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China Bottoming? And Is the IPO Market Weak...or Strong?

A policeman patrols under a giant communist emblem on the Tiananmen Square on June 28, 2011 in Beijing, China.
Getty Images
A policeman patrols under a giant communist emblem on the Tiananmen Square on June 28, 2011 in Beijing, China.

China: Was the first quarter the bottom?

China's Shanghai Index was up 1.8 percent overnight...on what? Well, bank lending hit a 14-month high...that's certainly good news. Credit does seem to be expanding. This is a big help to Chinese authorities: If they can improve the economy by just loosening credit controls, why bother to lower rates and risk higher inflation? Gross domestic product report due tomorrow — consensus is for annual growth of 8.3 percent.

Yields are rising again in southern Europe. Italy's auction of three-year bonds got done, but at a high yield: 3.89 percent, up more than 100 basis points from the prior auction of a month ago. That's a big jump.

Portugese and Spanish markets weak again: Spain’s IBEX at a three-year low, Portugal at a five-month low and not far from a decade low.

Elsewhere:

1) S&P 500 futures dropped about 4 points on the disappointing initial jobless claims figures, but it's not clear if the Good Friday holiday impacted the numbers. It is also igniting debate that the warm weather in January, February, and much of March "stole" job growth, as was immediately raised when the nonfarm payroll figure for March came in weak.

2) Three out of five ain't bad, right? Maybe...only three out of five scheduled initial public offerings actually priced last night. Aluminum maker Aleris postponed their IPO, while solar thermal company BrightSource Energy outright withdrew their IPO. That means they withdrew the filing. BrightSource cited "market volatility."

A couple of oilfield-product companies — think pipes, valves, fittings for the oil industry — priced: Forum Energy, pricing 18.9 million shares at $20 (well above the 15.8 m share and $18 to $20 price talk) and MRC Global priced 22.7 million shares at $21 (low end of the $21 to $23 price talk).

Investment management company Oaktree Capital priced 8.8 million shares at $43 (less than the 11.3 million shares expected and at the low end of the $43 to $46 price talk).

What happened with the others? The IPO market is a collection of haves and have-nots. Sometimes the have-nots can get in, if the price is right. You can sometimes get in if the markets are hot, but without the pricing eventually the markets catch up with them.

With Aleris, the book seems to have come together around $11, but they were looking to price around $14 to $15. No go.

As David Menlo at IPOFinancial.com has pointed out, it's not that the IPO market is weak, it's that the investors are in charge. It's not about pleasing the underwriters or the company.

What does this mean for Facebook? Probably not much. They are the big "have."

3) Occupy Wall Street is back: protestors are camping out in front of Federal Hall, across from the New York Stock Exchange and in front of the TJ Maxx store, handing out flyers for May Day protests.

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