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Uh! Oh! Start of New Bull Market, or ??


JEast
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I love Twitter and I love listening to what a lot of you have to say on Twitter.

 

It's this century's version of water cooler talk, except that I can choose any water cooler in the world.

 

And I choose the one where all the smart investors are hanging out at.

 

 

 

****I will not be buying Twitter stock. I bet it will be very highly priced.

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Guest wellmont

feels like a "topping". could go on for a while as folks get more lathered up. and twitter is the kinda thing that could make people "feel good" about stocks again.

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We are definately not at the beginning.  To me it appears that leverage is appearing in RE financings, credit standards are being lowered and LBO shops are selling investments.  This may be the beginning of the end (last 3 innings) as even now sentiment towards stock is not positive.  Once the sentiment becomes more positive and bargains become harder to find then it may make sense to watch out.

 

Packer

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Too hard to call.  The market has been so manipulated by interest rates / deficit spending that I am not sure that standard market dynamics apply.  For instance, we are in the middle of a recovery and yet job growth keeps stalling out.  Retail sales suck.  House prices though are going up, equity prices are going up.  I don't know, I will stay in on the basis of american energy production and the fact that there is still pent-up demand but this definitely doesn't feel right.

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Too hard to call.  The market has been so manipulated by interest rates / deficit spending that I am not sure that standard market dynamics apply.  For instance, we are in the middle of a recovery and yet job growth keeps stalling out.  Retail sales suck.  House prices though are going up, equity prices are going up.  I don't know, I will stay in on the basis of american energy production and the fact that there is still pent-up demand but this definitely doesn't feel right.

 

In other words, asset prices are up but earnings power is still low.

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Aside from Hilton and Twitter I would throw in the massive Verizon offering.

 

Leverage in large LBOs has been creeping up towards 2007 levels. PIK toggle deals are back, covenants are gone.

Anecdotally, yesterday on Pandora: "if you have a job and $100 in cash, get your new Toyota now. Our goal: 100% credit approvals".

 

I also had a conversation with the manager of large BDC mezz/senior lender this week. Portfolio firms are ok but there are no positive outperformers that show big unexpected growth. And if the short end of the curve ever moved substantially higher, interest coverage would deteriorate quickly from the currently benign levels.

 

I have no idea whether we're topping right now or whether there's another one or two good years ahead of us. Too many variables (China, France, housing market, oil prices, black swans etc). But either way, it's the time to be cautious and conservative.

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Guest wellmont

the verizon offering was certainly facilitated by low rates and QE. but at least that deal makes financial sense. I believe twitter IPO could be a watershed event for the market and it has potential to get the individual investor involved in a way they have not been for 13 years, provided FED stays accommodative. I have heard valuations of $25b being thrown around for twitter, which does not have $1b of revenue yet. CNBC is going to shift from clashing hedge fund personalities to twitter IPO. the twitter IPO has been the most discussed topic in my twitter stream, by far, since the announcement. I can see lots and lots of twitterers wanting a piece of twitter regardless of price. that gives them a stake in the financial markets again. I don't think twitter is going to extract every last $ from initial investors, ensuring a first day pop. A highly successful twitter IPO could bring copy cat IPOs very quickly.

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