Posts by Michael Santoli

  • At halftime, the 2015 stock market is still up for grabs

    Michael Santoli at Yahoo Finance 3 hrs ago

    In order to truly enjoy watching the 2015 stock market, you’d probably need to be a big soccer fan.

    With one half of play in the books, the bulls and bears are locked in a scoreless tie. Most of the action has taken place in the middle of the field. Offensive chances were few but thrilling, and firm defense in the face of frequent threats has been valuable.

    That is to say, after exactly six months, the S&P 500 index (^GSPC) is almost perfectly flat for the year, having added a trivial five points to end Tuesday at 2063. A holder of the index has earned a half-year’s dividend of about 1% - which isn’t terrible, but looks unimpressive next to healthy gains in overseas stocks.

    This year is the closest to the flat line after six months of any year since good recordkeeping began in 1928. And the S&P was contained within a 7.7% high-to-low range the whole time – the third tightest span for a first half ever, following 1993 and 1994.

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    But who can predict for sure? That’s why they play the games.

  • Brokerage veteran extols 'traditional virtues' of Wall St. in new book

    Michael Santoli at Yahoo Finance 19 hrs ago

    Jason Trennert began his Wall Street in an entry-level support role in the wake of the 1987 stock-market crash. By the time the industry was battered by the 2008 global financial collapse, he was a longtime investment strategist and founding partner in his own brokerage firm, Strategas Research Partners.

    Over that span, he retained few illusions about the various shortcomings of finance. But he also developed a deep appreciation for the crucial role Wall Street plays in the economy.

    In the storm of recrimination that still rages over the perceived damage done by the financial industry to world economic fortunes, Trennert saw a need for an amiable reminder of what’s right about the business, and how it helps fuel economic growth.

    The result is “My Side of the Street: Why Wolves, Quants, and Masters of the Universe Don’t Represent the Real Wall Street,” a blend of personal memoir and sober defense of his chosen field.

    He launched his current firm on a shoestring in 2006 and came through the financial crisis intact, though a bit chagrined at the way the largest banks nearly sank the system.

    “A bull market would probably be the best antidote,” Trennert concludes.

     

  • Traders looking to pounce on panic won't find much yet

    Michael Santoli at Yahoo Finance 1 day ago

    That was not a panic.

    Even with Eurozone stocks shedding nearly 4%, with the S&P 500 (^GSPC) suffering its biggest daily loss in 14 months, with all 10 S&P industry sectors down and with more than 93% of all trading volume in declining stocks – Monday’s market action did not qualify as a chaotic, indiscriminate selling purge.

    That’s both good and bad.

    The lack of a truly unhinged rush out of stocks and riskier bonds is reassuring on one level. It at least suggests that the upended Greek bailout process and nasty downturn in Chinese stocks aren’t seen as having an immediate viral chain reaction across global finance.

    Yet traders who look for good odds of playing a rebound often prefer to see a more disorderly selloff driven by rash emotions and raw fear. We didn’t get that on Monday – and probably shouldn’t have expected to, given how near stock indexes are to recent highs and how steady credit markets had been.

    Yet starting in the morning it became a steady, orderly retreat from stocks, the one-day chart of the S&P 500 describing a neat slant lower until it closed at its low for the session.

  • Will distance from Greece save U.S. markets?

    Michael Santoli at Yahoo Finance 2 days ago

    They say the only insulator against a magnetic force is distance. So is the United States far enough away from the pull of overseas financial calamity to remain safe?

    Greece – on the cusp of default and a banking crisis - is pretty far away. China, where stocks have dropped more than 20% in weeks despite central bank rate cuts, is even more distant. Puerto Rico is just offshore, but the reality of its heaving debt load has been with us for so long that a leader calling them “not payable” doesn’t cut too close.

    The means by which faraway market storms come to whip around U.S. stock prices is some form of contagion. This can occur when basic global banking and capital-market function is disturbed, or when many of the same people who own the collapsing assets also own stuff here and need to sell it to raise cash.

    With Greece’s dire debt situation a drawn-out story that’s been with us for half a decade, its effects now seem largely sequestered from markets here.

    Indeed, as noted here recently, the U.S. stock market has been where global volatility has gone to die this year, with large-cap indexes behaving almost as a sort of safe haven in a skittish world.

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  • As a merger wave swells, companies dare the government to stop them

    Michael Santoli at Yahoo Finance 6 days ago

    Days beforea judge sided with the Federal Trade CommissionTuesday in blocking the merger of food distributors Sysco Corp. (SYY) and U.S. Foods Inc., Office Depot Inc. (ODP) shareholders voted to approve its sale to Staples Inc. (SPLS) - a deal that would complete the roll-up of the former Big Three of office-supply retailers into a single company.

    Weeks earlier, Charter Communications Inc. (CHTR) agreed to acquire larger rival Time Warner Cable Inc. (TWC), which along with Charter’s pending purchase of privately owned Bright House Networks will create the country’s second-largest cable network. Comcast Corp. (CMCSA), of course, had just walked away from a deal to acquire Time Warner Cable in the face of Federal Communications Commission oppositions.

