explain it. It is concerning now how poorly those   Anheuser Busch, CVS and Altria were all masters of the trade. The relationship between low bond yields, increased borrowing to fund buybacks and equity performances is integral as to why equities have been strong. If the ability for corporates to borrow deteriorates, the virtuous chain will break.

The World Gold Council observed that the 2018 buybacks and dividend payouts have taken the total payback spree to nearly $8 trillion dollars since 2009. They observed that this is more than enough to buy all the major companies in the UK, France, Germany,  size of Russia’s economic output and similar to the total amount of gold ever mined throughout history.  I did enjoy visiting a life sized Buddha statue in solid gold, that had a donations box positioned in front of it, it seemed symptomatic of where the retail public sits now.

While America’s corporate boards splash the buyback cash, directors of those same boards, are heading for the door, resignations are at the fastest rate in 15 years; even more so than in 2008. They are awfully clever like that. Insiders, who know exactly how their companies are doing sold more stock in February evidently than they have in a decade.

The Duke CFO sentiment survey states that 48.6% of US CFO’s believe the US will enter a recession by the end of 2019, 82% say by the end of 2019. Are they leaving or selling?!

 report a year on year fall in earnings of roughly 2.7%,   was a year when the S&P went sideways, with a few slips. At the same time Ray Dalio has suggested that we have seen the end to the great debt supercycle. It is that which has kindly donated all the money for those buybacks.

Some optimists might rebut these fears by rejoicing in the end of the FOMC tightening cycle (at least they raised rates a bit to be able to stop, most others  more often than not, a prelude to the recession the insiders are so sure is coming. Declines in retail sales are normally a good early indicator. Credit card debt for January and February was severely ugly. If one   curve inversions is now 45%, this has never been a good level for equity markets.

According to reports, about 75% of the S&P 500 will, by mid-March, be in their black out period where they are not allowed to buy back stock - or are severely restricted in how much they can do.

 impact) is insider selling. This is always a quandary and a distasteful one. As corporates buy back their shares, directors sell theirs. Twas ever thus.

Andy Ash E:

5 | ADMISI - The Ghost In The Machine | March/April 2019

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