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Share Buybacks

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The Market Bull – November 27, 2018

Volatile early trade gave way to a mixed close, on little real news. Trump figures Americans can easily handle a 10% tariff driven increase in prices, based on income and cost of living data I’m not so sure. Britain has a Brexit deal with the EU, but it is unlikely to pass at home. More warnings about corporate debt levels and the reckless process of debt funded corporate share buybacks. Fresh off its corporate tax cuts, hearings are discussed to determine whether or not GM bit the hand that fed it following the announcement that it would close 8 plants and layoff some 14,700 workers. What’s really surprising here is that everyone acts surprised, particularly the government, debt funded corporate share buy backs have been going on for years and while beneficial in the short-term amount to corporate financial suicide long term. Something companies are just now starting to figure out in the face of rising interest rates and falling share prices as interest is required to be paid on a debt whose proceeds were used to make a losing investment.

Case/Schiller reports that home prices gained 5.5% in September from a year ago and .1% for the month using its National Index. Of the 20 cites that make up the series the top 3 for the month include Las Vegas +.9%, San Francisco +.6% and Chicago +.5%. At the other end of the scale San Diego fell .1% while Miami and Los Angeles were tied at +.1% each.

Black Knight reports that mortgage delinquencies reversed course in October falling 8.2%. The number of delinquent and foreclosed properties fell .37% to 4.12% for the month.

Standard and Poors 500 Index closed at: 2,682.20 up 8.75
NASDAQ finished the day: 7,082.70 down .85
Gold ended trading at: $1,213.50 down $8.90

This is Caleb Lawrence Registered Investment Adviser I can be reached directly 831-334-5318 or stop by my office 5321 Scotts Valley Drive and Willis Road in the Scotts Valley Plaza, Suite 202, Scotts Valley, Ca, 95066.

Additional writings, and other entries are also available on my Blog at www.clinvestments.com

Advisory services offered through Caleb Lawrence Registered Investment Adviser Inc.


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