Stock Buybacks Surge: Another Red Flag for the U.S. Economy.
Unf*cking The Republic
April's $233B Buyback Bonanza Explained
Host summarizes April's $233 billion in announced buybacks and argues this surge signals corporate pessimism rather than confidence.
Corporations announced a staggering $233.8 billion in stock buybacks in April, the second-highest monthly total ever recorded. But unlike previous buyback bonanzas, this isn’t a sign of economic strength or corporate confidence. Quite the opposite. Are buybacks just one big shell game or are they fiscally prudent? Corporate stock buybacks have inspired great debate since a Reagan era tax law change and a Clinton era deal sweetener. On the one hand they have enriched shareholders and made executives extremely wealthy. On the other hand, the growth in buybacks mean companies aren’t investing in innovation, workers, or expansion. Let’s talk about it.
Resources
Longtermtrends: S&P 500 PE Ratio
FRED: Quarterly Financial Report: U.S. Corporations: All Information: Total Cash on Hand and in U.S. Banks
BNN Bloomberg: Corporate America plans record stock buybacks as turmoil mounts – BNN Bloomberg
Bipartisan Policy Center: How the U.S. Taxes Stock Buybacks and Dividends
Congress.gov: Stock Buybacks: Concerns over Debt-Financing and Long-Term Investing
Federal Reserve Bank of Boston: The Great Leverage 2.0? A Tale of Different Indicators of Corporate Leverage
Penn Wharton: Raise the Excise Tax Rate on Stock Repurchases
Skadden, Arps, Slate, Meagher & Flom LLP: Newly Proposed Regulations on Stock Buyback Excise Tax Largely Adopt Approach From Initial IRS Guidance
The New Republic: Bill Clinton Created This Terrible Corporate Loophole. Will Hillary Close It?
ProPublica: The Executive Pay Cap That Backfired
Harvard: Short-Termism And Capital Flows
Roosevelt Institute: Regulating Stock Buybacks: The $6.3 Trillion Question
ICIJ: The Panama Papers: Exposing the Rogue Offshore Finance Industry
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