Frequent readers will recall that it was Andrew Lapthorne’s revelation back in late 2015, which was behind the following chart, indicating that virtually all net debt issued this century has gone for one thing: to fund buybacks, i.e. wealth transfers from bondholders to shareholders.
Now, in a follow up note as the increasingly politically-charged topic of record (projected) buybacks…
If you prefer fake news, fake data, and a fake narrative about an improving economy and stock market headed to 30,000, don’t read this fact based, reality check article. The level of stupidity engulfing the country has reached epic proportions, as the mainstream fake news networks flog bullshit Russian conspiracy stories, knowing at least 50% of the non-thinking iGadget distracted public believes anything they hear on the boob tube.
This stupendous degree of utter stupidity goes to a new level of idiocy when it comes to the stock market. The rigged fleecing machine known as Wall Street has gone into hyper-drive since futures dropped by 700 points on the night of Trump’s election. An already extremely overvalued market, as measured by every historically accurate valuation metric, soared by 4,000 points from that futures low – over 20% – to an all-time high. Despite dozens of warning signs and the experience of two 40% to 50% crashes in the last fifteen years, lemming like investors are confident the future is so bright they gotta wear shades.
The current bull market is the 2nd longest in history at 8 years. In March of 2009, the S&P 500 bottomed at a fitting level for Wall Street of 666. In a shocking coincidence, it bottomed on the same day Bernanke & Geithner forced the FASB to rollover like mangy dogs and stop enforcing mark to market accounting. Amazingly, when Wall Street banks, along with Fannie and Freddie, could value their toxic assets at whatever they chose, profits surged. The market is now 240% higher.
In Part One of this article I addressed the deceit of Hillary Clinton and politicians of all stripes as they promise goodies they can never pay for, in order to buy votes and expand their power and control over our lives.
I created the chart below for an article I wrote in 2011 when the national debt stood at $14.8 trillion, with my projection of its growth over the next eight years. I predicted the national debt would reach $20 trillion in 2016 and was ridiculed by arrogant Keynesians who guaranteed their “stimulus” (aka pork) would supercharge the economy and result in huge tax inflows and drastically reduced deficits. As of today, the national debt stands at $19.7 trillion and is poised to reach $20 trillion by the time “The Hope & Change Savior” leaves office on January 20, 2017. I guess I wasn’t really a crazed pessimist after all. I guarantee the debt will reach $25 trillion by the end of the next presidential term, unless the Ponzi scheme collapses into financial depression and World War 3 (a strong probability).
The total disregard for the most perilous issue confronting the nation by politicians of all stripes is a national disgrace, proving beyond a doubt the elite ruling class has no conscience, no sense of morality, and no loyalty to the common people or future generations. The sociopaths who act as if they are in control addressed the 2008 global debt meltdown by adding tens of trillions in new debt to an already unsustainable system, setting the world on a course towards total financial collapse and world war.
Continue reading “HILLARY: DECEIT, DEBT, DELUSIONS (PART TWO)”
Guest Post by David Haggith
I have pointed out in previous articles how most of the growth in stocks over the past few years has been due to stock share buybacks. Without this hideous (and at one time illegal) practice, there would have been no bull market over the last few years.
That’s right. Research from no other place than Wall Street, itself, indicates that almost all of the returns since 2009 have been due to stock share buybacks!
Liz Ann Sonders, chief investment strategist and perma-bull at Charles Schwab, recently acknowledged that “… there has not been a dollar added to the U.S. stock market since the end of the financial crisis by retail investors and pension funds….” Since every buyer has a seller (and vice versa), what group or groups had enough of a buying presence to push the S&P 500 14.2% off of the February closing lows? Corporations. (Seeking Alpha)
Most people assume what has kept the market afloat this year after sinking 11% at the start of the year was a mixture of better news out of China, oil prices stabilizing, and indications that the Fed won’t raise rates as much as thought. But the real thing bouying the market could be something else: Stock buybacks…. The stock buybacks come at a time when major investors including individuals, foreign investors, and pension funds have been selling off their shares, according to a note from Goldman Sachs, amid market volatility and weak oil prices. (Fortune)
Continue reading “Stock Share Buybacks Now Bought Out — American Enterprise in Decline”
The chart below would appear to be in conflict with the results of a recent Gallup poll regarding stock ownership by Americans. The ratio of household equities to money market fund assets is near a record high, 60% above the 2007 high and 30% above the 1999 internet bubble high. The chart would appear to prove irrational exuberance among the general populace.
In reality, the lowest percentage of Americans currently own stock over the last two decades. With the stock market within spitting distance of all-time highs, only 52% of Americans own stock, down from 65% in 2007. As the stock market has gone up, average Americans have left the market. They realize it is a rigged game and they are nothing but muppets to the Wall Street shysters.
The stock market has regained all of its loses year to date as economic indicators continue to flash red, corporate profits continue to plunge, consumers continue to spend less at retailers, real wages continue to fall, and housing sales continue to decline. The entire dead cat bounce has been generated through corporate stock buybacks, Wall Street lemmings trying to make up for their terrible year to date investing performance, and central bankers who will stop at nothing to verbally manipulate markets higher – since their monetary machinations over the last seven years have been a miserable failure in reviving the real economy.
As John Hussman points out, the market is poised to deliver nothing over the next decade, with a 40% to 55% “dip” in the foreseeable future. I wonder how many barely sentient, iGadget addicted, non-questioning, normalcy bias dependent zombies are prepared for a third Federal Reserve generated market collapse in the last 15 years?
