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Tag Archives: stock buybacks

When A Bond Bull Becomes A Raving Stock Bull

Over the last few years, I have continually battled the “bond bears” about calls for higher rates simply because rates were low.  Here is a short list of some of the more prominent calls for higher rates: Those are just a few, and certainly, there were many other calls for higher rates from every corner of Wall Street. One of the biggest issues with the predictions of rising 10-year bond yields, which started in earnest in 2013, is they have been consistently wrong. For a bit of history, you...

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The Fed’s Massive Debt for Equity Swap

“All assets are priced where they are today because of central banks. That’s modern finance — it’s not about psychology or flows anymore, it’s about what the central banks are going to do next.” – Mark Spitznagel Cause and Effect Rene Descartes, a 17th-century mathematician, asked the fundamental question of how causal power functions. He was interested in how things relate to each other in terms of causality and how the thought of an action gets translated into a physical action. The...

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Powell Channels Bernanke: “Subprime Debt Is Contained”

I recently discussed one of the biggest potential “flash points” for the financial markets today – corporate debt. What I find most fascinating is how quickly many dismiss the issue of corporate debt with the simple assumption of “it’s not the subprime mortgage market.” Correct, it’s not the subprime mortgage market. As I noted previously: “Combined, there is about $1.15 trillion in outstanding U.S. leveraged loans (this is effectively “subprime” corporate debt) — a record that is double the...

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Strike Three: The Next Bear Market Ends The Game

At the beginning of this year, I was at dinner with my wife. Sitting at the table next to us, was a young financial advisor, who was probably in his mid-30’s, meeting with his client who appeared to be in his 60’s. Of course, the market had just experienced a 20% correction from the previous peak and the client was obviously concerned about his portfolio. “Don’t worry, there is always volatility in the market, but as you can see, even bear markets are mild and on average the market returns 8%...

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What Could Go Wrong? The Fed’s Warns On Corporate Debt

“So, if the housing market isn’t going to affect the economy, and low interest rates are now a permanent fixture in our society, and there is NO risk in doing anything because we can financially engineer our way out it – then why are all these companies building up departments betting on what could be the biggest crash the world has ever seen? What is more evident is what isn’t being said. Banks aren’t saying “we are gearing up just in case something bad happens.” Quite the contrary – they...

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The Great Stock Buyback Debate

I recently wrote about stock buybacks in our weekly newsletter. However, a recent report from Axios noted that for 2019, IT companies are again on pace to spend the most on stock buybacks this year, as the total looks set to pass 2018’s $1.085 trillion record total. “By the numbers: Companies so far have spent $272 billion on buybacks, data compiled by Mike Schoonover, COO of Catalyst Funds, for Axios shows. Between the lines: The amount of spending on buybacks announced by companies in the...

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Technically Speaking: A Warning About Chasing This Bull Market

This past weekend, we discussed the breakout of the markets to all-time highs. The question I asked this past weekend was simply; “The bull market is back, but can it stay?” When I was growing up my father, probably much like yours, had pearls of wisdom that he would drop along the way. It wasn’t until much later in life that I learned that such knowledge did not come from books, but through experience. One of my favorite pieces of “wisdom” was: “Exactly how many warnings do need before you...

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The Market’s Misread Of The Fed’s Minutes

Last week, the Federal Reserve released their March FOMC meeting minutes. Following the release, the markets surged higher as the initial reading by the markets was “the Fed is done hiking rates.” As the Wall Street Journal reported in Fed Minutes: Officials See Little Need to Change Rates This Year. ‘Minutes of the March meeting released Wednesday showed officials see little reason to continue raising rates due to greater risks to the U.S. economy from the global growth slowdown and muted...

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Fundamentally Speaking: Earnings Growth Much Weaker Than Advertised

With analysts once again hoping for a surge in earnings in the months ahead, along with an economic revival, it is worth noting this has always been the case. Currently, there are few, if any, Wall Street analysts expecting a recession currently, and many are certain of a forthcoming economic growth cycle. Yet, at this time, there are few catalysts supportive of such a resurgence. The Fed isn’t hiking rates, but they aren’t reducing them either. The Fed isn’t reducing their balance sheet...

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The Bond Bull Market

Last year, I wrote an article entitled “The Upcoming Bond Bull Market,” which, at the time, was pushing against the mainstream consensus which was predicting rates could only go higher. I am updating that article with the latest data points as the overall thesis of “why” we have remained bullish on bonds since 2013 remains intact. As we said at the time as yields were hitting some of the highest levels seen in the last decade: “The worse things seem, the better the opportunities are for...

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