If you want to know how the powers that be keep stock market bubble hopes alive take a look at this…
August 13 (King World News) – Gerald Celente: To 11 August, U.S. companies have announced $983.6 billion in stock buybacks, the most in this part of a year since at least 1982, according to research firm Birinyi Associates.
Buybacks are on trend to reach $1.1 trillion this year, which also would be a record. The 20 largest U.S. corporations account for almost half of the repurchases, The Wall Street Journal reported.
Megabanks Bank of America, JPMorgan Chase, and Morgan Stanley are major buyers. In the tech sector, where the artificial intelligence frenzy has showered cash on key players, Alphabet and Apple have signaled massive purchases.
In May, Alphabet had already said it would buy back $70 billion worth of its shares this year. JPMorgan will reacquire $50 billion of its shares, Bank of America $40 billion, and Morgan Stanley as much as $20 billion.
Robust earnings and a cash windfall from the “big beautiful” tax cut bill have enabled the plans, the WSJ said.
At the same time, the trade war’s chaos has stalled investment plans, making buybacks an inviting way to make a quick return on loose cash.
Buybacks withdraw stock shares from circulation, raising stock prices and earnings per share. Both metrics are often used to calculate executive bonuses.
At the same time, buybacks take money from investments in innovation, productivity, and workers’ compensation, analysts point out. In that way, uncertainties over the trade war could stunt economic growth over time. (See “Weak Corporate Investment Threatens Global Economy, OECD Warns” in this issue.)
Plans for buybacks sparked in July when the economy showed signs of strength as trade deals and robust corporate earnings were announced. Last month, companies unveiled plans to repurchase $165.6 billion in stock, almost double last July’s record of $87.7 billion.
TREND FORECAST:
This is precisely what happened when Donald Trump passed his tax-cut laws in 2017. He said the companies would use the tax breaks for capital improvements which would in turn create jobs. No, they did not heavily invest in capital improvements, instead, 2018 was the biggest year of stock-buy-backs on record. And according to the Tax Policy Center, the one percent got 64 percent of the tax-breaks.
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