FAST FIVE: "Red Flags Galore": Companies Sold A Mindblowing $113 Billion In Stock In Q2
In which case, it's “red flags galore” because as the following chart from Goldman's head of European Equity Sales, Mark Wilson, shows companies haven't sold this much stock in a single quarter in.
According to Bloomberg data, secondary offerings in the US raised $113 billion in the second quarter, the most on record.
As Goldman adds, “we're about to close out another record month of global equity issuance, with June set to eclipse the recent record set in May; the numbers (>$230b of supply in 7 weeks), and the market's ability to absorb this sizeable supply, have been impressive (the quantum of global supply vs prior peak periods shown in the 1st chart; US supply vs recent years trend shown in 2nd chart)” Following up on this staggering pace of equity sales, Bloomberg writes that “the record-high pace of secondary offerings that took hold in the second quarter is poised to continue into the summer” as share sales by US-listed firms and their top holders raised the most money and happened the most frequently of any other quarter on record.
The paradox, of course, is that companies dumped stocks – with buybacks largely dormant – to a market dominated by (mostly young) daytraders who were so eager to lap anything up they almost bought an equity offering of worthless stock by bankrupt Hertz, another unprecedented event.
And all of this was, of course, started by the Fed which unleashed trillions in liquidity, including buying corporate bonds and ETFs – the Fed is now a Top 5 shareholder in some of the biggest bond ETFs.