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 a net outflow of $274 billion. In other words, buybacks well exceeded gross issues. Non-financial 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.
However, the financial sector data include stock issuances by all exchange-traded funds, which rose to $174 billion over the latest four-quarter period. Excluding these ETFs, net issuances by financial corporations was a negative $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.
Source: Ed Yardeni — Ed Yardeni is the president and chief investment strategist of Yardeni Research Inc., a provider of independent investment strategy and economics research for institutional investors.