Posts by Michael Santoli

  • Market's monsters prove benign, as scare-and-relief pattern holds

    Michael Santoli at Yahoo Finance 13 hrs ago

    The premise of the Pixar movie “Monsters Inc.” is that monsters only scare children as a job, and they’re at least as afraid of the kids as kids are of them. The stock market this year brings this conceit to mind.

    Not every night at bedtime, but often enough, some nasty-looking threat pops out of the closet to frighten investors, but then retreats – lacking the true malice or resolve to maintain the menace.

    Playing the role of ugly intruder in the night have been the oil and commodity bust, Greece teetering on insolvency and abandonment, the Fed’s planned march to its first rate boost and a chaotic surge-and-crash pattern in Chinese stocks.

    Standard worries about U.S. growth, stalled corporate earnings and ragged action in the market itself have lingered close, to ensure anxiety levels never fall too low.

    So far, at the index level, not much damage has been sustained. As more than one cut-to-the-chase market observer has noted, the market can register bad news or scary threats by not going up, as well as by going down.

    As we ride this range, here’s a dog’s breakfast of market observations:

  • Like a baseball GM, Yellen must decide on a deadline trade

    Michael Santoli at Yahoo Finance 1 day ago

    How is Major League Baseball in midsummer like the Federal Reserve on the verge of a policy change?

    Once you start considering the question closely, the similarities pile up. The lopsided majority of baseball trades in a given season happen in the week before the July 31 trade deadline – with this year’s cutoff being 4 pm on Friday.

    Teams like to wait as long as possible to determine if they’re positioned to contend as they are, or if they need to add one more player to gain a solid edge, or if it’s time to give up and rebuild for next year. They decide, in other words, if the pre-season plan is working fine, or if they need to be buyers or sellers of talent.

    The Fed doesn’t have a strictly defined deadline for lifting interest rates from zero, but its preseason plan was to get there by the end of this year and September is now the focus. So Fed officials need to assess how their expectations for growth and jobs and inflation are playing out before they decide whether to become a “buyer” of the sustainable economic improvement idea by bumping up rates a bit, or a seller by waiting until next year.

  • UPS delivers on profit; Baidu disappoints; Blackberry upgraded

    Michael Santoli at Yahoo Finance 2 days ago

    Time for your daily dose of trending tickers, the stocks you're following based on your Yahoo Finance ticker searches.

    United Parcel Service 

    UPS helped the S&P 500 to stay on the green. Shares of United Parcel Service (UPS) gained after delivering better-than-expected second quarter profit of $1.35 a share. Revenue, however fell short from a year ago on the stronger dollar and lower fuel surcharges.

    Baidu 

    U.S. traded shares of Baidu (BIDU) dropped after falling short on earnings and outlook. The Chinese internet search company posted second quarter profit of $1.81 a share. That's 7 cents shy of analysts estimates. Baidu's current quarter outlook also came in below expectations.

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    Blackberry 

  • A world of fear lands on Janet Yellen's desk

    Michael Santoli at Yahoo Finance 2 days ago

    Maybe it’s time again for investors to list a “hierarchy of fears.”

    This is how therapists start treating post-traumatic stress disorder, by ranking the most-scary things that haunt a sufferer.

    With possible Grexit on hold, sapped of its ability to frighten for the moment, the list of fearsome forces looks something like this:

    -China’s caustic stock market is looking just about “unriggable”by the government there.

    -Commodities and related emerging-markets stocks and currencies are caught in a sloppy liquidation.

    -Junk bonds are getting roughed up pretty badly, in a typical sign of building credit stress, at least in the dicier pockets of the market.

    -The U.S. stock market itself has been misfiring noisily, with a now widely noticed weakness in the broad majority of stocks no longer obscured by the handful of growth-stock darlings and levitating bank shares.

    Where all these global concerns meet, I’d argue, is at the Federal Reserve committee room in Washington.

  • Tired, narrow market could be nearing a top: Leuthold's Ramsey

    Michael Santoli at Yahoo Finance 6 days ago

    Market cycles don’t always unfold according to the familiar script, but they tend to trace similar story arcs.

    And right now, the U.S. stock market is moving through plenty of the plot points associated with a gradual, tantalizing topping process.

    This, at least, is the view of veteran market watcher Doug Ramsey, chief investment officer at the Minneapolis research and asset-management firm Leuthold Group.

    During the past several months of range-bound trading in the vicinity of its all-time high above 2100, the Standard & Poor’s index has been increasingly reliant on a narrowing group of strong stocks and has largely masked significant beneath its calm surface.

    “Over the last six months specifically,” Ramsey says in the attached video, “it’s been some of the usual characters that tend to tire out and start to lag late in a bull market.”

    Ramsey notes, in particular, the widely discussed drop of more than 10% in the transportation sector and similar damage to utility stocks as typical features of a “distribution” process that can precede a more important peak in the broad indexes.

