Insiders are selling shares at the fastest pace, because before the 2008 financial crash we could be on the verge of a new devastating recession.
Business insiders sold an average of $ 600 million worth of shares per day in August. August is also the fifth month this year when insiders sold more than $ 10 billion in shares.
The only other time that happened was in 2006 and 2007, according to TrimTabs Investment Research, that the liquidity of the stock market follows.
Although the $ 10 billion figure may not mean as much as in 2007, as the stock market is now much larger, more insiders on the way to the exit point to serious concerns about the future of the markets.
American business leaders are selling stocks at the fastest pace since 2006 and 2007. This chart shows the NASDAQ sell-off this year so far
August is on track to become the fifth of the year in which insider sales exceed $ 10 billion. This graph shows the S&P 500 sale this year so far
Business insiders sold an average of $ 600 million worth of shares per day in August, a trend that may indicate concerns about the future of the markets (file image)
A trend in sales by top managers, prominent shareholders and directors is often seen as a bleak signal about a company because these insiders have a better understanding of financial data than the average investor.
Insiders would not sell if they were confident that the shares are going straight up, and maybe know something and want to sell their shares before the market drops or the shares of their company take a dive.
& # 39; It indicates a lack of confidence & # 39 ;, said Winston Chua, an analyst at TrimTabs CNN.
& # 39; When insiders sell, this is a sign that they believe valuations are high and that it is a good time to be out of the market. & # 39;
Last week alone, top managers from Chipotle, Visa, Salesforce, Slack and Home Depot sold all shares sold, according to OpenInsider, a site that tracks the sale of insider shares.
But some analysts say insider selling is not always the best indicator of market confidence, because it can simply be the result of insiders preparing for leaner compensations, diversifying their assets or raising money to pay taxes.
& # 39; Most managers are paid for profit growth. If they expect bonuses to be slower, they will sell shares to close the gap, & # 39; Nicholas Colas, co-founder of DataTrek Research, told CNN.
& # 39; It is another sign that management knows that this will be a difficult year for increasing profits. & # 39;
Last week alone, top managers from Chipotle (left), Visa (right), Salesforce, Slack and Home Depot have all shares sold according to OpenInsider
Insiders have better information about the financial data of the company and may want to sell their shares before the market drops or the shares of their company take a dive. Slack and Salesforce on the photo, whose execs sold shares last week
A trend in sales by top managers, leading shareholders and directors is often seen as a bleak signal about a company because these insiders have a better understanding of the financial data than the average investor (file image)
Nevertheless, the TrimTabs report makes it clear that insiders are selling more than at any other point since 2007.
The fear of the recession has sent stocks last year, including the worst December since the Great Depression.
Although the S&P 500 continues to rise by 14 percent in 2019, markets collapsed in August, largely driven by the escalation in Donald Trump's trade war with China.
The market is in a four-week period as investors attempt to measure whether trade conflicts and slowing economies around the world will drag the US into recession.
Trump's decision to raise rates on all exports from China by 5 percent last Friday resulted in a fall in stocks, with the DOW falling by 2.4 percent and recovering about a third of the losses on Monday.
The trade war has increased the fear of a recession in recent weeks, and there are signs that this is in the offing.
The most feared recession signal from the market flashed earlier this month when a closely monitored segment of the so-called interest rate curve – which follows the spreads between long-term and short-term government bonds – was reversed for the first time since 2007.
This led to a wide sale of the market.
Given that such an inversion occurred before 1950 before any recession, investors are globally alert. Business insider reported.
President Donald Trump's trade war with China has increased the fear of a recession in recent weeks (Trump depicted with Chinese President Xi Jinping in June)
Trump's decision to raise rates on all exports from China by 5 percent last Friday caused the shares to fall, with the DOW falling 2.4 percent one day (Trump pictured with Xi Jinping in June)
The Trump trade war hinders US growth and, according to Goldman Sachs economists, will increase consumer prices (file image)
The trade dispute between the US and China hinders US growth and, according to Goldman Sachs economists, will increase consumer prices.
& # 39; The most recent proposed rate escalation would cause US consumer prices to rise slightly further than previously estimated and also to further reduce US growth & # 39 ;, economists wrote to the bank in a report of 26 August.
The rise in consumer prices would damage US portfolios because the price of goods would rise.
The latest proposed rates that will take effect from 1 September include items such as clothing, shoes, electronics and TVs.
Rates that come into force at the peak of the Christmas shopping season in mid-December will include cell phones, computers and toys, and rates on European cars would, according to the bank, contribute to price increases.
Goldman Sachs also estimated that by the end of the year the conflict could cumulatively lower real GDP growth by 0.7 percent.
Real growth may not recover until mid-2021, as the uncertainty about the future of trade with China weighs on the US economy, according to the bank.
Goldman Sachs said it believed there was a 95 percent chance of a Federal Reserve cut in interest rates later this year.
Market viewers hoped for a further federal incentive to avert a US recession.
The trade war with China also raises fears of economic decline in Europe, with data from and data from Germany, the continent's largest economy, which are still signaling a recession.
Global market viewers are becoming more cautious about what awaits us.
UBS, the largest asset manager in the world, advised clients to reduce their equity exposure, the first time the bank has done so since the depth of the European debt crisis in 2012.
This graph shows the Dow Jones industrial average from 1985 to the present. US executives are currently selling shares as it is 2007, as the fear of recession is growing
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