Mish's Global Economic Trend Analysis

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"Precarious" Global Economy Posted: 17 Sep 2014 11:26 PM PDT It's not often I agree with the IMF on anything, but this time I do. The Global Recovery is Precarious, says International Monetary Fund. The International Monetary Fund has warned that the global recovery is on precarious footing, as rising geopolitical tensions and the prospect of tighter monetary policy in the US risk dampening the outlook for global growth. In a document prepared ahead of this week's G20 meeting of finance ministers and central bank governors in Australia, the IMF said that growth in the first half of this year was weaker than it had predicted in April. The Fund signalled it is likely to cut its next batch of forecasts which will be released in October. The Fund's assessment is the latest sign that mounting tensions in Ukraine and the Middle East have worsened the prospects for the global economy. Headline Agreement I need to pause right there, with the obvious, because the IMF can see no further than what has already transpired. "While the recovery is projected to regain some strength in the reminder of 2014 and 2015, it would be weaker than foreseen in the spring," the IMF said. The Fund expects growth to accelerate in advanced economies, with the US and the UK enjoying the strongest rebound. However, the outlook for the eurozone and Japan is more uncertain, as inflation remains below central bank targets. Acceleration of Growth in Advanced Economies? I strongly disagree. Germany is on "precarious" footing to say the least, and prospects for the US with a declining global economy are not so bright either. While I agree with the headline, I disagree with the details as well as how we got here and what to do about things. But yes, things are precarious, and I suspect, about ready to go over the cliff. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

Companies' Stock Buybacks at Biggest Pace Since 2007; Companies Rewarding Investors? Posted: 17 Sep 2014 11:05 AM PDT In yet another sign of market over-exuberance, the Wall Street Journal reports Share Repurchases Are at Fastest Clip Since Financial Crisis. Corporations bought back $338.3 billion of stock in the first half of the year, the most for any six-month period since 2007, according to research firm Birinyi Associates. Through August, 740 firms have authorized repurchase programs, the most since 2008. The growth in buybacks comes as overall stock-market volume has slumped, helping magnify the impact of repurchases. In mid-August, about 25% of nonelectronic trades executed at Goldman Sachs Group Inc., excluding the small, automated, rapid-fire trades that have come to dominate the market, involved companies buying back shares. That is more than twice the long-run trend, according to a person familiar with the matter. Large Repurchases in 2014 Rewarding Investors - Not Contrary to the above graphic (and common wisdom), companies do not reward investors by buying back shares at inflated prices. Companies bought back the most shares in 2007, right before the crash, and the least shares at the most opportune time in 2009. In practice, insiders buy low and sell high, and pocket cash from options all the way up. Insider activity is exactly the opposite of how companies treat shareholders. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

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