Posts by Michael Santoli

  • Why is a liberal watchdog group barking at Bill Ackman and other short sellers?

    Michael Santoli at Yahoo Finance 7 hrs ago

    Progressive nonprofit policy groups usually applaud when informed citizens accuse big companies of exploiting consumers and rally government action against the abusers.

    Unless, it seems, those citizens happen to have put some money where their mouths are by betting against the shares of the companies they assail.

    Citizens for Responsibility and Ethics in Washington is a mostly liberal-leaning group that typically works to expose corruption among government officials. Yet this month, CREW tried to kick up a fuss when it urged Congress and the Securities and Exchange Commission to investigate hedge fund managers who have enlisted government agencies and legislators to go after companies whose stock they’d sold short.

    The main target of the group’s outrage is Bill Ackman of the $19 billion hedge-fund firm Pershing Square Capital, whose aggressive public crusade against Herbalife Ltd. (HLF) has raged since late 2012 and has involved the cajoling of members of Congress and the Federal Trade Commission.

  • S&P 2040, Apple/Beats threatens Pandora & Lulu lowers outlook: What to watch

    Michael Santoli at Yahoo Finance 7 hrs ago

    Here are three things to watch in Thursday's trade... Number 1:

    The stock market has shown it can absorb plenty of worry. But for the moment, it appears the abundance of unwelcome news remains a bit too much for a market near all-time highs to ingest without lying down for a while.

    The S&P 500 (^GSPC) is again ready to dip back into the red for the year, and at this hour has also disgorged all the upside that followed the Federal Reserve’s gentle message of last week.

    Soggy economic data in the States is running into a Fed that at least for now is staying on message about being open to lifting interest rates in coming months. Markets, at last, seem to be hearing the Fed’s meaning: If you’re wishing for the Fed to keep rates at zero, it means you’re wishing for the first-quarter soft patch in growth to drag on.

    This would be fine – and ultimately probably will be fine – if world markets weren’t already dealing with the tightening of financial conditions that’s come with a stronger dollar.  Emerging-markets are squeezed, as are American corporate profits.

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  • Buffett saves Kraft, Comcast dips & transports hit the Dow: What to watch

    Michael Santoli at Yahoo Finance 1 day ago

    Here are three things worth keeping an eye on today... Number 1:   Now starts the game of “Who’s next?” among the Big Food stocks.   Kraft Foods Group’s (KRFT) agreement to merge with Heinz in a deal backed by Warren Buffett and his partner 3G Capital is driving a pop of some 25% in Kraft shares. The pair will invest $10 billion in the merged company, essentially funding a planned $16.50-per-share special dividend going to Kraft shareholders.   In the two years since Buffett’s Berkshire Hathaway Inc. (BRK-B) and 3G teamed to buy Heinz, investors have viewed the pair as a possible rescuer of every slow-growth maker of packaged foods on the board.   Now that they’ve anointed Kraft, you can already hear traders chattering about what it could mean for any of the other owners of iconic but tired food brands. Campbell Soup (CPB) has already been eyed as a buyout or breakup target. What about Kraft’s former sibling Mondelez (MDLZ), or General Mills (GIS) or Kellogg (K)?   At minimum, investors and analysts will compare the value now assigned to Kraft as a target for peer companies.   But be careful about this sort of extrapolation.   The same sort of excitement for food pairings followed Buffett and 3G’s Heinz deal in early 2013. The whole group was bid up in subsequent weeks – and then the stocks have just sat there going sideways for two years.   These are companies with weak pricing power often on the wrong side of consumer’s emerging preferences for healthier, less industrial foods. The stocks are richly valued already and have been bolstered by the dividend cult. And, don’t forget, the biggest potential buyer will now be busy digesting Kraft for a long while to come.

  • Michael Lewis: A year after 'Flash Boys,' market still broken but can fix itself

    Michael Santoli at Yahoo Finance 2 days ago

    A year ago, Michael Lewis inadvertently set a spark to a raging debate over high frequency trading with his book "Flash Boys."

    His tale of a maverick group of Wall Street professionals seeking a better way for big institutions to trade stocks away from opportunistic middlemen quickly touched off a simplistic argument across media and finance over whether high-tech predators were picking the pockets of innocent little investors. Lewis’s own charge that the market was effectively “rigged” did nothing to cool the passions.

    But to hear Lewis and his book’s hero, Brad Katsuyama, tell it, the story was less about one set of predators feeding off of helpless investors. Instead, it was about the way Wall Street had developed an overly complex, opaque system for trading stocks that levied a tax – an undemocratic, but ultimately voluntary tax – on investing.

    Since then, much noise has been made by investor advocates, the electronic-trading industry mounted a counter-assault and regulators lobbed a handful of one-off enforcement actions, but little has changed in the way the market works.

  • Buyback slowdown in the U.S. & manufacturing in China, Europe: What to watch today

    Michael Santoli at Yahoo Finance 2 days ago

    Here are three things to keep an eye on today while trading Tuesday... Number 1:   The world is getting a test today on whether bad news is bad for stocks and good news good.   The bad - or at least disappointing – news from China overnight was that its PMI manufacturing gauge fell to an 11-month low.   China’s slowdown has been a theme for months now. A frothy real estate market is coming off the boil. Exports are pressured. Foreign investment in the country has slowed. The transition to domestic consumer spending as a driver of growth is happening - but gradually.   And yet the mainland stock market has been screaming higher. Deutsche X-trackers Harvest CSI300, the U.S.-listed fund that follows the local A shares market in Shanghai, which trades under symbol ASHR, is up 12% this month and more than 60% in the past six months.   This rally has been carried along in large part by hopes that the Chinese authorities “mini-stimulus” efforts will be broadened to become a more aggressive easy-money campaign. Shanghai stocks again traded higher on the news overnight, and now U.S. investors get to weigh in.   Today will help show whether this “bad news is good news” trade is still in force.

