According to the latest quarterly Flow of Funds Accounts published by the Federal Reserve on Friday, US non-farm non-financial companies (firms hereafter) returned more money to their shareholders in the second quarter of this year than they earned from their domestic operations. This has now happened in 32 of the last 48 quarters. We are not convinced, however, that the amount of money flowing to shareholders makes the US equity market appear attractive. We continue to expect the S&P 500 to edge back to 1050 by the end of the year.
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