Market News

Exxon faces a thorny problem that will challenge capitalists for a generation: find a constructive solution to the carbon problem while fighting back against the logic of looters.

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In trading on Thursday, shares of State Street Corp.'s Non-Cumulative Perpetual Preferred Stock, Series C (NYSE: STT.PRC) were yielding above the 5% mark based on its quarterly dividend (annualized to $1.3124), with shares changing hands as low as $26.12 on the day. This compares to an average yield of 5.49% in the "Financial" preferred stock category, according to Preferred Stock Channel. As of last close, STT.PRC was trading at a 8.56% premium to its liquidation preference amount, versus the average premium of 5.01% in the "Financial" category. Investors should keep in mind that the shares are not cumulative, meaning that in the event of a missed payment, the company does not have to pay the balance of missed dividends to preferred shareholders before resuming a common dividend.

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Few expected the US government to end its four-decade-old ban on crude oil exports, which barred shipments to countries other than Canada, anytime soon. Despite impassioned lobbying by exploration and production (E&P) companies for years, few analysts expected any movement on that front before the next occupant of the White House arrived in 2017.

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About three years ago, the stocks of insurance software provider EBIX Inc. (NASDAQ:EBIX) was under attack by short sellers. The company was also the subject of an investigation by the U.S. Attorney General of the Northern District of Georgia. Goldman Sachs just called off its merger deal to buy the company at $20 a share. It seemed that its troubles could only get worse and the stock dropped to $8.Fast forward to today, the company is now back to its growth track. It won several large contracts and entered the London insurance market, which is the largest insurance market in the world. The company has grown its revenue by more than 30% over the last three years. Its net income suffered decline initially due to the lawsuit but it is now growing again. We expect that the company continues to grow its earnings at double digits in the next years.In the meantime, the company continues to buy back its shares. Over the past three years, the share count has been reduced by 15%. The stock price has made an all time high of close to $50 and it is now traded at around $45.Three years ago GuruFocus Founder Dr. Charlie Tian wrote that EBIX Is a Deep Bargain. It was also the largest holding in his personal portfolio. He has a gain of more than 200% and has not sold any. It is now by far the largest holding in his personal portfolio and he will not sell the stock in foreseeable future.With the stock prices making all time high, and the company business growth at double digits, the short sellers haven't given up completely although they are at deep loss. Currently the short percentage of float is about 31.2%. However, all of the short sellers shorted the stock at much lower price. They have been covering their shorts over the past months.

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Traders are always discussing market liquidity and transparency, but I tend to analyze it on out-of-the money Options. The problem is, while initiating the transaction may be in a liquid market, a reasonable exit strategy can be very difficult to find. Frequently the most effective method of liquidation can be by trading the underlying Stock, ETF or Futures Contract. Options markets tend to be much wider for in-the-money Options than out-of-the money. The reason, for the most part, is obvious. In the money Options have large Deltas which tend to, because of the movement of the underlying instrument, make it difficult to hedge. In illiquid Stocks, ETFs and Futures, wide markets on out-of-the money Options in volatile instruments may make sense. In a market like SPY (SPDR S&P 500 Trust ETF), the lack of liquidity for out-of-the money Options is difficult to understand.

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Fed Chair Janet Yellen capped off Friday with remarks echoing what investors have heard from other Fed officials recently: A near-term rate hike may be in order.

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The dog days of summer are here, and you may be tempted to put your portfolio on autopilot and check out for the next three months. That would be a big mistake, though, because you could miss out on some of the year's biggest dividend hikes.

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As investors and traders head into the long Memorial Day weekend the S&P 500 is once again close to the April highs and the widely watched 2100 area. This is despite the raft of negative headlines that filled my inbox this week, including: The Market Is In For A Shock, A Market Under Pressure, Prepare For A Recession and The Recent Rally May Be A Head Fake. It appears that many hedge funds and banks are short the stock market as they are looking for another rally failure. In last week's column "Avoiding The Big Money Blues" I pointed out the hazards of following the hedge funds or well known money managers. Often when a majority of these big traders are on one side of a trade the market goes in the opposite direction. Last week's action in gold was a good example. There were early signs from the market internals last week that the recent trading was not going to lead to a sharper correction and a new rally phase was more likely. The evidence was strong enough for me to recommend that Viper ETF traders buy several ETFs that ended sharply higher. This end of the correction was confirmed last week ( Uncovering Best Of Breed Stocks) as the Nasdaq 100 A/D line "moved above its WMA and the May 10th high". As stocks continued higher through the week the technical studies have gotten even stronger. (See Market Wrap section) Surprisingly, despite the strong stock market only 17.8% of individual investors are bullish according to AAII who pointed out "This is the lowest level of optimism recorded by our survey since April 14, 2005". The very high neutral reading also goes back over 16 years. So what fears are keeping investors from buying stocks?

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Fifty years ago, when factory/union workers comprised the American middle class, the majority of Americans' retirement savings were company pension plans (defined benefit plans) created by an employer. As America evolved into a service economy, middle class workers experienced a drastic shift how they received their retirement benefits as defined benefit plans (DBPs) were largely replaced by defined contribution plans, such as 401Ks and IRAs.

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