US Stock-Bond Ratio Reaching Extreme

This post is taken from our weekly report dated January 23rd 2018. We are seeing a rotation into equities and out of bonds at the start of this year. BAML, using EPFR data, noted that equity fund flows over the past 4 weeks are up to $58 billion, the largest ever, and...

Buyback Boom Peaked, Debt Hangover Ahead

Over the past four years, companies that have bought back their stock have outperformed the market significantly. Most companies did not finance the buybacks with internal cash flow and borrowed at low rates to buy their own shares. The cost of debt is mispriced, so...

Earnings to weigh on US equities

Most of the talk on US equities is still centered around whether and when the Fed will start scaling back its asset purchases (let alone start raising rates). The point here is of course that if the Fed decides to remove the punchbowl, equities will take a dim view....