Tuesday, June 28, 2011

Markets advance on optimistic view of Greek debt

Stocks had their 2nd day of strong gains. Dow rose 145, advancers over decliners almost 4-1 & NAZ added 41. The Financial Index broke into the black in the PM, but continues to slosh around 200.

S&P 500 Financials Sector Index

Value	201.85
Change	0.83 (0.4%)

The MLPs rose & the REIT index went into the black, rising 1½ to the 238s (on a recommendation that they are under fair value). Junk bond funds fell as did Treasuries with the yield on the 10 year Treasury backing up to over 3%. Treasuries fell on hopes Greece problems will be worked out. Oil had a rebound day as the $90 floor floor held & gold climbed back above $1500.

Alerian MLP Index

Value	366.78
Change	2.11 (0.6%)

Below is the link for today's Market Update video:

Treasury yields:

U.S. 3-month	0.025%
U.S. 2-year	0.489%
U.S. 10-year	3.044%

CLQ11.NYM

...Crude Oil Aug 11

...92.83

...

2.22

(2.5%)

Photo: Bloomberg

Christine Lagarde, currently the finance minister of France, was named the new head of the IMF to become the first woman serving as the managing director. “I would like to thank the Fund’s global membership warmly for the broad-based support I have received,” Lagarde said. “I will make it my overriding goal that our institution continues to serve its entire membership with the same focus and the same spirit” as it did during the global economic crisis, she continued. The IMF board said that it “looks forward to Ms. Lagarde effectively leading” the organization. Her first major problem will be to getting the finances of Greece squared away. Then there are more European countries to worry about.

Lagarde Named New Head of IMF

Filings for IPOs around the world are accelerating at the fastest pace since 2007 while the debt crisis in Greece & China’s rising inflation drag down stock markets. 720 companies, including Groupon & Beijing Jingneng Clean Energy, announced plans in Q2 for offerings of $67B, the largest number of deals in a qtr since 2007. However, there are problems. More European deals have been pulled this year in 5 years amid concern that Greece will default. All but 5 of the biggest IPOs in Hong Kong have declined since their debut, with Chinese inflation rising to its highest since 2008. A jump in US-listed internet stocks wasn’t enough to buoy the market, even after LinkedIn (LNKD) more than doubled in its first trading day & Yandex NV surged 55%. Online social game company Zynga plans to raise $1½-$2B in an IPO, possibly tomorrow. Zynga is expected to float only a small portion of its shares & the IPO could value the company as high as $15-$20B. Zynga's IPO would be the latest in a string of social media companies to take advantage of the equity markets. Speculative juices are running high.

IPO Filings Accelerate to Highest Since 2007 Just as Stock Markets Retreat

Zynga could file for IPO as soon as Wednesday- Reuters

LinkedIn Jumps After JPMorgan, UBS Predict Further Stock Gai

Photo: Bloomberg

LinkedIn jumped $9.18 after 4 analysts began coverage of the stock. This follows a rise of $8.31 to $84.69 yesterday. Its IPO last month helped open the floodgates to more technology IPOs, making for the biggest year in new internet stocks since the dot-com bubble burst in 2000. This is the kind of behavior that makes me worry about the health of the stock market.

LinkedIn Jumps After Banks Predict Stock Gains

LinkedIn Corporation (LNKD)

Stock markets are ignoring Greece, because earnings matter more. Earnings season will begin in 2 weeks & expectations are high although the slowdown in the economic recovery may put a damper on those expectations. IPOs are getting a lot of attention despite a largely dismal year. Prada sold stock last week (in Hong Kong) & its reduced offering got only a lukewarm reception. Greece needs to approve austerity measures tomorrow, something the population is not behind. Stay tuned for the vote.