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Los Angeles Times
a day ago
- Business
- Los Angeles Times
Traders resist defensive stocks' haven status amid Mideast risk
U.S. equities investors are reluctant to seek safety amid flaring geopolitical tensions, raising the risk of getting caught off guard if the conflict between Israel and Iran takes an unexpected turn in the days ahead. Normally, this level of anxiety would be enough to send money managers scurrying into stocks offering shelter, especially with President Trump weighing whether to offer Israel military backing in its conflict with Iran. That step could roil crude prices and stoke worries about inflation, and potentially reignite a rush for investment havens. Yet, the events since last week have only triggered a modest shift into so-called defensive sectors such as utilities, consumer staples and health care. That's even as US stocks whipsaw their way higher, with the Standard & Poo'rs 500 Index is just 2.7% away from a new all-time high. For Matt Maley at Miller Tabak + Co., it's an ominous setup that leaves investors vulnerable given the fluid situation. 'The war may or may not get worse, but given that any upside potential for stocks is limited due to extended valuations, investors should be taking more precautions,' said the firm's chief market strategist. Underscoring how safer stocks have been on the sidelines lately, defensive sectors' influence on the benchmark — measured by the combined weight of the groups in the gauge — is currently at a 35-year low, Strategas' Todd Sohn found. What's more, a Goldman Sachs Group Inc. pair-trade basket that represents going long cyclicals and short defensives has seen a modest uptick since Israel launched airstrikes against Iran's nuclear program and military targets last week. If traders were rushing to safety due to concerns over the economy the basket would decline, like it did in early April, when investors feared the impact of tariffs on growth. Trump will decide within two weeks whether to strike Iran, his spokeswoman said on Thursday. Some say there's good reason for investors to be reluctant to jump into defensives in the face of geopolitical unrest. First, data from UBS shows the impact of such events on equity markets tend to be short-lived. In the past 11 major geopolitical events, the S&P 500 on average fell just 0.3% one week after the event, while 12 months later it rose 7.7%. According to Christopher Murphy, co-head of derivatives strategy at Susquehanna, positioning among hedge funds remained light. In other words, many institutional investors did not aggressively chase the recent rally higher, limiting their need for a forced pivot on geopolitical shocks. Even on the day of strikes, investors showed little fear of a volatility breakout, and were adjusting their exposure and not exiting markets, the strategist said. 'Investors are still hedging with precision, but the dominant behavior remains risk-adjusted engagement — not panic,' he said. That may be the case but there's one outlier trade. Investors are piling into energy stocks, which tend to behave defensively in times when crude oil supply is at risk. Any escalating Iran-Israel conflict could push oil prices even higher. Meanwhile, some market pros are starting to advise investors to make a bigger defensive move. The Wells Fargo Investment Institute recommended boosting exposure to such stocks amid the uncertainty surrounding tariffs that will extend through the rest of the year. The utility sector stands out to Wells Fargo strategists. The group, which can act as a hedge against market volatility and economic risks, is relatively shielded from tariffs given the businesses are primarily domestic, they wrote in a note. Utilities are also set to benefit from the infrastructure buildout in artificial intelligence. Moreover, valuations are relatively favorable, they added. The S&P 500 Utilities Index is trading at a forward price-to-earnings multiple of 17 times, compared to the S&P 500's 22 times. Dennis DeBusschere at 22V Research said he won't be buying any surge in defensives, given the firm's view that Israel will not strike Iran's oil exporting facilities, thereby limiting the impact on interest rates and inflation expectations. Dey writes for Bloomberg.
Yahoo
a day ago
- Business
- Yahoo
Traders Resist Defensive Stocks' Haven Status Amid Mideast Risk
(Bloomberg) -- US equities investors are reluctant to seek safety amid flaring geopolitical tensions, raising the risk of getting caught off guard if the conflict between Israel and Iran takes an unexpected turn in the days ahead. Security Concerns Hit Some of the World's 'Most Livable Cities' One Architect's Quest to Save Mumbai's Heritage From Disappearing JFK AirTrain Cuts Fares 50% This Summer to Lure Riders Off Roads NYC Congestion Toll Cuts Manhattan Gridlock by 25%, RPA Reports Taser-Maker Axon Triggers a NIMBY Backlash in its Hometown Normally, this level of anxiety would be enough to send money managers scurrying into stocks offering shelter, especially with President Donald Trump weighing whether to offer Israel military backing in its conflict with Iran. That step could roil crude prices and stoke worries about inflation, and potentially reignite a rush for investment havens. Yet, the events since last week have only triggered a modest shift into so-called defensive sectors such as utilities, consumer staples and health care. That's even as US stocks whipsaw their way higher, with the S&P 500 Index is just 2.7% away from a new all-time high. For Matt Maley at Miller Tabak + Co., it's an ominous setup that leaves investors vulnerable given the fluid situation. 