But don’t call it an omen of bad luck; its more like monetary rigor mortis. The bull market is dead, but the robo-machines and talking heads of bubble vision just don’t know it yet.
And most certainly, the full-time stock traders who occupy the C-suites of corporate America don’t know it, either. They are still buying their own drastically over-priced shares hand-over-fist. During last Monday’s knee-jerk rip even Goldman Sachs confessed that their corporate buyback desk had a record day.
That should not be surprising, however. America’s stock option addicted executives are getting desperate. With nearly all of the SP 500 companies having now reported Q2 results, LTM reported earnings have come in at about $97.35 per share. That’s down 5.6% from prior year and 8.2% since the cycle peak in Q3 2014.
What’s worse, GAAP earnings are rolling over a point that represents niggardly gains from the Q2 2007 peak prior to the last bubble’s collapse. While the magic 2100 line represents a 35% gain from the October 2007 high, earnings growth during the last eight years computes out to a trifling 1.72% per annum.
Let’s see. Who would pay nearly 22X for earnings that are growing at such a tepid rate, and which are also clearly rolling over in the context domestic business cycle that is very long-in-the-tooth and a global deflation cycle that is gathering frightful momentum?
Well, of course, the robo-machines are eager buyers. After all, its hard to get the PE multiple wrong during the course of 10 second holding periods.
So the dumb stock churning machines can be forgiven. But that doesn’t exonerate the borrow and pump carbon units which ostensibly manage America’s top