However, before we get into their analysis, let me remind you of something.
The whole premise of the “Trump Rally" is that lower tax rates, lower regulations, and infrastructure spending is going to juice earnings of companies and drive asset prices higher.
If that is the case then how do you explain this:
“Corporate executives are buying their own firms’ shares at the slowest pace in at least 29 years, the latest sign of uncertainty as the bull market in U.S. stocks enters its ninth year.
Share purchases and sales by executives are parsed by investors searching for signals about what insiders expect from the market. Sales can show wariness about valuations, while purchases can signal confidence that more gains lie ahead.
Insider buyers have been scant. There were a total of 279 insider buyers in January, the lowest number going back to 1988, according to the Washington Service, a provider of insider-trading data and analytics."
“Meanwhile, the number of sellers has been above average, pushing a ratio of buyers to sellers in February to its lowest since 1988.
Insider caution about buying stocks comes with the S&P 500 near a high and after the index has more than tripled since bottoming during the financial crisis on March 9, 2009.
While many investors expect corporate earnings to pick up in coming quarters, reflecting the continuing U.S. economic recovery and Trump administration tax-cut and deregulatory plans, the strong market gains mean that investors are paying more now for expected corporate earnings than at any point in over a decade.
The price-to-earnings ratio of the S&P 500 based on analyst forecasts for the next year is near 17.7, the highest since 2004, according to FactSet."
Of course, valuations are a key issue going forward as:
“What you pay today, has everything about what your return on investment is tomorrow."
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