By Thomson Reuters – Re-Blogged From Newsmax
U.S. companies’ shopping spree for their own shares helped put a floor on market declines in 2018. Don’t look for the same level of support in 2019.
Wall Street’s recent volatility has optimists betting that buybacks could provide the market with an even better buffer in 2019. But many strategists see the lift from buybacks – a major factor behind the bull market – losing some force as earnings growth slows while tax policy bonanzas fizzle out.
“Companies bought back around 2.8 percent of shares outstanding in 2018. That was a substantial support to the market and bigger than dividends,” said Jack Ablin, chief investment officer at Cresset Wealth Advisors in Chicago.
By Michael Pento Re-Blogged From Silver Phoenix
The perfect storm of zero percent interest rates that existed concurrently with a debt-disabled economy lured executives at major corporations into a decade-long stock buyback program. The Fed pumped money into the economy thru its various Quantitative Easing programs to force interest rates near zero percent, with the expectation corporations would borrow money at the lowest rates in history and then invest in their businesses in the form of Property Plant and Equipment (capital goods). This in turn would expand productivity and help foster a low-inflation and strong growth environment.
But many corporate executives found a much more enticing path to take in the form of EPS manipulation. That is, they boosted both their companies share price and, consequently, their own compensation, by simply buying back shares of their own stock.
By Mike Gleason – Re-Blogged From Money Metals
Tenuous Markets Bracing for Vindictive House Dems, Budget Crunch, plus an interview with Michael Pento.
Welcome to this week’s Market Wrap Podcast, I’m Mike Gleason.
Coming up Michael Pento of Pento Portfolio Strategies joins me for a conversation you will not want to miss. Michael weighs in on the recent words from Fed Chair Jerome Powell and why he believes the initial reaction from Wall Street about what the Fed will now be doing on interest rates is misguided, and he reveals the inside scoop on why he’s been blackballed by CNBC and others in the mainstream financial media. So, make sure you stick around for an explosive conversation with Michael Pento, coming up after this week’s market update.
By John Rubino – Re-Blogged From Dollar Colllpse
A recent MarketWatch article notes that:
GE was one of Wall Street’s major share buyback operators between 2015 and 2017; it repurchased $40 billion of shares at prices between $20 and $32. The share price is now $8.60, so the company has liquidated between $23 billion and $29 billion of its shareholders’ money on this utterly futile activity alone. Since the highest net income recorded by the company during those years was $8.8 billion in 2016, with 2015 and 2017 recording a loss, it has managed to lose more on its share repurchases during those three years than it made in operations, by a substantial margin.
By John Rubino – Re-Blogged From Dollar Collapse
Based the last few days’ headlines you’d never know the world is in year 10 of a pretty good expansion. Check this out:
Note the strong words: “freaking out,” “plunging,” “slides,” “on verge of new crisis,” “terrified.” These headlines — which aren’t cherry-picked; they’re representative of what’s out there — display a palpable sense of panic.
[This may be one of the very few stock buybacks to make sense for stockholders – because company profits are growing quickly and other opportunities are hard to find. -Bob]
By Associated Press – Re-Blogged From Newsmax
Warren Buffett’s company more than quadrupled its third-quarter profits because of a huge paper gain in the value of its investments, although its insurance and railroad businesses also improved.
Notably, Buffett’s company bought back nearly $1 billion in stock during the quarter — the first time that’s happened in years — a possible sign that the world’s most famous investor has been unable to find attractive investments to purchase.