June 28 - Jeffrey Goldfarb and Rob Cyran discuss how rising interest rates led to price cuts in a rash of stock market debuts, including CDW and HD Supply, and whether the IPO party is over.
Ben Bernanke dumped -- massive bucket of cold water on not the IPO market this week regardless what it is trying to say it's that great -- bit spooked investors. Two big issues HD supply -- CDW had to cut the price of their of their. I debuts at their whole bunch of other ones that they're wound up cutting as well what what. Two things I mean for -- just the basic point you know investors are -- -- -- their. And warm distrustful of the government securities and -- that they think. Well I don't in their risk for you rate is going up so it a hundred basis points yes there's an even -- -- that means they're really risky stuff like IPOs are gonna ever gonna sell off. And -- -- I mean because you know HD supply is cool wholesaler we've seen some good news in the housing market. CDW seems like they're fairly normal visitors really what it really basic business is the problem is that got a huge amount of debt on both these companies you know they're both brought out many people that -- company's satellite data on the and they took that they've paid a little bit the depth that they'd try to protect him investors and investors things well on that a bit too much debt. Because these companies got trouble in 2008 both these coming -- the profiles were. About support scared of these kinds of profiled earlier at me -- arrested a couple weeks cut -- scared on right now and now they suddenly they are it's it's it's the whole flight from risk. All over the place. And it isn't just debt I mean there are there were several other kind of the other ones were not necessarily. Deadly look at different kind of bad for me it's bad rescue program it's more like it'll make any money. It's -- -- now everything -- -- -- which which wasn't a problem again that we can -- and possibly investors things well -- making money. Never actually reading the perspectives of the yeah exactly and and it's it's not a coincidence perhaps that a company that's a Biotech for pets. I actually cut the -- -- certainly onion what. It has been the kind of -- activist leaders saying okay we're not so sure about this quality you know -- technology that's I guess on the -- so we do see one issue that actually held up pretty well yeah it was. The new company you can count. Basic business not much not much -- three times David making money they make money they're expanding so investors said okay you know. I'm not can take the bad about it and I can't take companies you meant that that'll buy a new book. I mean if there -- serves that this will continue mean how much. If there is a sobriety I guess as we put it kind of a punch -- being taken away by the Fed I mean it's not completely gone but it's starting to -- If you. Will this kind of look at you'd expect for the rest of the year and I would expect that just because there are a lot of what is it -- yet is that here and then -- this either. Heavily indebted companies private equity or lost it comes to venture capitalists want to get rid of and I assume that the rates -- -- in the end it will mean they won't but if if rates continue to rise -- these days till. There's going to be kind of a flight risk and and both of these words come as well -- emerging markets also one other coated with a sort of were also -- it right -- there's a big prison in cement company that was gonna go public in the exit polls that offering and the other thing is also in in China there is a company's. Known -- that owns hotels in mainland China. And they are gonna cut the price of their listing by substantial well. All right we will keep an eye on the IPO markets of course it will be back with more breaking news next week.