Cyprus: the options are getting narrower. The Russians do not seem interested in swapping loans for gas, and the European Union has objected to a proposal to take over pension funds as part of a Troika bailout. Looks like uninsured depositors in the second-largest bank, Laiki Bank, will get hit hard in a restructuring that would divide the bank into a "good bank" and a "bad bank." There are estimates that this restructuring could save 3.6 billion euros, which would go a long way toward getting to the 5.8 billion euros that Cyprus needs to raise.
Financial controls are coming. Depositors with less than 100,000 euros may not lose their money outright, but they won't like the restrictions--no matter how much they have in the bank. Limits on withdrawals, limits on check cashing, and perhaps even outright conversion of checking accounts into fixed term deposits are coming(translation: you don't have a checking account, you have a bond from the bank).
1) Big week for IPOs: three more price overnight. Marin Software (MRIN),which does cloud-based advertising management,priced 7.5 million shares at $14, above the 7 million shares and price talk of$11-$13;
West Corp (WSTC), a phone service provider controlled by Thomas H. Lee Partners, priced 21.3 million shares at $20, below the price talk of $22-$25 and will trade on the NASDAQ. This was the only IPO that priced below its price talk this week;
Five Oaks Investment (OAKS), a hybrid Real Estate Investment Trust (REIT) that invests in residential mortgage-backed securities, priced 4 million shares at $15, in line with the $15 price talk;
It's been a strong week for IPOs: yesterday Aviv REIT (AVIV)--which owns mostly nursing facilities--priced 13.2 million shares at $20 each…the high end of its $18-$20 price talk, and closed at$22.55; and
Enanta Pharmaceuticals (ENTA) priced four million shares at $14 apiece, at the low endof the $14-$16 range, and closed at $17.18.
On Wednesday, ModelN (MODN), which makes business software for life sciences and technology industries, increased the size and price of its IPO on the NYSE, increasing the number of shares from 6.46 to 6.7 million shares, and pricing at $15.50, above the price talk $12.50-$14.50, and is currently trading above $19.
More coming: next week's big IPO, Pinnacle Foods (PF), expected to price 29 million shares at $18-$20, one of the larger IPOs we have seen this year: we're talking famous brand names like Birdseye, Aunt Jemima, Vlasic pickles. Blackstone took them private in 2007.
There are three other deals due next week as well. Yet don't get too excited, though...of the 27 IPOs that have gone public this year (not counting today), only 6 of the 27 are trading below their initial offering price.
Will there be more deals now that these have done fairly well? There should be.
2) In a rocky week for stocks, inflows into stock mutual funds continue, but at reduced levels. Lipper reported inflows of $1.88 billion into stock mutual funds. This was the lightest inflows of the year, but still inflows. Modest outflows in stock ETFs. But inflows continue into bond funds: $5.1 billion into bond mutual funds, $900 million inflows into bond ETFs, so after three months no Great Rotation (out of bond funds, into stock funds) is evident yet.
There have been into stock mutual funds every week this year, with the exception of the first week.
2) Tiffany (TIF) up big after the high-end jeweler said it expects worldwide sales to rise six to eight percent this year, led by demand in Asia. TIF posted better-than-expected Q4 earnings, but revenues were light. The company earned $1.40 per share, five cents more than what the Street expected. TIF sees 2013 EPS growth of six to nine percent, or $3.43 to $3.53, which brackets analysts' $3.50 estimate, in line with guidance that was given in January;
TIF has been a big gainer this year, up 19 percent. Valuation is a bit of a problem: it trades at almost 20 times forward earnings, well above what most other luxury goods retailers trade for;
3) BP: we'd rather buy back shares. Instead of going out to explore for oil, BP announced they would buy back $8 billion in shares (about 6 percent of the float). It wasn't entirely unexpected: they had just sold a big stake in a joint venture, TNK-BP, to Russia's Rosneft, so they had a lot of cash on hand; and
4) Rocky week for global markets: only China up among major indices. S&P 500, Dow poised for worst week this year; Dow Transports on track for worst week in four months; Japan ends with worst week in four months.