The bull market’s biggest driver is falling—fast…
Bloomberg reports U.S. share buybacks dropped 38% in 2016. That’s the steepest drop since the depths of the Great Recession in 2009.
And that’s not the only thing falling…
Profits have dropped for the fourth straight quarter. That’s led to a seven-year high in the number of companies slashing their dividend payments.
It comes at the same time capital expenditures dropped 5.9% on the quarter—again, the highest since 2009.
As we noted here, companies buying back their own shares have powered the S&P 500 higher over the second-longest bull market in history. Now it appears to be stalling out…
Bottom line: We’re entering a traditional period of seasonal market weakness (May through October). When combined with a steep drop in buyback activity… the markets have a tenuous floor beneath them. Tom’s advice to play “maximum defense” remains the order of the day. Be sure you’re following PBRG’s risk-management protocol to the letter.
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