Don’t look at us. It’s the rest of the world’s fault!
Market Roundup
That was the loud-and-clear message coming from the Federal Reserve today. I say that because policymakers took a pass on raising short-term rates from the current 0.25-0.5% range, despite sounding relatively optimistic about the domestic economy.
Specifically, the post-meeting statement said that “household spending has been increasing at a moderate rate,” that the “housing sector has improved further” and that there has been “additional strengthening of the labor market.” It also said that prices might be low now, but that they should rise “as the transitory effects of declines in energy and import prices dissipate and the labor market strengthens further.”
So why not move? Because the world is a mess. Or in Fedspeak, “business fixed investment and net exports have been soft” and “global economic and financial developments continue to pose risks.” Chairman Janet Yellen also said in her press conference that weaker global growth and financial market volatility overseas was causing U.S. financial conditions to tighten somewhat.
Policymakers are apparently so concerned that they even lowered their projections for how many rate hikes they’re planning to implement this year. The average expectation is two hikes now, compared with four previously.
Not everyone favored a “do nothing” approach. Kansas City Fed President Esther George voted to hike rates by a quarter-point. But she was clearly overruled.
Personally, I’m less sanguine on the U.S. economy than the Fed appears to be. I believe the backdrop is more mixed. Unsold inventories have been piling up, while supposed early-year strength in retail sales was just revised away.
|
|
| Inventories are building up, another worrying sign for the U.S. economy. |
The jobs data has been relatively decent. But even it has some hair on it. Worrisome activity in the commercial real estate and auto markets also tell me that future growth is likely to disappoint.
So what does this all mean for the markets? Well, the Fed’s inaction and policymaker comments today caused the dollar to tank against almost every other major currency. That included safe haven-style currencies like the Swiss franc and the Japanese yen … traditional dollar alternatives like the euro and British pound … and so-called commodity currencies, such as the Australian and Canadian dollars.
Gold also reversed sharply, tacking on more than $30 an ounce at one point after declining earlier in the day. Higher-yielding, lower-volatility stocks that I favor, including utilities and consumer staples, surged even further in value. That helped push the broad averages higher. But bank stocks lagged notably, as did many biotech names.
| “All this central bank talk and “on again/off again” policymaking is deterring investors from focusing on the real issue out there.” |
Once you get past the short term, though, I contend that all this central bank talk and “on again/off again” policymaking is deterring investors from focusing on the real issue out there. We’re late in the economic cycle, and we’re late in the credit cycle.
That means this is going to be a more treacherous and volatile environment for investors, no matter what the Fed or its foreign counterparts do. So don’t let the latest chatter from Janet Yellen or Mario Draghi distract you from that. Ditto for the wild short-term swings we’re increasingly seeing in the markets.
Now it’s your turn. Was Janet right to sit tight on rates? Or should the Fed have gone ahead and hiked? Is it right to focus so much on global developments? Or should the Fed stick to its domestic knitting? Speaking of the domestic outlook, do you think the economy is doing well? Just okay? Lousy? Let me hear your thoughts in the comment section below.
|
Meanwhile, you were already debating the outlook for consumer spending in the last 24 hours.
Reader Anthony G. didn’t mince words, saying: “The Fantasy Island economy is now exposed. If the economy does not get a fix, it will shake apart like a street junkie.”
Reader Frebon shared this take on the latest figures and the economic outlook: “You can’t trust data from the government anyway. Take all the data with a grain of salt, find trends and look at the real economy and employment. What you’ll see is not very encouraging.
“Gold is not the way out because there is no demand, and therefore no inflation. Cash will actually be better because our data-dependent dodos at the central banks think negative rates are the way to go. If they can’t figure out a way to create demand, maybe Bernie is right. Get the money out of the wealthy’s hands and into the people of the middle-class who will actually spend it.”
Reader Richard L. added: “The majority do not know (maybe a better word is ‘understand’) that the U.S. economy is in shambles — and for sure, they do not know why the U.S. economy is in shambles. If the people did know how bad it really is, that would make the economy worse, because people would hold what little money they have even tighter.”
