Welcome to Live from the Compound. My name is Michael Baddnick. I'm here with Barry Rittholz and Ed Yardenny of Yardenny research.

Bybacks have become the topic that you're not just for Wall Street, but also for Main Street.

Correct.

And one of the things that people use to make arguments is data.

And I was flabbergasted where last week I read in Barons that you said that some of the data

that we're using might not be correct.

What did you mean? How did you find this out?

Well, the Federal Reserve puts out flow of funds data on a quarterly basis.

And is that the Z1? That's the Z1. Okay1 and it's very detailed I really love that data set it's very

been very good at understanding with a little bit of a lag what the financial system is doing and everybody uses the

table that shows who's buying equities and who's issuing equities and what that data has been showing for a few years is that nobody's

buying stock other than corporations buying back their own shares and I've been staring at that for a while

and just something just didn't make sense to me.

Because when you look at the S&P 500 earnings

per share, and then you look at aggregate earnings of the S&P 500 it's not

that big a difference in terms of the growth rate it's about 1% per year from

2011 to 2018.

So if they're buying hundreds of billions

of dollars of their stock back,

why aren't the numbers much bigger?

And I think the answer is, with regards

to the flow of funds data, is that they forgot to include a category called employee stock plans.

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