The relentless cram down of IPOs has come to a screeching halt as 4 of the 8 deals to price Thursday night got postponed. The insane valuations many Internet stocks traded at and still trade at got taken to the woodshed. Amazon, Facebook, LinkedIn, Google, Yelp, and many others not as well known ended one of the bloodies tech weeks since 2000. The selling in those names may have climaxed for now as many could stage some brief but sharp reversals. Also income tax due April 15th probably had something to do with the poor market action for the bulls.
Insider selling has reached a crescendo level that most market observers such as myself have never seen. I have attached this most recent graph from the Washington Service. At some point the greed becomes revolting, especially in the Internet names, like Facebook and Google where management can’t seem to sell it fast enough.
The most notable event of the week, though, was one that almost no one talked about. Core PPI came in Friday at 0.6% versus the expected 0.1%. This was on the back of a Wall Street Journal article about how the Fed is worried about low inflation. At a .6% rate for more than one month, no one will be talking about deflation. Oddly enough long bonds rose slightly as investors fled risky assets. Talking about running into the fire. If rates rise appreciably expect real carnage in the markets but none worse than the bond market.
We picked at some names today but held mostly back on real commitments. We did short the 30 YR Treasury futures. There should be a rally next week.