The 3Q earnings season is underway, and with that we may see a spike in volatility as companies try to match market expectations at a time of relatively high valuations. Even though the Mag7 are still relevant for the well being of the market, the sector leaders YTD are homebuilders and Utilities, which tells us the rotation continues its course. But as you can see below, the cash rich Tech sector has announced a massive buyback of $130Bn in stock buybacks or about 1% of their market cap. It is likely that any weakness in their share prices, out of the blackout periods currently underway, will be used to deploy those buybacks and retire stock. That should give the last push to the indices to finish the year strong even with the elections just three weeks away. It’s not only central banks injecting liquidity in the system through rate cuts and stimuli, companies have created their own luck, and it’s mostly a U.S. phenomenon.
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