Posts by Michael Santoli
Michael Santoli at Yahoo Finance 1 day ago
Six years later, the echoes of the financial crisis are still audible: Banks continue to be fined for misbehavior, regulators continue to rewrite new financial rules, and the public remains mistrustful of Wall Street.
Yet Tim Massad, chair of the Commodity Futures Trading Commission, believes all this activity – albeit unfinished - is building toward more stable and trustworthy financial markets.
“We’ve got to get back to a reality, as well as a perception, that the markets are not only fair but that they are an engine of growth for our economy. They’re not simply a source of profit on Wall Street,” Massad said in an interview from the Global Financial Leadership Conference in Naples, Fla, this month. “We’re making good progress on that.”
Massad, who took the job leading the CFTC in June, helped oversee the Treasury Department's Troubled Asset Relief Program in the immediate crisis aftermath, and previously worked as a private-sector lawyer on financial matters including derivatives.
Indeed he does - six years after the crisis, and counting.
Michael Santoli at Yahoo Finance 2 days ago
Amid the the blissful calm of a new record stock market high, the sharp, fleeting panic of early October can seem like a mere bad dream.
Or was it a premonition of the turmoil that awaits investors facing an unbalanced world economy with central banks pulling in different directions?
Mohamed El-Erian, chief economic advisor for Allianz and former CEO of its Pimco asset management division, fears that the spasm of volatility last month was probably a preview of jumpier times ahead.
In particular, he is concerned that the rapid moves underway in currency markets, driven by stark variations in world growth rates and monetary policies, might make their way into equity markets into next year.
The reason the Standard & Poor’s 500 (^GSPC) tumbled 9% in a few weeks and the 10-year Treasury yield (^TNX) whooshed briefly below 2%, El-Erian says, was “because the two premises the markets had been relying on were shaken.”
Michael Santoli at Yahoo Finance 7 days ago
Light a couple of candles and sing for the “relentless rally,” the tireless gain-without-much-pain phase of this bull market, which has added $8 trillion worth of U.S. stock-market value since it began two years ago.
Sure, this bull market dates back five and a half years to the March 2009 climax of the financial crisis. But it was in mid-November of 2012, just after the election, when the character of the advance changed.
Investors at that point stopped expecting a crisis relapse with every sunrise, the economy moved out of intensive care and into recovery mode, Washington was stalemated to the point of irrelevance and central banks continued delivering easy-money medicine to an economy that decreasingly needed it.
As a result, markets re-embraced risk, stock prices started rising faster than corporate profits and companies turned toward aggressive deal making. This, I’ve called the “liftoff phase.”
Tailwinds pick up behind the U.S. consumer
Michael Santoli at Yahoo Finance 7 days ago
President Obama’s plan to extend broad protections to undocumented immigrants by executive order will antagonize the Republican Congress and drive it to act on its own to pass more targeted reforms next year, says former GOP presidential candidate Steve Forbes.
“The president is going to try to rule by decree instead of in a Constitutional way of actually having the approval of Congress before you do these things,” Forbes says in the attached video. “I think what that sets the stage for is next year, the GOP Congress will pass reforms like removing caps on H-1B visas for high tech.”
American technology companies avidly want an expansion of this visa program, which enables foreigners with specialized skills to work legally in the U.S. for a period of years. Forbes also advocates loosening rules to allow non-U.S. citizens who come to American universities for advanced degrees to be allowed to stay to work here.
Michael Santoli at Yahoo Finance 13 days ago
The report that bond-fund giant Pimco paid its co-founder and now-exiled investment chief Bill Gross $290 million in 2013 triggered an immediate and unsurprising rush of awe and head-shaking Friday.
Such a profusive pay package, reported by financial advisor and blogger Barry Ritholtz in his Bloomberg View column, came in a year when Gross’s flagship fund was lagging its peers and his management style caused enough friction for him to bolt for a startup fund at Janus Capital Inc. (JNS) in September.
This provided an ideal setup for outrage over finance big shots being paid obscenely for weak performance and bad behavior, such as Gawker’s sarcastic take: “ Everybody knows that the financial world is the purest example of pay accruing to winners solely by merit.”
Yet there are a few subtler takeaways that might be of more lasting use and interest to investors:
Michael Santoli at Yahoo Finance 14 days ago
If you are lucky enough to be sitting on a huge profit in a stock, the decision is either to hold on in hopes it continues to climb, or sell and pay taxes on the gain.