Finally, Reader Al said: “I have always thought that the consumer (American or otherwise) should purchase everything they really NEED, and save for anything they really WANT. The current state of the economy would be well-suited to saving as opposed to spending. Hopefully, the primary reason the consumer is not to be found is because they are being prudent and saving for their wants.”
I appreciate the viewpoints. I believe we are very late in this economic and credit cycle, and that consumers are stretched thin. Rising healthcare and housing costs are a real burden, and that’s offsetting the benefit of falling gas prices. It’s also worth mentioning that those falling prices have decimated the domestic energy industry, which became a much larger part of the U.S. economy than in the past during the shale energy boom.
For those and other reasons, I remain skeptical about the spending power of the average American consumer. And I remain concerned that a recession may not be very far off.
If you want to weigh in further on the economic cycle, make sure you head to the discussion section below. Or do what I suggested yesterday: Get more details on the 2016 Money, Metals, & Mining Cruise, scheduled to sail on July 10-17 from Anchorage to Vancouver. I plan to discuss the economic and credit cycle in detail on board, and would love to meet with you there. You can call 800-797-9519 or click here to learn more.
|
Donald Trump won the states of Florida, Illinois and North Carolina overnight, while losing Ohio to John Kasich. Hillary Clinton swept almost all of the Democratic primaries. It appears both front-runners also won in Missouri. But the races were so close (within margins of less than 1 percentage point) that we could be headed for a recount.
The commodity rout may soon claim its next victim. Peabody Energy (BTU) surged along with a bunch of other super-junky oil, gas, coal, steel, and iron ore stocks courtesy of the “China stimulus will save us” trade in the first several days of March. It soared from around $2.20 to more than $7.
But the company just admitted in a Securities and Exchange Commission (SEC) filing that it may not be able to continue as a “going concern.” Or in plain English, it might go broke under the weight of falling demand and $6.3 billion in debt.
Shares of embattled drugmaker Valeant Pharmaceuticals (VRX) plunged more than 50% yesterday after the firm lowered earnings estimates, made an embarrassing $600 million typo in a press release, and warned that it might breach debt covenants if it can’t file accurate financial reports on time. Large investors and hedge funds have lost billions of dollars on the former darling of the drug industry.
The London Stock Exchange plans to merge with Germany’s Deutsche Borse in a $30 billion deal. The transaction would create the largest stock exchange based and operating in Europe. But it’s possible another bidder such as Intercontinental Exchange (ICE) of the U.S. could come in with a higher offer.
So what do you think of the debacle at Valeant? How about the latest exchange combination in Europe? Will more commodity firms follow Peabody into or toward Chapter 11? Hit up the discussion section below to weigh in.
Until next time,
Mike Larson
Recommended Articles by Mike Larson:
Mike Larson graduated from Boston University with a B.S. degree in Journalism and a B.A. degree in English in 1998, and went to work for Bankrate.com. There, he learned the mortgage and interest rates markets inside and out. Mike then joined Weiss Research in 2001. He is the editor of Safe Money Report. He is often quoted by the Washington Post, Reuters, Dow Jones Newswires, Orlando Sentinel, Palm Beach Post and Sun-Sentinel, and he has appeared on CNN, Bloomberg Television and CNBC.
{ 67 comments }
for most of hard working Americans , middle class , we are barely heads above water so the economy is NOT that great but for the Super Rich they might have other story we are going DOWN slowly but surely we need to pray for America to RETURN !!!! spread the word
Globalization is taking its toll. A chain is only as strong as its weakest link and some links have already started to crumble!!
With Japan, China and the EU making central bank “adjustments”, perhaps the Fed wanted to get out of the way and bury their heads in the sand for a while. If the economic numbers improve at all, going forward, we can expect another increase or perhaps two more increases before year end.
I see that Valeant Pharmaceuticals, despite being in technical default for some $30 Billion in bonds, actually opened up nicely, then bounced around before ending up 3 cents – or essentially flat. Do investors somehow think the company can somehow pull a turnaround? Some probably thought Enron would do a turnaround, too. Perhaps the brokers’ automated systems don’t recognize the bond problems. Hard to believe, but may be.
