Deutsche Bank’s Joseph LaVorgna has a mystery for you to solve. I’ve highlighted it in the chart below:
(Chart: Deutsche Bank)
Here’s what he has to say:
“The most recent data on capital expenditures have been largely disappointing. Real nonresidential fixed investment spending (capex) has declined in two of the last three quarters and is on track to fall again in Q3.”
The bank thinks that may be a headwind for the Fed when it comes to policy normalization. Now hmmm… I wonder where all that money is going that could be going to capex? Oh! That’s right….
So think about that next time you’re grateful to the companies you own for inflating their bottom line (and your wallet) by using all of their FCF for financial engineering.
Oh well, another reason not to move in December.