Back in June, I posted an earlier version of the graph above. At that time, there had been something of a pause in IPO pricings following the rather disastrous debut of Facebook. It was unclear to me whether or not that was going to be the beginning of a larger problem:
Whether this represents the start of another big slowdown, or a temporary glitch driven by Facebook, remains to be seen. Probably much depends on Europe. If Europe is soon going to generate another Lehmann-type event, then we are in for an extended drought in IPOs of a number of months. On the other hand, if the authorities there are able to thread the needle and find a way to keep things lurching forward, then perhaps this will soon look like a glitch. It's very hard to predict which way that will break since it depends on the actions of a small number of officials, and those will only become clear at the eleventh hour.In fact, we now know that the ECB has managed to keep the lid on events in European markets (though the situation is far from resolved) and as a result, the US economy has continued to move forward at a steady pace, though not a speedy one. One result of this is that the IPO market reopened in late June and that the pace of IPOs overall this year is similar to the last few years since the great recession. While things in the economy may not be fully recovered, the process of new ideas being turned by entrepreneurs into new companies which eventually turn into new public stocks is operating in the normal manner.
While there continue to be various present and possible future drags on the economy: high oil prices, continued weakness in Europe, the possible "fiscal cliff" in the US next year, possible problems with Iran, overall it seems rather more likely than not that the market will continue on the current trajectory for a while to come.