From a long-term investment standpoint, the stock market remains obscenely overvalued, with the most historically-reliable measures we identify presently consistent with zero 10-12 year S&P 500 nominal total returns, and negative expected real returns on both horizons. From a cyclical standpoint, I continue to expect that the completion of the current market cycle will likely take the S&P 500 down by about 40-55% from present levels; an outcome that would not be an outlier or worst-case scenario, but instead a rather run-of-the-mill cycle completion from present valuations.
Continue reading “YELLEN, DRAGHI, KURODA: DERANGED LAB RATS”
“What are the odds that people will make smart decisions about money if they don’t need to make smart decisions–if they can get rich making dumb decisions? The incentives on Wall Street were all wrong; they’re still all wrong.” ― Michael Lewis, The Big Short: Inside the Doomsday Machine
Corporate earnings reports for the fourth quarter are pretty much in the books. The deception, falsification, accounting manipulation, and propaganda utilized by mega-corporations and their compliant corporate media mouthpieces has been outrageously blatant. It reeks of desperation as the Wall Street shysters attempt to extract the last dollar from their muppet clients before this house of cards collapses.
The CEOs of these mega-corporations accelerated their debt financed stock buybacks in 2015 as stock prices reached all-time highs and are currently so overvalued, they will deliver 0% returns over the next decade. This disgraceful act of pure greed by the Ivy League educated leaders of corporate America to boost their own stock based compensation is reckless and absurd.
It is proof education at our most prestigious universities has produced avaricious MBAs following financial models and each other like lemmings going over the cliff. Proof of their foolishness is self evident after perusing the chart below. These intellectual giants evidently never learned the basic rule of buying low and selling high in order to make a profitable trade.
Hat tip Backtable
In Part One of this article I laid the groundwork of the Fourth Turning generational theory. I refuted President Obama’s claim that the shadow of crisis has passed. The shadow grows ever larger and will engulf the world in darkness in the coming years. The Crisis will be fueled by the worsening debt, civic decay and global disorder. I will address these issues in this article.
The core elements propelling this Crisis – debt, civic decay, and global disorder – were obvious over a decade before the financial meltdown catalyst sparked this ongoing two decade long Crisis. With the following issues unresolved, the shadow of this crisis has only grown larger and more ominous:
Debt
“To honor these obligations we could (a) raise all federal taxes, immediately and permanently, by 57%, (b) cut all federal spending, apart from interest on the debt, by 37%, immediately and permanently, or (c) do some combination of (a) and (b).”
The level of taxation and/or Federal Reserve created inflation necessary to honor these politician promises is too large to be considered feasible. Therefore, these promises, made to get corrupt political hacks elected to public office, will be defaulted upon.
Continue reading “FOURTH TURNING – THE SHADOW OF CRISIS HAS NOT PASSED – PART TWO”
The CEOs of the biggest corporations in America are Ivy League educated MBAs with the common sense of a nitwit. Did they ever hear the phrase – buy low, sell high? Evidently not. These boneheads just completed purchasing $500 billion of their own stock at all-time record highs. The PE of the market has only been higher twice in history – 1929 and 2000. Do they pay these idiots millions of dollars to purposely piss away shareholder wealth?
The chart below details the pure and utter stupidity of corporate CEOs. The only time in history when they purchased more of their own stock was in 2007, prior to the 50% crash in stock prices over the next 16 months. To understand the true brainlessness of these arrogant hubristic assholes, you have to look at 2009. In the year where stock prices were 50% lower than one year before, these titans of finance bought back the LOWEST amount of stock in the last thirteen years. These morons continuously buy high and sell low. The previous peak in stock buybacks was 2000. That worked out well for stockholders too.
And now for the cherry on top. Don’t believe the bullshit about corporate balance sheets with record levels of cash. Corporate debt levels are at all time highs. Guess what they used the debt for? That’s right. They borrowed to buy back their own stock at all-time highs. Fucking brilliant!!!!
Luckily their disgusting level of compensation is based on Earnings per share. Guess what goes up automatically when you buy back your own shares? With less shares, EPS is boosted higher. These were the same CEOs begging to be bailed out by the taxpayer in 2009. When this farce blows up in the near future and their companies go into the toilet again, these idiots will declare that no one could have seen this coming.
The idiocy and fecklessness of these CEOs never grows old.
Submitted by Tyler Durden on 01/06/2014 08:38 -0500
Everyone knows that the Fed, through the bank excess reserves/cash deposit pathway, participated in indirectly purchasing some $1 trillion in risk assets in 2013 through POMO – a process that many have confused with economic recovery. It is also known that corporate stock buybacks have managed to keep S&P500 EPS rising by removing the total number of shares outstanding (and thus lowering the S in EPS in a world where absolute E stubbornly refuses to grow): after all, someone has to keep those activist shareholders happy or else they release unpleasant letters about corporate CEOs.
However, what may not be known is just how large the total amount of corporate buybacks in the past year was. The answer: the second highest in history, just shy record of 2007 (when there was no additional $1 trillion in stock purchases coming from the Fed/Primary Dealer complex), amounting to $500 billion (even if non-US buybacks have been a tiny fraction of US).
Presented otherwise, corporations injected roughly half of the total POMO cash used by the Fed to push the S&P straight-line higher.
For the sake of stocks, and with QE tapering, let’s hope that this critical buyer remains in the market or else the tapped out retail investor may have a tough time to keep the S&P at its now more expensive than 2007 level for long.
