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Guess Who Was Buying Stocks (Again)?

Submitted by Tyler Durden on 09/09/2015 18:35 -0400

Corporate buybacks, based on BofAML's client flows, are at the highest four-week-average level in 18 months as the irrationally non-economic buyers of last resort pile in to tumbling prices to maintain their CFO's and CEO's year-end performance bonuses. While hope remains that this pick-up will continue, the demise of the corporate credit market suggests the last greater fool just entered the market...

So who was buying? Simple! Companies, again!

But do not expect it to last...

It's hard to justify blowing cash on buybacks when the cost of financing is surging... and liquidity is drying up for even the best issuers.

This week's calendar (of corporate issuance) looks huge (as evident in higher yields thanks to rate-locks) but it all seems desperate last-minute deals (with decent concessions) ahead of The Fed's decision.

Charts: Bloomberg

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Wed, 09/09/2015 - 18:39 | 6528969 JamaicaJim

Got to suck the marrow out of Johnny Lunchbucket.......get every drop.....

maggots

Wed, 09/09/2015 - 19:26 | 6529125 knukles

Hey! Comin' up on the 4th quarter and gotta make the plebes happy for bonus season.
Plus, those stock options can get really really in the money if this all goes right.

Happy happy joy joy .... maybe we can afford that 20,000 acre spread up in the New Zealand mountains with the fresh water trout stream, grazing pastures, paved airfield for the Gulfstream .....

Wed, 09/09/2015 - 19:33 | 6529145 Hype Alert

Those stock options don't buy themselves. Load debt up on the company and sell your stock options to the only buyer you have control over. Quite a racket.

Wed, 09/09/2015 - 18:40 | 6528971 khnum

so thats where all the cash was hiding

Wed, 09/09/2015 - 18:43 | 6528978 buzzsaw99

The beauty of that is it creates MOAR IG bitchez. In a non Owebomba world equity goes to zero before creditors get a haircut. These days though who the fuck knows (except the squid which knows everything before it happens) the president can unilaterally rewrite laws anytime he wants.

Wed, 09/09/2015 - 18:42 | 6528981 Chuck Knoblauch

The only manufacturing in the US is the buyback.

LOL

Wed, 09/09/2015 - 18:50 | 6529014 Tsar Pointless

Not quite. Everytime an idiot offspring - er, child - is born, a new toy for Big Pharma/MIC is created. So, there.

Wed, 09/09/2015 - 19:29 | 6529129 franciscopendergrass

Yes, manufactured stock prices. Stock prices should be organic, Monsanto GMO free, free of steroids, antibiotic, QE, interest rate manipulation.

Wed, 09/09/2015 - 20:49 | 6529352 Chuck Knoblauch

Manufactured debt and money to buy stocks.

Wed, 09/09/2015 - 18:49 | 6529005 Md4

When it finally goes up in smoke...

...just don't forget who's who, and who did what...

Wed, 09/09/2015 - 18:51 | 6529020 starman

QE 4 in 3 2 1

Wed, 09/09/2015 - 18:59 | 6529050 Oxygen

Stock market crash and war in 3,2,1...

Wed, 09/09/2015 - 19:10 | 6529089 JoeySandwiches

Ahh, so this is the last of the soon-to-be fleeced dumb money?

I only feel bad for the workers that are gonna be laid off because of the losses.

Wed, 09/09/2015 - 21:08 | 6529419 Mayer Amschel R...

Profits haven't been invested into S&P 500 companies for years now. How fitting that the captains of industry loot their companies into smithereens. I expect many 50+ year old large corporations to be ripped apart and their assets sold for pennies on the dollar when this gets serious.

Wed, 09/09/2015 - 19:16 | 6529101 Youri Carma

Corporate Bond Drought Gives Way to Deluge Ahead of Fed
9 September 2015, by Michelle Davis and Cordell Eddings (Bloomberg)
http://www.bloomberg.com/news/articles/2015-09-09/corporate-bond-drought-gives-way-to-deluge-as-fed-meeting-looms

Wed, 09/09/2015 - 19:20 | 6529110 Chad_the_short_...

The shales aren't doing any stock buybacks.

Wed, 09/09/2015 - 19:45 | 6529169 Crocodile

If you look at the gyrations in the market; it is obvious this market wants to drop and is persistent in the endeavor. It is a matter of a little more time like days or weeks, not months. Then, it gets very bad and we will see the best in people by the grace of God and the worse in people by the nature of man.

Wed, 09/09/2015 - 20:27 | 6529287 rosiescenario

"...to maintain their CFO's and CEO's year-end performance bonuses..."

That is not correct....year end performance bonuses are very rarely tied to the price of a company's stock.

What these buybacks are about is making the options issued to the board and management of value. The directors and management are pilfering their shareholders' equity by piling on debt to do stock buybacks which further enrich the board and management.

Just take a glance at companies with large insider stock sales and you'll see that this stock being sold was the result of cheap options being exercised.

Wed, 09/09/2015 - 21:54 | 6529603 Phillyguy

Corporate buy-backs + Central Bank (FED, BOJ, ECB) intervention are no longer sufficient to keep the stock market inflated. Case in point- the Dow was up almost 400 points Tuesday (9/8) and was up circa 160 points Wed before crash and burning to close -239 points. Clearly selling pressure (read paranoia/pessimism) is out-weighing market manipulation. My advice- short the market using Proshares ETFs (I am not a broker!), buy as much gold as u can, and hope for the best (but plan for the worst).

Wed, 09/09/2015 - 21:59 | 6529614 kelley805