Posts by Michael Santoli

  • With global economic policies hamstrung, investors turn to earnings

    Michael Santoli at Yahoo Finance 1 hr ago

    As markets become unsettled this week witnessing the stark limits of global finance policy, investors now direct their fraying hopes toward private-sector profits.

    The war of wills and vexing bureaucratic maneuvers that have Greece in a brutal economic limbo drag on.

    In China, desperate and transparent government attempts to stem the nasty reversal of the mainland market melt-up have so far been ineffective.

    And with it all, the U.S. bond market has swiftly lost confidence in the Federal Reserve’s ability to follow through on its hopes to begin cinching-up interest rate policy in the next few months.

    All of these policy-making setbacks could well prove temporary, of course. And so far there has not been an observable chain reaction of capital-markets contagion resulting from them.

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    Yet the squishy results of these market-steering efforts are weighing steadily on risk appetites at a time when a few of the once-reliable themes running through this bull market have faltered.

    Meantime, what might be called the financial-engineering theme has also sputtered out for the moment.

     

  • The Ugly American's guide to the Greek crisis

    Michael Santoli at Yahoo Finance 1 day ago

    We can argue about whether it should’ve been surprising. But there’s no denying the fact that Greek voters' resounding rejection of more austerity was a genuine surprise to pollsters, most economists and investors.

    Yet this surprise won’t necessarily produce a shock across world markets. Yes, the euro declined a bit in value and European stock markets pulled back, with those of debt-burdened Mediterranean countries getting it worst.

    But the response mostly mocked the predictions that a No vote in Greece or an increasingly likely exit of Greece from the Eurozone would invite a “Lehman moment.”

    Unlike when Lehman failed almost seven years ago, central banks are proactive in liquefying markets, default risk is mostly borne by public institutions, and Greece just isn’t central enough. If there’s a way Greece could be like Lehman, maybe it’s in becoming the one unfortunate casualty that makes authorities vow to protect all the other vulnerable players.

    Ultimately, though, markets are amoral machines that constantly ask “What’s it mean for me?” This fits with a stereotypical privileged self-centeredness of Americans.

    - The damage to U.S. stocks looks to be muted .

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

    Michael Santoli at Yahoo Finance 6 days 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 6 days 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 7 days 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 8 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 12 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 13 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 14 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 15 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.