Courtesy of Mish.
Here’s the question of the day: are corporate stock buybacks fueling the stock market?
Let’s look at a couple of charts and a news report to help determine the answer.
Quarterly Stock Buybacks
Stock buybacks are at a nine-quarter low according to an Email TrimTabs press announcement.
“Buybacks have been trending lower for the past two years, which is a cautionary longer-term signal for U.S. equities,” said Winston Chua, analyst at TrimTabs. “Along with central bank asset purchases, buybacks have been a key pillar of support for the bull market.”
“The U.S. stock market isn’t likely to get as much of a boost from buybacks as it did in recent years,” noted Chua. “Apart from big tech firms and the too-big-to-fails, fewer companies seem willing to use lots of cash to support share prices.”
There are numerous references to that announcement, but until now, nobody checked to see if the relationship was in fact true.
S&P 500 vs. Volume Lows in Share Buybacks