I read elsewhere that billionaire investors such as Bill Ackman (21 million shares + options, I read) and John Paulson were among those who have lost huge sums in Valeant. Maybe they were among those trying to boost prices earlier today. It didn’t seem to work.
I also read that the big sub-prime auto lender, Santander, also missed their SEC filings. Who else will turn up?
Chuck Its about time guys like this got burned.
With Italy, Spain and Greece teeter-tottering every other day, The north sea mainland countries are reeling from the insurgence of refugees, skyrocketing crime rates and general economic stress. It’s no wonder the UK is going to vote on leaving the EU June 23rd. What a mess! That would leave Germany holding the bag. How long before the feds acknowledge that all this will spillover into the US? It’s going to be a hot, tumultuous summer!! I fear we could be facing another global meltdown.
The real villains in the Valeant debacle have to be the Board of Directors….where were they when all of these problems were going on? The SEC should be investigating them and their total lack of oversight.
MARKET SMELLS FED BLOOD
Franco-Nevada (FNV) has gone from $48/share to $66 share in only 4 months. It a rocket to the moon, while gold is stuck around $1250/ounce. So clearly, some mining companies are on a tear while others are not. Emerging Markets Index back up to $33/share and U.S. Dollar Index down to 95. Market smells Janet Yellen’s blood ( no interest rate increases in 2016 until after the election, at the soonest. )
What do I think of the Valeant (VRX debacle? I think its shares rose about $2.00 this morning and convinced me we might be about to go into a huge crash, but the manipulators will go down singing, “Happy Days Are Hear Again!” I don’t think I want to play in such a rigged game. Thanks, Mike, for keeping us informed.
The Fed has now declared itself to be totally irrelevant and having no clue on what’s going on. Perhaps we need Fed people with common sense instead of economic doctorates. Keep this up with the Charade of the other Central Banks and the coming recession will turn into something far worse. Ms. Yellen see ya on the breadline.
VRX and its officers deserve this year’s ENRON award. Using accounting gimmicks, tax loopholes and Hedge Fund money over the past 5 years, they bought real drug companies at inflated prices, fired their research departments, and raised the prices of the drugs they acquired, ripping off Medicare and the American taxpayer.
They will probably walk away having pocketed billions of dollars in stock sales along the way.
I did not expect a market rally today. The central banks are keeping the bears at bay.
The business cycle is alive and well.
I’m middle lower class haven’t had a raise in 4 years. I work for one of the largest pharma in the world..record profits and bonuses. Not for worker. Insurance up. Student loans due. What consumer spending?.
In Australia, my daughter used to work for one of the largest pharma comp. She said the same thing. Short cuts in biotech security and pay rises for the top bosses rule.
Oh c’mon all you whiners, look around you, everything is just fine. The roads are full of new cars, the shopping mall parking lot’s are overflowing, money is being spent, help wanted signs are in every window as you drive down the street – our Government says everything is better than fine and we all know out Govt. wouldn’t lie to us – right? Of course half the cars are sold to sub prime borrowers, they may be at the malls but no one is spending heavily and the help wanted signs are for part time jobs paying minimum wages.
Amen,John..I may be driving an older vehicle,and yes,I am somewhat envious of all the folks driving their shiny new cars (many of which cost more than my house is worth),but I have the satisfaction of actually OWNING mine—Defaults on auto loans are endemic in our town,so many of these people will never actually take clear title!
I believe the only thing keeping this market moving is the fact that the zero interest rate policy of the Fed , the confused Fed! , allowing the corporations to borrow and buy back their stock , and inflating their earnings is what’s keeping the market from crashing!
As for VRX, time will tell what is really going on?
We need to keep the government out of business so that the free market will correct itself, this is why we are in trouble now, the Fed manipulation of the markets!
Free market? What free market–hasn’t been free since Nixon. Free elections? Hilary was hand picked, do you really think the GOP ‘Ivy League Mafia’ is going to let Trump have the baton? Our government has been an oligarchy for years. Just because you were taught something, doesn’t mean it’s true.
there is such a disconnect between wall st
& main st. these people in my view
are out of touch with reality.
