Posts by Michael Santoli

  • Five years into recovery, Dow companies squeeze workers as investors thrive

    Michael Santoli at Yahoo Finance 4 hrs ago

    A recent flurry of four-figure staff reductions by American Express Co. (AXP), eBay Inc. (EBAY), Coca-Cola Co. (KO) and other Big Business stalwarts might seem at odds with the broader picture of a cash-rich Corporate America enjoying record profits and buoyant stock prices. Yet there’s nothing novel about corporate prosperity coexisting with lean times for workers. In fact, most of the five-year economic expansion and corporate profit bonanza since late 2009 have come with only scant increases in headcount at the largest companies.  As the chart shows, the 30 huge companies that comprise the Dow Jones Industrial Average have barely nudged their employee ranks higher, by 6.4% since the end of the recession in late 2009, according to data provided by Howard Silverblatt, chief index analyst for S&P Dow Jones Indexes.

  • Wall Street's case of January jitters looks (almost) like last year's

    Michael Santoli at Yahoo Finance 3 days ago

    Reveler’s remorse struck investors – again – as the New Year dawned. The stock market rolled into both this year and last near at an all-time high only to stumble from the start of January, putting a broadly optimistic Wall Street on edge. As noted here Dec. 30, as the market hit its all-time high, the end of 2014 was a virtual replay of 2013. The echoes have continued. As in January 2014, so-so U.S. growth data, financial upheaval abroad and doubts over the continued resilience of corporate profits undercut widely shared expectations of more market gains and an accelerating U.S. economy that would finally allow interest rates to rise toward “normal levels.” We’re even getting another blast of crippling winter weather now, a year after the “polar vortex” took some blame for stalling economic progress for a few months. A year ago, the market setback measured almost 6% and lasted until Feb. 3, at which point stocks’ long upward march resumed until late summer. Beginning at its Dec. 30, 2014, peak, the Standard & Poor’s 500 index retreated by as much as 4.9% before nearly pulling even for the year last week. So, have the January jitters – 2015 edition – just about run their course? Parallels to last year Many indicators of investor mood and equity-market fundamentals since then are certainly tracking closely with last year’s path, arguing tentatively that markets are moving past a minor bout of panic. The CBOE S&P 500 Volatility Index in both years went from a December low near 12 – a level suggesting that traders were expecting calm – to above 20 in January, before settling back into the mid-teens where it now sits. On the surface, this has the look of a passing storm that did little damage. But the jumpier action in all asset classes and the preponderance of 1% daily moves in big U.S. stock indexes hint that the character of the market has subtly changed and we might be in for a less gentle ride in 2015 even if stocks should strengthen further. The whippy action in stocks and unconvincing evidence of global growth have helpfully dimmed overoptimistic market expectations among investors.

  • Powerball lottery sales plunge as 'jackpot fatigue' sets in

    Michael Santoli at Yahoo Finance 7 days ago

    It’s getting harder to find Americans who are willing to pay $2 for the (remote) chance to win a couple hundred million bucks.

    Powerball lottery ticket sales collapsed by some 40% in the second half of 2014 from the same period a year earlier in the 44 states, plus the District of Columbia, which participate in the sweepstakes.

    Lottery industry experts are blaming “jackpot fatigue,” a phenomenon in which bettors seem to require ever-larger stakes in order to continue buying tickets at the same pace.

    La Fleur’s magazine, which covers the lottery industry, notes that there hasn’t been a Powerball jackpot above $257 million in nearly a year. In the 15 months prior to February 2014, there were five jackpots of at least $400 million, including one of $600 million in the spring of 2013.

    Powerball jackpots build over time until a winning ticket or tickets hit. The lack of ever-larger jackpots, then, is a statistical fluke. But it’s the buildup of stakes toward record levels that generates buzz and seems to excite casual players into wagering.

    This certainly seems to describe what’s been happening to Powerball sales.

    More from Yahoo Finance

  • 'Robo-advisor' promises to beat ETFs at their own game

    Michael Santoli at Yahoo Finance 8 days ago

    Did the evolution of investing culminate in the creation of the index ETF, a simple product packed with decades of finance research and technological smarts?

    Or can the new generation of software-centric investment firms deliver on promises to improve the low-cost investing game beyond ETFs?

    Beginning 75 years ago, mutual funds pooled investor money to improve upon haphazard stock portfolios. Index funds, dating to the 1970s, were even more efficient than mutual funds and outperformed most of them. Exchange-traded funds that track market indexes then added greater liquidity and tax benefits, growing from zero to $2 trillion in two decades.

    Now a leading automated investment service for individuals is claiming to outdo even index ETFs – by, rather ironically, unbundling them into individual stock holdings.

    Here's how it works: A Wealthfront tax-optimization program books losses from declining stocks and reinvests the cash in similar stocks in order to mimic the index while generating better after-tax returns. These tax losses can offset taxable gains elsewhere in an investor’s portfolio, and up to $3,000 of these losses can be used to reduce taxable income in a given year.

  • Why should the Swiss central bank action matter to you?

    Michael Santoli at Yahoo Finance 14 days ago

    Switzerland has fewer people than Virginia and a smaller economy than Turkey. Yet an arcane policy move by the Swiss National Bank early Thursday rocked global financial markets.

    When Switzerland’s central bank ended an effort to limit the rise of the Swiss franc, the franc soared by 30% against the euro, the Swiss stock market shed a quick 10% and U.S. shares dropped in the initial shock.

    How will the Swiss surprise matter to the typical American, if at all?

