That giant sucking sound? It's liquidity leaving currently tradable stocks to fund this season's IPOs.*
From Reuters via the New York Post, May 15:
Elon Musk’s rocket and satellite maker SpaceX is planning to price its blockbuster initial public offering as early as June 11 and has picked Nasdaq as its listing venue, people familiar with the matter told Reuters on Friday.
SpaceX, which is set to trade under the ticker ‘SPCX’, has accelerated its IPO timeline and is now aiming to flip its prospectus public as early as next Wednesday, with a roadshow launch targeted for June 4 and a market debut as early as June 12, according to three sources familiar with the matter.
The new plan to IPO during the second week of June represents a quicker-than-expected timeline for SpaceX’s offering, pulling forward a process that had initially been targeted for late June — around the time of Musk’s birthday — the sources said, requesting anonymity as the discussions are private....
Subjects near and dear: supply, demand, liquidity etc.
October 2008 - IPOs Produce Smallest Gains Since 1995 as Offerings Increase
Supply and demand. The one effect I can guarantee is the sopping up of billions of dollars and yuan* that would otherwise go into currently trading issues. IPO exits are not only a sign of a top but actually help bring them on by removing some liquidity....
December 2018 - "Nasdaq, 'Tech,' & IPOs are in for Gut-Wrencher"
The Fed's interest rate moves are not that big a deal.
I know that runs counter to a lot of commentary but the upticks are not a problem. Yet.
The bigger headwind facing the market is the Fed's balance sheet unwind sucking up liquidity.
And next year's planned mega-IPOs threatening to do the same....
September 2025 - "US IPO Activity On Track For Best Quarter Since Q1 2022"
This is what we were referring to introducing August 6's "Blackstone prepares portfolio companies for IPOs":
One of the reasons markets trend higher is a lack of new shares coming on to the market.
Over the last few months the IPO window has been opening and the offerings absorb buying power that would otherwise go into issues already trading.
See also: supply/demand.
The Wall Street marketeers are nothing if not opportunistic.
And depending on how much stuff they are primping, packaging, and pushing, this is why stock offerings tend to mark the short/intermediate-term tops in markets.
Just something to be aware of, not a hard and fast rule.
