What's Up On Wall Street - Steven Russolillo, WSJ

Well those of you who did not -- FaceBook shares on Friday may be because the NASDAQ was freezing new around here and turns out price made a pretty good decision I'm looking at the shares of FaceBook peered down. Four dollars and 58 cents a share or 12% currently going off trades are currently going off at 33 dollars and 62 cents a share. June -- the rest of the stock market doing. Not too bad the Dow is up 36 points NASDAQ up ten S&P 500 up five gold trading down four dollars eighty cents. You've got that ten years sitting at one point 733. A slightly oil up just a tiny bit it's holding at 9113. All right we're -- joined now by Stephen reversal. From the Wall Street Journal how's the stock market sentiment New York Stephen today it it seems like it's still negative up here in Boston. Well and that it's heavily negative than here in New York as well you know it would the last two weeks have been pretty bleak the data -- thirteen of the last of these. It's -- Six states losing streak as we entered today. So the market is up a little that this morning but still though you get that feeling that. People are just really bearish right now and the FaceBook IPO that you guys mentioned before that certainly isn't helping matters. But I think if you're looking at the broad market that'll. The concern right now is about Greece. And even -- we've been talking about -- for years does that that the jitters have rarely ramp up here over the last month or so. And and the big the big question is whether Greece is going to stay in the eurocard. They have there they have an elections coming up in June. But. There's just clear divide it would be. What needs to happen and and and what the future's going to be there and so and and not so much -- which is the ripple effect so that Greece were to leave the eurozone. There's Spain was -- means for Italy. And so. You know that is the big. Prevailing theme right now and that is why the market has struggled so much of the last two weeks and then on top of that -- -- -- coming to market in very very turbulent environments. And so will we saw on Friday and mean. You can just watch the the share price bounced up and down from -- thirty dollar level that's where the way that the stock was priced originally. And you concede that the underwriters it would definitely at least -- seemed like you were supporting the upgrade at that level. Now we get to date to trading and it's just rate from the open the stock tumbled down double digit. And a percentage basis basis but now it seems to have on the floor around 33 to 34. But you know that can change at any second and it's just. It's a big disappointment for for a lot of people involved in this I think particularly at least -- -- -- -- -- that we're -- -- -- and talking to seem -- You know the on the race into this this crisis. Big time and so. You think they got greedy Stephen is that it is it just they they said you know we can sell this at any price or gonna go for the absolutely tippy top and maybe they over priced about 510 bucks a share. Yet you know I think that's a great great point because. You know they routed Andy Reid praised the that the price range up to two to thirty you ever been in there originally was around twenty to 35 and so. It seems like if you just look at that the valuation metrics at the -- -- -- -- -- PE multiples -- around seventy or right now which is extremely high when compared to. Where apple and Microsoft from the other tech titans are treating -- and so. -- I mean neurological the -- -- seems like you know if there was so much demand for the thing where there was. There was perceived to be published and for the then why. Isn't doing better and so that's the the Monday Morning Quarterback he would -- theirs says that the -- them. -- the the Federal Reserve has been intervening with the economy really since 2008 when the market crashed and we at the beginning of the banking crisis is scheduled. To conclude quantitative easing to the middle of June that's not that far away. Do you think they're gonna do more easing based on what we're seeing with the economic environment do you think they're gonna come back out and do another round of easing. Well you know it it it it's. Seems like we're heading towards that pass -- I don't know that things are bad enough for now for the says that the stepped in and implement. When you know that it steadily closed -- history its Operation Twist or whatever -- We'd seen that pattern now over the last few few. Few years. 2010 the market was little rocky. And the Fed stepped in with with it with quantitative easing and so so the same the same thing happened again 2011. And it seems that whatever the stimulus programs are coming to a and the markets start altering and then. You know that's when the spring and summer months are here and then. Once that comes second set and in the market recovers does better and so. He if you just look at the chart over the last three years and clearly see what the -- started their programs and then when they stopped and so. One would think that we year. Potentially heading toward. Something that the that made me do that at some point in time market's gonna have to be able to behave on its -- be able to. And we are not that forever and understanding to other doing now is they're keeping treasury rates artificially low or would it look like the next round of easing what -- what else do they have they can't lower interest rates any more than they are. With they just continue to keep interest rates at 175 on the ten year treasury your. Is there are some other idea that you and I haven't thought. I I don't know that there is another idea out there and you hear a lot of people talking about there is some that the -- the a couple of tools that it will implement at this point and so. It's pretty Dicey prospect. You know your guess is good it is good as -- acting when he came out with Operation Twist that's. That's private people but that just was a different variation of what they had been doing so. Maybe have thinks similar like. That they can potentially implement -- At this point it's -- it's a big unknown but. That is the big concern as what really what's gonna happen with trees and we have that that -- GP meeting over the over the weekend. And the Obama was touting more. You know rules programs as opposed to implement more austerity. And that's that's the big question is so what is the best effort for Europe to take at this point and so. I literally out of a lot of question out here looking added deflationary. Economy you've got China's real estate market is starting to crumble. You've got deflation in Europe he couldn't sell a piece -- real -- -- if you want it to. And in the United States were just start to recover a little bit but I mean it's it's not that hard. To envision us slipping into a deflationary environment where commodity prices. Start to decline pretty rapidly. What does that look like as people think that they like -- and -- there saying well gee I hope gas goes to two bucks a gallon but deeply should. Is not generally good thing for our economy. Right now and I I think the way that inflation's -- is that in the short run maybe not such a bad thing right I mean if you want go by car and this is he coming down. You know he get that part cheaper than could've gotten a few months earlier but. The problem with that deflationary spiral that people are just assumed that the that prices of anything will just keep getting cheaper and so. They they're not gonna -- eight -- a device something now because you think 3456. Months later -- get it even cheaper and so. No -- buying anything that -- is that is that that just flows group entirely and so that's the big concern with who would with deflation it. Yeah not a lot of people talk about deflation right now I mean -- especially gas prices the war. Creeping higher now have come back a little bit so. I. -- we're a ways off from any sort of deflationary scare. What do you think of the Chinese real estate market -- in effect crumbles last week PA it was reported that day I think 43 at a seventy. Real estate markets in China words suffering fairly significant price declines mean if China goes through. A real estate bubble that looks like ours isn't that gonna be really rough on the world economy. Well that would that would be disastrous absolutely and there's no question about that in China seems that it received big wildcard right now because. The focus right now is so much Europe and given so much on the US people are very concerned about that the labor market here in. Whether that took -- three months as of strengthening labor market returns that we saw earlier this year. That's kind of petered out of the last few months to people worried about president. But from China -- other things do it when he -- that -- and investors are saying you know again we can. China is something we're always concerned about a direct it was it does get it -- -- start spiraling that is something that could have a huge blow to the market. Are what Stephen thank you very much for your time I appreciated is always respect -- appreciate that Stephen Russell joining us today from the Wall Street Journal.