    --The limited, but coveted, array of goods that the U.S. buys from Switzerland, including watches and chocolate, will likely get more expensive. The largest Swiss companies include pharmaceutical giants and banks, but their products are not, strictly speaking, sourced in Switzerland. A strengthened franc also means Switzerland, one of the world's most expensive countries, gets pricier for tourists. Already, there have been reportsof higher ski pass rates at popular resorts.

  • As gas prices collapse, high-octane fuel fetches unusually fat premium

    Michael Santoli at Yahoo Finance 15 days ago

    The oil-price crash has provided dramatic relief for pain at the pump. But drivers who like to fill up with premium-grade gasoline are feeling a twinge of discomfort as they’re asked to pay an unusually hefty added charge for the good stuff.

    With U.S. crude-oil prices collapsing from near $100 per barrel last summer to below $45, the average national retail price for regular unleaded gasoline has tanked by 43% since June 30 to $2.07 per gallon this week, according to the U.S. Energy Information Agency. High-octane premium gas dropped, on average, by only 37% to $2.49 a gallon.

    As a result, the price spread between premium and regular unleaded has spiked to a record high above 40 cents a gallon, as the chart below makes clear.

    The fat premium that’s now being demanded for premium is one more reason for most drivers to stick to plain old 87-octane regular – which is perfectly fine for the vast majority of recent-model cars.

    [Get the Latest Market Data and News with the Yahoo Finance App]

    The reasons for the widening price between regular and what used to be known as “high test” involve demand, supply and chemistry.

  • Wall Street ties and Elizabeth Warren sink Treasury nominee's chances

    Michael Santoli at Yahoo Finance 16 days ago

    Such are the victories available to the hardcore wing of the minority party in Congress.

    When Lazard investment banker and hefty Democratic donor Antonio Weiss withdrew his name from consideration for the number-three job in the Treasury Department, it represented a clear win for Sen. Elizabeth Warren (D-Mass.) and her anti-Wall Street contingent.

    From the moment President Obama nominated Weiss to serve as Undersecretary of the Treasury for Domestic Finance, Sen. Warren railed against what he representedmore than the man himself.

    In a speech last month, she declared: “This is about building some counter pressure on the Wall Street bankers. The titans of Wall Street have succeeded in pushing government policies that made the megabanks rich beyond imagination, while leaving working families to struggle from payday to payday.”

    Progressive advocacy groups celebrated the defeat of Weiss’ candidacy for a job whose occupant has almost never been familiar to the public.

  • Stocks have had a 'normal' decade. Is that a relief or a worry?

    Michael Santoli at Yahoo Finance 20 days ago

    The past 10 years brought a credit boom and bust, the most damaging financial crisis in decades and $12 trillion in money creation by desperate central banks – all of which made for a pretty average decade.

    Rather average, that is, in terms of the returns produced by big U.S. stocks.

    Through Dec. 31, the average annual total return for the Standard & Poor’s 500 stock index was 7.6%, according to FactSet. That’s up sharply from negative 1% five years earlier, when the market was winding up a “lost decade.” This measure of the past decade’s gains is now approaching long-term average yearly return.

    Since 1926, big American stocks have delivered just over 10% a year, and Jeremy Siegel’s study on stock performance dating back to 1871 pegged the average at 6.8% after inflation, which is slightly above the pace of the past 10 years.

    A glance at this long-term chart of rolling 10-year stock returns would lead many to the conclusion that this uptrend is really just getting in gear. Throughout history, this gauge has spent far more time at levels well above the current one.

     

  • On Wall Street, 2014 is ending just as 2013 did. A January warning?

    Michael Santoli at Yahoo Finance 1 mth ago

    As a fresh year approaches, a strong fourth-quarter rally carries stocks to a new high as December ends, economists are projecting the economy will lift off and investors grow enthusiastic about further upside in the coming year - even as they anticipate higher interest rates.

    That’s how 2013 finished up – and also the way the current year is closing.

    What makes this more than a simple seasonal curiosity is the fact that the upbeat close to 2013 was followed by a rude and jarring New Year’s market decline that sank the Standard & Poor’s 500 index by nearly 6% in a month.

    As I discuss with Yahoo Finance’s Rick Newman in the accompanying video, the synchronicities in market conditions this year compared with a year ago are striking:

    -From its low following an early October pullback, the S&P 500 this year is up 11.9%. From the October 2013 low, the index climbed 11.7% through year-end. In both cases, there was a powerful surge forming a “V” bottom in October, followed by a slight pullback in early December and a somnolent upward drift in each year’s final weeks.

    Déjà vu, or never mind?

    In need of a ‘new story’

    Rate risk?

     

  • The gift of a TV binge? Netflix gift cards a surprise hot holiday item

    Michael Santoli at Yahoo Finance 1 mth ago

    Giving someone a plastic gift card for a digital streaming-video service might seem as odd as sending a virtual fruitcake.

    Yet Netflix gift cards, available for the first time in recent months, have emerged as a hot holiday item, with spot shortages striking the handful of retail stores Netflix Inc. (NFLX) is using to distribute them.

    In Manhattan, the cards seem to have been sold out for the past several days at Staples Inc. (SPLS) and GameStop Corp. (GME) locations, the only chains in the borough that carried them.

    When asked about the Netflix cards Monday, a saleswoman at a GameStop in downtown Manhattan asked, “What is it with this epidemic?”

    The woman, who declined to give her name because she wasn’t authorized to speak on behalf of the company, said a customer had bought “about 30” in the previous week, leaving the shop with just a few remaining. Since then, she said, “we’ve had like eight million calls” from people seeking the cards.

    (For what it’s worth, you can still find plenty of Hulu gift cards on the shelves.)