Corporations – And Corporate Execs – Fall Out Of Love With Their Shares

Jon Blogosphere, Corporate, Market Commentary

It’s no secret that one of the main things propping up the US stock market has been corporations’ willingness to buy back their own shares with borrowed money. The following chart illustrates the rather amazing correlation between share repurchases and share prices.
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This was obviously a short-lived strategy, one that would end when companies got so leveraged that borrowing more started to look pathological rather than wise. And that time may have come:
U. S. Buyback Announcements Tumble to a 2012 Low (Bloomberg) – Stock buybacks appear to be slowing down, suggesting either corporate America’s outlook has dimmed, stock valuations have become prohibitively high or, most optimistically, that companies are starting to listen to investors and put funds toward other uses. Buybacks announced for the second quarter’s earnings season between July 8 and August 15 totaled an average of $1.8 billion a day, the lowest volume in an earnings season since the summer of 2012, according to TrimTabs Investment Research.

This post was published at DollarCollapse on AUGUST 16, 2016.