I have never been a big fan of the FOMC, and have have seen them fall out of synch with interest rates at least a half dozen times in my 40 years as an investor. Given those feelings about their relevance, and their history of going in the wrong direction at the most troubling points in time, I stopped being overly concerned about what they say (if you can actually understand what they’re saying), and rely more on real data/analysis.
Lastly, their involvement on a political level has grown continually during my years of investing, and I’m fed up with it. For me, the FOMC is no longer needed or relevant.
This is very insightful. Enjoyed the the artical and the comments.
It is difficult to game out where the insanity ends, both abroad and domestically. How much credit can the Chinese push into their markets to produce more steel and cement, which must either be used there, or, exported. To where? Domestically, I do not see where the surge in consumer demand is supposed to come from; even ultra-cheap credit simply pulls future demand forward, leaving a price to be paid in credit risk and diminished future demand. Of course, I went to school in the early 70’s, what would I know about the new meaning of money?
Just one thought about mixed cement. It must be mixed and used immediately, within a few hours. I would think it too heavy to export already formed.
Hi John
I am in the same boat only I went to school earlier. I watched some high muckety muck Chinese in the past peoples congress get up and spout how great things were and the transition was going well and there would no hard landing and the government would inject money into the system whenever needed. Plain and simple a economy will not survive if you keep injecting money into it to prop it up. What amazes me is that the Chinese investors swallow all of this garbage and head back into the market and buy. Its the same as the American market. The Fed comes out with their not to warm and not to cold forecast and the market moves up. Will there ever be a return to economic fundamentals.
PS I just noticed that the oil market moved up on Fed speak ignoring the ever increasing oil in storage. The world has truly gone nuts and we keep listening and believing the garbage and funny numbers the governments throw out. They are almost at the same level as Moses when he came down from the mountain with the 10 commandments.
One could assume that the Feds are in touch with reality and the reality is thatt an increase in Rate causes an influx of foreign money and makes American exports more non competitive.which in reality kills jobs
This was taught 50 years ago in my undergraduate economics course.
I doubt if this dogma has changed and I am sure all of the members of the Fed Reserve Board still remember it.
So no rate increase today .
Most of the sitting members still get a passing grade.
Buy American made when ever you can but it isn’t always easy
made in american will become king again.
hawk 5000 I was watching a program on a company who was inventing machines that would make American flags and clothing materials without the benefit of human hands. If they get this perfected a lot of jobs will return from overseas. If you take out the labor aspect and the large shipping distance there could be revival of clothing industry in the USA. If the imbalance of business keeps shifting back and forth across the globe there will be much local turbulence and destabilization.
If production is done by robots, making things may return to America, but jobs? Nada!
Thought whatever the Fed said was already discounted into the rally before their release.Cutting back there rate increase tells me that a bumpy road is ahead. Trade with caution as this rally doesn’t seem to have legs.
Trading this week was very low volume and reserved, as traders were largely waiting to see what the Fed would do. By no means were people sure, and there was no rally ahead of the announcement; in fact, the market was down prior to the 2 o’clock release of the Fed’s rate decision.
British Petroleum just reduced their estimated economically recoverable reserves at Prudhoe Bay by sixty five per cent, primarily because of lower prices. This is a big deal ignored by the media. If they have to reduce a first class reserve like this you can imagine how much other companies, particularly shale producers, are going to be forced to revise their reserves downward. This number is the basis for their borrowing power. I think the next six months are going to very ugly for US. oil and gas producers. I also saw where once great companies like Tidewater and Phillips are considering bankruptcy. Jim
didn’t the greatest investor of all time, warren buffett, just buy a ton of phillips stock?
i would think any deep-water of off-shore assets would be worthless since the advent of fracking.
OH CMON ……….Eagle495 quit using my name you know very well HILLERY CLINTON and BERNEY SANDERS want to stop all fracking in this country they have both already said it in their campaigns ………so lets figure this out if they stop fracking theres goes the abundance of cheap oil and gas and hence the offshore oil and gas reserves become highly valuable democrats don’t want cheap oil and gas they want a gallon of gasoline to sell for between $ 9.50 dollars and $12.00 dollars so that their wind and solar programs work
so buy wind and solar.
