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Caleb Lawrence – KPIG-KPYG Radio – Share the Wealth – February 7, 2017

The major averages enter the final hour about even on another lackluster session with the markets seemingly unable to find direction. CoreLogic reports that home prices advanced 7.2% in 2016 closing on the early 2006 high, in the face of painful valuations driven by flippers who seem to have even more enthusiasm now than they did in 2006.

The December trade deficit slipped 1.5 billion to 44.3 billion as exports increased 5 billion to 190.7 billion and imports advanced 3.6 billion to 235 billion. Despite increasing rig counts the oil deficit continues to grow while trade in general looks to recover its 2015 losses.

All sorts of ideas have been floated to stimulate the economy, increasing the size of required minimum distributions, deregulation when we don’t bother enforcing the rules we have, and the real kicker, a corporate tax amnesty designed to get corporations to repatriate their foreign earnings so that they will invest in plant and equipment creating jobs, tax revenues and everything will be great again. Lost in the shuffle is the reality that corporations in the last few years have not only used nearly every Dollar they earned to buy back their shares they borrowed that much and more again to do the same thing. This is the most inefficient use of business capital, the fact that they have chosen this path instead of business investment even when the average age of corporate assets is painfully high and very likely part of the reason why productivity gains have faltered of late is because management figures this is the best use of capital with respect to returning value to shareholders.

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