Good morning. Yesterdays grinding session ended with the market closing basically flat. The consolidation continues.
The market is still digesting a world where Central Banks are putting their feet back on the asset price accelerator with stocks right near all time record highs. Imagine that! Who would have thought that the Central Banks, after opening the Pandoras Box in 2008/2009 would want to continue inflating asset prices? And who would have thought the same people who failed trying to fight this market through 3 rounds of QE and record low interest rates are saying that we are going to crash yet again... in the face of Central Banks cutting rates and ramping up QE?
I think that is great news. When everyone is in agreement that stock prices are going to keep heading higher.... I think that will be about as good as any indicator that the market is going lower. However, I'll also be watching for this ---->> Time To Sell?
For now this market continues to feed on the negatives. And despite calls for pending market doom, I think its going to new record highs yet again.
Somewhat surprising, and a little concerning, from my perspective, is that share buybacks have fallen in each of the first two quarters this year.
...and rather dramatically so.
Share buybacks and passive investing are two of the more important drivers of this market. If we lose the support of the share buybacks... who is left to buy? LOL!
The good news is, with the FED making two cuts in its last two meetings since Quarter 2 ended, we are already seeing corporations upping their sharebuybacks. Just the last few trading days the likes of American Express and Target have come out with brand new shareholder enrichment programs.
With that being said, I think their is a good chance we see those record highs comes again over the short term. Low interest rates are here to stay... for a long time.... and while it signals a low growth world, it will continue to aid the inflation of risky assets.
