What's in a name? An awful lot, in the case of the NYSE. The NYSE and ICE have released all sorts of details on their proposed merger, except the name of the company.
(Read more: ICE in $8.2 Billion Deal for NYSE-Euronext)
How important is that? U.S. Senator Charles E. Schumer, whose blessing is required to make the deal work, released the following statement a short while ago:
"The New York Stock Exchange has to adapt to new times, and this merger may be just the thing that gives it a chance to grow. Mr. Sprecher and Mr. Niederauer have assured me that they will keep the floor open and in New York, expand their derivatives business here, and have dual headquarters here and in Atlanta. I am also pleased they will keep the New York Stock Exchange name and protect the brand."
Well, not exactly. True, there will be a subsidiary called the New York Stock Exchange (Duncan Niederauer will be the CEO), but we do NOT know what the name of the combined company will be.
A lot of meaning will be in that name: if they name it Global Exchange, for example, with no mention of the NYSE, that will be telling.
My own sense is that while officials from both companies have said they will keep the U.S. cash equities business, along with the NYSE trading floor, that is only for the moment. Down the road — it may be a few years -- there is a high probability that this low-multiple business will be spun off in an IPO or sold outright.
Likely buyers? BATS, London Stock Exchange, Deutsche Boerse.
Elsewhere: when will investors get interested in stocks? Still outflows from stock funds, inflows into bonds. There has been much discussion about re-allocation in the past few weeks. Out of bonds, into stocks.
Still not happening. Weekly numbers released by ICI (mutual fund industry) show money still coming out of stock funds, into bond funds.
Mutual fund flows:
12/12 $8.4 b outflow
12/5 $7.1 b outflow
12/12 $1.8 b inflows
12/5 $5.2 b inflows
True, bond inflows at $1.8 billion are afraction of the prior week, but still...it's inflow.
So far in 2012, here's what it looks like:
Mutual fund flows, 2012:
Equity funds: $134 billion OUTFLOWS
Bond funds: $302 billion INFLOWS
Will this ever change? Yes. If the bond bubble bursts -- and yields rise -- you will see movement. I used to believe that new highs in equities might do the trick. But we hit multi-year highs in September, and there were NO inflows.