{"id":229051,"date":"2021-04-17T00:51:00","date_gmt":"2021-04-16T21:51:00","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/get-ready-for-stock-buybacks-to-roar-back\/"},"modified":"2021-04-17T00:51:00","modified_gmt":"2021-04-16T21:51:00","slug":"get-ready-for-stock-buybacks-to-roar-back","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/get-ready-for-stock-buybacks-to-roar-back\/","title":{"rendered":"#\n  Get ready for stock buybacks to roar back"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_84 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a2d1a12b2c7c\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a2d1a12b2c7c\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/get-ready-for-stock-buybacks-to-roar-back\/#Stock_buybacks_expected_to_jump_30_in_2021\" >Stock buybacks expected to jump 30% in 2021<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/get-ready-for-stock-buybacks-to-roar-back\/#Share_buyback_comeback\" >Share buyback comeback<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/buradabiliyorum.com\/en\/get-ready-for-stock-buybacks-to-roar-back\/#Cash_surge\" >Cash surge<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/buradabiliyorum.com\/en\/get-ready-for-stock-buybacks-to-roar-back\/#Joy_Wiltermuth\" >Joy Wiltermuth<\/a><\/li><\/ul><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<p>&#8220;<strong>#<br \/>\n  Get ready for stock buybacks to roar back<br \/>\n<\/strong>&#8221;<\/p>\n<h2 class=\"article__subhead\" itemprop=\"alternativeHeadline\"><span class=\"ez-toc-section\" id=\"Stock_buybacks_expected_to_jump_30_in_2021\"><\/span>\n  Stock buybacks expected to jump 30% in 2021<br \/>\n<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><\/p>\n<div class=\"column column--full article__content\">\n<div class=\"article__side\">\n<div class=\"container--sticky not-active\">\n<div class=\"cx--next\">\n              <\/div>\n<\/p><\/div>\n<\/p><\/div>\n<div id=\"js-article__body\" class=\"article__body article-wrap at16-col16 barrons-article-wrap\" itemprop=\"articleBody\" data-sbid=\"WP-MKTW-0000234135\">\n<div class=\"barrons-article-ad-wrapper\">\n<div data-track=\"barrons-article-ad-wrap\" class=\"barrons-article-ad sticky_item\">\n<div class=\"barrons-main-article-ad-target sticky_target body_ad\" aria-hidden=\"true\"><\/div>\n<\/p><\/div>\n<\/p><\/div>\n<p>       Households aren\u2019t the only ones <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/fred.stlouisfed.org\/series\/PSAVERT\" class=\"icon none\">sitting on a pile of cash<\/a>.<\/p>\n<p> U.S. corporations ranging from financial powerhouses to <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/technology\/\" data-internallinksmanager029f6b8e52c=\"4\" title=\"Technology\" target=\"_blank\" rel=\"noopener\">technology<\/a> titans also have been stockpiling cash as a ballast against the COVID-19 storm.<\/p>\n<div class=\"paywall\">\n       Investment-grade companies ended 2020 with <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/social-mediaa\/\" data-internallinksmanager029f6b8e52c=\"1\" title=\"Social Media\" target=\"_blank\" rel=\"noopener\">media<\/a>n cash and cash equivalents near 33.3% of their liabilities, according to a new S&amp;P Global report, using the latest data on companies it rates. That was slightly below the median pandemic cash peak of 34.3%, but still far higher than the 19.3% cash levels seen at the end of 2019, before the world went into crisis mode.<\/p>\n<p>Now, with the U.S. vaccination effort intensifying and the economic recovery hitting a higher gear, big companies increasingly are expected to dip into their cash hoards to fund stock buybacks.<\/p>\n<p>\u201cCompanies have a lot of cash,\u201d said Michael Arone, State Street\u2019s chief investment strategist. \u201cAnd if you think about how they can use this cash, share buybacks can be attractive in an uncertain environment.\u201d<\/p>\n<p>To that end, Arone expects stock buybacks to increase 30% in 2021 from last\u2019s year\u2019s depressed levels, but still remain about 24% below the 2018 peak of about $800 billion in annual share buybacks.<\/p>\n<p>This chart shows share buybacks edging higher for S&amp;P 500 index<br \/>\n        SPX,<br \/>\n        <bg-quote field=\"percentchange\" format=\"0,000.00%\" channel=\"\/zigman2\/quotes\/210599714\/realtime\" class=\"positive\">+0.36%<\/bg-quote><br \/>\n      companies since the lows of last year. It also shows the fresh surge in global mergers and acquisitions.