Have you ever wondered what in the world is keeping this incredibly overpriced and highly speculative market at today’s levels?

Here is one possible explanation…..

Huge New Prop under the Stock Market is a One-Time Affair

That $173.6 billion in share repurchase plans includes the record-breaking mega-announcement from Apple that it would buy back $100 billion of its own shares. Here are the top five that account for $134.3 billion, or 77% of the total:

• Apple: $100 billion
• Micron: $10 billion
• Qualcomm: $8.8 billion
• Adobe: $8.0 billion
• T-Mobile: $7.5 billion

To put that May total of $173.6 billion – these are just announcements of planned repurchases sometime in the future that may never fully transpire – into perspective: In Q1, total actual share buybacks reported by the S&P 500 companies amounted to $178 billion, an all-time record. That averages out to “only” $59.3 billion a month on average, compared to the announcements in May of $173.6 billion.

The author goes on…..

The note TrimTabs provided as to why these share buybacks are suddenly blowing off the charts is key: The corporate tax law has changed concerning the “repatriation” of “overseas cash” that represents many years of untaxed profits invested mostly in US Treasuries and corporate bonds. This “repatriation” is a one-time affair. Once this limited “overseas cash” has been “repatriated” and spent on share buybacks, dividends, and executive bonuses, it’s gone. And then what?

These immensely overvalued shares will then have to find real buyers.

But for now, companies are selling their Treasuries and corporate bonds, which have taken a beating recently, and are using the proceeds, while they last, to buy back their own shares at historically overvalued prices. This gives the market, that has been struggling since January 26, some crash insurance, but with an expiration date.

And there you go boys and girls.

As I have said so many times before, history teaches us that corporates always behave as retail investors do. That is, they buy at the top and sell at the bottom. In that regard their present stupidity makes perfect sense.

I will bet you my left kidney that their decision to purchase own stocks at today’s valuation levels will look very foolish when the stock market finally cracks and drops 50%+. If you would like to find out exactly when that will happen, please Click Here

6/5/2018 – A mixed day with the Dow Jones down 14 points (-0.06%) and the Nasdaq up 31 points (+0.41%)

How crazy is today’s stock market bubble?

Not crazy at all if you listen to the bulls. According to many of them the stock market is undervalued and tech blue chip companies like Apple and Microsoft are providing a once in a life time buying opportunity.

Really?

Let’s explore this notion a little by looking at Microsoft and their bizarre $3 Billion GitHum acquisition offer.  Here is a very good look at the subject matter.

TECH BUBBLE 2.0

Microsoft`s recent purchase of GitHub for for 7.5 Billion in stock tells us a couple of things about financial markets right now. Namely, the number being discussed for GitHub was around 3 Billion, and Microsoft overpaid by 4.5 Billion. But did they, as Microsoft which is sitting at $102 a share with a p/e of 83, yes an 80 p/e handle depending on how you calculate this metric, that is how big a bubble there is right now in these blue chip technology stocks. Microsoft is the same stodgy mature technology company that traded in a range of $22 a share to $32 a share on a good quarter for the longest time. The only thing that changed is the ECB buying 90 Billion Euros of assets each month and the Swiss National Bank not wanting the Swiss Franc to appreciate (get too strong) versus the Euro, so they created money out of thin air in terms of Swiss Francs, sold these to artificially weaken their currency, thus buying US Dollars, and then happily buying Microsoft stock, and Apple, etc., etc.

In fact, every technology company should buy anyone they want to acquire right now because all their shares are going to be dropping precipitously over the next three years as the technology 2.0 market crash begins. Artificially high paper gains never last and high P/E Ratios for declining revenue growth companies like Microsoft, Apple, Intel, Cisco and the like all revert back to historical norms. Your stock prices are all artificially high due to the Central Bank Liquidity Punchbowl Bonanza so overpaying for companies with future worthless stock is a good idea, and essentially a freeroll.

We couldn’t agree more. 

What you seeing today is distortion in nearly all asset classes to the 10th degree. Thanks to the FED and their insane monetary policies. No secret there.

The real trick in knowing when this massive speculative house of cards will come crashing down. If you would like to get that information based on our timing and mathematical work, please CLICK HERE

As Mr. Trump himself says, this is THE BEST job market and unemployment figure in the history of the Union. I guess it would be pointless to point out that Mr. Trump had very little to do with the above as his predecessor and the FED were basically responsible for bringing the unemployment down from over 10% in 2009-10 to what it is today. In other words, Mr. Trump is jumping on a massive freight train speeding down and claiming responsibility.

We are also very much aware of the numerous problems associated with the official unemployment number.  Such as 100+ Million Americans being out of a labor force ( a record), our middle class collapsing and 78 Million Americans Hustling Dimes. 

As much as the above stings, history suggests things are about to get a lot worse. You see, jobs are a lagging indicator. The unemployment rate always bottoms when the stock market peaks. That is to say, instead of cheering this number investors should approach it with concern.

A positive day with the Dow Jones up 178 points (+0.72%) and the Nasdaq up 52 points (+0.69%)

Today’s analytical environment is anything but simple. Both bulls and bears can very well argue their cases without ever coming close to any sort of a consensus.

For instance, while the Dow/S&P remain range bound and far from their all time highs, the Russell/Nasdaq are either hitting or near their respective all time highs.

Undoubtedly followed by an uncomfortable Booyyyaaahhh screams coming out of Jim Cramer’s CNBC studio.

At the same time the valuations are mind boggling. Forget about Shiller’s Adjusted S&P P/E of 33 (arguably the highest in history), the Russell 2000 is selling at 100+ times earnings. Much more, about 150+ if we take out certain accounting gimmicks.

Paging Warren Buffett…….is that a good value? 

We pray that Mr. Buffett does not see this silly question as his older hearth might not be able to take it, but the real concern remains.

No matter what the bulls say we are in a massive bubble of historic proportions. When the history books are written future generations of investors will laugh at fools and robo-machines paying 100+ time highly speculative earnings.

Further, the divergences we are seeing between highly speculative indices and their more established cousins are too be expected as the specs do tend to peak after major indices put in their respective tops.

Perhaps no amount of financial analysis can summarize today’s environment better than the picture below.

If you would like to find out what happens next and most importantly WHEN, please CLICK HERE