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 buyers of stock were corporations. They borrowed in the debt markets to pump up their stock prices.
All of the other sources? Insurers, mutual funds, broker dealers, pensions, hedge funds, foreign buyers, households? Net nada.
Now, however, the greatest source for stock demand is disappearing. According to Goldman Sachs, share buybacks will be cut in half in 2020.
Not only is there going to be significantly less stock buying demand from corporations, but their earnings per share (EPS) will look less rosy as a result. Guggenheim sees EPS falling 36% for the S&P 500 in 2020 alone.
Can one square any of this data with the S&P 500 trading at 2660? A mere 22% off 2020 stock bubble highs? Alas, investors would be wise to prepare for the next leg down.