<\/p>\n<div data-layout=\"inline\n                \" data-layout-mobile=\"\" class=\"\n          media-object\n          type-InsetMediaIllustration\n            inline\n  article__inset\n          article__inset--type-InsetMediaIllustration\n            article__inset--inline\n  \"><\/p>\n<figure class=\"\n        media-object-image\n        enlarge-image\n        renoImageFormat-\n        img-inline\n        article__inset__image\n      \" itemscope itemtype=\"http:\/\/schema.org\/ImageObject\"><\/p>\n<div style=\"padding-bottom:46.40625%;\" data-mobile-ratio=\"46.40625%\" data-layout-ratio=\"46.40625%\" data-subtype=\"\" class=\"image-container  responsive-media article__inset__image__image\">\n        <img decoding=\"async\" srcset=\"https:\/\/images.mktw.net\/im-326274?width=140&amp;size=2.154882154882155 140w,\nhttps:\/\/images.mktw.net\/im-326274?width=540&amp;size=2.154882154882155 540w,\nhttps:\/\/images.mktw.net\/im-326274?width=620&amp;size=2.154882154882155 620w,\nhttps:\/\/images.mktw.net\/im-326274?width=700&amp;size=2.154882154882155 700w,\nhttps:\/\/images.mktw.net\/im-326274?width=860&amp;size=2.154882154882155 860w,\nhttps:\/\/images.mktw.net\/im-326274?width=1260&amp;size=2.154882154882155 1260w\" sizes=\"(max-width: 140px) 100px,\n(max-width: 540px) 500px,\n(max-width: 620px) 580px,\n(max-width: 700px) 660px,\n(max-width: 860px) 820px,\n1260px\" src=\"https:\/\/images.mktw.net\/im-326274?width=620&amp;size=2.154882154882155\" data-enlarge=\"https:\/\/images.mktw.net\/im-326274?width=1260&amp;size=2.154882154882155\" alt=\"\" title=\"Share buyback comeback\"><\/div><figcaption class=\"wsj-article-caption article__inset__image__caption\" itemprop=\"caption\">\n<h4 class=\"wsj-article-caption-content\"><span class=\"ez-toc-section\" id=\"Share_buyback_comeback\"><\/span>Share buyback comeback<span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p>      <span class=\"wsj-article-credit article__inset__image__caption__credit\" itemprop=\"creator\"><br \/>\n            Breckinridge Capital Advisors<br \/>\n          <\/span><br \/>\n  <\/figcaption><\/figure>\n<\/div>\n<p>       Arone said buybacks can be a \u201cfairly conservative\u201d option for companies looking to spend cash, while also looking to balance anxieties about potentially higher corporate borrowing costs and taxes.<\/p>\n<p>Corporate taxes may increase to 28% from 21% under President Biden\u2019s $2.3 trillion infrastructure plan, which big businesses already have begun to push back against.<\/p>\n<p>\u201cThe cons would be that corporate executives are not using the excess cash to reinvest back in their business,\u201d he said, adding that repurchases also can mean less spending on research and development, as well as mergers and acquisitions that can help businesses grow or gain an edge against competitors.<\/p>\n<div id=\"cx-membership-tile\"><\/div>\n<p>The below from S&amp;P Global illustrate how today\u2019s higher corporate cash levels stack up with the past, but also highlight how much investment-grade companies are holding versus their speculative-grade counterparts. Cash levels also have been broken down by industry, including for information technology, communications and financial companies. <\/p>\n<div data-layout=\"inline\n                \" data-layout-mobile=\"\" class=\"\n          media-object\n          type-InsetMediaIllustration\n            inline\n  article__inset\n          article__inset--type-InsetMediaIllustration\n            article__inset--inline\n  \"><\/p>\n<figure class=\"\n        media-object-image\n        enlarge-image\n        renoImageFormat-\n        img-inline\n        article__inset__image\n      \" itemscope itemtype=\"http:\/\/schema.org\/ImageObject\"><\/p>\n<div style=\"padding-bottom:109.765625%;\" data-mobile-ratio=\"109.765625%\" data-layout-ratio=\"109.765625%\" data-subtype=\"\" class=\"image-container  responsive-media article__inset__image__image\">\n        <img decoding=\"async\" srcset=\"https:\/\/images.mktw.net\/im-326276?width=140&amp;size=0.9110320284697508 140w,\nhttps:\/\/images.mktw.net\/im-326276?width=540&amp;size=0.9110320284697508 540w,\nhttps:\/\/images.mktw.net\/im-326276?width=620&amp;size=0.9110320284697508 620w,\nhttps:\/\/images.mktw.net\/im-326276?width=700&amp;size=0.9110320284697508 700w,\nhttps:\/\/images.mktw.net\/im-326276?width=860&amp;size=0.9110320284697508 860w,\nhttps:\/\/images.mktw.net\/im-326276?width=1260&amp;size=0.9110320284697508 1260w\" sizes=\"(max-width: 140px) 100px,\n(max-width: 540px) 500px,\n(max-width: 620px) 580px,\n(max-width: 700px) 660px,\n(max-width: 860px) 820px,\n1260px\" src=\"https:\/\/images.mktw.net\/im-326276?width=620&amp;size=0.9110320284697508\" data-enlarge=\"https:\/\/images.mktw.net\/im-326276?width=1260&amp;size=0.9110320284697508\" alt=\"\" title=\"Cash