Welcome to DU!
The truly grassroots left-of-center political community where regular people, not algorithms, drive the discussions and set the standards.
Join the community:
Create a free account
Support DU (and get rid of ads!):
Become a Star Member
Latest Breaking News
General Discussion
The DU Lounge
All Forums
Issue Forums
Culture Forums
Alliance Forums
Region Forums
Support Forums
Help & Search
Stock buybacks exploded after the tax cuts. Now they're slowing down
https://www.cnn.com/2019/08/22/investing/stock-buybacks-drop-tax-cuts/index.html
New York (CNN Business)Corporate America's epic buyback mania may finally be succumbing to gravity.
The 2017 corporate tax cut left US businesses flush with cash. S&P 500 companies responded by rewarding shareholders with record amounts of buybacks in 2018, with each quarter setting an all-time high.
However, that record-shattering pace appears to be slowing. S&P 500 companies executed $165.7 billion of buybacks during the second quarter of 2019, according to preliminary estimates by S&P Dow Jones Indices. Although that's still a stunning amount of repurchases, it marks a 13% decline from the same period a year ago.
The slowdown in buybacks, which have become a lightning rod for criticism among some in Washington and even on Wall Street, underlines the impact the tax law had last year as companies steered a sizable chunk of their windfall to investors.
"2018 was an adrenaline high," said Howard Silverblatt, senior index analyst at S&P Dow Jones Indices. "Companies pounded their chest and rushed to show how much money they could return to shareholders via the new tax changes."
The pullback in buybacks may also reflect a desire by companies not to get stuck buying their own stock near record highs.
"A lot of these companies have seen their stock price go up a lot. Treasurers are thinking, 'Maybe I save some ammo in case anything crazy happens,'" said Ian Winer, advisory board member at Drexel Hamilton.
New York (CNN Business)Corporate America's epic buyback mania may finally be succumbing to gravity.
The 2017 corporate tax cut left US businesses flush with cash. S&P 500 companies responded by rewarding shareholders with record amounts of buybacks in 2018, with each quarter setting an all-time high.
However, that record-shattering pace appears to be slowing. S&P 500 companies executed $165.7 billion of buybacks during the second quarter of 2019, according to preliminary estimates by S&P Dow Jones Indices. Although that's still a stunning amount of repurchases, it marks a 13% decline from the same period a year ago.
The slowdown in buybacks, which have become a lightning rod for criticism among some in Washington and even on Wall Street, underlines the impact the tax law had last year as companies steered a sizable chunk of their windfall to investors.
"2018 was an adrenaline high," said Howard Silverblatt, senior index analyst at S&P Dow Jones Indices. "Companies pounded their chest and rushed to show how much money they could return to shareholders via the new tax changes."
The pullback in buybacks may also reflect a desire by companies not to get stuck buying their own stock near record highs.
"A lot of these companies have seen their stock price go up a lot. Treasurers are thinking, 'Maybe I save some ammo in case anything crazy happens,'" said Ian Winer, advisory board member at Drexel Hamilton.
graph and video at the link
Watch the stable geniuses propose new tax cuts. At least Dems control the House this time.
6 replies
= new reply since forum marked as read
= new reply since forum marked as read
they sit on the cash. When the recession hits, stock prices tank, they buy back the rest of the stock.
.... just like i read here on DU was that the CEOs would use it to buy back their company's stock.
And now that tax cut has exploded the deficit and will help to crater the economy too.
