Tuesday, August 16, 2016

Today's links

1--Who's Buying Stocks???  With $128 Billion In Equity Outflows, Barclays Asks "Who's Buying Stocks" And Gives An Answer


The biggest buyers of equities are corporates themselves with S&P 500 net buybacks rising to $500bn over the last four quarters from $375bn in 2013. To put that into perspective, total inflows into equity MFs and ETFs were $159bn in 2013. With about $1tr of dividends being paid out globally, reinvested dividends are also a key source of flow, particularly outside the US where buybacks are less popular. Reinvested dividend payments rose in early August. The drop in IPOs YTD (~50%) and the continuation of M&A have also been supportive from a demand-supply perspective.

 

Based on those S&P 500 companies that have reported buyback data for Q2, gross buybacks fell by $22bn (-15%) from Q1 to Q2 and net repurchases declined by $11bn (-10%) (Figure 16). For the first time since 2012, more S&P 500 companies reduced the amount of buybacks in Q2 than increased the size (Figure 17). However, this followed a strong Q1 when companies seemingly upped repurchases during the selloff. Trailing four quarter buybacks remain stable. We would expect flat to mildly lower growth in Q3 as weak comps roll off. As a percentage of market cap, net buybacks in Q2 are 1.5% annualized, about the same level of 2012-2014 as buybacks have kept pace with market value.


2--Billionaire investors turn bearish as US stocks hit record highs


Several big-name hedge fund investors soured on U.S. stocks in the second quarter and moved to gold and other bearish bets, failing to anticipate the stock market rally in the current quarter.

Noting the recent run-up in the benchmark Standard & Poor's 500 index to fresh record highs while economic growth remains weak and corporate earnings are stagnant — George Soros, Jeffrey Gundlach, Carl Icahn and David Tepper were among billionaire hedge fund investors and money managers who slashed their long equity positions in the second quarter, according to regulatory filings.

All three major U.S. stock indexes ended at all-time highs on Monday, extending their record-setting climb of the past few weeks. The trailing price to earnings ratio of the S&P 500 is now at 20, a level at the high end of its historical range


3--'A Lot of People Are Saying' Trump Is a Democratic Party Plant


4--What's next following Erdogan-Putin summit?


Varlik, Mevlutoglu and Oguz agree that the most important aspect of the summit was its timing after the coup attempt and whether its outcome could be a turning point not only in Turkish-Russian ties, but also in relations with the United States, NATO and the EU, particularly regarding Syria. Obviously, Ankara leaders returned from the summit with high hopes. Moscow tends to be a bit more guarded....

Erdogan’s inclusion of Hakan Fidan, the head of Turkey’s National Intelligence Organization, in the delegation to Russia indicated that Syria was one of the key agenda items of the summit. It appears that Ankara and Moscow want to cooperate toward a solution in Syria and reconcile their divergent political objectives about Syria's future.

To this end, and to avoid another incident such as Turkey shooting down a Russian jet, it appears Russia and Turkey will be sharing intelligence, similar to what was done with Israel. Erdogan has given the go-ahead for Turkey to set up a tripartite system for aligning military, intelligence and bureaucratic interests between the two countries.

It is not hard to guess that Turkey lobbied feverishly for its warplanes to have access to Syrian air space, especially the area of northern Syria controlled by the Kurdish nationalist Democratic Union Party (PYD). Recent headlines such as “Turkish warplanes resuming Syrian flights after 10 months” are but reflections of this hope.
It is also likely that the status of the PYD and Turkey’s struggle against the Kurdistan Workers Party (PKK) were among sensitive issues at the summit

5--When is a coalition not a coalition? When the countries involved don't want Washington to know what's really going on

Iran and Turkey reached "a general agreement” on fundamental principles on protecting the territorial integrity of Syria and the formation of a pervasive and national government. Ansari said that while these are general agreements, they can be “the beginning steps of resolving the Syria crisis.”
In response to a reporter's question on whether or not Russia, Iran and Turkey are forming a new axis in Syria, Ansari said that such a grouping would inflame the sensitivities of the various actors involved in the country. Rather, he said, Iran is pursuing a consensus of the influential countries involved. He said that Iran is not after a closed coalition, but would prefer a “type of understanding of shared principles with other regional and international players.”...

On the current battles between opposition groups and the Syrian government in Aleppo, Ansari said, “Terrorist groups have a number of times tried to capture the city.” He described the situation in which a large segment of the population has been forced to flee a “humanitarian disaster” and said that Iran and Russia would attempt to bring the situation in Aleppo to an end so that people could return to their homes.
Ansari did not get into greater detail on the talks or the solutions to resolving the situation either in Aleppo or Syria....

Turkish Prime Minister Binali Yildirim said Aug. 15 that after resolving differences with Israel and Russia, the time has come to improve relations with Syria. However, one of the conditions that Yildirim proposed was that in a future Syrian government, no one sect would have dominance over the other and current President Bashar al-Assad would not have a position in the long term.


