According to the Wall Street Journal, corporate share buybacks have added a net of $4 trillion to the U.S stock market since the start of 2009. Contributions from elsewhere? They net out to ZERO. What that means is, since the end of the Great Recession, the only net...

They call 'em, "Fallen Angels." They're bonds that the credit agencies demote from investment grade (IG) to high yield (HY). Unfortunately, there's nothing angelic about a wave of downgrades happening all at once. And that's what transpires in recessions. For example,...

The financial media would like you to believe that COVID-19 is the sole reason for economic hardship and financial market losses. Unfortunately, few outlets have been willing to dig deeper beneath the surface. For instance, before corona was a "thing," consumer...

It has been 20 years since the tech bubble burst. And it has been 12 year since the Bear Stearns bailout ushered in the Great Financial Crisis of 2008. Lost in the shuffle? Long-term investing results. Over 20 years, "risk-free" Treasury bonds have handily...

Quant funds, those that rely on algorithmic or systematically programmed investment approaches, account for roughly 25% of all all U.S. stock trades. Some estimates place that percentage closer to 50%. Either way, the quant fund impact is substantial. It follows that...

I have never quite understood the purpose of year-end price targets for the stock market. Every bank issues them. And each year, all of the banks offer eternally optimistic views on how the 365-day period will play out. (There's never a bear in the picnic basket!)...

U.S. investors tend to think in terms of what is happening stateside. Yet many of them have a fair amount of overseas exposure. Take the popular Vanguard Target Retirement Fund 2030 (VTHRX) with $40,000,000,000 under management. That's $40 billion with a "B." VTHRX...

Popular media personalities wanted you to believe that this bear market would be "stick-saved" by the Q4-2018 bottom. Yet hope is not a bear market survival strategy. Even the idea that we'd see a miracle turnaround in 2020 the way that we did during Christmas in 2018...

Yes, I knew that the Federal Reserve had blown a massive stock bubble. And yes, I started this blog to bring more attention to the dangers of central bank efforts to create a wealth effect. Bubble specifics notwithstanding, I can't say that I anticipated the wealth...

What did the markets require for a Friday bounce? A trifecta in stimulus. The Fed announced its formal intention to print electronic credits to buy Treasuries all across the Treasury bond curve (a.k.a. "QE"). Congressional reps as well as White House spokespeople...

Remember the Tax Cuts and Jobs Act of 2017? Small- and mid-sized corporations should have used the extra money on capital expenditures and debt repayment. Instead, most chose to spend on stock share buybacks. Profitability hopes soared in 2017. And through the magic...

Theoretically, a strong consumer would be well-positioned to acquire a host of durable goods. They should be able to purchase everything from appliances to furniture, electronics to sporting goods, jewelry to medical equipment. Would it surprise you, then, that...

The 2020 stock bubble is in trouble. Here are several telltale signs: (1) The CBOE's VIX Volatility Index recently rocketed in ways that few could have imagined. (2) A zero-percent yielding precious metal has broken out to multi-year highs. (3) Due in large part to...

The 2020 stock bubble has yet another hole to patch... widening credit spreads. In particular, the spread between investment grade bonds via LQD and junk bonds via HYG are expanding. High yield credit (HYG) outperformed investment grade (LQD) up until the 3rd quarter...

Federal Reserve committee members still insist that the U.S. economy is in great shape. Do you believe them? Today, the central bank served up an emergency intra-meeting cut of 50 basis points. The new range for the overnight lending rate is 1.0%-1.25%. Blame it on...

During the "Great Financial Crisis" (GFC) of 2008, the S&P 500's dividend yield surpassed the 10-year Treasury yield. This relatively rare event has happened a few times since. In March of 2020, however, the S&P 500's dividend yield has started to...

Dow Theory has been a popular tool on Wall Street for 100-plus years. It considers two significant market indexes -- the Dow Jones Industrials Average (DJI) and the Dow Jones Transportation Average (DJT). Some theorists say that when "lower highs" are immediately...

Were you invested in a diversified basket of equities over the last two years? It may surprise some folks to learn that the NYSE Primary Exchange Index is actually down since January 2018. That's a long strange trip to nowhere.      

A mesmerizing jolt of leverage in late 1999 topped out in March 2000. That same month, the S&P 500 hit its all-time bubble peak. A similar surge in leverage began in 2006. Margin debt peaked a mere three months (July 2007) before the stock market's high water...

Venture capital is in free fall, down 51% in just eight months.  Otavio Costa notes that two of the barometer's components have nosedived in the last three months alone -- deal counts (-40%) and early financing (-54%).      

It happened in 1990. It happened in 2000. It happened in 2008. Each time that the New York Fed's Recession Probability Model cracked 30%, economic contraction occurred shortly thereafter.      

The Bloomberg U.S. Startups Barometer is a weekly indicator that tracks the well-being of the environment for private tech companies. The index peaked at 1545.32 on June 24, 2019. On February 10, 2020 it fell to 833.74. The Bloomberg Startups Barometer may only be...

Proof positive that the Fed manipulation of rate policy has done little for the typical American. Workers must put in nearly 130 hours to afford a single share of the S&P 500. Why is that significant? It’s approximately 3x more than it was just 10 years ago. In a...

A near-record stretch of calm has ignited options traders’ desire to buy speculative call options. Over the past 6 weeks, they’ve bought (to open) 70 million more contracts than they’ve sold (to close). According to Sentiment Trader’s data, there has never been...

