Fed put, Trump put, but don’t forget the C-suite put; Buybacks
Buybacks may hit $1 trillion this year as companies switch from capital expenditure.
The “Fed put” means that if a diving market threatens to damage the economy via the wealth effect then the U.S. central bank will cut borrowing costs.
The “Trump put” hoped that the new administration would dial back its destabilizing policies if the market feared a sharp economic downturn.
Can we now add the “C-suite put?”
That’s when economic uncertainty discourages corporate capital expenditure and as equities fall encourages instead more share buybacks.
That’s what analysts at Citi led by Scott Chronert think may happen.
Jamie Chisholm MarketWatch 10 March 2025
The real, less respectable reason why companies engage in buybacks, namely to boost earnings per share. Plender
US companies spending more than $700bn on their own shares.
https://englundmacro.blogspot.com/2016/03/the-real-less-respectable-reason-why.htm
Large companies flush with cash have been increasingly repurchasing their own stock over the last few decades.
In fact, the value share repurchases by S&P 500 companies has exceeded those companies' total dividends every year since 1997.
Some view the rise of buybacks as undesirable, saying they are short-sighted and often done for questionable reasons.
Others argue they benefit both the company and investors.
https://www.investopedia.com/articles/financial-advisors/121415/stock-buybacks-good-thing-or-not.asp
Tillbaka till Rolfs länktips 10 mars 2025
https://englundmacro.blogspot.com/2025/03/rolfs-lanktips-10-mars-2025.html
Kommentarer