'The war may or may not get worse, but given that any upside potential for stocks is limited due to extended valuations, investors should be taking more precautions,' said the firm's chief market strategist. Underscoring how safer stocks have been on the sidelines lately, defensive sectors' influence on the benchmark — measured by the combined weight of the groups in the gauge — is currently at a 35-year low, Strategas' Todd Sohn found. What's more, a Goldman Sachs Group Inc. pair-trade basket that represents going long cyclicals and short defensives has seen a modest uptick since Israel launched airstrikes against Iran's nuclear program and military targets last week. If traders were rushing to safety due to concerns over the economy the basket would decline, like it did in early April, when investors feared the impact of tariffs on growth. Trump will decide within two weeks whether to strike Iran, his spokeswoman said on Thursday. Reluctance Explained Some say there's good reason for investors to be reluctant to jump into defensives in the face of geopolitical unrest. First, data from UBS shows the impact of such events on equity markets tend to be short-lived. In the past 11 major geopolitical events, the S&P 500 on average fell just 0.3% one week after the event, while 12 months later it rose 7.7%. According to Christopher Murphy, co-head of derivatives strategy at Susquehanna, positioning among hedge funds remained light. In other words, many institutional investors did not aggressively chase the recent rally higher, limiting their need for a forced pivot on geopolitical shocks. Even on the day of strikes, investors showed little fear of a volatility breakout, and were adjusting their exposure and not exiting markets, the strategist said. 'Investors are still hedging with precision, but the dominant behavior remains risk-adjusted engagement — not panic,' he said. Putting Up Guardrails That may be the case but there's one outlier trade. Investors are piling into energy stocks, which tend to behave defensively in times when crude oil supply is at risk. Any escalating Iran-Israel conflict could push oil prices even higher. Meanwhile, some market pros are starting to advise investors to make a bigger defensive move. The Wells Fargo Investment Institute recommended boosting exposure to such stocks amid the uncertainty surrounding tariffs that will extend through the rest of the year. The utility sector stands out to Wells Fargo strategists. The group, which can act as a hedge against market volatility and economic risks, is relatively shielded from tariffs given the businesses are primarily domestic, they wrote in a note. Utilities are also set to benefit from the infrastructure buildout in artificial intelligence. Moreover, valuations are relatively favorable, they added. The S&P 500 Utilities Index is trading at a forward price-to-earnings multiple of 17 times, compared to the S&P 500's 22 times. Dennis DeBusschere at 22V Research said he won't be buying any surge in defensives, given the firm's view that Israel will not strike Iran's oil exporting facilities, thereby limiting the impact on interest rates and inflation expectations. Ken Griffin on Trump, Harvard and Why Novice Investors Won't Beat the Pros Is Mark Cuban the Loudmouth Billionaire that Democrats Need for 2028? The US Has More Copper Than China But No Way to Refine All of It Can 'MAMUWT' Be to Musk What 'TACO' Is to Trump? How a Tiny Middleman Could Access Two-Factor Login Codes From Tech Giants ©2025 Bloomberg L.P.
Yahoo
06-06-2025
- Business
- Yahoo
Robinhood Extends Rally as Speculation Over S&P 500 Inclusion Grows
(Bloomberg) -- Robinhood Markets Inc. shares extended gains into a sixth straight day as investors speculate that the online brokerage could become the latest firm to earn a coveted spot in the S&P 500 Index. Next Stop: Rancho Cucamonga! ICE Moves to DNA-Test Families Targeted for Deportation with New Contract Where Public Transit Systems Are Bouncing Back Around the World US Housing Agency Vulnerable to Fraud After DOGE Cuts, Documents Warn Trump Said He Fired the National Portrait Gallery Director. She's Still There. Wall Street firms including Bank of America Corp. and Barclays Plc have called the company a top candidate to join the benchmark, a distinction that would spur passive funds to snap up its shares. The rebalancing is set to be announced after the close of regular trading Friday. Robinhood shares rose 3.3% in the session, bringing their gain to 17% over six trading days. 'It does seem like the speculation about the stock being included in today's S&P 500 announcement is having the bigger impact,' said Matt Maley, chief market strategist at Miller Tabak + Co. 'With so much money invested in index funds and index ETFs today, the stocks involved will rally no matter what.' Ares Management Corp., AppLovin Corp., and Tradeweb Markets Inc. are among other companies that analysts have flagged as possible additions. Barclays analyst Benjamin Budish said the S&P 500 has added an average of 1.5 new companies in the June quarter, either through additions or promotions from its other indexes. Fellow new-finance player Coinbase Global Inc. received a dramatic boost when its inclusion was announced last month. The stock jumped 24% in the next trading session on its way to a 34% weekly gain. Robinhood, meanwhile, has jumped more than 100% this year and, on Tuesday, closed at a record for the first time since 2021. 'Stocks selected for index inclusion typically experience 7%+ gains into the first day of trading,' Budish wrote in a note to clients. 'However, the stocks appear to sell off by about 1.4% on average in the first week following index inclusion, and are down about 1% in the following 4 weeks.' Other stocks linked to cryptocurrencies also advanced Friday as US labor data boosted appetite for risk and lifted digital tokens. Coinbase rose 2.9%, while Bitcoin was trading above $104,000. --With assistance from Monique Mulima. (Updates shares throughout, Bitcoin price in final paragraph.) Cavs Owner Dan Gilbert Wants to Donate His Billions—and Walk Again The SEC Pinned Its Hack on a Few Hapless Day Traders. The Full Story Is Far More Troubling YouTube Is Swallowing TV Whole, and It's Coming for the Sitcom Is Elon Musk's Political Capital Spent? Trump Considers Deporting Migrants to Rwanda After the UK Decides Not To ©2025 Bloomberg L.P. Sign in to access your portfolio
