One of the biggest fears on Wall Street right now? That the surge in IPOs and equity issuance could trigger a market sell-off.
But history says the opposite. According to Deutsche Bank’s Jim Reid and strategists Binky Chadha & Parag Thatte, issuance waves usually happen because markets are strong — not because they’re about to crash. Companies raise capital when: • Investor demand is high • Earnings momentum is strong • Risk appetite is elevated Since early 2023, US equity issuance has jumped from ~$30bn to ~$120bn per quarter. Mega-IPOs are coming. Yet even the largest deals are only ~0.1% of the S&P 500 market cap. Past issuance cycles? Median returns were: • +8% over 3 months • +20% over 12 months The only major exception: 2008. Bottom line: strong demand is absorbing new supply. This market still feels a lot more like 1999 than 2008. Source: Zerohedge, DB
S&P 500 ex AI vs. S&P 500 5-day change
That is the biggest spread since AI was birthed... Source: zerohedge, Bloomberg
Rotational market lives on. We note that 368 stocks were higher in the S&P 500 yesterday. The most since late April.
Rare to see so many stocks going up with the S&P 500 retreating. Source: Ryan Detrick
THIS RANDOM CHINESE STOCK WAS UP OVER 3600% + YESTERDAY
THE STOCK WAS AT $1.13 AT OPEN IF U INVESTED $1,000 AT OPEN YOU WOULD HAVE OVER $36,000 8 HOURS LATER $INHD Source: Gurgavin
INCREASE IN EQUITY SUPPLY = SHARES FLOATED AT IPO + EXPIRING LOCKUPS
Source: BofA
Active large-cap equity managers are struggling to keep pace with a technology-led market rally, with only 20.5% outperforming the S&P 500 this year.
Source: Bloomberg, The Daily Shot
Any retail investor who bought Cerebras after the IPO got decimated.
What about SpaceX?
Anthropic is now worth as much as 11 of the biggest software companies combined.
Source: Carbon Finance
