It appears that the equity index rally we’ve seen over three last 2 weeks has an owner: stock buybacks. Companies have let the blackout period expire and have decided to inject liquidity in the market, at double the historical average rate, as you can see in the chart below. While the motivation for the coordinated action at this time of the year is not clear, these buybacks have changed the market’s perception towards the probability of recession and have taken some pressure from the Fed’s shoulders as they approach the end of year #fomc with a stable market. Having said all that, is this new pace of buybacks sustainable? Are investors being manipulated by them to artificially maintain the market in a positive mood? Who will take the baton if buybacks are not there?
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