The US stock market is currently looking pretty worrying, setting records this month and not in good ways...
Companies buying back their own shares is the only thing keeping the stock market afloat right now:
Companies buying back their own shares is the only thing keeping the stock market afloat right now:
Stocks right now are hanging by a thread, boosted by a bonanza of corporate buying unrivaled in market history and held back by a burst in investor selling that also has set a new record.
Both sides are motivated by fear, as corporations find little else to do with their $2.1 trillion in cash than buy back their own shares or make deals, while individual investors head to the sidelines amid fears that a global trade war could thwart the substantial momentum the U.S. economy has seen this year.
"Corporate cash is going to find a home, and it's either going to be in buybacks [companies buying their own shares to inflate share prices], dividends [companies paying their shareholders money] or M&A [companies buying other companies] activity. What it's not going to be is in capex [new jobs and new factories]," said Art Hogan, chief market strategist at B. Riley FBR. "Individuals are looking at the turbulence we've seen this year that we had not seen last year. That creates its own sort of exit sign for investors who don't want to deal with that."
Both sides are motivated by fear, as corporations find little else to do with their $2.1 trillion in cash than buy back their own shares or make deals, while individual investors head to the sidelines amid fears that a global trade war could thwart the substantial momentum the U.S. economy has seen this year.
"Corporate cash is going to find a home, and it's either going to be in buybacks [companies buying their own shares to inflate share prices], dividends [companies paying their shareholders money] or M&A [companies buying other companies] activity. What it's not going to be is in capex [new jobs and new factories]," said Art Hogan, chief market strategist at B. Riley FBR. "Individuals are looking at the turbulence we've seen this year that we had not seen last year. That creates its own sort of exit sign for investors who don't want to deal with that."
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