Blog Posts by Michael Santoli

The political standoff over the U.S. government's fiscal future has so far proven mostly immune to reason and perspective when it comes to tax rates.

Pimco chief investment officer Mohamed El-Erian can patiently explain to us that "this is about more than taxes." The Congressional Research Service offered a sober analysis of the unclear connection between tax rates and economic performance, before Senate Republicans forced the withdrawal of the report.

In an improbably lively New Yorker magazine essay, Harvard historian Jill Lepore framed current policy headlines as merely an extension of a centuries-long struggle of Americans to reconcile themselves to their government's revenue demands. And conscientious financial advisers everywhere are trying to warn clients not to get caught up in the tax implications of their business and saving decisions.

A Lively Tax Discourse

From one angle or another, these contributions to the tax discussion point out, appropriately, that the relatively

There are two ways to evaluate the tenure of Intel Corp. (INTC) CEO Paul Otellini, whose retirement next May after nearly eight years in the job and almost 40 years at the computer-chip leader was announced Monday.

Measuring the growth in Intel as a business and assessing the large cash-allocation decisions under his control, Otellini's tenure seems an unequivocal success.

As the company points out, Intel's revenue from 2005 through 2011 grew from an annual pace of $39 billion to $54 billion and increased per-share earnings from $1.40 to $2.39. The company generated a cumulative $107 billion in cash from operations under Otellini and paid out $23.5 billion in stock dividends as the quarterly dividend payout nearly tripled.

Yet deferring to the stock market's judgment, the Otellini era at Intel has appeared to be one of a well-managed retreat. Intel shares, just above $20 today, are almost 20% below where they traded on June 30, 2005, the end of the quarter when Otellini succeeded Craig

Is Wall Street freaking out about the "fiscal cliff"?

It has appeared that way at times in the week since President Barack Obama's re-election cast urgent attention on the need for a budget compromise before $600 billion in automatic tax increases and spending cuts kicks in.

Here's a handy way to determine what might cause financial markets to overreact to an approaching event: Figure out what economic surprise last made a number of smart people feel stupid for having underestimated its potential for market mayhem

The last episode that humbled many astute economists and investors was the tenacious standoff in Congress in the summer of 2011 over raising the nation's borrowing limit. Debt-ceiling votes were widely viewed as procedural necessities, and the notion of inviting a potential government default was unthinkable to rational analysts, leading them to assume cooler heads would prevail.

Of course, the mutual stubbornness of the party leaders sparked a credit-agency downgrade of the

In a conference call this morning to discuss Jefferies & Co.'s (JEF) freshly struck deal to be acquired by its largest shareholder Leucadia Corp. (LUK), Jefferies' longtime chief executive Richard Handler told investors, "I've thought about this my entire career."

There is no reason to doubt the remark by Handler, who shares a commitment to opportunistic deal-making and long-term growth of capital with the founders of Leucadia, a financial conglomerate commonly dubbed a miniature Berkshire Hathaway Inc. (BRK-A)

Yet the tough financial-market conditions now plaguing small and mid-sized brokerage firms must also have something to do with Jefferies decision to sell Leucadia the 71% of the company it doesn't already own. At about $17 per share, the cash and stock deal represents a 12% premium over Jefferies closing share price Friday; still, it's lower than the stock traded as recently as March.

In this respect, Jefferies has become the second mid-tier investment bank in a week to sell for

Like anything complicated, a dramatic market move is inevitably driven by things we know, things we don't, and things we know that just aren't so. The past two days' 3.5% stock sell-off has had an unusual volume of sloganeered causes pinned to it, making it all the more important to figure out where the obvious factors deviate from the valid ones.

Here's a run-through of some of the political, economic and technical elements said to be at work in this swift market gut-check:

The election
President Obama's re-election was a close enough call as of Tuesday morning that a significant number of investors clearly set up a tactical bet on a Romney win.

Even though the overall market had closely tracked the betting markets' probability of an Obama advantage most of the year, in the days ahead of the vote large bank, defense names and coal stocks — the go-to beneficiaries of a notional Romney administration — jumped sharply.

These trades have been largely unwound, judging by the steep

Can a single stock embody a "bear market?"

Chatter is rife that Apple Inc. (AAPL) shares entered a bear market with their recent slide of more than 20% from a September high — just above $700 to a recent $541. This notion applies a simplistic, unhelpful definition of a stock bear market — at least a 20% drop in the broad indexes — to a single company.

If there is any utility in labeling a general market environment a bear market, it is to offer an investor some sense of the direction of the dominant trend in prices in the indexes and the majority of individual stocks over a significant period. And it speaks to how many opportunities for reward the market offers versus the risk of loss.

In bear market cycles, such as the ones that ran from 2007 to 2009 and 2000 to 2003, rallies tend to be sharp but short-lived, merely interrupting deeper and more-treacherous declines, making the tactic of "buying dips" in one's favorite stocks hazardous. Another old maxim of bear markets is that they

Wall Street absorbed the shock and economic disruption of Superstorm Sandy. And equity investors were prepared to make their peace with a status quo electoral outcome, with President Obama remaining at one end of the Mall and a divided Congress on the other. But one external force that stocks have not yet persuasively proven themselves inured to is a U.S. dollar that rises in value against other currencies.

The rise in the U.S. Dollar Index to a two-month high Wednesday is not in itself the driver of a stock sell-off that sent the Dow Jones Industrial Average plummeting more than 300 points at its nadir. But it is the dominant symptom of the broad flare-up in global market anxiety.

Related: Markets Plummet After Obama Victory Puts 'Fiscal Cliff' in Focus

The largely as-expected U.S. election result left markets choppy but not radically changed overnight. In the pre-market hours, though, renewed focus on the still-fragile European economic condition, along with questions about

Following a presidential election, the stock market usually renders a swift verdict on the winner. The trouble is, the market's decision is often overturned on appeal in the weeks and months to come.

Economic forces and unforeseen events soon take over, rendering those hasty bets based on the final Electoral College tally little better than a coin flip.

Over the past 14 presidential races, the stock market rallied on the Wednesday following Election Day six times and declined eight. In those six years when the market responded to the upside, stocks continued higher for the subsequent week every time, according to a study by www.SentimenTrader.com.

The other eight years, the market's negative response persisted over the following week six times, a pronounced record of weakness given stocks' general historical tendency to rise in any given week.

Predictions Often Fail

Yet beyond about two weeks from Election Day, subsequent returns bear no particular relationship to the market's initial