...$500 TRILLION in synthetic securities...
Actually, you're wrong. The latest number from the Securities Manufacturing Institute is now over $517T.
Posted on 04/26/2016 4:11:28 AM PDT by expat_panama
Most people assume what has kept the market afloat this year after sinking 11% at the start of the year was a mixture of better news out of China, oil prices stabilizing, and indications that the Fed won’t raise rates as much as thought. But the real thing bouying the market could be something else: Stock buybacks.
“Corporate repurchases are the main source of net demand for US stocks,” a team of Goldman Sachs analysts led by David Kostin noted in report out on Friday. Demand stemming from stock buybacks will help push up share prices—boosting the S&P 500 to a flat return of 2100 by the end of 2016 as the markets contend with weak growth and a messy earnings outlook, according to the Goldman analysts.
Stock buybacks, in which companies buy back their own stocks...
...price-to-earnings levels have escalated, investors need to review the data, and differentiate between the two, determining the proper multiple to pay for growth (via sales, cost cuttings, and efficiencies) and the proper level for buyback growth,” Silverblatt wrote.
The stock buybacks come at a time when major investors including individuals, foreign investors, and pension funds have been selling off their shares, according to a note from Goldman Sachs, amid market volatility and weak oil prices. The S&P 500 however has gained around 2% year to date.
Both Apple AAPL -0.57% And GE GE -0.26% announced multiyear $50 billion buyback programs in 2015, of which there’s about 60% of 93% to complete respectively, while Walmart Stores WMT 1.09% authorized a $20 billion buyback program, of which there still 88% left to complete. That leaves about $210 billion in unused share buybacks for the future, Goldman Sachs reported.
(Excerpt) Read more at fortune.com ...
Heard of it via FR, never read it. thanks for the link
The market is up because of an expectation of low equivalent returns from interest bearing investments.
Heard of it via FR, never read it. thanks for the link
That's the 'easy' version the pundits can grasp, but there's a bit more to it.
When interest rates go up stock prices do in fact go down but not because of the comic-book story we get from the drive-bys that investors are moving money from stocks to bonds. In fact when rates go up investors dump bonds too. The reasoning is that money is going to be tight, companies will wind back and become 'worth-less', so those companies' shares become 'worth-less'. Their bonds too.
That's what Marx once said about all factory owners, managers, clergy, and even parents for that matter.
Today's Marxists are now saying that all advertising is a waste and a drag on the economy, others say we need to get rid of pro-sports, and your gripe is the so-called "big money boys". In the real world back on the Planet Earth, if you think my boys aren't providing a service then you don't have to buy it from 'em. An awful lot of us do however and we're folks that profit nicely and are most grateful.
Yeah we seem to be hearing that phrase a lot lately. Maybe it's because the right doesn't want to see anything good happening w/ O being in office these days, and that the left doesn't want anything good happening on Wall Street. Ever.
In the mean time you and I can deal with the fact that things are what they are and reality matters.
I'm not sure where the Marxism schtick is coming from, but it's evidence of a poor argument.
I'm glad you're making money and I hope no one pulls the rug out from under you.
i am NOT WORRIED about the “market”
I AM WORRIED about the $500 TRILLION in synthetic securities like derivatives, swaps, offsets and other bankster vegas style bets beyond “hedging”......
i could care less if it weren’t for “TOO BIG TO FAIL”
USA GDP $14-15 trillion per year
HOW DOES THAT STACK UP AGAINST $500 trillion the banksters are gambling with backed up by YOU .... THE TAXPAYER GUARANTEEING IT ALL
oh i know you got your $1/2 MILLION BONUS CHECK...and profit sharing and stock options..... RIGHT and your multi million dollar salary and perks like the GS JPM C BAC WFC UBS execs and the hedgefunds and investment advisors etc... right??
didn’t you ..... of course NOT.... but you did bail the banksters out in 2008 and you will do it again, in the event of another collapse.... and DODD FRANK only made it more likely to happen.... not to mention obozo messing with the saudis... and the $21 trillion debt... and counting...
keeping in mind that russia chna iran and perhaps now saudi arabia perhaps turkey already want to cut loose from the petro dollar... and if the petro dollar collapses then you can start using dollars as toilet paper .... these guys been stocking up on GOLD.... WHY??
but dont fret.... the IMF and the FED and the BIG GOVERNMENT cabal have your BEST interests at heart and are PLANNING FOR YOUR WELFARE...... right?? Like doing awy ith currency and using electronic funds... Do you like dealing with the DMV.... well envision dealing with a hack on your electronic fundsa nd calling the treasury.... you and 350 million other callers...
up down sideways goes the market.... but the real threat is the one 99% of the FOLKS dont even know about.... the $500 trillion derivatives etc...floating around out there, only as good as the counterparties involved and we saw how well that worked out with AIG... that is what has me concerned.......
Always trying to complicate things. It’s simple, when interest rates are low, bond and stock prices are going to be high. Whichever one is considered to be too high relative to risk will be sold, and funds put into the other.
...$500 TRILLION in synthetic securities...
Actually, you're wrong. The latest number from the Securities Manufacturing Institute is now over $517T.
That's great! We can even say you're a better person than I am if you want but it won't change much outside this particular thread. We'll still see how when a CEO of a company w/ say, has a net worth of $100B, and he directs the CFO to borrow $50B and buy back half the shares, and the company ends up w/ the remaining half of the shareholders owning twice the % of a company w/ a net worth of $50B --half as much.
Buy-backs themselves don't cause change (aka "manipulate!!!!") the share price. They do however often precede an expected rise in the share price and it's a form of (legal) insider trading that ends up improving the company's finacial position.
And a rigged casino at that. So much collusion and corruption between business and government it’s a sad joke to listen to the bureaucrats trot out and prattle how they are keeping an eye on the market, fascism made acceptable, American style. Were I not mandated by my companies 401K I wouldn’t touch it.
Yes, years ago business professors (often with their own private-sector gigs) described how the psychology of the market defied logic; people tended to buy as it soared and sell as if fell - almost guaranteeing they’d lose their shirts.
My $.02 was just about the relationship of the markets to average Americans; the billions of people in Asia have much more impact than the few hundred million here.
Right; unless people didn’t learn from 1929, when it boils down to it, it is just paper.
Been thinking that this can in fact happen temporarily and would involve breaking a lot of laws. Maybe we want to say that you don't know for sure this has actually happened. The reason is that if you do know for sure it's happened and you haven't reported it then as I understand it you'd also be committing a felony as an accessory after the fact.
Thanks for accusing me of being a felon though; nice touch.
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