  • Small caps, Apple and Lions Gate: What to watch today

    Michael Santoli at Yahoo Finance 3 days ago

    As we start a new trading week here are three things you should keep an eye on today.

    Number 1:

    Will they buy the all-time high in the little guys?

    That’s the question that greets the surging small-cap stock bellwether, the Russell 2000. It has sprinted higher seven of the past eight days and among the widely watched equity indexes it is alone in sitting at a fresh never-before-seen high.

    The Russell 2000, tracked by a popular iShares ETF under symbol IWM, contains companies with a combined market value of $4 trillion – less than six Apple’s worth. Yet it contains all sorts of clues about risk appetites, liquidity, credit conditions and expectations for the US economy and dollar.

    When the U.S. dollar was racing to rapid gains against the euro, the outperformance of the domestic-focused small caps made sense. Now it’s a momentum proxy, a good measure of whether the gentle message of an eager-to-please Fed can deliver more than a week’s boost to animal spirits.

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  • Biotech, real estate and Greece: What to watch today

    Michael Santoli at Yahoo Finance 6 days ago

    Welcome to Friday. Here are three things to keep an eye on during the trading day.

    Two of today’s three are animated by near-opposite human cravings, but both have been crucial drivers of this bull market: biotech stocks and REITs.

    Number 1:

    Biotechs are all about a hoped-for future, the promised huge payoff from smarts and risk-taking, magic molecules to extend lives and maximize human potential.

    What price to pay for such distilled human genius and the enormous future profits from designer drugs?

    Lately, almost no price has been too high. The iShares Nasdaq Biotech ETF (IBB) is on one of its manic tears, up 6% this week, 33% the past six months and 134% in two years. The fund is on the verge of its sixth straight month of gains, one short of a record streak set in 2011 and 2012. Back then a stiff gut check followed.

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    Number 2: The real estate investment trusts appeal to an entirely different set of investor impulses: The perceived security of real assets and the bird-in-hand comfort of regular cash dividends.

    Number 3:

  • Cutting the cable cord might not save you as much as you think

    Michael Santoli at Yahoo Finance 7 days ago

    After years of complaining about being locked into expensive pay TV plans, the American viewer is now being bombarded with choices, as media companies and gadget makers invite them to “cut the cord” and go “over the top” by pulling in more “a la carte” video programming.

    Apple Inc. (AAPL) is planning to offer a trimmed-down package of popular broadcast and cable networks to stream over Apple devices for a reported $30 to $40 per month. 

    Sony Corp. (SNE) has a broader assortment of cable channels and some on-demand playback capabilities – though no broadcast networks – over its PlayStation game console for $49.99 a month. 

    DISH Network Corp.’s (DISH) Sling TV has about 20 channels for $20 in its core service. 

  • Yellen reaction, Tesla and Nike: What to watch today

    Michael Santoli at Yahoo Finance 7 days ago

    Here are three things we're keeping an eye on today at Yahoo Finance.

    Number 1:

    It’s a good thing for Janet Yellen that she’d never admit to engaging in a currency war. Because if this was her chosen fight, it’s now clear she didn’t come with enough ammunition to overwhelm her enemies.

    When the Fed chair struck a gentler tone than expected Wednesday about the prospect of higher interest rates some time this year, bond-fund big shot Bill Gross and others quickly interpreted this as a bid to cool off the surging dollar, whose ascent against other major currencies has been its fastest in nearly 40 years.

    The markets tried out this idea for a few hours, as the euro rebounded by more than 4% at one point after the Fed statement and oil bounced, in a rare reprieve for both instruments This cleared the way for a nice little stock-market rally, too.

    Of course, a sober assessment of Yellen’s intentions and plans don’t support the idea of outright “currency war.” The Fed is still looking for the perfect delicate moment when it can push short-term rates off the zero line, when most every other central bank of note is pulling policy the other way with rate cuts and money creation.

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  • Traders "patient" ahead of Fed 2pm, Williams-Sonoma needs to keep winning

    Michael Santoli at Yahoo Finance 8 days ago

    Here are three things you should keep an eye on today when wading into the market.

    Number 1:

    There’s no neat formula for deciphering the meaning of the Fed’s policy statement this afternoon, but let’s propose one anyway: The formula to watch is "ten minus two."

    That is, keep track of how the 10-year Treasury yield (^TNX) moves in relation to the two-year yield after the Fed statement is released at 2pm and Chair Janet Yellen takes media questions at 2:30.

    Assuming the statement excludes the phrase saying the Fed can remain patient in moving toward higher interest rates, as most expect, it will at least nominally open the way for a hike over the summer.

    Now, any language shift is mostly about Yellen preserving flexibility, rather than a hawkish turn. But if, say, the two-year note rises in yield, it’ll mean the market is pulling forward the chance of higher rates.

    Number 2:

    Yet the fact that Macerich stock only gave up 3.5% of the 35% it had gained since the November bid implies the market still sees the chance for higher values being realized from the business.

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