If you are even luckier and happen to be Warren Buffett while owning a heavily appreciated stock, there is a third sweet option: Swap the shares back to the issuing company tax-free in exchange for a choice asset and some cash.
For the third time this year, Buffett executed such an enviable maneuver when he exchanged his $4.7 billion worth of Procter & Gamble Co. (PG) shares for P&G’s Duracell battery division and $1.7 billion in cash.
Buffett’s Berkshire Hathaway Inc. (BRK-A, BRK-B) came by its P&G position through Buffett’s longtime ownership of Gillette, which acquired Duracell in 1996 before Gillette sold itself to P&G in 2005. P&G is in slim-down mode and recently announced it was considering shedding the Duracell unit.
Michael Santoli at Yahoo Finance 14 days ago
Transformers were a 1980s Hasbro Inc. (HAS) toy craze that has been parlayed into a megabucks action-movie franchise in recent years. The “Penguins of Madagascar” is set to hit theaters this Thanksgiving from DreamWorks Animation Inc. (DWA) as action figures of its glib penguin characters hit stores ahead of Christmas.
This symbiotic relationship between kids’ playthings and kids films forms the core rationale behind the reported interest by Hasbro in acquiring DreamWorks Animation.
The New York Times is reporting that the companies are discussing a deal, with Dreamworks Animation co-founder and CEO Jeffrey Katzenberg said to be seeking more than $30 per share, at least a 35% premium to Wednesday’s closing price, which would value the company above $2.5 billion.
Michael Santoli at Yahoo Finance 16 days ago
To some, it’s the only true money; to others a near-useless mineral. Which means that gold is always carried along currents of investor emotion.
So when - at what price – might gold’s fans feel sufficiently demoralized by its relentless decline to surrender in a climactic selling purge?
With gold near $1,160 and down around 40% from its 2011 high above $1,900 per troy ounce, the gold bulls’ most ardent arguments have dissipated or even been discredited: Inflation is dormant, the U.S. dollar on the rise, the federal government is solvent and modern civilization abides.
At this point in a bear market, attention turns toward anticipating what “capitulation” might look like – that phase when remaining loyalists surrender hope and liquidate in disgust.
This is the kind of climactic market washout that is only ever clear in retrospect. But while there are inklings that gold has fallen far from favor among traders, if a comprehensive capitulation is to finish this move it hasn’t nearly happened yet.
Of course, a rapid move below $1,000 for gold would mean serious additional pain and a further loss of at least another 15%.
Michael Santoli at Yahoo Finance 20 days ago
Wall Street wants to let you in on a sure thing -- a simple trick to grabbing easy gains in the market, using nothing more than a calendar. Who could resist?
No quantum of market data has been passed around more actively in recent weeks than the fact that the year following midterm elections has been positive for stocks every time since 1950. What's more, in the sixth year of a president’s term, such as the current one, the market’s rise has been steep in the six months following the election.
This reassuring snapshot of the historical record has market pundits treating further upside as a forgone conclusion. And investors seem to be listening: Bank of American Merrill Lynch calls the $37.5 billion in net new flows into stock mutual funds “huge,” which stands as the biggest two-week surge since October 2013.
Any outcome viewed as a no-brainer by such a crowded consensus is begging for some skeptical scrutiny. And as it turns out, pulling apart the numbers leads to a more ambiguous conclusion.
The main takeaways:
-The election-year pattern relies on a rather small sample size.
Michael Santoli at Yahoo Finance 21 days ago
The long-term limits on global energy supply is what impelled founder Elon Musk to create a line of high-performance, longer-range battery-powered cars.
The relative scarcity of Tesla shares, with a quarter of the company still in Musk’s hands, has helped push up their price 675% the past two years as excitement grew over the vehicles’ long-run promise. (That same scarcity has sometimes made it hard for skeptics to find shares to borrow and sell short, making it a rather jumpy stock all around.)
But the scarcity freshest in investors’ minds following the company’s quarterly report Wednesday night is of Tesla’s cars themselves, which at the moment are desired by the public beyond the pace at which Tesla can deliver them.
That Tesla still struggles to meet demand for its electric cars even as gasoline prices have crashed to a four-year low in the U.S. is a testament to the unique market position Tesla enjoys.
Yet Musk emphasized that these modest shortfalls have nothing to do with flagging demand for the Model S sedan, the car now in production, but with factory retooling and the ongoing engineering challenge of scaling up manufacturing as rapidly as it has hoped.