Morning Brief Tuesday May 15, 2012

Good Morning. Today is a very big day on the economic front with the release of retail sales and business inventories. Something we have discussed a lot recently is final demand and if in fact the recent inventory build is sustainable.

These two data points will tell us one very simple thing. Is the retail sector forecasting growing demand thus giving them the confidence to invest in higher inventory levels. As a reminder retail inventory levels remain below pre-recession highs contrary to those of wholesale and manufacturing.

In other words the pipeline is full and unless the consumer is buying more retail inventory levels will not rise. And if the pipeline is clogged, the inventory build cycle will reverse and second half GDP will falter.

The other news relates to Greece and if they meet their bond payment due today. The real risk though is

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