Eagle Eye Opener: Euro Strengthens in 2012; U.S. Financials at Risk for Fiscal Cliff; Facebook Depressed 2012 IPO Market

Eagle Eye Opener

Euro Exits 2012 Stronger… What About 2013? (Reuters)


Just six months ago, investors would have had a tough time finding an expert who was optimistic about the European Community (EU) getting through 2012 intact. From Nobel Prize-winning economist Paul Krugman, to billionaire investor George Soros to Willem Buiter – chief economist for Citigroup – it seemed everyone was calling for the breakup of the EU or the demise of the common-currency euro.  As we exit 2012, the euro has risen against the dollar, Greece has stepped back from the precipice and bond yields in Spain, Italy and Greece have fallen. Ask an economist today about next year, and you’ll get a more tepid response, but one still on the negative side. So, investors should bide their time before jumping back in.

U.S. Financials Strengthen in 2012 But Are at Risk to Fiscal Cliff (Investors.com)

As the U.S. housing foreclosure crisis abates and the demand for housing improves, the country’s biggest mortgage lender, Wells Fargo (WFC), posted its second straight quarter of increased profits. Last quarter’s profit rose 12%, with estimates suggesting that number will grow to 17% at least in the current quarter. WFC’s stock is up 23% for the year. In fact, according to government figures, the entire U.S. banking industry will post its highest earnings in six years, climbing 6.6% to $37.6 billion. However, analysts still consider financials vulnerable to taking a big hit from the financial cliff, when it arrives on January 1, 2013. We’ll know in less than a week if this situation is true or not.


Facebook Debacle Depresses IPO Market in 2012 (Bloomberg)

According to Bloomberg, initial public offerings (IPOs) slumped in 2012 to their lowest level since the 2008 financial crisis. Facebook’s (FB) mishandled IPO and subsequent share price plummet seems to be one of the main reasons why.  IPO investors had to weather the storm after Facebook’s debut, as IPOs froze for an entire month in the United States. Europe offerings in 2012 were down two-thirds, compared to last year’s offerings, while funds made from Asian IPOs were halved in 2012. Looking ahead, despite business fears regarding the fiscal cliff, offerings in Q4 2012 reflect an IPO rebound in Europe and America.  Europe’s offerings showed a five-fold increase over those in the same quarter in 2011, while U.S. offerings rose 15%. Does this rise foretell a boom in 2013 IPOs? Stay tuned…

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