Wall Street is about to begin implementing a system that will track every trade, making it a treasure chest of secret trading information. » Read More
The S&P is moving in a narrow range, but look beneath the hood and you will see a market that is showing healthy rotation and no signs of breaking down. » Read More
With a new special purpose acquisition company, Chamath Palihapitiya is on the hunt for a big investment. » Read More
U.S. stocks reversed earlier losses that came on Tuesday after a series of deadly terrorist attacks struck Brussels. As the details of those tragic events unfold, CNBC's Bob Pisani explains how investors should react.
The attacks in Belgium, in particular, have focused attention on airlines and other travel-related stocks.
Watch the exclusive video for Pro subscribers below:
Market consolidation: it's boring but necessary.
It's another consolidation day, and you should be happy for that. I know, it's boring, but it's healthy for the markets. We need to move sideways before we have a shot at another leg up. Otherwise, you quickly get into oversold territory.
Just look at what has happened in the last few weeks:
1) Volatility has dramatically declined, with the Volatility Index at the lowest level since November; Lowry, the oldest technical analysis service in the U.S., has noted that selling pressure "has significantly receded."
2) Oil is no longer in a pattern of lower lows and lower highs.
3) China has stabilized.
Perhaps most importantly, pullbacks have been very minor. Since Feb. 11, we have been in a rally-consolidation-rally trend.
The initial Feb. 11-17 rally took the S&P to 1,926 from 1,810, a breathtaking rally of 6.4 percent (!!) in four trading sessions.
Then there was a consolidation phase from Feb. 18-29 when the markets moved mostly sideways.
We hit another big leg up on March 1, when the S&P rallied 2.4 percent on an oil rally and a better-than-expected ISM report.
The market again moved sideways from March 2-10.
The most recent leg up started March 16 on dovish comments from the Fed, which has taken us up another 2 percent in four trading sessions.
Now, it looks like we are in another consolidation period. Volume has dried up, which is normal after a quadruple witching. Are we overbought?
Probably, but not by much. After this kind of rally, it would be normal to have some kind of retracement, where we give up, say, a third of the rally, which would bring the S&P 500 to roughly 1,970 from here.
Why hasn't it happened yet? Because sentiment was so absurdly negative on everything that even stability in China (not an improvement in the outlook, just stability) was greeted as a godsend.
Here's one thing for sure: no one is set up for a bull market this year. No one. Look at the year-end targets for some of the major strategists. Up small. Flattish. No bull market.
That's why I still say, the pain trade is higher.
If you don't think a weaker dollar is not the major factor in Thursday's market rally, look at Caterpillar up 2.5 percent today and more than 4 percent since the Fed announcement at 2 p.m. on Wednesday, despite a profit warning that reduced first quarter earnings by 30 percent. Huh?
CAT is not alone. Look at a small sample of materials and energy stocks since the Fed's Wednesday announcement (as of 1 p.m., Thursday)
On the weak dollar we have seen: 1) the Dow and S&P 500 move into positive territory, and 2) new highs expand at the NYSE.
Will this last, or should traders sell the rally? I can't help but think it won't last, since the dollar will surely start to strengthen as we get near June and the next Fed press conference, where they are likely to hike 25 basis points.
Or maybe not.
Meantime, enjoy the fun. Besides industrials, materials, and energy, emerging markets are catching a bid...again.
By the way, I keep hearing that if the Fed does not hike in June, the next chance for a rate hike won't come until December because it's unlikely they would do it in September, so close to the election.
Sorry, that's just not true. Has the Fed ever raised rates in September in a presidential election year? In September 2004, the Fed raised the Fed funds rate 25 basis points to 1.75 percent.
It was a strange moment during Janet Yellen's press conference Wednesday, the moment when she was asked when was the right time to raise rates: "If not now, when?" She gave a rambling answer that seemed to reflect an underlying anxiety.
Some traders flippantly remarked that it was like the Fed had a new dual mandate: Instead of "jobs and inflation" it was "Trump and Sanders."
