In a recent interview on Fox Business, Ed Butowsky joined other panelists to discuss the following topics on the horizon for investors and analysts in 2011:
Billion dollar IPO boom in 2011?
Investors expect a huge launch of multi-billion dollar IPOs starting in early 2011. For comparison, in all of 2010 there were roughly $200 million in IPOs, which isn’t too bad considering the recession. When scrutinized by investors and analysts in 2010, many of these companies didn’t really want to go public, but due to financial difficulties elsewhere, they were forced to hit the IPO button. Looking ahead, the IPO momentum for 2011 is credible. Many of these companies that could withstand the waiting period are now mature and ready to go. While the market looks healthy, this could also be wishful thinking. Venture capitalists are looking at their books and trying to find a way to get their biggest holdings off the books, and with the current state of the economy, this is an ideal time for them to get rid of these holdings. The economy can be a scary talking point, there is bound to be some sort of correction, whether the market corrects itself for the collapsing dollar. Overall, this environment for IPOs looks like the tech bubble of the past, however this could be good for the economy to a degree. While this administration lacks clarity and creates more gridlock than ever, the companies whose initial public offerings could create new jobs and the growth that is needed in our economy.
Potential Post Tarp Bank Failures
Nearly 100 banks that received Tarp funding during the recession are facing potential bankruptcies. These banks received more than $4.2 billion in taxpayer money. It is certain that these banks will fail despite the help they received, but the reality is that no one knows how many banks will actually fail due to a lack of transparency. If these banks start to fail, this will surely have a ripple effect in the market. It is important to note that the banking industry is a good indicator of how the economy is doing. While many of the bailed out banks did repay their share of the Tarp funding, it will be these banks that go bust that will test the fragility of this economy. To make matters a little worse, there are many adjustable rate mortgages coming due in the next few years that will put additional pressure on some of these troubled banks. This shouldn’t surprise anyone and could actually double by the middle of the year.