If only ETFs could buy underwritings. If only the gunners in the S&P futures pits had enough money to buy all the shares of the aerospace, retail and hospital care companies that are for sale.
That's how you have to feel when you consider that the market seems out of fuel --excepting the cash that is flushed in from the sidelines because interest rates aren't going any higher.
I say that because when I see the Alberstons IPO be pushed back, which represented a very good call on the prospects of having a number two supermarket stock to Kroger (KR), and when I see all of the Boeing (BA) that was for sale off of a Delta's (DAL) executive's bashing of a new bubble in commercial aircraft, and when I read, once again -- like the old days -- that HCA (HCA) has an uninsured patient problem, I recognize that there are an awful lot of sectors out there that have money coming from them, not going to them. Maybe enough sectors that some real damage can be done.
Layer on top of that the price slash on the First Data (FDC) IPO, the biggest deal out there at the moment, and you have to think that this market can't handle any more supply -- a situation thing that has never been associated with a positive environment for equities.
That's why it is important to recognize that the ETFs and futures markets are so in charge that they can distort even the most straightforward of markets.
Let's take this Alberstons deal. If priced right in the tough stock market, it might be an ideal stock to own as part of a Kroger-Alberstons duopoly. But the investment bankers want way too much for it. The range had been set at $23 to $26. I believe it could get done at $20, and that this represents a fairly good call on a deleveraging retailer. It felt like the old Dollar General (DG) to me.
But then Wal-Mart (WMT) drops the bomb on numbers and the Wal-Mart¿led ETFs crush all retailers -- including Albertson's and Kroger -- and the Albertson's deal is put on ice. In addition, I am sure some bears think that Wal-Mart will have to practically give food away in order to get customers back. Believe me, that is not its plan, but people have a right to be as wrong as they want to be.
Or consider First Data. Here's a 3% grower, at best, that the underwriters were hoping to get something like a Mastercard (MA) or Visa (V) multiple, at one point. Now there's not even enough money around to get the thing done at what was the low end of the range.
Still, you have to wonder how desperate the seller, KKR (KKR), really is to even bring the deal on the heels of the Wal-Mart debacle: Do you really want to be levered to retail payments when the world's largest retailer said things aren't so hot?
All of these issues have to do with one thing: where's the fuel? What's going to take us higher? How can we move up when there's not enough money around to price deals?
The answer is that the money has to come from somewhere else. In other words, we are facing more of the same: rotational bear markets everywhere until we get to the point where either more money comes in or stocks are so cheap on earnings that people don't even want to rotate out of them at these reduced prices.
Judging by the action in individual stocks and underwritings -- not the indices as a whole -- we aren't there yet. Now if only ETFs could buy underwritings. Then these deals would get done!