Energy has been one of the very strong points for the American economy. If the big American energy companies start going belly up, we are in BIG trouble. Also, they could be vulnerable to takeover by foreign companies – maybe including Russian and Chinese, or even Arabian. Not pretty!
Fed Info Session Today: Janet Yellen played her cards correctly today. This has been a problem in the last year or so because the Fed has been getting a lot of pressure from the media to do this, or do that. Some time ago they wanted her to raise rates, then were all up when she didn’t (where usually that would be cause for celebration in this day and age). Then when she raised them they got all upset – after just having gotten upset that she didn’t raise them. Managing the images here have become a lose-lose scenario for Janet Yellen recently.
But I think this time she’s made the wisest choice possible – which is to the talk about it approach to implement Fed policy – rather than the act upon it approach. This is much smarter than most people realize (especially most people who making their living bashing the Fed) because the Fed does in fact have a relatively small number of actual policy tools at their disposal, and those tools can be extremely powerful and have far reaching ramifications and unintended consequences if used even the slightest bit incorrectly. So avoiding action and resorting to talking it up instead was a great approach. It also shows that the Federal Reverse is sensitive to what’s going on in the financial markets – which they SHOULD BE. (forget all those dopes who say that the Fed should be data driven and ignore the market – that is a lot of baloney) And lest any of you forget who will get hauled in before Congress and grilled like a well done cheeseburger should the economy wipe out on her watch? You got it!
The facts are that the US economy is and has been limping along reasonably satisfactorily. It’s not enough if you want robust growth, but it’s enough to keep on making incremental progress -and considering where we have come from -that is (in truth) something to be happy about. (check out the international scene if you doubt this) So there is no basis for the Fed to issue stern warnings – because there isn’t much different that we know and have digested going on.
On the other hand the markets have been quite fragile of late and making a move that would spook them and add stress to an otherwise over-stressed situation would be a bad idea. Furthermore with weakness showing in the equities markets worldwide, it’s important for the US to provide some leadership because the rest of the world is clearly looking to us in America for something they themselves don’t have – confidence. This is no small matter. It is crucial at this juncture for the US equity markets to hand in there, and Yellen’s no rate increase decision will help hold the line here in the US. Hopefully some of that will rub off on global markets in the near future.
Furthermore when stocks decline it’s very important not to have turmoil in the bond market at the same time – for obviously reasons. And raising rates, especially embarking on a schedule of planned rate hikes going forward would push the bond market ever close to the cliff of destruction of resale depreciation. The economy doesn’t need that any earlier that it has to get it. Sooner or later that bloodbath will happen – but there is no question that later would be a LOT BETTER than sooner the way things are right now.
Being a new Fed Chair is not an easy task. Everyone looks up to him/her to do the impossible. Those at the Fed of course realize that the supposed “godlike power” they are supposed to have are a myth. The Fed does not control the economy – yet everyone (including many of our esteemed at Weiss) act not only as if they can – but as if it’s their fault when things don’t go well economically. And there is no school to enroll in, no classes to take to learn how to be a Fed Chair. It is strictly on the job training. The chances of getting the blame are high – and the chances of getting credit for anything good happening is low became everyone else, from the Corporate CEO’s to the President will clain that success as their own. Being the Fed chair really is a rotten job.
When Ben Bernanke assumed the Chair at the Fed he had a lot of truly noble ideas about how things could be run. Coming from academia he was forward looking and hoped to transform the Fed into a more transparent institution that served the public in a clearer, more participatory and more effective way. But he was not prepared to deal with the mythology of the Fed and the ludicrous expectations that people have of them. But he learned – the hard way. Eventually he realized that the Fed Chair can’t talk much – and has to be really careful about what he says. With time Bernanke also mastered the art of implementing “talk policy” rather than action policy. It was one of the best things he learned how to do as the Fed Chair – for the very simple reason that if he can help steer the boat (what little steering power he has) with words it is so much safer and less disruptive than doing it with actions. And furthermore it keeps the Fed’s powder dry for when they really need it. Janet Yellen is showing that she is learning this method to. She is starting to come into her own as the Fed Chief at this time.
