04-12-2016, 10:44 PM
More than that, though, is that investors are tiring of companies devoting so much money toward buybacks and dividends and comparatively small levels to capital spending. Dividends and buybacks combined in 2015 for a record $954.6 billion, according to Howard Silverblatt, senior index analyst at S&P Dow Jones Indices. In its latest Global Fund Manager Survey, Bank of America Merrill Lynch found that the level of market professionals who believe companies are spending too much on payouts — "fatigue with financial engineering," as the survey put it — has reached its highest level since the bull market began in March 2009.
Buyback fuel for the bull market is losing steam
Buybacks are becoming an increasingly inefficient way to boost share prices, with individual companies that devote a large share of buybacks underperforming their peers over the past year.Caterpillar, for instance, has been a company aggressively buying back shares but with little to show performance-wise. The company has spent more than $8 billion buying back shares over the past three years, a time during which its stock has declined more than 12 percent. More broadly, an exchange-traded fund that tracks the companies that commit the most to buybacks has performed poorly. The SPDR S&P 500 Buyback fund has lost about 9 percent over the past year, a time during which the S&P 500 index has been down about 1.2 percent.
Buyback fuel for the bull market is losing steam
Stimulus is building up. The bonanza from cheap oil – worth $1,000 a year for average households, says Mrs Yellen – is accumulating in bank accounts and has yet to be spent. The fiscal austerity of recent years is giving way to a net fiscal boost worth 0.5pc of GDP in 2016 as state and local governments stoke spending.
The Yellen Fed risks Faustian pact with inflation
The U.K. referendum on its membership of the European Union is the greatest risk facing the region, the vice-chair of financial services firm Allianz Global Investors told CNBC. Elizabeth Corley, the global CEO at Allianz Global Investors, said that it was a "very, very significant issue" regardless of the outcome of the vote on June 23.
THIS is biggest risk facing Europe: Allianz exec
The world economy is beset by feeble growth and a recovery that is “weak, uneven and in danger of stalling yet again,” according to the latest Brookings Institution-Financial Times tracking index.