Wed, May 23, 2012, 1:02 AM EDT - U.S. Markets open in 8 hrs 28 mins

Deals, Disasters Spell “Emotional” Traders’ Market

A whirlwind weekend of news and developments around the globe set us up for an active and interesting trading session Monday.

Although the U.S. markets are still technically in a month-long downtrend, AT&T's (T) huge $39 billion bid for T-Mobile USA has -- perhaps erroneously -- emboldened some investors who think the deal could spark a wave of new M&A activity.

Meanwhile, continued strife and uncertainty in Libya is pushing crude prices higher, as U.N.-backed airstrikes that began Saturday put 2% of the world's oil supply at risk. And all the while the ongoing battle in Fukushima, Japan, to bring the earthquake-damaged nuclear plant under control continues, amid alternating reports of progress and setbacks.

So with risk coming in and out of the market almost as frequently as the tides, where do you go from here? We asked Simon Baker, the CEO of Baker Avenue Asset Management, what the smart money is doing in light of these developments.

Baker tells Macke and me he has been increasing his cash position since mid-February, and he's currently 50% in cash. The risk of owning equities, he says, has risen with the numerous international crosscurrents. Baker says it has become an "emotional" traders' market.

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12 comments

  • Alex1444  •  1 year 2 months ago
    Well that was a waste of 5 minutes of my time. The AT&T acquisition of T-Mobile will be bad for consumers (i.e. reduced competition), CAT should make some money, ok tell us something that isn't obvious. At least we found out where Jeff Macke went; the last time I saw him he was on CNBC's "Fast Money" and talking to us "as if we were children" about "car guys" and getting off the bus at Crazytown. Yeah it didn't make any sense to me either, but it looks like Macke has since collected some of the "yarbles" he lost that day. And what's with the Brit, is he trying to imitiate the Elvis Costello look? Hey I guess that 5 minutes was more entertaining than I thought.
    • Alex1444 1 year 2 months ago
      Actually I guess the Macke rant was from two years ago (how time flies), and was something about "car people" (not "car guys"), and on CNBC but not on "Fast Money". It was on some CNBC show hosted by Dennis Neal (or Kneale?) which was subsequently pulled off the air. Macke used to be pretty insightful, but the "car people" rant was about like that female reporter at the recent Academy Awards who was temporarily unable to speak coherently. Hopefully he's back and ready to make sense again.
  • M  •  1 year 2 months ago
    Just what is the point of this terribly under-written and under-researced piece? This writer has the attention span of dog running free.
    • Great divide 1 year 2 months ago
      This is typical journalism in America today. It's all hype and scarce tactics. No research or facts
    • Osage 1 year 2 months ago
      The purpose is to sell/'host' ads around the content
  • Doggy  •  1 year 2 months ago
    Great, more M&A's. Wonderful for Wall Street, terrible for employees and consumers. Wonder how many jobs will be lost and how this will impact mobile quality and price. Does anybody care? Does the FTC still exist? Looks like we're going to end up with one or two major players in every industry, lingering high unemployment, and a handful of happy investors.
  • MarketTrader  •  1 year 2 months ago
    Despite the broad nature of the interviewers��� questions, Mr. Baker is correct. This is not a market for retail investors to attempt to navigate. The events unfolding in the Middle East and Japan are volatile enough to defy the best institutional global macro players. Those funds that eliminated Japanese exposure earlier in the year for underlying market reasons look like geniuses, and many of the best investors who rode the market���s rise to date have gone cash or put on shorts in anticipation of a greater correction. Baker���s prudently targets wealth preservation with ���risk-on��� growth in conditions where fundamentals are positive ��� a strategy many retail and institutional investors who are active in this market will wish they had considered.
    • fififi 1 year 2 months ago
      I am a retail investor with forty years of experience and I can navigate through almost any market by now including the great recession. Takes guts and practice.
  • Victor  •  1 year 2 months ago
    To the contrary, I think that the recent market correction and uptick is a sign that the system is now ignoring major world events, and will continue to ignore them. Staying in cash now is like putting it under a mattress in 1945.
  • Adam  •  1 year 2 months ago
    To Mr. Baker's comment that this market has become an "emotional" traders maket, I can only reply... DO YOU THINK SOOOOOOOOOOO..........

    Oh brother........
  • H  •  1 year 2 months ago
    M&A isn't going to get people to spend when oil and everything is going up overall. Mergers only mean job cuts so how is this a good thing?
  • Common Sense  •  1 year 2 months ago
    2011 is starting to look a lot like 2008. Except 2011 is on steroids (or QE).
  • J EDGAR  •  1 year 2 months ago
    Watching stock prices rise reminds me of the old expression, "there is a sucker born every minute." This might be the last good time to sell before the Dow plunges below 10,000. Anybody who is bullish on stocks with gold at $1,400 an ounce and oil at $100 a barrel has spent too much time near a Japanese nuclear reactor.
  • Seth  •  1 year 2 months ago
    Love it, I think this is an excellent piece from two people who understand market sentiment which apperars to be drving the market. I'm tired of the cnbc women trying to become celebrities along with fast money advisors not owning up for lousy advice.
  • Richard Blaine  •  1 year 2 months ago
    Invest in T-bills and sell stock, 60-40
    • BA 1 year 2 months ago
      Totally agree.....
  • cec  •  1 year 2 months ago
    Very cool show...didn't even know this existed....awesome. Macke is back!! and Did El Nesto Grande leave the (8 People in the box arguing all at once and you can't understand a thing) 2nd rate business channel??

ABOUT BREAKOUT

Breakout is Yahoo! Finance’s daily all-out, roll-up-your-sleeves, dive-in, interactive investing show, offering fresh segments throughout the trading day. If you love making money, if you want to protect what you have, if you’re passionate about understanding these crazy markets, you’re in the right place. Welcome!

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