The Dow and S&P disconnect from reality continues widening as stocks abnormally move higher to the amusement of US corporations. Here’s how.
Companies continue selling their stocks and repurchasing them to boost company earnings per share making earnings appear bigger than they actually are. S&P 500 companies purchased $162.38 billion of shares in the first quarter of 2016. This total equates to the second largest quarter of repurchases on record. The fact is corporate earnings have been dead in the water since 2014. What we see taking place are earnings that look good on paper but hold no validity in the fiscal growth of a company.
Stock values in the S&P have ballooned on average 61% from their historic average and the gap is widening every day. It’s interesting to note that stocks have only been more expensive on three occasions: the Great Depression, the Dot Com bubble and the months leading up to the 2008 housing crisis.
Whether it be quantitative easing, central bank purchases, or corporate buybacks, these programs are all we have left to support a ponzi scheme that has collapsed before our very eyes. Just as Washington and the Fed tout an “improving economy,” Wall Street execs tout earnings success across the board.
You see, stock wealth is only real to those who get out in time leaving the herds to suffer catastrophic losses as always.
Prepare for what’s here.
Alert!! Silver sales continue hitting record demand as silver holds gains of 45% in 2016, outperforming gold. We remain in a perfect environment to capitalize on these lows prices!