Taps Coogan – December 20th, 2022

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The following chart from Liz Ann Sonders shows the rolling one year sum of buybacks among S&P 500 companies.

Despite a year of essentially flat economic growth and bearish market action, buybacks remain near all time highs. Indeed, despite the most widespread expectations of a recession on record, with 70% of economists now calling for one, earnings forecasts for 2023 remain bullish.

When the cognitive dissidence that’s leading analysts to simultaneously expect a recession and think that earnings growth will be strong next year resolves itself, we suspect that buybacks will be on the chopping block. All of which suggests that the real pain of this bear market hasn’t even started.

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