    More from Michael Santoli: 

  • 'Nifty' growth stocks keep the bears at bay, for now

    Michael Santoli at Yahoo Finance 6 days ago

    It would be a nifty trick if the big stock indexes can keep holding their ground as asset markets around the world beat a retreat.

    We’re seeing a slow-motion crash in emerging markets currencies and their stocks, as partially gauged by the iShares MSCI Emerging Markets ETF (EEM).

    Global commodities prices are collapsing, in a move closely linked to the painful EM hangover. The fund under ticker GSG, which tracks the Goldman Sachs Commodity Index, is near a five-year low.

    The credit markets are looking wobbly, too, with yields on junk bonds stubbornly lifting, largely due to weakness in energy and commodity issuers.

    And energy and industrial stocks here are being tossed aside, too, with 3M Co. (MMM), Caterpillar Inc. (CAT) and Illinois Tool Works Inc. (ITW) joining United Technologies Corp. (UTX) in the market's field hospital.

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  • Big-name investors stand atop a welcome 'wall of worry'

    Michael Santoli at Yahoo Finance 7 days ago

    Will it really be the big, scary threats that important gray-haired investors see coming over the horizon that we should all expect to upend financial markets?

    The question is timely now that the largest hedge fund firm ever, Ray Dalio’s Bridgewater Associates, is on the front page of the markets’ newspaper of record turning negative on Chinese stocks, saying there is “no safe place” for clients’ money there.

    This alarmed - and alarming - message comes mere days after the brilliant billionaire investor Carl Icahn told us all that junk-bond ETFs were a disaster-in-waiting - tinderbox theaters just waiting to ignite and trap their customers.

    We also heard this week of a broader set of accomplished hedge-fund handicappers who are urgently hunting for the next “big short” focusing on various instruments catering to yield hogs and growth gluttons such as bank-loan funds and small-cap stocks.

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  • With Apple and others, stocks ran ahead of reality

    Michael Santoli at Yahoo Finance 8 days ago

    Companies closed their books for last quarter on June 30 – more than three weeks ago. So how did the story of the quarter change so much in the past week or two - going from “earnings are just good enough” to “earnings weren’t so good at all?”

    In the last couple of weeks, traders celebrated results from tech and growth-stock bellwethers Netflix (NFLX), eBay (EBAY), Intel (INTC), and especially Google (GOOGL, GOOG) that were modestly better than anticipated.

    This week so far, reports similarly in the zone of forecasts from Apple (AAPL) and Microsoft (MSFT) were met with disappointment and reflex selling after Tuesday’s close and early today.

    The fact is that the only thing that’s truly changed over that span is stock prices and the investor emotions and expectations that rose with them.

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  • Shanghai stock rout invites timely buyout bids for U.S.-listed Chinese firms

    Michael Santoli at Yahoo Finance 13 days ago

    It had the look of a brilliant, gutty trade.  

    Before the sun was up in New York on July 9, just as the Chinese stock market was rebounding hard from a savage weeks-long selloff, bold bidders emerged with an offer to buy all available American depositary receipts of E-Commerce China Dangdang Inc. (DANG) for $7.81 each – a 20% premium to its prior closing price but less than half its value of four months earlier.

    The Shanghai market's scary cascade, begun in mid-June, had washed the stock of Dangdang lower with it - despite the fact that it’s listed on the New York Stock Exchange. By the night of July 8, Dangdang shares had fallen 41% in less than four weeks to a two-year low of $6.51. The following day , the Shanghai market finally reversed higher, surging 7%, as government efforts to prop up stocks took hold.  Before the opening bell rang in New York, the bidding group made its buyout offer.

    It’s unclear how much traction these efforts might get. The company says it has put the offer to a special committee of independent board members and has authorized the committee to retain advisors.   

  • Giant stocks lead a rally, as investors cry 'Get me in'

    Michael Santoli at Yahoo Finance 13 days ago

    The stock market spurt of the past week might not qualify as a huge rally, but it sure has been a rally of the huge.

    Shares of the very largest companies in America have outpaced the broad market by an impressive margin during the brisk rebound of the past several days.

    An exchange-traded fund called Guggenheim Russell Top 50 Mega Cap (XLG) tracks the 50 largest U.S.-listed companies and from a week ago Wednesday through last night it was up 4.7%. The S&P 500 (^GSPC) over that time was up 3.8% and the equal-weighted version of the S&P 500 – a proxy for the “average stock” that trades as Guggenheim S&P Equal-Weight ETF (RSP) – was ahead just 2.9%.

    This recent preference for the stocks of the bluest chips was hard to miss even in Thursday’s drowsy little rally. Apple Inc. (AAPL), on no news, gained 1.3% versus 0.8% for the broad market. Microsoft Corp. (MSFT) and IBM (IBM) were also clear leaders.

    So, what’s behind this sudden preference for the giants of the market?