- Lawrence Lewitinn at Talking Numbers1 hr ago
The market appears to be bearish on fear.
One of the most important measures of expected risk, the CBOE Volatility Index (the "VIX") has sold off considerably in the past several days. After trading as high as 17.5 on April 15, it closed at 13.19 on Tuesday.
The VIX is sometimes called the "fear index" because it measures how much investors are willing to pay to protect their portfolio. Specifically, the VIX measures prices for put and call options on the S&P 500 index. The higher the VIX, the more volatility investors expect.
So is a low VIX signaling too much market complacency? After all, geopolitical tension remains high and earnings have been mediocre at best.
According to Steve Cortes, founder of Veracruz TJM, investors should use a lower VIX as a buying opportunity to protect against risks in the market.
- Amanda Diaz at Talking Numbers17 hrs ago
The fast-food giant reported first-quarter earnings just shy of street estimates, but did see a rise in March sales. The mixed results sent the stock from positive to negative throughout the trading day, and eventually lower for the close.
Today's price action serves as a sort of microcosm for the stock this year. McDonald’s shares have been stuck in a range over the past 12 months, gaining less than one percent and lagging the broader market. Meanwhile, competitors such as Sonic, Jack in the Box, Wendy’s and Burger King have surged.
So is it worth taking a bite out of the golden arches?
“I think McDonald’s is the ultimate safe name,” notes Zachary Karabell, Head of Global Strategy for Envestnet and CNBC contributor. But "safe" doesn’t necessarily make it a profitable investment. Karabell doesn’t see any reason to buy the stock, “I feel totally uninterested but also rather neutral. I don’t think it’s a dynamic space. I don’t see this outperforming the overall market.”
- Amanda Diaz at Talking Numbers17 hrs ago
Stocks are in the midst of their sixth straight day of gains. And leading the charge? Energy.
In fact, since the S&P 500 hit a two-month low on April 11, 2014, the energy sector has rallied more than 5 percent.
The standouts have been oil service stocks like Halliburton and Schlumberger, both of which are trading at or near all-time highs, and Baker Hughes, which is trading at its highest levels since late 2011.
Halliburton got a boost this week after reporting better-than-expected earnings on Monday. The company beat estimates by 2 cents, and saw profit growth on improved margins in North America.
So is this the best way to play rising energy prices? Or is it too late to buy at all-time highs?
“Oil services have been on fire, and I don’t think it’s too late to buy,” said Steve Cortes of Veracruz TJM. “I wouldn’t go all in, but I think you can start picking away at the buy side here.”
- Maxwell Meyers at Talking Numbers17 hrs ago
Apple’s moment of truth arrives today after the close when the world’s largest company reports second-quarter results.
Interestingly enough, it was earnings a year ago that sent Apple shares on a torrid run, rising 33 percent in the past 52 weeks as the company increased its stock repurchase program and stirred renewed optimism among investors about a refresh for its iPad and iPhone products.
But 2014 has not been kind to the tech giant. Shares have fallen 5 percent year-to-date and have badly trailed the market.
So will results change all that for Apple?
According to Tavis McCourt of Raymond James, there are three things investors will learn from Apple’s earnings tonight.
First: Is Apple’s business slowing, or is it declining? That may seem like semantics, but according to McCourt, it’s a subtle but important distinction. “The guidance is for modest growth, and if they can achieve that, it’ll be good for the stock,” McCourt told Talking Numbers. “The risk is that this business is in slow decline because of the commoditization of high-end cell phones.”
- Maxwell Meyers at Talking Numbers1 day ago
If filling up your car seems more expensive, that’s probably because it is more expensive.
Quietly, wholesale gasoline prices have been on a tear, hitting an eight-month high as a combination of higher oil prices and refinery outages have conspired to cause more pain at the pump.
So what could this mean for the stock market given that, at least according to some economists, each penny increase in gasoline prices equals $1 billion dollars less spent on other parts of the economy?
Curiously, it may not be such a bad thing.
“Gas prices have largely been a proxy for the broader economy. Strength in the economy filters down to higher gas prices, and we are seeing that,” said Richard Ross of Auyerbach Grayson and a Talking Numbers contributor.