John H
Happy Holiday in whatever world you live in John H. (<:
Mule
Thanks for telling it like it is. Obviously traders liked what she said, even if Mike and others on this site like to bash her.
I am sorry to say that as I listened to Yellen speak,I was truly impressed with the endless stream of vague,meaningless,out of touch with reality econo-babble…If anyone truly believes that things are going well,look around.In particular,,her lament that lower fuel prices are not driving consumers into a junk-buying frenzy speaks volumes.Long live frugality!
You’r dreaming John H. So you feel that the solution to kicking the can down the road is to further procrastinate, by kicking the cans further down the road. What I would like to know from you is how later it will be easier to deal with an even bigger pile of rusty cans full of bigger holes, than it would be to move ahead asap to address issues early on. Just because the Fed failed to raise rates when they should have years ago, does not mean that as time goes by things will be easier for them to solve. Two wrongs do not make a right no matter what is in your dreams; make that no matter what is in your nightmare. Sooner or later the piper will need to be paid; and the longer he pipes the greater his fee. You are asking for the piper to play, so you must pay him the fee; not me.
the true un-employment is 24% and as long as they don’t include the people that have their benefits run out and and still cant find a job,maby she knows this and knows that a raise would in fact put the US on a downward path.
Thank you,Dennis! I live in Flint,Mi,where the real UE rate is closer to 30+%–Governments have used various forms of chicanery to understate real unemployment for decades,and while I can’t speak for other states,here in Michigan it has traditionally been done to avoid certain triggers that would mandate huge increases in benefit payments–we have a long rich tradition of appreciating labor when you are working and paying taxes;not so much when you get laid off and need help…..they would much rather you left for other states,and thousands have done exactly that!
John H –> What a bunch of hot air.
She like the other two government parasites is setting the stage for her next six figure salary at Goldman, after she retires with an overly generous guaranteed for life pension. Nothing and I will repeat for you John Nothing she has done has benefitted the majority of middle class attempting to even survive in this lopsided economy. Unless they earn their salary off of commissions selling securities, or the latest racket “Financial Planner.” Also, it is absolute pure B.S. that for the last 8 years there has not been serious inflation, unless you cherry pick the numbers. Her “FED Speak” is pure nonsense babble. The press eats it up. Babble does denote wisdom. She has not the guts to come out and admit that she must keep her wall street buddies happy so they reward her when she retires from government just like her predecessors Bernanke and Greenspan.
The problem, Ivano, is that there has to be a balance between jobs for the lower middle class, and borrowing conditions that allow employers to have jobs available. If interest rates are kept high, it becomes much more difficult to get the loans necessary to run a business, and that includes being concerned about stock prices. We were coming from a near total meltdown, which could have displaced many more people, and hurt the government’s ability to maintain a safety net for our retirees and poor. Certainly mistakes were made since the turn of the century, but Fed policy since the Great Recession has been pretty good.
Dear Phil,
” but Fed policy since the Great Recession has been pretty good”.
Really, Also there is no such thing as a lower middle class or middle class only rich and poverty.
Reply to Ivano – I never said we don’t have inflation. I fact I’ve said the just the opposite – that we inflation is running up prices in many areas (other than in gas/oil) but that the gov’t numbers on it don’t reflect that correctly. It is perfectly clear that the gov’t agency that reports inflation (which I don’t believe is the Federal Reserve) has a vested interest in making inflation numbers “look good”. I believe I’ve said that inflation is rolling a number of times here on the Weiss blog. It is Larry who says it isn’t – but I have said that he’s wrong. (Keep in mind he does not live in the US so he does not confront the cash register regularly as you and I do)
But it does not seem to me that you are interested in giving the Fed chair a chance.
Cement and concrete are not the same thing.
cement is used to make concrete. concrete is used to make sidewalks.
It think this analysis makes perfect sense. We’ll quickly see how the slow digestion of FED action will translate in the market but I don’t expect sparks or a blowout top.
