Euro Climbs Against Dollar, Pound

The Euro gained 0.2% on the US dollar as German business confidence unexpectedly stayed at record highs in May, signaling that the ECB may be forced to raise interest rates even as the region's debt crisis intensifies.  The Euro fell below 1.40 US yesterday for the first time since March.

The pound suffered against the euro for the first time in 4 days Tuesday as Moody's Investors Services Inc. may lower the credit rating of 14 key UK banks, and a report that showed the UK budget deficit widened in April. The Euro climbed as much as 0.3% against the Sterling in early trade.

Goldman "More Bullish": Crude Oil, Gold, US Futures Gain

Goldman Sachs is "more bullish" on commodities today, following the biggest drop in raw materials in two weeks, reversing their call a month ago to sell. Goldman believes that economic growth in the 2nd half will be sufficient such that key supply constraints will be reached that will undoubtedly push prices higher. The risk trade back on; crude oil, copper and zinc were up over 1% on the back of this news. Gold is up 0.34% to $1520.60, Silver up almost 2% to $35.50.

LNKD Update: Insiders permitted to sell 180 days after IPO

Of the 94.5million shares in existence of LinkedIn Corp., there are 7.84 million shares trading in the secondary market. Less than 10% of the total share count floats in the marketplace, perhaps a reason why its currently trading at its current price level. Its a function of supply and demand, and for whatever reason excluding rationality people want to own this dog. Sell it. 

After 180 days insiders are allowed to sell their stock in the market and divest. Given that insiders currently own a whopping 87 million shares, a glut of supply is coming to market as even insiders know that the current market price is astronomical. Lawrence Haverty of Gamco Investors believes insider selling could drive the price below $30/share.

This will be the textbook example going forward of how markets fail, how markets are irrational, how they can be manipulated, and how certain individuals, ahem..underwriters, banks, wall street junkies make a shit load of money at the expense of the public. Its a zero sum game folks, money is neither created nor destroyed, just transfered from one medium to another.

LinkedIn Shares Fall Sharply, Recover

As we have analyzed the insane valuation of NYSE:LNKD in previous posts, and spotted the easy short at $120 a share, shares were down today in early trading over 8%. Not surprising. I do find it interesting that the shares are rallying throughout the day, now 1-hr before the close, the shares have moved from $84 to $91.06, down only 2.5%.

Still the valuation is rich, the stock, currently trading at 2300x forward P/E multiple, its the most expensive stock on the market. The most recent EPS was 4 pennies per share. AAPL for example trades at 16x forward earnings, so if we are to use the average P/E multiple on the S&P 500 (16x), the stock price would be a meagre 64 cents.

So to derive the price, we multiply earnings ($0.04 EPS) by 16 (S&P P/E). Of course earnings will grow going forward. But no where near to the degree what the market is paying.

Even as I wrote this post, the stock is moved down to $88.70. Absolute insanity.

World Stocks, Oil, Euro Slump; EU Debt Crisis is Worsening

The Bears are out today as stocks across the globe dropped precipitously Monday as fears of the European debt contagion spread, and data out of China showing that growth is slowing. On China, Copper fell the most in two weeks, dropping almost 4%. Light Sweet Crude also fell, to nearly US $97/bbl, a drop of 2.84%. Precious metals were mixed; Gold up slightly, silver edging lower.

Asian stocks were hit the hardest, the MSCI World Asian Index dropped 2.2%. European stocks also tumbled; the CAC40, DAX, and FTSE down an average of 1.8%. In North America, the TSX was closed for Victoria Day holiday, while the DOW30, S&P500 were down an average of 1.2%. The Nasdaq suffered the most down 1.72%.