Editor's Note: Todd posts his vibes in real time each day on our Buzz & Banter.
Good morning and welcome back to a flickering pack. I was out-of-pocket last week, enjoying a few days with my family in San Diego before returning to the East Coast on Wednesday for some non-trading work matters.
I tried to take a legitimate break from the tape but kept abreast of the top-line headlines as old habits are hard to break. While the S&P
(INDEXSP:.INX) declined a grand total of 44 cents
during the five-session span, there was plenty of motion under that movement.
Some top-line vibes, in no particular order:
The US Attorney of the Southern District of New York issued a five-count criminal indictment of SAC Capital Advisors -- the firm, not the founder -- including four charges of securities fraud and one charge of wire fraud. While many Street insiders (with knowledge, not information) believe Stevie himself is untouchable (plausibly deniable), the indictment of the company is a new twist. I wrote on Twitter last Friday that I "Openly wondered if we'll look back at SAC as a watershed moment for the market through the lens of lost Wall Street commission and counter-party risk," which was precisely what Gretchen Morgenson wrote about in yesterday’s New York Times.
China continues to walk a very fine line between bottom-line growth and restructuring the economy as they order a nation-wide debt audit; the Shanghai Composite is down 13% for the year. The Japanese Nikkei (INDEXNIKKEI:NI225), for its part, is down 7% the last five sessions, although it's still 31% higher (16% in dollar terms) year-to-date. The outcome of "Abenomics," much like the Greenspan Put once was and the Bernanke Call currently is, remains an open question.
We've seen a spate of multi-billion-dollar deals; Publicis Group (EPA:PUB) and Omnicom Group Inc. (NYSE:OMC) agreed to merge in an all-stock deal to create the world's largest advertising company with $23 billion in revenue. Perrigo (NYSE:PRGO) also agreed to buy Elan Corp. (NYSE:ELN) for an oh-by-the-way $8.6 billion. As Peter Atwater often says, when it comes to M&A, you buy when you can, or when you have to.
Facebook (NASDAQ:FB) had a great year last week, popping 30% on earnings as they seemingly took solid steps to solve their mobile advertising conundrum. I've been involved in this stock both ways this year, but I wasn't there for this move. I'm reminded of a theme we spoke of some time ago, "Alpha Bits," which seems to be in full effect this year. Go figure; the world embraces index funds and stock-pickers have their day in the sun.
All in all, the market was extremely resilient last week; it had several opportunities to sell off but it held its ground in thin summer trading (it's hard to put the "volume litmus test" to work during this slow summer period, but the reaction to news is always more important than the news itself). Meanwhile, Americans are more confident about the economy than at any time since July 2007, according to the University of Michigan, as we’re smack-dab in the middle of what Jeff Saut and others describe as a seasonal danger zone.
For my part, I've got a few shekels on the snake eyes
while respecting both sides of the market ride.
Good luck today.
Position in SPY.
Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at email@example.com.
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