It's the most active week for IPOs since at least June as investors seek to raise $1.6 billion from seven issues » Read More
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The IPO thaw is finally here. Maybe. It's been two months since the market bottomed, but it's been nearly four months since any significant companies went public.
This morning SecureWorks, Dell's security spinoff, said its long-awaited IPO was expected to price 9 million shares between $15.50 and $17.50, valuing the company at up to $1.42 billion.
Exchange operator BATS Global Markets (BATS) is scheduled to price its long-awaited IPO next Thursday night for trading Friday, and there's a lot at stake.
First, BATS will be listing and trading on its own exchange, after an historic 2012 technology glitch that forced them to abandon their IPO. Second, the entire IPO community will be watching the deal as an indication of the health of the IPO market.
BATS has to execute the IPO and price it so investors make money. If the deal does well and the markets hold up, two other IPOs are waiting the following week: casino REIT MGM Growth Properties (MGP), and American Renal (ARA), which runs dialysis facilities.
Well, this is a bit of a disappointment. We have oil flying (up nearly 7 percent!), we have a weak dollar, we have China quiet all week, and we have a dovish Fed that traders believe have put some kind of floor under the market.
And this is all we get? The Dow Industrials up 40 points in a lackluster, average-volume session? In the past months, if oil would be up 7 percent and the dollar would be weak, we would have been up 200-250 points. What's wrong?
You can argue oil may be decoupling from the markets. Maybe. But the usual suspects that would benefit from a weak dollar are all up: energy, materials, industrials. In fact, there's more than four stocks advancing for every one declining.
So, why the crummy point action?
The Department of Labor has finally released its rules on financial advisers, introducing — in most cases — a higher "fiduciary" standard that requires brokers to act in the best interest of their clients, which may include providing lower cost alternative investments where appropriate.
Those of us who for years have been urging American investors to invest in lower-cost products like ETFs can only hope that this will be a wake-up call to those investors.
The new rules will only apply to retirement accounts, but I expect those retirement accounts to slowly —reluctantly — begin to offer lower priced funds, including lower-priced actively managed funds, as well as offering a sprinkling of ETF products.
And I hope that investors will start making more low-cost investment choices.
Lower interest rate concerns are again messing with the global markets, particularly financials. Many European bank stocks closed down 4 percent to 7 percent. Big U.S. banks are also down 2 percent or more.
The yen had another move up overnight to 108 to the dollar, a big move considering it was 113 few days ago. It's at a 17-month high against the dollar.
This is partly as a result of a more dovish Fed, but it's making life more complicated for central bankers.
After long delays, the Department of Labor is poised to release new rules Wednesday on the legal obligations of financial advisors. The new rules will likely require brokers to abide by a "fiduciary" standard — putting their clients' best interest before their own.
This is a battle about getting your financial advisor to act in your best interest. It's also a battle to lower the cost of investing, which, depending on your advisor, can be anywhere from cheap to very high.
In one sense, it's simple. There are essentially two different types of financial advisors: brokers and investment advisors. Both can sell you stocks and bonds and ETFs and mutual funds, but the standards are different.
I was asked several times over the weekend what the implications of the Panama Papers were for global markets. The short answer is I don't know, but there are several implications for the markets that need to be considered.
1) More bank regulatory scrutiny? To the extent that banks were facilitators of these offshore accounts, it would add impetus to more regulatory scrutiny.
2) More scrutiny by U.S. prosecutors of foreign banks? It looks like several subsidiaries of European banks were among the more active creators of these offshore accounts. U.S. prosecutors have already initiated fines and sanctions against foreign banks for violations of U.S. laws. This may provide additional information for even more scrutiny.
3) More regulation/taxation in general? This will provide even more ammunition to those on the more hawkish side of regulatory and tax issues — Sen. Elizabeth Warren of Massachusetts is a good example — who will use this to argue for even more bank regulations and higher taxation of the wealthy.
By the way, while much of the focus appears to be on political figures hiding (potentially) ill-gotten gains, it appears that one of the most common uses of these accounts is for a much more mundane purpose: to hide assets due to a divorce settlement.
Stocks are mixed today, and volatility is flat and trending down, and that may be a surprise to a lot of people. The market had reasons to go down. Stocks have been strong and are somewhat overbought. On top of that, we have a strong dollar and weak oil today, two traditionally toxic combinations for stocks.
But stocks are mixed, with the S&P flat. What's going on? The Fed's dovish posture and today's economic data is a positive for stocks.
The March nonfarm payroll report was mostly inline with expectations, with no major revisions. That moved the dollar up, putting some pressure on commodities and commodities stocks.
As the first quarter comes to a close, one sector notably stands out in the negative column: biotech. The iShares NASDAQ Biotech ETF, a market-cap weighted basket of biotech stocks, is down 24 percent this year. Unlike most of the market, it never participated in the mid-February bounce.
Let's look at just the biggest names, the biotech stocks in the S&P 500. All of them have performed terribly this year:
Vertex: down 37 percent
Regeneron: down 33 percent
Alexion Pharma: down 29 percent
Biogen: down 17 percent
Celgene: down 17 percent
Gilead Sciences: down 9 percent
Amgen: down 8 percent
Pretty ugly, eh?
Fed Chair Janet Yellen's uber-dovish speech Tuesday is already being felt in international markets. The renewed dollar weakness is affecting trading, as the yen strengthened overnight, and the Nikkei dropped 1.3 percent.
Elsewhere, many emerging market currencies, including the Chinese yuan, gained on the weak dollar. Expect further inflows into emerging market funds like the EEM. Foreign inflows into emerging market stock and bond funds hit a 21-month high in March.
Europe is trading in a more risk-on mode, with autos like BMW and Daimler up roughly 3 percent, and oil companies like Total and ENI bouncing back from Tuesday's losses. Banks like UniCredit are lagging.
The weaker dollar is helping commodity stocks like Anglo American, which is up 13 percent in London trading
Technology and energy are leading in early trading in the U.S.
A fresh bout of volatility could be here for stocks, if history is any indication.
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