This week, the yield on an index of double-B U.S. corporate bonds (junk) hit a record low of 3.47%. The vexatious combination of historically low yields and disturbingly weak credit protection on junk debt is a humongous warning sign.      

No price analog is flawless. That said, the similarity between 1999-2000 and 2019-2020 is rather disturbing.      

It looks like MAGA ate the stock market. No, not the Trump acronym, the other MAGA. Microsoft, Apple, Google and Amazon have soared beyond $5 Trillion in market capitalization. That's 17% of the S&P 500 in four stocks. Before the 2000 bubble burst, Cisco, Dell,...

Earnings and price. They're supposed to move together. The dramatic disconnect between the price of the Dow and forward estimates is beyond alarming.      

The Fed’s accommodative monetary policy produced substantial stock inflation, while growth in “real economy” prices has been subpar. Specifically, since the recovery began in 2009, wages have grown about 50% and nominal GDP has grown roughly 50%. In contrast, stocks...

If the consumer is as strong as many would like you to believe, should the SPDR S&P 500 (SPY) be outpacing the SPDR S&P Retail ETF (XRT) by 3000 basis point (30%) in two short years? E-commerce explains some of the discrepancy. And the erosion of...

Corporations should use generally accepted principles (GAAP) when reporting their earnings. Instead, they prefer to discuss "non-GAAP" earnings to make profits look better than they are. So what happens when you strip away the chicanery of non-GAAP to look at GAAP?...

During 2000’s tech bubble, the insanity was primarily contained to the info tech and communication services sectors. Dot.com. Digital. However, the notion that investors should pay any price imaginable for a piece of the dot-com pie had become entirely irrational....

The stock bubble peak in 2000 marked an unprecedented 128% overshooting of the trend. That was leaps and bounds worse than the price move above the trend in the bubbles of 1901 and 1929. For most of the 21st century, though, the Federal Reserve has done everything in...

As a result of several factors such as the rise of e-commerce, changing consumer behaviors and rising rents, shopping malls have been hit particularly hard over the last decade. The mall vacancy rate in the U.S. is now at an all-time high of 9.7%, according to Reis...

The S&P 500 clearly sits in the top 5% of historical valuations on at least eight different measures. Price-to-sales, price-to-book, 10-year P/E, EV-to-EBITDA, EV-to-Sales – it almost does not matter which metric you choose. They’re all flashing a cayenne pepper...

A heavily indebted country with debt-to-GDP north of 100%. That’s like making $100,000 per year while carrying a credit card balance of $100,000. Tack on an aging demographic that has been drawing down at an ever-increasing rate on social benefits. Cap it off with an...

The world's massive debt-to-GDP ratio is, in many ways, unimaginable. 322%! Countries with limited borrowing capabilities could face extraordinary hardships in meeting financial needs. And the refinancing risk? A total of more than $19 trillion of syndicated loans and...

Corporate debt as a percentage of GDP correlates with recessions and market tops. In every credit cycle, excessive leveraging leads to rapid deleveraging to restore balance sheets. Indeed, the last three recessions (as well as their corresponding stock declines)...

“Bubblicious” evidence is blindingly glaring when one examines the disconnect between S&P 500 stock prices and corporate profits. In the late 1990s, stocks rocketed (green line), even as profits had flatlined (red line). In the late 2010s? Same exact thing. The...

The total value of companies (Enterprise Value) in relation to profits (EBITDA) has surpassed the bubble peak from 2000. No stock bubble here?      

Consumers may drive 70% of U.S. economic growth (GDP). And consumers may be quite confident about the present-day economy. On the flip side, the difference between consumer expectations for the future and current consumer conditions is at levels seen just before...

Wall Street tells you to forget the manufacturing segment of the U.S. because we are primarily a consumer-oriented society. However, manufacturing downturns preceded both the 2001 recession as well as the 2008 recession. Equally important? Goods-producing corporations...

Money-losers. Those were the types of companies that came to the stock market during the late 1990s dot-com boom (and eventual bust). Same thing happened in 2019 as three-quarters of IPOs represented businesses with negative earnings.      

A little too parabolic. (Yeah, I really do think.) Parabolic moves for the tech sector have never ended well for the stock market. In the first chart, the yellow line show what transpired for the Nasdaq 100 as 2000 approached, as well as the aftermath. The red line...

The Federal Reserve has engineered a variety of asset bubbles by suppressing and manipulating borrowing costs. Leading up to the bursting of 2000’s stock bubble, household assets as a percentage of disposable personal income nearly reached 500%. In 2007’s real estate...

Back in 1999, General Electric (GE), Exxon Mobil (XOM), Microsoft (MSFT), Cisco (CSCO) and Wal-Mart (WMT) comprised the largest companies in the S&P 500. In 2019, the S&P 500’s “Top Five List” boasted a cornucopia of tech giants, including Facebook (FB),...

There have only been three times in U.S. history when stock valuations bounced three standard deviations off the lows. The 1920s, the 1990s and the 2010s. The 1920s ended with the 1929 stock crash and a four-year bear that eviscerated 90% of wealth. 90% losses....

Warren Buffett is mindful of the stock market’s extreme overvaluation. His holding company, Berkshire Hathaway (BRK.B) has a cash position that is 55% of the value of his portfolio holdings. That’s roughly $128 billion of $233 billion at last count. He hasn’t held...

Warren Buffett once described market-cap-to-GDP as “…probably the best single measure of where valuations stand at any given moment.” The Wilshire 5000 total stock market capitalization relative to gross domestic product (GDP) is HIGHER in January of 2020 than it was...