How can raising interest rates only 2 times this year be Dovish, Because from 4 to 2 means None for this year! We already seen what happen in Dec. there is no way the FOMC can ever raise rates again. In fact I will Bet in 2017 they will have to release QE forever until Europe And Japan goes down in Flames.
Re-read John’s post about jaw-boning. The idea is to strike a balance between “the economy is great, so we have to raise rates to keep inflation in check ” and “the economy isn’t doing too well, so we have to keep rates low to stimulate it”.
It’s women who really rule the world not men. It’s a paradox the weak strong.
After cutting the Prime interest rate to zero, Bernake vacilated for years and never increased the rate.. As a result, the market became more inflated because of increased speculation.
.
Janet Yellen continues to procrastinate, but finally increased the actual rate by 25 basis points in December..
I call Yellen the BAG lady not because she looks a bit disheveled, but because she’s gonna be left holding the bag when a needed rate increase ends the speculative party on wall street. ,
OBAMA is calling the shots on yellen
By the way, I read that ultra-liberals are very upset at Obama’s pick of Garland for SCOTUS. He is middle-of-the-road at best. There is a story that Republicans told Obama would deep six him if they win the presidency, but would okay him in a lame duck session of Congress if Hilary wins. They know what sort of far left liberal Hilary would appoint to the court – and keep appointing. The court might only number 8 justices (or fewer) through her entire term as long as the Reps have the say.
garland is a liberal a moderate liberal
Liz Ann Sonders, chief investment strategist for Charles Schwab, says that on a cumulative basis, not a single dollar has been added to the stock markets by retail investors and pension funds since the end of the financial crisis. The big rise has been almost totally funded by stock buybacks, and they continue happening. FedEx announced a $3.25 Billion buyback on top of $8 Billion since 2014. GM plans $5 to $9 Billion by 2017. Schlumberger authorized $10 Billion after laying off 10,000 employees in the 4th quarter of 2015. Wells Fargo, $17 Billion. It has all been very nice for the bottom lines of the higher ups in those companies, I’m sure, but not for most of those down the line, many of whom are out the door. Something has to give, somewhere.
Reply to Chuck Burton: I’m not so sure this statement from Schwab is correct. We know there have been a lot of buy backs on Wall St. – and even thought it’s not my favorite use of shareholder money, I do understand that in a slow economy it’s no always such a good idea to keep on pressing for growth. So buybacks are a way of playing it safe in difficult economic times.
But to say that no capital has come into the US markets in all the time seems questionable to me. The US market have done pretty well in the last 8 years and that alone ought to have attracted a lot of capital over and above he regular stream of money coming in from retirement plans – which is pretty consistent.
A couple of analysts at Deutsche Bank, Torsten Slok and David Bianco believe it’s a mistake to attribute the bulk of the market’s gains to buybacks. In the article linked below they say ““Since March 2009 the market capitalization of the S&P500 is up around $10 trillion and the total amount of buybacks over the same period is around $2 trillion. Slok also said “In other words, the vast majority of the increase in the S&P500 has nothing to do with buybacks.†I think this is much more likely to reflect the truth about investment and international cash flows that the statement out of Charles Schwab.
Read it yourself at:
https://finance.yahoo.com/news/torsten-slok-david-bianco-stock-buybacks-share-repurchase-myth-120836246.html
John H
I forgot to add this, from the same source (above): “The bottom line is that the rally in the stock market since 2009 is real because it has been driven by earnings and not by buybacks,†Slok said.
John H
Janet Yellen was asked once again.”Doesn’t Low interest rates continue to hurt savers?” She replied basically the US economy comes first. Really ! who’s economy
The true facts about the US economy: 95% Percent of the Average Americans
1. American Households are making $6,400 Less annually since 2007
2. 50 million Americans are not working or 16% of the population.
3. 46 million Americans are collecting food stamps.
4. 9 million Americans are collecting disability checks
The Fed & Janet Yellen serves the Top 1% Elitist Americans. Their portfolios are up 200%.
The Federal Reserve destroying the Dollar and Americans Savings Since 1913
the panel showing the “f”, bird, “in” etc. that appear on the left side of the discussion are very annoying. Please see that a change is made….