{"id":7889,"date":"2015-05-06T07:05:29","date_gmt":"2015-05-06T12:05:29","guid":{"rendered":"http:\/\/olduvai.ca\/?p=7889"},"modified":"2015-05-06T07:05:29","modified_gmt":"2015-05-06T12:05:29","slug":"the-rich-get-richer-titanic-stock-bubble-fueled-by-buyback-blitz","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=7889","title":{"rendered":"The Rich Get Richer: Titanic Stock Bubble Fueled by Buyback Blitz"},"content":{"rendered":"<h3 class=\"subheadlinestyle\"><a href=\"http:\/\/www.counterpunch.org\/2015\/05\/06\/the-rich-get-richer\/\" target=\"_blank\">The Rich Get Richer:\u00a0Titanic Stock Bubble Fueled by Buyback Blitz<\/a><\/h3>\n<p>Why are stocks still flying-high when the smart money has\u00a0fled overseas\u00a0and the US economy has ground to a halt?<\/p>\n<p>According to Marketwatch:<\/p>\n<blockquote><p>\u201cFor the eighth week in a row, long-term mutual funds saw more money flowing out of U.S. stocks and into international stocks, according to the Investment Company Institute\u2026\u2026For the week ended April 22, U.S. stocks saw $3.4 billion in net outflows from long-term mutual funds\u2026For the year to date, net outflows for U.S. stocks are $13.79 billion, while inflows for international stocks are $41.12 billion.<\/p>\n<p>Those figures, however, don\u2019t count exchange-traded funds. In April alone, mutual funds and ETFs that focus on international stocks saw $31.8 billion in net inflows, while U.S.-focused funds and ETFs shed $15.4 billion, according to TrimTabs Investment Research.\u201d (\u201c<a href=\"http:\/\/www.marketwatch.com\/story\/why-us-stocks-are-near-highs-even-as-fund-investors-flee-2015-04-29\">Why U.S. stocks are near highs even as fund investors flee<\/a>\u201c, Marketwatch)<\/p><\/blockquote>\n<p>So if\u00a0retail investors are\u00a0moving their cash to\u00a0Europe and Japan\u00a0(to take advantage of QE), and the US economy is dead-in-the-water, (First Quarter GDP\u00a0checked in at\u00a0an abysmal 0.1 percent) then why are stocks still just two percent\u00a0off their peak?<\/p>\n<p>Answer:\u00a0Stock buybacks.<\/p>\n<p>The Fed\u2019s uber-accommodative monetary policy has created an environment in which corporate bosses can borrow boatloads of money at historic low rates in the bond market\u00a0which they then\u00a0use to purchase their own company\u2019s shares.\u00a0\u00a0When a company reduces the number of outstanding shares on the market, stock prices move higher\u00a0which provides\u00a0lavish rewards\u00a0for both\u00a0management and shareholders.\u00a0\u00a0Of course, goosing\u00a0prices adds nothing to the company\u2019s overall productivity or growth prospects, in fact, it undermines future earnings by adding more red ink to the balance sheet.\u00a0But these \u201cnegatives\u201d are never factored into the decision-making which focuses exclusively on short-term profits. Now get a load of this from Morgan Stanley via Zero Hedge:<\/p>\n<p>&nbsp;<\/p>\n<p>&#8230;click on the above link to read the rest of the article&#8230;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Rich Get Richer:\u00a0Titanic Stock Bubble Fueled by Buyback Blitz Why are stocks still flying-high when the smart money has\u00a0fled overseas\u00a0and the US economy has ground to a halt? According to Marketwatch: \u201cFor the eighth week in a row, long-term mutual funds saw more money flowing out of U.S. stocks and into international stocks, according [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[5185,303,305,5220,2151,534,3550,3054,1138,5221,841],"class_list":["post-7889","post","type-post","status-publish","format-standard","hentry","category-economics","tag-bond-market","tag-fed","tag-federal-reserve","tag-marketwatch","tag-monetary-easing","tag-monetary-policy","tag-rich","tag-stock-buybacks","tag-stock-market","tag-stock-prices","tag-us-economy"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/7889","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=7889"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/7889\/revisions"}],"predecessor-version":[{"id":7890,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/7889\/revisions\/7890"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=7889"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=7889"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=7889"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}