Time of India
21-05-2025
- Business
- Time of India
Asian stocks gain, oil rises on Israel-Iran report
Oil rose after CNN reported that US intelligence had suggested Israel is making preparations for a possible strike on Iranian nuclear facilities. Stocks in Asia advanced on Wednesday. West Texas Intermediate gained 1.5% to $62.96 a barrel. It's not clear that Israeli leaders had made a final decision to carry out the strikes, CNN said, citing unnamed officials. Contracts for the S&P 500 and the Nasdaq 100 were down 0.1%, paring most of their losses earlier in the day. The Swiss franc and the yen, traditional safe haven assets, inched higher. Benchmarks in Australia, South Korea and Japan all climbed, pushing a gauge of Asian shares 0.4% higher in early trade. Geopolitical tensions may add headwinds to the markets, which had calmed recently after a month of turmoil from the tariff blitz unleashed by US President Donald Trump. Investors are scouring charts for clues on whether the advances in stocks can persist, with the S&P 500 near levels that some technicians view as a sign of overheating after a six-day run put the index on the verge of a bull market . 'There is little question that the momentum in the equity market is quite strong. That said, the market is getting overbought near-term, so it could see a breather at any time,' said Matt Maley at Miller Tabak. 'However, unless that breather turns out to be a serious reversal, a retest of those all-time highs soon is very possible.' Live Events Oil prices have been volatile since last week on mixed headlines about the fate of Iran-US talks, which may pave the way for more barrels to return to a market that's expected to be oversupplied later in the year. An attack by Israel would hinder any progress in those negotiations and add to volatility in the Middle East, which supplies about a third of the world's oil. The tensions boosted demand for haven assets in early Asian trading, sending a gauge of the dollar lower. 'The US dollar has of course lost its luster as the undisputed safe reserve asset,' said Richard Franulovich, head of FX strategy at Westpac Banking Corp. As such, 'these periodic geopolitical flare ups are going to show up more forcefully in alternatives like the yen and Swiss franc going forward' Meanwhile, Federal Reserve Bank of St. Louis President Alberto Musalem said tariffs will likely weigh on the US economy and weaken the labor market. Musalem said the Fed can deliver a 'balanced response' to both inflation and employment as long as Americans' outlook on future prices remains anchored at the central bank's 2% target. Long-term Treasury yields climbed Tuesday as fractious US budget negotiations kept focus on the growth in deficit spending, with traders piling into bets that they will surge further. Trump is growing frustrated with demands to significantly boost the cap on the state and local tax deduction, according to a senior administration official, signaling a deadlock as Republicans aim to quickly pass a giant tax-cut bill.
CNBC
08-05-2025
- Business
- CNBC
This financial stock is poised to 'make a lot of money,' says Miller Tabak's Matt Maley
There is a lot more upside ahead for Blackstone , according to Matt Maley, Miller Tabak's chief market strategist. The alternative asset manager moved higher Thursday but is still down about 18% year to date, underperforming the broader market. The S & P 500 has lost 3.5% so far this year. Blackstone was one of three stocks Maley called out as buys during CNBC's " Power Lunch ." Blackstone The firm is filled with "the smartest guys in the room," Maley said. He's expecting a rebound in Blackstone similar to what the stock saw in 2022, when it lost 40%. In comparison, the S & P 500 fell more than 19% that year. "When it bounced back, it outperformed back in a big way," he said. These days, he thinks Blackstone is oversold. "When they come out of this downturn, they're going to make a lot of money," he said. "I think it's a real good play down here." Travelers This insurance play is more of a trade, with a time horizon of about six months, Maley said. Travelers ' underwriting was still pretty good when it announced quarterly earrings in April, although it has been dealing with catastrophic losses, he said. It is also a "long way from hurricane season," Maley added. However, the main reason for his call is a technical one. The stock has been bumping up against the $270 level for about six months, he said. This is the fourth time it's doing so — and is finally breaking above it, Maley said. "If it can push just a little bit higher and confirm that breakout, it is going to attract a lot of momentum money," he said. "It should run quite a bit further." Travelers hit a 52-week high on Thursday and closed at $270.82. It is up nearly 13% year to date. TRV YTD mountain Travelers General Dynamics The world is not becoming any safer — and defense contractor General Dynamics should benefit, Malek said. Global tensions remain high around the globe, witness the current conflict between India and Pakistan, he noted. "Defense spending around the world — Europe, U.S., everywhere — is going to be much better in the years ahead," he said. General Dynamics is up about 3% year to date.
