On September 17, 2007, Capital Flow Watch called the top of the Buyback Bubble, issuing a warning that stock prices might be in for a sharp fall. Unfortunately, that comment turned out to be correct. The outlook considered two simple facts: Stock prices are supported by equity buybacks, which, in turn, now […]

As expected, the Pandora’s box called the “Pension Protection Act of 2006” is full of nasty surprises. The Wall Street Journal (October 25, 2006) reported that the new “Pension Law Shrinks Lump-Sum Payments” to workers. See: New Pension Laws Will Alter Capital Flows Here is how Congress managed to cheat American workers: Under the old law, when […]

Despite worries about rising interest rates engineered by the Federal Reserve Bank, demand for corporate and foreign bonds in the US market continued firm through Q1 2006. Even with firm demand, corporate bond prices weakened in Q1 2006 because a significant increases in new offerings by corporations seeking to finance stock buybacks. The graph shows the principal […]