- Alex Rosenberg at Talking Numbers1 day ago
Why UBS predicts a spring fling for the housing market
As the weather warms up, UBS thinks the housing market will follow.
“Looking ahead, we expect a sharp spring rebound in quarterly average U.S. housing starts following the exceptionally frigid winter,” UBS chief U.S. economist Maury Harris wrote in a recent note.
UBS had projected that annualized housing starts would come in at an annualized pace of 1.06 million in the first quarter, and would tally up to 1.15 million over the course of 2014. The actual first-quarter result was well below that. But Harris has not reduced his full-year estimate. Instead, he now expects to see a strong spring snapback as the housing market plays catch-up.
“U.S. housing starts in Q1 were restrained by especially inclement weather…. We are raising our Q2 annualized housing starts forecast to a 1.15 million annualized pace versus our earlier 1.10 million forecast. Also, we are boosting our Q3 projection from 1.15 million to 1.22 million,” Harris wrote.
- Amanda Diaz at Talking Numbers1 day ago
Gold started the week off on a sour note, continuing its four-day losing streak and hitting its lowest levels since early April despite mounting geopolitical tensions over the weekend.
The precious metal is still higher on the year, so is this just a small setback or are we setting up for a steeper decline?
Ryan Detrick, Chief Technical Strategist at Schaeffer’s Investment Research sees gold heading to $1,420 an ounce and says a reversal of the key moving averages is a positive technical indicator for gold. “Recently the 50-day moving average has moved above the 200-day moving average, a bullish cross,” Detrick noted. “This can be a sign that the bulls are going to take charge here.”
But some market strategists see gold as more of a fair-weather investment.
“Gold’s four-day losing streak seems most related to the decline in jitters in the broader markets,” notes Enis Taner of Riskreversal.com. “Gold is likely to rise if volatility in the stock market rises as well.”
- Amanda Diaz at Talking Numbers1 day ago
The boardroom battle between Sotheby’s and hedge fund manager Dan Loeb of Third Point continues to thicken.
The auction house fired its latest shot at the activist investor, sending a letter to shareholders saying, “We believe Third Point has presented misleading information that distorts the reality at Sotheby’s,” and urging shareholders to vote for all 12 of Sotheby’s director nominees.
Loeb responded in kind, firing off a fresh letter on Monday making his case for board representation. "We are convinced that having an owner's perspective in the boardroom yields better results, that this board is in dire need of fresh insights, and that our candidates are more qualified than the company's emissaries we are seeking to replace," Loeb wrote.
- Lawrence Lewitinn at Talking Numbers2 days ago
This is a big warning for stocks.
About one-third of the entire Dow Jones industrial average will report their quarterly earnings this week including such important names as McDonald's, AT&T, Boeing, Procter & Gamble, Microsoft and Visa, among others.
Of the 83 companies in the S&P 500 index that reported quarterly results as of Thursday morning, 62.7 percent have beat expectations, 14.5 percent met expectations and 22.9 percent came in below expectations.
According to CNBC contributor Gina Sanchez, founder of Chantico Global, the market can expect earnings to beat expectations because they've been guided lower by companies. However, investors should pay attention to the earnings numbers themselves rather than whether those numbers beat what the market anticipated.
- Talking Numbers2 days ago
Something strange is happening in the market. Stocks have been recovering their losses, but the rate on the U.S. 10-year Treasury has barely budged.
In fact, the yield on the benchmark 10-year note has remained in a range between 2.6 and 2.8 percent since late January after starting the year around 3 percent. Rates and bond prices move inversely to each other. So if stocks continue to rally, will bonds sell off?
CNBC contributor Gina Sanchez, founder of Chantico Global, said don't bet on it.
"I don’t really think we're going to see the interest rates really start to rise considerably until we see a change in inflation expectations," said Sanchez. "We're still a ways off from that, even though we're expecting that, at some point next year, the (Federal Reserve Bank) is going to raise rates. We're definitely getting the signal that bonds aren't really reacting yet."
Either way, rates will play a crucial role in where stocks go next.