“The latest rally in US Equities has been called the “most hated” rally in history.  Why do you suppose that is?  I think the big reason is that most retail investors (basically everyone) has not participated in (nor benefitted from) the rally.  Wait, then who or what has made the market go up?  If you look at the capital flow, you will see an alarming pattern:

So, for me this means one of two things, either people simply do not believe that this rally is sustainable or they literally cannot afford to keep their money in the market because they need to pay for trivial things like rent and food.  I think it’s a bit of both.

So, if capital is flowing out of the equity markets, how is it going up?  Someone has to be buying it.

Zerohedge tries to shed some light:

“…Corporations have unleashed the biggest debt-funded stock buyback spree in history, providing the natural offset to wholesale selling by virtually everyone else, and allowing the market to barely dip over the past year.”

“S&P 500 companies have churned out more than $2 trillion of repurchases since 2009, helping sustain a rally where share prices almost tripled. Bolstering the outlook for debt-financed buybacks, credit stress has eased since February, with the extra yield demanded on investment-grade bonds over Treasuries narrowing by 36 basis points.

The growth rate of buybacks is slowing as profits are poised for a fourth quarter of declines. After rising an average 37 percent in the previous five years, repurchases grew less than 4 percent in 2015. During the last two decades, there have been two times when earnings contractions lasted longer than now. Both led companies to slash buybacks, with the peak-to-trough drop reaching an average 62 percent.”

Let me get this straight…you have a market that can and will only go up based on corporations buying back their own shares with higher and higher levels of debt.  What could possibly go wrong?  Not to worry, when this debt goes down the “you-know-what”, we will have a fresh batch of garbage for the various central bankers to put on their rock solid balance sheets.”