Retail (Shock) Therapy

It must be a quiet day; CNBC are still showing clips of President Obama killing a fly. It is impressive dexterity for sure, but hardly newsworthy. The SPX exhibited little price action or conviction yesterday as it flirted with the 200 day only find a level there, for now anyway. The risk currencies have had a bounce this morning with the exception of GBP which has slipped on the retail sales banana skin. The numbers were worse for sure but we do need to remain cognisant of the fact the ONS had been inflating the figures for the past 2 years…by 50+%. So perhaps taking that into account, they're not that bad, relatively anyway? The report does note that May 08 saw an unusually high number due to the better weather (and the fact they were cooking the numbers??). All that said, May 09 was not exactly arctic, either in temperature or indeed in the markets. The Green Shoots surely would have encouraged people to go out and spend more, no? Anyway, the number sucked and that, combined with the Net Borrowing data printing a high have led to the GBP tumble.

We had 3 more cash calls this morning (Marstons, GKN and Wavin) and a CB from Air France. We had $64bn of stock issuance in May, that is almost twice the previous record of $38bn according to TrimTabs Research and this pace has continued in June. I’ve said before that companies don’t issue stock when they think it’s cheap and the research shows historically high levels of issuance lead to poor subsequent equity performance. You can see the details on the PragCap link, you need a subscription to access TrimTabs. Volumes are pretty healthy, running c100% 20 day average although they are off the lofty levels of 150% we saw this morning.

Lastly, on a quiet day, I found an amusing piece on the Austrian Filter blog giving another example of why we should be wary of Administrationspeak…
Timothy Geitner: "Don't Believe Us!"
On a speech given at 11:10am on April 6, 2008, Timothy Geitner advised Americans to"...be wary of any organization that claims to guarantee success and demands upfront fees."The only organizations that I can think of that fit that description is Bernie Madoff's Hedge Fund and the Federal Government. In fact, when testifying before Congress, Tim Geithner repeatedly stressed two facts: 1) That his plan will work. 2) That it requires upfront funds provided for by the tax payer.