David Santschi, CEO TrimTabs, reflects on how he sees September unfolding:
U.S. companies have been committing much less money to shrink the float late this summer. New cash takeovers and new stock buybacks have dropped to $114.1 billion in the third quarter, down from $304.7 billion in the first quarter and an all-time record $560.9 billion in the second quarter. While some of the slowdown is likely seasonal, it is also occurring as our proprietary macroeconomic index and credit indicators are pointing to slower economic growth. We will be watching to see if corporate buying picks back up after Labor Day.
Broad emerging markets stock and bond funds had virtually no outflows amid the turmoil in emerging markets in early August, and China has been by far the most popular region for equity traders despite continuing trade tensions with the U.S. We will be watching to see if the calm persists after market participants return from summer vacations.
Our key macroeconomic indicators, including our proprietary macroeconomic index and real-time tax collections, suggest the U.S. economy has much less momentum than the Trump Administration and the Federal Reserve claim. We will be watching to see if growth continues to slow as central banks provide less support for asset prices.