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Corporations were the biggest buyers of stocks under the beef market, but now they sell




A trader takes an order in Standard & Poor's 500 stock index option pits on the Chicago Board Options Exchange following the Federal Open Market Committee meeting on January 25, 2012 in Chicago, Illinois.

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Corporations have been the largest buyers of stock in the beef market. But they lower themselves, which can be a worrying indicator.

Generally, the public is regarded as "the public" on the stock markets, or viewed in a different way "stupid money". Retail investors tend to buy the most at the top and sell at least the bottom. Retail investors have not participated so much in the market, making it more difficult to use this amount as an indicator of emotion. But Ned Davis, senior investment strategist at Ned Davis Research, said there seems to be a new audience to look at: companies.

"Strong public sales should be bullish, but perhaps the amount of this cycle is companies," Davis wrote in a note to clients Wednesday. "The non-financial group volume has accumulated into shares with buybacks, mergers and acquisitions."

Davis pointed out that recent new business offers have jumped to the highest level this year. This includes large introductory public offers such as Uber and Lyft, as well as secondary offers from companies such as Tesla. Based on that, "maybe even the corporate audience is beginning to feel that the shares are exaggerated," Davis said.

Investors believe that it is a basic offer and demand equation. The demand for shares in the form of buybacks is decreasing, while the supply of shares through listed bonds and other issues increases. When the supply exceeds the demand for a product, the price usually falls and the shares are no different, they argue.

However, it summarizes buybacks showing weakness – an indication that the companies are less optimistic about the future. According to Larry McDonald, editor of The Bear Traps Report, a sharp decline in investment means companies will also buy fewer own shares. The latest quarterly investments for S & P 500 came at the lowest since the fourth quarter of 2017, which suggests a decline in share purchases.

"In our opinion, the long-standing trade war (and the uncertainty it brings) paralyzed the finance directors and their ability to invest for the future," he said.

McDonald pointed to the trust, earnings, and export of business "everything rolls over considerably." Buybacks are often driven by corporate debt. To buy back your own stock, companies lend money as a financing strategy. According to McDonald, over 50% of debt issuance in the last decade has been used to buy back shares.

"We have begun to see cracks in debt issuance. This permeates the company's repurchase capability," McDonald said.

Instead of high-grade, but risky corporate debt or junk mail, investors are flipping for safer alternatives like US Treasurys. Trading warlords sent 10-year government bond rates, moving in the opposite direction of prices, to their lowest level since September 2017 on Wednesday. It triggered concerns about the economic outlook, and sent stocks down as much as 400 points. Increasing trade tensions in China-US. trade also weighted on markets.

"I'm convinced that capital markets are going to shut down meaningfully for a long time," McDonald said.



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