Trimtabs now 200% long

[HenryTo]

Turned "very bullish" over the weekend because of a combination of liquidity factors, such as corporate buying, lack of insider selling and primary & secondary offerings, etc. Says that the trend going forward should not change.

I try to keep track of Trimtabs on a weekly basis and definitely do consider their positions when writing our commentaries, but I definitely won't take what they're saying as gospel. We will see,

[HenryTo]

TrimTabs is still bullish. Following is a short excerpt from their latest commentary:

Thomson Financial: S&P 500 Companies Sitting on Record $766 Billion in Cash at End of First Quarter 2005—10.4% Increase from End of Fourth Quarter 2004 – Even After $32 Billion Microsoft Dividend.

According to Thomson Financial, S&P 500 companies were sitting on a record $766 billion in cash at the end of the first quarter of 2005, which is 10.4% more than they held at the end of the previous quarter.
This cash pile, which is equal to 6.9% of the market capitalization of the S&P 500, should provide ample fuel for acquisitions, stock buybacks, and dividend increases over the near term.

[HenryTo]

Quoted from their latest commentary:

TrimTabs Overnight Liquidity Update – May 17th, 2005

Where's the Slowdown? Wages and Salaries Jump 9.1% Year-over-Year Last Four Weeks. TrimTabs Online Job Postings Index Reaches Highest Level since June 2001.

The real-time data we track belies the nonsense in the financial media about an economic slowdown. TrimTabs Personal Income reported today that wages and salaries for the 130+million U.S. workers subject to withholding have jumped a robust 9.1% year-over-year over the past four weeks. What’s more, “Other than withheld” income taxes rose a whopping 43% year-over-year during the four-week period surrounding the April 15 income tax deadline. The bulk of the additional $46.8 billion in “Other than withheld” payments are made by self-employed individuals. Of course, growth in self-employment is not measured by the U.S. Bureau of Labor Statistics (BLS) establishment survey.

Not only are wages and salaries surging, online job demand is steadily increasing. The TrimTabs Online Job Postings Index has climbed to its highest level since June 2001.

We expect the U.S. stock market and the U.S. dollar to continue rebounding as long as wages and salaries continue rising at least 6% year-over-year. In other words, even if current growth rate slows a bit from torrid to healthy, both the U.S. stock market and the U.S. dollar should perform well.

Standard & Poor’s Reports Former S&P 400 Industrials Sitting on Whopping $631 Billion in Cash—More Than $626 Billion on Hand before Microsoft Distributed $32.6 Billion Special Dividend. That $631 Billion Has to Be About 10% Market Cap.

Confirming our bullish view of the U.S. economy, Standard & Poor’s reports that the former S&P 400 Industrials are currently sitting on a whopping $631 billion in cash. This cash hoard is even larger than the $626 billion on hand before the distribution of Microsoft’s $32.6 billion special dividend. There is no way this massive amount of cash could have accumulated if the U.S. economy were snoozing.

While we don’t know the market cap of the former S&P 400 Industrials, our guess is it’s around $6 to $7 trillion. Cash on hand of $631 billion is about 10% the market cap of those 400 stocks. Maybe Kirk & Carl can combine and offer to purchase the entire S&P 400 Industrials using existing cash on hand to fund the deal?

While Corporate Buying Remains Strong, Corporate Selling Slows to Trickle.

Corporate buying remains strong. This week began with UPS’ announcement that it is buying Overnite for $1.25 billion in cash, and stock buyback announcements have been continuing at a healthy clip. Over the past five trading days, an impressive 35 buybacks totaling $4.7 billion ($950 million daily) have been announced. So far today, Tuesday, at least seven buybacks totaling $618 million have been announced.

Meanwhile, corporate selling has slowed to a trickle. Based on data from Thomson Financial, we estimate that insider selling has dropped to $400 million daily. As for new offerings, only $618 million in fresh paper has been sold over the past two trading days, and the calendar for the rest of this week is equally light. Dealogic reports that only one small deal for $138 million is pricing tonight for sale tomorrow, and less than $500 million is scheduled for the rest of this week. Thus, we would be surprised if new offerings topped $1.5 billion ($300 million daily) this week, which is historically light for the end of May. Even more bullish, new offerings are usually light during the week before and the week after Memorial Day weekend.

Net Foreign Purchases of U.S. Equities Fall to $1.7 Billion in March from $16.4 Billion in January and $7.5 Billion in February.

The U.S. Treasury reported on Monday that foreigners were net buyers of only $1.7 billion in U.S. stocks in March, down from $16.4 billion in January and $7.5 billion in February. March’s purchases were the lowest since September 2004—just before the big year-end rally. Remember, at least half of foreign flows are from offshore hedge fund investing mainly in the U.S.

As expected, the U.S. dollar bears pounced all over the Treasury International Capital System data to support their case that the current account deficit and trade deficit will sink the U.S. economy. What they fail to recognize is that foreign flows are usually a good contrary indicator.