After opening lower the major averages enter the final hour with small gains. The Chinese vow to fight Trump to the bitter end over the latest tariff threats, launching an unusual and personal attack on his character in the media. Once again, the president demonstrates that it’s about alienation and estrangement.
Factset Research reports that with 81% of the Standard and Poors 500 companies having reported second quarter earnings so far. 80% have reported earnings above estimates, with an average beat rate of 4.9%. 74% of companies are beating sales estimates by an average of 1.4%. Solid numbers to be sure, but when record levels of stock have and are being bought back it’s easy to produce earnings and revenue per share numbers like these.
Indeed it seems we continue to follow the Japanese model who pursued similar stock buyback strategies prior to their bust in the early 90’s. With buybacks on track to more than double last year’s pace despite high and rising corporate debt levels and interest rates. You have to wonder just how far this can go. As like the hordes of Chinese buyers for real estate, stock buybacks have largely become the markets, should either falter the results could be catastrophic.
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