The deal would create the largest exchange in Europe, with a market cap close to $30 billion (close to the market cap of Intercontinental Exchange, the owner of the NYSE).
One small surprise: no cash. It's an all-stock deal. LSE shareholders would own 45.6 percent of the combined group while Deutsche Boerse shareholders would own 54.4 percent.
Simply put, politics and regulation are what's really important here, because both of these — if not handled carefully — could derail a deal, no matter who gets the LSE.
Do presidential elections matter for the stock market? A lot of cynics insist it doesn't matter, that the markets do whatever they want to do regardless of who is in power. The answer is, it depends on how you ask the question.
In exclusive content for CNBC Pro subscribers, Bob Pisani explores the correlation between politics and the stock the market, as well as the best way to play it.
Watch the video below for all the highlights:
Recent comments from central banks in Europe and Japan have reminded everyone that markets are still very dependent on stimulus talk.
Last week, European Central Bank President Mario Draghi remarked that he doesn't see a need for further rate decreases. Markets dropped.
On Tuesday night, the head of the Bank of Japan declined further stimulus measures, despite a poor economic outlook. Markets struggled.
The question now is, what signals will the Federal Open Market Committee send about its June meeting?
Lots of discussion over the weekend about the one-month anniversary of the Great Turnaround, that day on Feb. 11 when everything—stocks, commodities, the dollar—reversed.
Stock exchanges do not come up for sale very often; one as large and prestigious as the London Stock Exchange even less often, so there is a lot of interest around this.
Deutsche Borse's attempt to merge with the LSE is reaching a critical stage. Deutsche Borse has until March 22 to make a formal offer.
Here's what this is all about:
1) Forget about stock trading: The money is in the clearing business and the technology/index business. Cash equities is not a high multiple business. Even though most people think of the LSE as a listing and equity trading venue, 60 percent of the revenues are generated by the clearing business and its information and technology business.
I love the clearing business. If I only had to own one piece of the financial world, I'd own clearing. It's boring, it flies below everyone's radar, and it makes money. Every single day. You're a toll keeper. You charge both sides to make sure that the stuff you are buying and selling (like stocks) actually gets delivered. You license other people to use your indexes (or to get access to your data, like stock quotes), and they pay you money every day.
The LSE has a 60 percent stake in LCH.Clearnet (LCH), one of the premier clearing operations in the world (the rest is owned by a consortium of banks).
The LSE owns Russell Investments (think Russell 2000), and the FTSE Group, another large provider of stock market indices.
In other words: These are world-class assets. And they don't come up for sale that often.
2) The synergy potential (i.e. cost savings) for the winner is significant. Reuters reports Deutsche Borse is claiming synergies greater than 300 million euros. That's significant, but I bet they — and maybe ICE — can do even better. When LSE bought Russell, they were reportedly able to achieve 80 percent synergies.
I'll give you another example: A few months ago, ICE spent $5.2 billion to acquire Interactive Data Holdings, which specializes in pricing corporate bonds. ICE is expanding its data business because it's so profitable. These data and indexing businesses can easily integrate back-office functions. It wouldn't be hard to see ICE integrating the LSE's Russell and FTSE together with IDC, where they could likely take out even more of the typical 30 percent synergies.
And remember, if you can demonstrate greater synergy, you can put more debt into the equation.
3) Exchanges have gotten bigger, and the markets have gotten more global. LSE's CEO, Xavier Rolet, has spoken often about the need for further consolidation among exchanges. He expects we could end up with as few as a half-dozen or so big global exchanges, and a few smaller ones. Some of these bigger exchanges would have a "continental" focus (North America, Europe, Asia), rather than a national focus.
4) Money aside, the big issue is politics and whether national regulators will allow these deals to go through. The last great wave of merger attempts about five years ago failed for exactly this reason.
In 2012 the NYSE tried to buy Deutsche Borse, and the European Commission turned it down on anti-trust concerns, specifically that the combined entity would have too much concentration in the interest rate futures market.
In 2011, the LSE was going to buy the Toronto Stock Exchange. Canadian authorities turned them down because the banks didn't want it.
