Why There Will Never Be A CapEx Recovery

Over three years ago, Zero Hedge first predicted that not only is there not going to be a capex boom - a boom which every year one after another weatherman, pardon, economist "forecast" is just around the corner (because there can be no true recovery without companies spending confidently for the long-term) but at that any moment corporations would unleash a massive dividend and stock buyback spree to boost their share prices and to shower management with record equity-linked compensation.

They did just that and we were right. The weathermen were wrong.

And unfortunately, until three things change dramatically, there will never be a capex boom, corporate revenues will keep declining, and companies will continue artificially inflating their stock prices by diverting every last profitable dollar into instant gratification for "activist" shareholders (and option-compensated management) instead of investing into long-term growth.

The three things are:

1. the disconnect of equity value from employment, and thus a market which no longer reward investment
2. the global demographic change
3. the all time high debt overhang which looms like a time bomb in every corner office, just waiting for rates to spike higher to be set off

But don't take our word for it. Here is Citigroup's:

Citi's tragic conclusion:

• These are not things you fix with liquidity

Unfortunately, liquidity is all the system has left. Which is also why, in the current system, there will never be a capex recovery, and instead all dollars will ultimately go to purchase every last share of stock until the market spontaneously combusts in a thought experiment supernova in which companies with zero employees have an infinite market cap, thus breaching the monetarist event horizon, and crossing the Keynesian streams.

Comments

[NotApplicable]

Mises warned us.

[WhyDoesItHurtWh...]

love the humor/sarcasm :

"Unfortunately, liquidity is all the system has left. Which is also why, in the current system, there will never be a capex recovery, and instead all dollars will ultimately go to purchase every last share of stock until the market spontaneously combusts in a thought experiment supernova in which companies with zero employees have an infinite market cap, thus breaching the monetarist event horizon, and crossing the Keynesian streams. "

[Uchtdorf]

Moses, too. "Thou shalt not steal" was the message he shared.

[ebworthen]

Like the FED - sacrificing the future for a hamburger today.

[WTFRLY]

McDonald’s unveils plan to fix company, change perception of its gross food ingredients – VIDEO

[Niall Of The Ni...]

What happened to all the comments?

Tyler, this isn't the first time comments have been eaten just like that. Get ZH serviced.

[NoDebt]

It's a feature, not a bug.

[NoDebt]

Just mentioned this in the other thread about share buybacks.  Spooky.

[A is A]

Market crashes first

Comment section on ZH is fixed first