Market Talk

It took about three months (which is a little longer than we initially expected) but GM shares finally reached another milestone: they breached below their November $33 IPO price.

As you recall, it was one of the most highly anticipated and hyped-up IPOs in years, and got off to a bit of a shaky start as shares flirted with breaking the IPO price throughout its first week of trading. Of course, the underwriters weren’t about to let this thing flop right away, and the stock eventually gained a little momement, carried along by a buoyant mood in the stock market overall.

It hit a high of $39.48 in early January, but it’s been mostly downhill since then, even as the broader market continued higher. The sell-side analysts have (naturally) been unabashedly bullish, with more than 70% calling the stock a buy, or some equivalent rating.

GM made $510 million in its fourth-quarter, and full-year profit of $4.7 billion. Investors don’t appear to be impressed, with the stock currently down 4% at $33.20; earlier as low as $32.05.

- Paul Volcker’s still confident his rule will pass. And, as Simon Johnson points out, Volcker’s message remains loud and clear: “We need a much stronger approach to big banks – an approach that will strip government-backed banks of their ability to take crazy risks and, most likely, an approach that significantly constrains (and hopefully even reduces) their size.”

- Is the equity market approaching a period where good news on the economic front is bad for stocks? “The real Goldilocks for this market is the one that is just perfectly weak,” Pragmatic Capitalist says. “Strong enough to keep the government pouring the kool-aid, but not strong enough to force them to remove the bowl.”

- SEC investigating about two dozen financial companies to determine if they engaged in accounting shenanigans prompts former labor secretary Robert Reich to wonder “where on earth has the SEC been?”

- “Lack of focus is still a major problem at AOL, and if the company doesn’t sharpen its focus quickly, it will continue to be a jack of all trades and a master of note,” Henry Blodget says.

- Recent research from NY Fed shows upstate NY’s housing markets were insulated from the boom/bust cycle; Buffalo, Rochester and Syracuse have actually enjoyed price increases throughout the recession. “The reason why is fairly simple: ‘The region’s relatively low incidence on nonprime mortgages,’” Barry Ritholtz writes.

- Employers squeezing more productivity out of workers doesn’t explain the economy’s lagging labor market, Dean Baker says. “The rapid productivity growth seen in the last four quarters is a typical pattern at the end of a recession.”

- Distortions in Friday’s monthly jobs report–temporary census hiring and weather-related boost to employment–could create false sense of security about the labor market. “This allows legislators to claim that past interventions are having a greater impact than they actually are, and escape the difficult politics of trying to implement additional stimulus measures,” Mark Thoma says.

- Looks like Apple (AAPL) stands to gain from at least one university using the iPad to attract students. Seton Hill University in
Pennsylvania says every incoming freshman will be given a tablet in the 2011-12 academic year, NYT’s Media Decoder blog reports.

- There were 14 IPOs that came to market this month. Since last March, 112 IPOs have come to market. “IPOs are starting to make a comeback, albeit a slow one,” Bespoke says. “The average monthly number of IPOs since last month is just over eight. To get to a healthy level, the average should get into the 20s.”

- Bonds cap an epic comeback.

- Google (GOOG) dumped from China Unicom’s (CHU) Android devices. “An obvious and, I suppose, inevitable response to Google’s recent defiance of the Chinese government,” John Paczkowski says. “I imagine we’ll be hearing of a similar move by China Mobile in the near future.”

- “The mortgage mods and foreclosure abatement programs are really all about propping up insolvent banking institutions,” Barry Ritholtz writes. “These programs are another losing round of helping Wall Street at the expense of Main Street. It is the worst kind of trickle down economics that has been seen in decades.”

- Bernanke says record-low interest rates still needed to support the economy, but the central bank has to be ready to tighten credit when needed to prevent inflation. His comments helped propel stocks higher. Then ECB President Jean-Claude Trichet said IMF help for debt-strapped Greece would be bad, really bad, which helped push stocks way off the fresh highs they set earlier in the session.

- If you thought 2009 was bad for newspapers, 2010 may be even worse, Newsosaur blogger Alan Mutter says. “If the rate of decay continues to slow in 2010, the industry will shrink at a slower pace than it did last year. But it still will continue to shrink. And declining shrinkage should not be taken as a sign of health.”

- Venture-backed IPOs might be making a comeback. Four non-biotech venture-backed deals have occurred this year, and all have performed fairly well, Paul Kedrosky notes. “Admittedly, four data points aren’t yet much of a trend, but it’s worth pointing we are seeing the beginnings of a resurgence in the venture-backed IPO market in 2010.”

- It may be a lost decade for some buy-and-hold investors, but keep in mind “some investing rules never go out of style,” Tom Petruno writes. “Try to buy good businesses, try to get them when they’re relatively cheap, and don’t underestimate the power of dividend income over time. And the cardinal rule: Stay well-diversified.”

- Tepid revenue growth won’t placate market much longer. “If we don’t start seeing a pick-up in top-line growth this market is not going to be celebrating for long and the recent optimism in stocks will be proven wrong,” Pragmatic Capitalist says.

- Once again, another weak Treasury auction today. Hard to pinpoint exactly what’s causing it, “but something has changed this week in the US Treasury market and the cost of borrowing is going up as it is in Europe too,” Peter Boocvkar says.

- The Dow Jones Internet Index, which last got any press back when pets.com was still around, surpassed its pre-Lehman levels last summer, and is marching higher and now making a run at its highs from 2007, Bespoke notes.

- AAII’s sentiment survey shows percentage of respondents who expect the market to rise has dropped two weeks in a row, even as stocks keep setting fresh highs. “This is not typical,” Jason Goepfert writes.

It may get hot in the valley again pretty soon.

Local review website Yelp.com reportedly has turned down Google’s (GOOG) $500 million offer, marking yet another curious event in the world of tech start-ups.

TechCrunch’s Michael Arrington reports Yelp CEO Jeremy Stoppleman walked away from “an all-but-signed deal” as the two companies had agreed on a price and were working through the acquisition’s final details. But “something happened” and Yelp notified Google over the weekend that it wasn’t going to sell, he says.

The news comes on the heels of reports that Twitter may actually turn a profit this year. The microblogging sensation will make $25 million from search deals with Google and Microsoft (MSFT), according to Bloomberg, which estimates Twitter’s operating costs between $20 million to $25 million a year.

And just a few days ago, Digital Sky Technologies, a Russian firm that has invested in Facebook, said it is buying a $180 million stake in social-gaming company Zynga.

These developments prompt VC Paul Kedrosky to wonder whether the tech world has gone crazy, or if the industry is on the verge of something big.

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Despite the fact that stocks are up and most people are attributing the rise to today’s weekly jobless claims numbers, we don’t think they’re very good, and when you look at the big picture, there are a lot of people out there who are not being given a chance to contribute to the economy, which has a wide range of implications.

The ISM’s services-sector index turns positive, albeit for one month and after a year-long slide. Also, companies are taking advantage of favorable circumstances to tap the equity and debt markets. Lastly, foodies and brides are going to be left to fend for themselves, as Conde Nast announces it’s shutting down four magazines, including Gourmet, Modern Bride and Elegent Bride.

The shuttering of Gourmet is going to leave a lot of foodie’s crying. My sister’s one, and a Gourmet subscriber since 1997. “This breaks my heart,” she wrote to me in an email today. “What the hell am I supposed to read now?”

I don’t know, Jeanne-Michele. But you can at least spend three minutes with Tomorrow’s News Today. It may take some of the pain away.