Syria skirmish may sound death knell for Summers' Fed bid
After spending a week in San Francisco, I was struck by trader commentary over the weekend that President Obama's bruising fight over Syria might change the outlook on the choice for the next Federal Reserve chairman.
The argument went like this: the fight over Syria is not going well for the President. There is a high probability that the President may lose an outright vote in the House of Representatives (despite some support from John Boehner), or be forced to pull the resolution before there is a vote.
This means that the President is in a weaker position to negotiate on his domestic agenda, which would include Obamacare and an end to the sequester. Most importantly for Wall Street, it may mean that he may not be as willing to support Larry Summers as the next Fed chairman, given the opposition that is already lined up against him.
My point: this is a second-term President with very limited political capital. His popularity ratings are not far from new lows. If he puts all his eggs into this basket, he will have less ammunition to fight the domestic fights. Where does he pick and choose to fight? Does he give up on Obamacare or Larry Summers?
By the way, my week spent in San Francisco was a real eye-opener. Real estate was the topic of conversation. A friend of mine living in Twin Peaks speculated he might get $800,000 for a less than 1,000 square foot apartment that has a garage. We are talking nearly $1,000 a square foot.
That's Manhattan prices. San Francisco is the fourth most expensive city in the country, behind Manhattan, Brooklyn, and Honolulu.
What's happening? In a move reminiscent of 1996-2000, resurgent dot-com entrepreneurs are once again taking over the southern parts of the city (the Mission, Noe Valley) .After 2000, they all fled and San Francisco's real estate market fell apart for years. But they're back, and they love the city again.
The Mission, formerly a gang-ridden part of the city, is full of restaurants like Foreign Cinema and Mission Chinese. At these eateries, impossibly good looking 24-35 year hipsters eat California style food in ridiculous combinations, like Kung Pao Pastrami (I kid you not -- I had it) and order $100 chardonnays from micro-wineries in Sonoma like Lynmar Estate and Merry Edwards: the smaller, less-known, the better.
1) Asian stocks rallied big on Monday. Thai stock market up 3.6 percent, Jakarta by 2.9 percent, Korean Kospi by 1 percent. Japan GDP revised to a gain of 3.8 percent, that, combined with winning the 2020 Olympics (their fist since 1964), was good for a 2.5 percent gain in the Nikkei. The Shanghai index was up 3.4 percent (3 month high) as August exports were stronger than expected, up 7.2 percent.
Strong Japanese growth plus strong China exports all add up to boosters for the entire regional economies.
Chinese financials were also strong on a story that banks could begin issuing preferred stock, which would provide an alternative source of financing.
2) IPOs are picking up. Right now, according to John Fitzgibbons at IPOScoop.com, there are about 50 IPOs in active registration, with 18-20 since mid-August and four announced in the last week, including several biotechs.
Why the pickup? The stock market dictates the traffic flow. Despite all the concerns, we are still in a strong stock market.
Another factor is legislation. The JOBS act changed the way IPOs go public. It enabled companies to speed up the process of going public. In the past, a lot of hopes and dreams were put into a filing with the SEC, which was public. Everyone could see when the filing occurred, but it could take weeks or months before anything happened, if ever. Now they can submit something to the SEC that is private.
If the pieces fall into place, meaning if they can get the bankers and the clients who will buy the stock behind them...when they file the S-1, they can go public almost immediately when there is an immediate window.
—By CNBC's Bob Pisani