6--There Are So Many Foreign Backers in Syria That Nothing Is Changing, Cockburn


7--Russian Military Options in Syria and the Ukraine, Saker


According to al Masdar news (https://www.almasdarnews.com), Iran has just granted Russia the right to use the Hamedan Air Base in western Iran. The original article entitled “Russia deploys jets at Iranian Airbase to combat insurgents in Syria (Pictures)” (https://www.almasdarnews.com/article/russia-deploys-jets-iranian-airbase-combat-insurgents-syria-pictures/) even claims to show pictures of Russian Tu-22M3s already deployed in Iran. IF this is true, this is very significant. Unlike Khmeimim, Hamedan is safe and is perfectly located to conduct military strikes in Syria and elsewhere in the Middle-East...


8--Writing Off Student Loans Is Only a Matter of Time


only 37% of borrowers actually paying down their loans, the federal student-loan program more closely resembles the payday-lending industry than a benevolent source of funds for college.


As this newspaper reported in April, “43% of the roughly 22 million Americans with federal student loans weren’t making payments as of Jan. 1,” and a staggering “1 in 6 borrowers, or 3.6 million, were in default on $56 billion in student debt.” If student debt continues to skyrocket, the federal government may have to deal with as much as a $500 billion write-down when future defaults and loan-forgiveness programs are factored in.....

But the most significant explosion in student debt might still come. In 2007 Congress passed the Public Service Loan Forgiveness Program, which allows borrowers who work for nonprofit organizations or government agencies to have their loans forgiven after 10 years. Students will be able to take advantage of this program for the first time in 2017. Yet no mechanism to evaluate who qualifies exists. Virtually every teacher, firefighter, social worker, police officer, doctor, or nurse who meets “their employer’s definition of full time” could have their loans forgiven.

The law will cost about $5 billion each year, according to the Congressional Budget Office. But very few close to the student-loan industry believe that the CBO’s assumption will pan out. The total student-loan portfolio is now $1.3 trillion, and the program grows by approximately $100 billion annually. If only 20% more borrowers default than the CBO expects, the Education Department could face at least a $100 billion loss on its existing pool of loans.

9--Washington ‘committed to’ Manbij pledge

10--Billionaire Soros doubles bet against US stocks

11--Putin: Russia ‘sincerely seeking’ to restore relations with Turkey


12--US 'Trying to Discredit Russia's Efforts in Syria' and Ruin Aleppo Operation


The battle for the city of Aleppo is shaping to become a milestone in the Syrian conflict; its outcome will most likely determine the fate of the country, if not the Middle East, philosopher and anthropologist Vladimir Lepekhin, director of EurAsEc (The Eurasian Economic Community) Institute, wrote for RIA Novosti.


For the analyst, this is not merely a battle between Damascus-led forces and rebels, but rather a "standoff" between the Russian and US-led coalitions.
This is why Washington and its allies are increasingly active in Syria.
The United States "is trying to undermine the Syrian Arab Army's (SAA) operation aimed at freeing Aleppo, the city that the US views as the capital of 'moderate' Syrian opposition. They also want to fuel tensions in Damascus suburbs and strengthen their positions in areas close to Raqqa and northeastern provinces," the analyst said.

13--As growth prospects fall, US markets hit record high:  “all the risks are to the downside.”


The worsening growth outlook for the US economy is compounded by international trends, which all point in the same direction.

Data on the Japanese economy, the world’s third largest after the US and China, show that gross domestic product grew at an annualised rate of only 0.2 percent in the second quarter, well below forecasts of 0.7 percent growth, following a growth rate of 2 percent in the first quarter.

The Financial Times reported: “The weak data suggest a combination of monetary and fiscal stimulus under the prime minister’s Abenomics program since the end of 2012 has not been sufficient to boost domestic demand.”

Corporate profits have fallen sharply as a result of the rise in the value of the yen and little or no wage growth has meant consumption spending has remained flat.
According to Yoshiki Shinke, the chief economist at the Dai-ichi Life Research Institute: “There is little expectation for consumption, capital export and exports to grow going forward so it looks like the economy will remain at a standstill for the rest of the year.”

Similar results are also expected for Germany, the major economy in the European Union, when GDP data are released on Friday. CNBC reported that economists polled by Reuters said they expected growth to be only 0.2 percent for the second quarter compared to 0.7 percent in the first.

According to CNBC: “Experts said the export-driven economy is struggling to sustain momentum in an uncertain global environment that encompasses unsteady emerging economies and the uncertainty surrounding Brexit.”
Carl Weinberg, the chief economist at High Frequency Economics, told the business news channel: “No matter how you look at it, the economy is slowing. The economic trend is clear. It is not pretty.”

He pointed to retail sales, industrial production and export data as the chief factors leading to lower growth and noted that “all the risks are to the downside.”




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