Corporate treasurers have been driving the bull market in stocks, not retail and institutional investors. The Fed’s Flow of Funds data show that net issuance of corporate equities over the past year through Q3 was minus $274 billion. In other words, buybacks well exceeded gross issues. Nonfinancial corporations registered net buybacks of $419 billion, while the financial sector had net issuance of $119 billion and foreign corporations issued $25 billion, according to the Fed’s data.
The financial sector data include stock issuance by all ETFs, which rose to $174 billion over the latest four-quarter period. Excluding these ETFs, net issuance by financial corporations was minus $55 billion.
The Fed also compiles monthly data for total gross equity issuance. Over the past 12 months through October, corporations raised $152 billion. However, that was overshadowed by buybacks. Data available for the S&P 500 show that they totaled $406 billion over the past four quarters through Q2.
Today's Morning Briefing: The Equity Cult. (1) Bond King gives a eulogy. (2) Resilience of stocks proves that the cult is dead. (3) The cult’s favorite stock is down hard. (4) Cashing in before the cliff boosts capital gains tax rate. (5) Are special dividends propping up the bull? (6) Meet the real equity cult: corporate treasurers. (7) The retail investor has left the equity cult to join the bond cult. (8) The cult at the Fed. (9) The hidden strength in GDP. (10) Highly recommended new App. (More for subscribers.)