For all the hype and hope chorus of “global growth getting stronger any day now”, so far Q1 earnings and revenue numbers are f’ugly, with 1/3rd of S&P companies missing earnings targets (even though they had aggressively guided expectations lower throughout the quarter) and most indicatively, 51% have, so far, missed their sales forecasts.
Perhaps this is why commodity currencies like the Canadian loonie remain out of favour in FX markets, with less buying interest today than at the last interim low in the fall of 2011 (see green circles on chart below). Lower on the week, today the Canadian dollar is at the same level as in June of 2009 when the world was struggling for traction out of the great recession–it still is today.
No wonder then, that corporate cash is not being deployed into capital expenditures, workers or business expansion. Rather management are using soaring stock valuations (buy high!) as an opportunity to hoover up company shares on the open market while continuing to sell their personal holdings of the same shares at a record pace in a brilliant financial strategy otherwise known as the pump and dump aka “get while the goin’s good”.
Cory’s Chart Corner
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