock market the official correction America’s long-dormant sense of propriety demands is only about 5 trading days old. Remember, a week ago last Friday the Dow Jones Industrial Average (^DJI) was at a record high that might have broken out with some vigor had not every private equity group on earth, with tech stocks already down 10%, deciding that last week would be a great time to stuff several IPOs into the market.
Out came La Quinta (LQ) and Ally (ALLY), IPOs so unloved they each priced at the very bottom of their original ranges and found almost no organic buying as they opened for trading. The most troubling thing about the deal as far Wall Street pros were concerned wasn’t the fact that suckers got stuck with bad shares. That’s business as usual. What was frightening was how casual Blackstone and the other underwriters were about breaking the range.
Here are the Trending Tickers for Friday April 11th as measured by your yahoo Finance searches:
Gap (GPS) - Shares are lower by more than 4% after the company said it saw a 6% decline in same store sales during March. Despite reiterating earnings guidance for the full year Gap said it expects margins for Q1 to be worse than expected. For those new to retailing, when both sales and margins are worse than expected earnings are probably going to come in light. Gap deserves a downgrade just for not having the guts to warn in plain English.
JPMorgan (JPM) - Shares are down more than 3% after the company missed earnings expectations, citing weakness in both trading and mortgage originations. CFO Marrianne Lake told analysts, "the reality is we still have issues open in front of us." According to Lake these issues include unknowable expenses related to litigation and compliance efforts. On the sort of bright side, an atypically subdued CEO Jamie Dimon said he has growing confidence in the overall economy.
Howard Schultz wants to sell a new drug
Having changed the way America spends its mornings, Starbucks (SBUX) Chairman and CEO Howard Schultz wants to capture your nights as well. Recently the chain announced plans to rollout its Starbucks Evening wine and beer stores. It’s an expansion of Starbucks Evening prototype stores.
The critics took issue with the idea of debasing the relatively wholesome environment of a coffee shop with the degeneracy of a bar. It's a point that seems almost willfully ignorant of caffeine's place as America's most socially acceptable and available-over-the counter-medication.
The skeptics and doomsayers say it will be impossible for Starbucks to switch from coffee shop to bar over the course of the day. They snipe that baristas won't have the skillset required to handle delivering the complexities of taking and filling booze orders. The customers will be different and alcohol is somehow more complex.
It's Friday, April 11th and stocks around the world are trading lower this morning after yesterday saw the worst one day Nasdaq (^IXIC) selloff since 2011. The most dramatic weakness overnight seen in Japan where the Nikkei (^N225) dropped to six-month lows after a plunge in Softbank and a warning from fast growing merchant Fast Retailing. Here are some things to keep in mind as we countdown the minutes to the closing bell.
Watch bank stocks after JPMorgan (JPM) reported weaker than expected earnings and revenues. CEO and Unofficial Prince of Wall Street Jamie Dimon described the quarter as a "good start to the year," but said the bank faced "industry wide headwinds in markets and mortgage."
- Jeff Macke at Breakout6 days ago
The Dow Jones Industrial Average (^DJI) fell 267 points on Thursday as any doubts about whether or not the market is in the middle of a full-blown correction were put to rest. Investors who got lured into stocks during yesterday’s rally were quickly flushed. Only the closing bell could stop the losses but not before the S&P 500 (^GSPC) had been hit for a 2% loss and the Nasdaq dropped another 3%.
As Aaron Task and I discuss in the attached clip, the selling was particularly bad in some of the biotech and social media stocks that were market leaders as recently as last month. Facebook (FB) gave back almost all of the 7% gain it posted on Wednesday and the iShares biotech ETF (IBB) got crushed to the tune of 6%.