Corporate Stock Buy-backs Rise 59% in First Quarter

Excerpt from Louis Navellier's Marketmail - 4/16/2019

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Even though the S&P 500 is off to its strongest start in almost a decade, Lipper reported that stock mutual funds had outflows of $39.1 billion in the first quarter. Some of these outflows could have been attributable to ETFs capturing more market share, but another major reason for the market’s strength seems to be the fact that companies in the S&P 500 repurchased $227 billion of their outstanding shares in the first quarter, according to FactSet. In the first quarter of 2018, S&P 500 companies repurchased $143 billion, so stock buy-backs soared 59% last quarter, due in part to extremely low interest rates.

In this ultra-low interest rate environment, the S&P 500’s dividend yield of approximately 1.85% remains super-attractive. The S&P 500 is up strongly this year despite low earnings projections, but my favorite economist, Ed Yardeni, pointed out last week that many institutional investors may be looking beyond the first quarter’s lackluster earnings forecasts, since first-quarter sales growth is expected to be strong and earnings growth for the second-half of this year and into next year is anticipated to be relatively strong. 

Frankly, the analyst community has been so aggressive in cutting their first-quarter earnings estimates that we could be on the verge of another round of positive operating earnings surprises in the coming weeks.

In This Issue of Marketmail (Click Here to Read)

Bryan Perry opens by saying the market sees a lot of good news beyond the current growth malaise story, including strong tech growth over the next five years. Gary Alexander offers part 2 of his story on how the press misuses statistics in their effort to scare (even misinform) the general public, to increase ratings. Ivan Martchev revisits the currency markets to weigh the latest dollar strength against the euro and some submerging “emerging” market currencies. Jason Bodner covers the growth sectors that have led this recovery, with a special focus on why the Semiconductors are leading the way. Then, I’ll conclude with a look at the latest misguided QE policies in Europe and some misleading inflation statistics just released.

Income Mail: Markets are Levitating Amid All the Static

     By Bryan Perry

High-Tech REITs Offer Strong Growth and Juicy Yields

Growth Mail: How Partisans Misuse Statistics to Try to Mislead Us

     By Gary Alexander

Five Examples of How to Spot the Misuse of Statistics

Global Mail: The Trade-Weighted U.S. Dollar is Headed to All-Time Highs

     By Ivan Martchev

The Trade Deal’s Impact on the Dollar and Other Currencies 

Sector Spotlight: Tune Out the Noise, Tune into the Key Statistics

     By Jason Bodner

Why Software and Semiconductors are Leading the Charge

A Look Ahead: Negative Rates in Europe and Japan are Causing Capital Flight

     By Louis Navellier

Inflation Rates Seem High but are Skewed by an Energy Price Surge