The Last Time This Happened, The Bull Market Ended

Tyler Durden's picture

In a somewhat stunning reality check for the new normal, companies in the S&P 500 have started paying out more money to shareholders than they produce in operating earnings. The last time spending on buybacks-plus-dividends exceeded operating profit was Q2 2007... that did not end well...



As Bloomberg reports,

S&P 500 companies spent $144.1 billion on share repurchases and paid out $93.6 billion of dividends. The total equaled 104.1 percent of profit, up from 95.1 percent in last year’s fourth quarter.


The increase reflects a reliance on repurchases to spur earnings-per-share growth, according to Howard Silverblatt, a New York-based senior index analyst at S&P Dow Jones.


“They’re getting a lot more pressure to do buybacks,” Silverblatt said yesterday in an interview. “It’s almost an entitlement program from an investor standpoint.” Repurchases will probably stay at current levels through year-end as many companies buy shares to offset expiring options, he added.

*  *  *

With the marginal cost of capital on the rise, however, one wonders just how long compensation-desparate CEOs are forced to admit that the short-term benefits of debt-funded buybacks are outweighed by the medium-term releveraging (which is at record highs) and cash flow crush that ensues.

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ThroxxOfVron's picture

Liquidation is the new CapEx.

PartysOver's picture

The Bull market ended in 2010.  Sorry typo, meant 2011,  Oops, did it again  meant 2012.  Dang it. 2013.  Oh crap, no seriously I meant 2104.   Oh, for Petes sake, all along I meant 2015.

Bighorn_100b's picture

Thumbs up for being spot on. The joke continues! Buybacks, M/A, low interest rates, job growth w/pay raises! LOL!

Think I'll buy a roll of silver Eagles over the weekend just for shits and giggles. I have enough ammo already.

Osmium's picture

Don't forget, this is a smegma year.

Bobbo's picture

Looks like the end of the world, to me. 
Right on Schedule. 
According to them.

What more do they want,
Other than what we feel:
Population reduction,
Most genteel.

Ness.'s picture

Works every time.  Spoos exploding higher.

sdmjake's picture

"They've done studies... 60% of the time it works every time"

nuubee's picture

When stocks become an entitlement, then corporate ownership of humans is complete. Welcome to your new slave society, same as the old one with less S&M.

RaceToTheBottom's picture

Funny how CEOs would do exactly what pays them the most, regardless of what is good for their companies???

Who da thunk it?

yogibear's picture

William Dudley's, NY Fed,  goal is to keep stocks going higher no matter what.  Pump as much printed money as neeed to keep the scheme from collasping.

jomama's picture

Is this Hindenburg omen #276541?

greenskeeper carl's picture

i lost count, but i think youre pretty close

cheka's picture

last two crashes were preceded by frbny raising rates.  the pigmen can flip the switch at their leisure.  first by inflation then by deflation..

sudzee's picture

Borrowing money to pay dividends. Where have I heard that before.

disgruntled housewife's picture

I think Bernie Madoff used the same strategy- he just borrowed from one client to pay to another. As your comment implies-there is essentially no difference. There is nothing real about the market anymore. There will be a crash, no doubt, but not until they have squeezed every small time player dry. Then the connected will waltz away owning everything they buy from the fire sale. This whole thing reads like a crappy book- we all know how this will turn out- it's the timing we should be hedging on or creating a derivative for based on when it's going to go south. My hedge is late September, early October 2015. This has been a long time coming and Zero Hedgers will be vindicated soon. Our pessimism- (?spelling) will not be for naught.

chisler's picture

The only other thing that can pile like this, is crap.

Osmium's picture

It's different this time.

mpath's picture

whether it is the end of the bull market or not--who cares. Trade the swings-they are giving you enough points in both directions. Weakness turn date has been for early July from Woody Dorsey.

Black hole set for 3rd quarter. Last black hole he predicted 1 month before it happened-TO THE DAY--the SPX shedded 200 points and then rallied 280 on his exact low date. This guy is a magican at picking these turns. I have made a fortune following him. See for yourself!


jmcwala's picture

Link to an advertisement that says waht you just said. Boooooooo!

ljag's picture


I know I can get a little snarky sometimes but not being able to post a comment on FB? What is going on

Bryan's picture

This time is different.

Consuelo's picture

There are no warnings or forward guidance with a knee-capping.



scubapro's picture



prices can keep going ihgher.   but each little bit adds to the pot, where fewer and fewer new buyers want to emerge and a few more people take profits.  nothing happens until the tipping point, where the balance shifts, and then pours continues to look OK, but is actuallygetting closer to fail.   think of an avalanche, snow and more snow, still nothing.  more snow and nothing. it stops snowing and then it really looks like it wont happen...bu then the sun comes out and just 1 degree more and BAM.

KingdomKum's picture

molon labe    (already)

marathonman's picture

What do CEO's care?  They get golden parachutes, take the money short term as dividends via buybacks and then as severance when they get sacked for running the company into the ground.  There is no downside in modern corporate governance.

q99x2's picture

The UN took over the military. The globalists took over the White House. Wall Street took over the printing presses.. Now we are all doomed.

malek's picture

But this time taking on additional debt is so much cheaper...

MrSteve's picture

Time to get long seed: corn,squash and beans, plastic sheeting, chicken wire, fermenting tanks, storage materials; real necessities.

Incubus's picture