Trader Talk with Bob Pisani


 

The summer of hell for IPOs [0.04]

Posted on Aug. 11, 2017, 12:34 p.m. by Trader Talk with Bob Pisani @ [source]

It's the summer of hell for IPOs as the mood turns sour despite record high markets.

IPOs started the year with great promise, but have fizzled on high profile disappointments from Snap and Blue Apron and the refusal of tech unicorns to go public and face lower valuations from a stingy investment community.

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The financial markets are acting really wacky right now. But having been badly burned already this year, they appear to be attracting far fewer buyers.

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Professional traders are not impressed with the Dow rally, driven by Boeing, Apple and a few banks.

August is typically a down month: The S&P 500 has on average dropped 2.1 percent this month since 2010, according to the analytics tool Kensho.

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Stock Market at an all-time high. Bank stocks rallied almost 30 percent in the month following the election, clearly on hopes of regulatory relief.

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Could an August surprise be in the cards? For Art Cashin of UBS, it could work, but "the surprise would have to come from Washington," he told me.

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Fifteen years ago, on July 26, 2002, Barclays began offering a new way to invest in bonds through a new division called iShares.

Fifteen years later, there are nearly 1,000 bond ETFs worldwide, with assets over $700 billion, most of it ($500 billion) in the U.S.

That's a success by any measure, but the head of the biggest ETF provider in the world says the business is going to get bigger.

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Amazon Business now has 300,000 registered corporate buyers, according to Crain's, and recently surpassed $1 billion in sales, according to Reuters. Last week, Goldman Sachs put out a note to clients entitled "Distributors Disrupted" where it claimed that "the value proposition of the industrial distributor is not keeping pace as new entrants like Amazon are disrupting traditional models.

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Bank fees have been growing like crazy [0.09]

Posted on July 21, 2017, 2:33 p.m. by Trader Talk with Bob Pisani @ [source]

Banks have been reporting earnings, and one item not getting enough attention is a rapidly growing line item called "noninterest income," which is a boring term for fees that banks charge their customers, both businesses and consumers.

Some growth in fee revenues is happening because customer accounts are growing, but banks have been pushing up what they charge for fees for years.

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What's the bottom line? Goldman Sachs — not exactly known for going out on the limb on valuations — had this to say to clients yesterday: "Although P/E ratios have expanded from 2007 high levels, they are not a source of risk by themselves, in particular in the near term if volatility remains anchored.

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Banks are beginning to report earnings. All four banks reporting (JP Morgan, Citigroup, Wells Fargo, and PNC) beat earnings expectations and all but Wells Fargo beat on the topline.

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Earnings season begins unofficially Friday.

The stock market is holding up because the global economy is improving and earnings are improving.

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Cybersecurity stocks like FireEye, Barracuda, Symantec and Palo Alto Networks rallied Friday, as snack food and beverage giant Mondelez International became the latest victim of a cyber attack. The cybersecurity business is still relatively small: KeyBanc notes it is only $35 billion but growing fast.

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Rates are rising all over the world. The Fed is already raising rates, and while neither the Japanese nor the ECB are raising rates, it's clear they are considering reversing their policies of buying bonds and stocks, in the case of Japan.

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As we go into the second half of the year, there are two questions that are dominating market discussions: 1) Why doesn't anyone want to sell?

The so-called Goldilocks investment scenario seems to even extend to inflation.

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Meal delivery darling Blue Apron is set to price tonight and trade tomorrow at the NYSE. It's getting a lot of interest from the IPO community for one principal reason: Amazon's purchase of Whole Foods has changed the dynamics of home delivery, a business a lot of players want to get into.

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Oil took another tumble midday Wednesday, below $43 a barrel, and regardless of the reason we are finally starting to see analysts on the Street throw in the towel and begin to take down 2017 earnings estimates.

The problem is simple: many analysts and strategists are still forecasting average oil prices of $60 this year.

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Apparel stocks dive as the Amazon juggernaut rolls on.

First, it was Amazon buying Whole Foods and threatening to disrupt the grocery business.

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After its stock pop, Amazon got Whole Foods essentially for free.

Amazon's stock was up $32 and change mid-morning.

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Instant messaging and video app Snap fell to its IPO price of $17 in what may be a warning sign for future IPOs.

Next week, Altice, one of the largest broadband communications and video services providers in the United States, is set to go public by raising 46.6 million shares priced between $27 and $31, a $1.35 billion offering at the midpoint.

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Market mood: I don't want to hear it. It wasn't just a few momentum stocks like Facebook, Amazon, Apple, Netflix and Google parent Alphabet (the FANG stocks) that moved.

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