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TrimTabs Liquidity News - Latest
June 18, 2001
NEGATIVE LIQUIDITY RECORD AS NEW OFFERINGS DROWN MARKET - $57 BILLION LAST 7 WEEKS. MAY INSIDER SELLING UP. FEW NEW CASH TAKEOVERS & BUYBACKS TO COUNTER SUPPLY FLOOD.
Stock market liquidity was the most negative ever last week, at negative 13.4 billion, easily surpassing the prior low of negative $11.2 billion set the week ended March 15, 2001. A record new offering calendar was the key. The $14.4 billion in new offerings over the five days ended last Thursday was a tad below the $15.2 billion sold the week ended November 12, 1999. However, the five days ended Wednesday, June 13, had $15.5 billion in new offerings which was a five day record. The $57 billion sold the last seven weeks is also a record.
BEARISH CORPORATE INVESTORS BEST LEADING INDICATOR
This go around the record new offering pace is combined with a slump in new cash takeovers and stock buyback announcements. That's worse for the market going forward because historically corporate investors are the best leading indicator of future market activity. Until cash takeovers and stock buybacks pick up while new offerings slow, this market is not going much higher any time soon.
NEUTRAL FLOWS SHOULD BECOME HEFTY REDEMPTIONS THIS WEEK. JUNK LOSING FANS.
Equity funds had estimated redemptions of $500 million over the five days ended Thursday. US funds attracted a small inflow at least at the 468 US equity funds with $509 billion in total assets that we track daily. Global funds continue to do worse than US, even though global markets are doing slightly less better in terms of net asset value performance.
CORPORATE INCOME DOWN ADJ. 20% FEB. MAY WHILE INDIVIDUAL UP ADJ. 6.5% - 7.5%.
Withheld income and employment taxes collected over the five days ended Thursday, June 14, 2001 are not comparable with the amount collected over the five days ended Thursday, June 15, 2000. The reason, those paid twice per month usually receive their checks on the 1st and 15th of each month. Therefore, after next week's numbers are in, we will compare the fortnightly and four week results.
BOTTOM LINE: WE REMAIN BEARISH. UNTIL NEW OFFERINGS SLOW & CASH M&A'S AND BUYBACKS SPIKE, LASTING RALLY UNLIKELY.
We stay bearish. CommScan says $6 billion in new offerings are already scheduled for next week, with none bigger than $1 billion. We doubt any where near that total can get done in a market where the highly regarded, though inflated, Kraft $8.7 billion deal broke syndicate bid the second day.
A stagnant cash M&A biz and less than the two year weekly average of stock buy back announcements does not engender any belief that a sustained rally is in sight.
Next TrimTabs Liquidity News update: Wednesday, June 20 after the close |