  • Market winners deliver a quiet message

    Michael Santoli at Yahoo Finance 7 days ago

    The temptation to overthink what’s driving the markets is strong.

    News is abundant and instant. The interplay of facts, expectations and emotions is complex and always shifting.

    But everyone who follows the tape should make it a point to unplug from the pretzel logic and strip the day-to-day action down to a few core elements.

    None of us can know the intentions of the officials in the room tussling over the Greek financial-aid package. So when markets have priced in a decent outcome over a few days it’s logical that headlines of a rejected Greek proposal would trigger a quick pullback in European stocks and riskier bonds.

    But the keep-it-simple rule for an American stock player might also have told us that every time the S&P 500 (^GSPC) gets to the upper reaches of its long trading range, it seems to get tested by some unwelcome macro headline. These have so far played out as minor gut checks for a listless but stable market, and it’s hard to argue with any handicapper who assumes this is just another.

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  • What matters most for markets' next move

    Michael Santoli at Yahoo Finance 8 days ago

    You never know what really matters until it’s too late.

    This is frequently true in life, and probably more often the case when it comes to markets.

    New information and developing trends can’t be called either important or irrelevant for how markets might act. Indicators and influences drift in and out of favor, and it’s tough to handicap which will matter, how much, or when.

    So with investors awaiting a series of known or hoped-for moments – a make-or-break juncture in the Greece talks, say, or a clear path for Fed policy – we’re left with a series of possibly, eventually important cross-market forces to puzzle over.

    -First, inevitably, is Greece.

    Exiting the weekend, markets concluded that some kind of extend-and-pretend deal between Greece and international creditors was nearing. Stocks in Europe and certain indexes of credit risk there priced in progress in one gulp, then have sat there waiting.

    It’s hard to make the case that the stakes are all that high for most markets, including the U.S., after we’ve been living with the range of possibilities surrounding Greece and the euro for some five years.

    -Next, is China.

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  • Traders buy the rumors of Greece, merger deals. Will they sell the news?

    Michael Santoli at Yahoo Finance 9 days ago

    On both sides of the Atlantic, they’re buying the rumor. We’ll have to wait to see what traders do with the deal news if it comes.

    European stocks were rallying hard as leaders prepared to gather for deadline negotiations over a financial support package for Greece. The opposing sides were tentatively reported to have moved closer to some sort of agreement with fresh proposals.

    Yet the anticipatory stock rally also has the look of the kids throwing an anniversary party for their warring parents, hoping that the celebration shames or inspires them to call off the divorce.

    This is the sort of trading action – a gap higher on stirrings of hoped-for news - that needs to prove out beyond a quick reflex bounce in order to be trusted.

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    It makes some sense for European stocks to firm up as the probability of a deal rises. The EuroStoxx 600 (^STOXX) index fell more than 7% in two months as the exhausting and contentious Greek talks dragged on.

  • For investors tired of Fed noise and Greece fear, Japan beckons

    Michael Santoli at Yahoo Finance 11 days ago

    Where can investors go to escape those ceaseless headlines about the Greek debt standoff and tedious debates over how and when the Fed might move?

    Try Japan.

    The Japanese stock market is one place that appears attractive right now, regardless of the outcome of the Greece talks or the Federal Reserve’s course of action, says Jason Trennert, chief investment strategist at Strategas Research Partners.

    In contrast to the U.S., where the Nasdaq Composite just eclipsed its 2000 high this week, Japan’s bellwether Nikkei index hasn’t notched a new high in 25 years. Japan’s investment bubble was arguably the most extreme in modern times, and the country over most of the past two decades has failed to restore growth or rationalize its corporate sector. The Nikkei 225 index, while up nicely in the past year, still trades at about half its all-time peak set in late 1989.

    “The big marginal change there now,” Trennert says in the attached video, “is that Japanese companies are now worrying about shareholder value, and they’re being exhorted to do that by the Prime Minister, [Shinzo] Abe.”

     

     

  • Traders channel Bill Murray on Greece, China: 'It just doesn't matter'

    Michael Santoli at Yahoo Finance 12 days ago

    Summer camps are opening their bunks, and stock traders are chanting Bill Murray’s dismissive rallying cry from that classic camp movie “Meatballs”: “It just doesn’t matter.”

    Greece’s financial lifeline remains in serious peril, you say?

    Doesn’t matter (yet). We’ve been at this five years and it’s hard to draw a direct link between Grexit and American corporate cash flows.

    The Shanghai stock market is down 10% this week alone and is beginning to look like a critically unstable speculative casino - is that right?

    That’s worth watching – but how much did it really matter to U.S. investors when the Mainland market was doubling over the past year?

    The internal action of the American stock market remains a bit ragged, doesn’t it, with those uncooperative transportation stocks bouncing only meekly even as the S&P 500 (^GSPC) advances toward the top of its months-long range?

    This helps explain why all those global and local concerns failed to prevent the U.S. market from popping nicely higher a day after Fed Chair Janet Yellen downgraded the economic outlook as expected.