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Trend Reversal: Yen Strong, But U.S. Stock Market Holds Up

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Trend reversal: Yen strong, but U.S.stocks holding up midday. That's a trend reversal: U.S. stocks have moved very closely with the Yen for the past several weeks. S&P Futures did pop up on the better-than-expected jobs and May Retail sales data.

Bernanke press conference June 19th: there's only three press conferences for Bernanke left this year: June 19, September, and December.

He is likely pleased that his trial balloon on tapering has initiated such turmoil...he must be somewhat pleased some are taking risk off the table, as some markets were heading toward a bubble (Japan and the yen carry trade) and are now clearly deflating. What next: does he calm things down or does he stoke the fire?

He seems to be in a better position, at least with today's data. After all, better to have the economy recovering with some tapering, rather than economy tanking with no tapering.

The debacle in Japan: what happened? I woke up at 5:30 a.m. ET and tried to find out what happened to cause the markets there to drop six percent, and no one could give me a clear answer.

World Bank cuts global GDP growth? Maybe.

Prime Minister Abe met with the head of the Bank of Japan, Mr. Kuroda. Mr. Kuroda said nothing, essentially signalling that he has done enough for the moment.

That is likely the source of the problem. Remember when ECB head Mario Draghi made his famous comment about supporting the euro and the Eurozone: "whatever it takes," he said.

And the markets immediately calmed down.

Mr. Kuroda needs a Draghi moment--he needs to say "whatever it takes" and he hasn't--yet.

No, this is an unwind of a crowded trade (the yen carry trade) and collateral other trades. The selloff in the Nikkei was very broad--everything from tech to healthcare to consumer services.

The IPO market is improving. IPOs have a real problem: they're always playing catch up with the market. You need the wind at your back to get an IPO out, and market conditions on the day it comes out can also influence your first day of trading.

Just look at cosmetics and fragrance maker COTY (COTY), which went public today at $17.50, opened at $17.50, and promptly dropped below that price. We know this: demand was strong yesterday, in fact it was well oversubscribed.

But the IPO biz relies on those who don't get the allocation they wanted to buy on the open, and that sentiment can be very fragile--particularly on days when the markets are in turmoil...and particularly when you have the Nikkei down 6 percent overnight.

Still: it's been a good start to the year.

Offerings this year:

  • 2013: 80
  • 2012: 78
  • Above Initial Price: 71%
  • Average Price Gain: 22%

Source: IPO Scoop

Not bad, particularly with 71 percent above the initial price. And June is starting out strong: last year four deals priced in June, we've already had four this June, with the calendar filling up very quickly

Of course, it all depends on market conditions!


—By CNBC's Bob Pisani

Symbol
Price
 
Change
%Change
USD/JPY
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S&P 500
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S&P FUT
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NIKKEI
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EUR/USD
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COTY
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  • A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

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