And in 2011, Australia and Singapore were talking about merging. Australian regulatory authorities threw cold water on that deal as well.
So who — if anyone — will win this battle? Two things seem important:
1) The principals have to convince regulators that this is not a "takeover." As noted above, other cross-country deals have failed because no one wants the crown jewel to be traded to another country. That's why this deal with Deutsche Borse and LSE seems to be very carefully pitched as a "merger of equals."
2) The principals will need to convince regulators that they are not creating an anti-competitive environment, which sunk other mergers. If there are concerns, they may have to divest assets. For example, both control important clearinghouses: LCH.Clearnet in the case of the LSE, and Eurex Clearing, the largest European clearing house, in the case of Deutsche Borse.
Who has the edge — ICE or Deutsche Borse? The talks originated with the Deutsche Borse, so it's logical to assume that's where the shareholder sentiment is.
It also makes some sense if you believe that regulators might be more amenable to "continental" mergers (i.e. between two countries on the same continent) than to "trans-continental" mergers, which is what the ICE-LSE deal would be.
But that may not be a universal sentiment. London banks may have good reason to be concerned that the merger with Deutsche Borse may allow Frankfurt to overtake London as the financial center of Europe.
And banks may have a very large say in the deal. The LCH.Clearnet agreement between the LSE and the banks states that banks can terminate any agreement upon a change of control. In other words, the banks appear to have some veto power over the deal, as least as it regards change of control of LCH.Clearnet.
So much of this may depend on whether British banks would prefer to have Deutsche Borse or ICE as partners.
Correction: An earlier version of this story misspelled the name of the LSE's chief executive.
What's next for stocks? The pain trade is still higher. The first seven weeks of the year was a total washout. But things have changed a lot since mid-February:
Since Feb. 11 bottom
S&P 500: up 10%
Eurostoxx 600: up 12.5%
Oil: up 47%
A lot of traders and funds are down 3, 4 ,5 percent or more this quarter, at a time when the S&P is down only 1.4 percent and climbing, sitting at the highest level since the first week of January.
Upside days like this are very important, because we are approaching the end of the quarter, so these types of days will force in traders who are under performing.
What's next? Look at the three biggest issues this year for the markets, and for earnings:
1) slow global growth/recession fears
2) oil weakness
3) dollar strength
Slow global growth is certainly still an issue, but the economic stats in the U.S. certainly do not indicate a recession, and that fear has certainly abated somewhat.
The dollar rise was a major issue for most of last year, but the rise stopped in the middle of last year—it's been mostly sideways since then. Down would be better, but not going up is an improvement.
Oil is the big story, up nearly 50 percent above the $26 level we saw a month ago.
This goes a long way toward explaining the slow melt-up in the markets: recession fears receding, dollar stabilizing, and oil off the lows are all positives for future earnings trends.
If these trends continue, earnings will stabilize, particularly for Energy and Materials. That's big news. And that's why Energy and Materials have outperformed.
The big caveat, of course, is "if" they stabilize. Let's take just one example: oil. We had exactly this conversation about oil stabilizing one year ago. Didn't happen.
In March, 2015, oil hit $45 (from almost $100 six months earlier) amid much wailing and gnashing of teeth. Six weeks later, in early May, it was back at $60, and plenty of people announced that the bottom was in. This was a period of much buying in the Energy Sector ETF as many tried to buy the bottom.
It worked, but only for a while. The XLE topped out in May. By June oil was again moving down. By August it was below $40. Then rallied again through the late summer before bottoming...again...at $26 in mid-February.
In other words, a lot of broken dreams. But those scars may be the best thing going for the markets. Having been so badly burned,
TIAA's Brian Nick explains why the bulls are losing momentum.
JPMorgan CEO Jamie Dimon is at it again, dismissing bitcoin and predicting its collapse. He couldn't be more wrong, says hedge-fund manager Brian Kelly.
Shares of First Solar surged after a trade agency ruled cheap imported solar panels had harmed American manufacturers.