surge\"><\/div><figcaption class=\"wsj-article-caption article__inset__image__caption\" itemprop=\"caption\">\n<h4 class=\"wsj-article-caption-content\"><span class=\"ez-toc-section\" id=\"Cash_surge\"><\/span>Cash surge<span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p>      <span class=\"wsj-article-credit article__inset__image__caption__credit\" itemprop=\"creator\"><br \/>\n            S&amp;P Global Ratings<br \/>\n          <\/span><br \/>\n  <\/figcaption><\/figure>\n<\/div>\n<p>       Bank of America<br \/>\n        BAC,<br \/>\n        <bg-quote field=\"percentchange\" format=\"0,000.00%\" channel=\"\/zigman2\/quotes\/200894270\/composite\" class=\"positive\">+1.06%<\/bg-quote><br \/>\n       shares jolted higher this week after it reported first-quarter profit that more than doubled expectations on Thursday and announced a $25 billion shock repurchase program.<\/p>\n<p>Blockbuster financial results from major banks helped lift the benchmark Dow Jones Industrial Average<br \/>\n        DJIA,<br \/>\n        <bg-quote field=\"percentchange\" format=\"0,000.00%\" channel=\"\/zigman2\/quotes\/210598065\/realtime\" class=\"positive\">+0.48%<\/bg-quote><br \/>\n       and S&amp;P 500 index to fresh all-time highs this week. On the flip side, share buybacks also can be criticized when they come as stocks trade at historically expensive prices.<\/p>\n<p><strong>JP Morgan Chase &amp; Co.<\/strong>\u2018s JPM board authorized a $30 billion share buyback program in December, with a first-quarter expected target, right after the Federal Reserve in December loosened its ban on big bank stock buybacks during the pandemic. <\/p>\n<p>The halt was put in place last June to help ensure the banking sector had enough capital on hand to function through the coronavirus crisis. The rollback allows buybacks, as long as the aggregate amount of the repurchases and dividends don\u2019t exceed the average of net income for the four proceeding quarters.<\/p>\n<p>Debt investors, in particular, often prefer companies holding cash to pay down existing debts, before buying back stock or funding dividends. Big companies borrowed trillions in the U.S. corporate bond market last year to build up cash buffers and help fund their operations through the crisis. The pace of debt issuance since has slowed, but remains robust this year as corporate executives look to potentially avoid paying more to borrow later, as interest rates climb. <\/p>\n<p><strong>Read<\/strong>: Bank of America tops charts with $15 billion bond deal, the biggest ever from a bank<\/p>\n<p>Corporate bonds pay investors a spread, or premium, over risk-free Treasurys. Rates volatility can lead to higher, or unpredictable, borrowing conditions and headaches for corporate executives trying to map out a longer-term path for a company. <\/p>\n<p>While the Federal Reserve has repeatedly promised to keep its shorter-term interest rates near zero until the economy has fully healed from the pandemic, the 10-year Treasury yield<br \/>\n        BX:TMUBMUSD10Y<span><\/span><br \/>\n      TMUBMUSD10Y has increased about one percentage point from its low back in August.<\/p>\n<p>Companies also might look to borrow in the bond market before any corporate tax changes take hold.<\/p>\n<p>\u201cThe U.S. Federal government debate regarding corporate and individual tax increases has begun to heat up as the first quarter ended,\u201d wrote Nicholas Elfner, co-head of research at Breckinridge Capital Advisors in a second-quarter outlook.<\/p>\n<p>\u201cWhile any changes in tax rates are difficult to predict at this point, the potential of a boost in the corporate tax rate cannot be discounted. Over the longer term, projected earnings growth could be tempered by a tax increase.\u201d<\/p>\n<p><strong>Also<\/strong> <strong>Read<\/strong>: Stock buybacks have totaled $5.3 trillion over the past decade \u2014 has that contributed to U.S. pandemic failures?<\/p><\/div>\n<\/div><\/div>\n<p><\/p>\n<div class=\"byline article__byline\">\n<p>      <span>By<\/span><\/p>\n<div class=\"author  hasMenu\" data-scrim='{\"type\":\"author\",\"header\":\"Joy Wiltermuth\",\"subhead\":\"The Wall Street Journal\",\"list\":[]}' itemscope itemprop=\"author\" itemtype=\"http:\/\/schema.org\/Person\">\n<h4 itemprop=\"name\"><span class=\"ez-toc-section\" id=\"Joy_Wiltermuth\"><\/span>Joy Wiltermuth<span class=\"ez-toc-section-end\"><\/span><\/h4>\n<\/p><\/div>\n<\/div>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">News<\/a> articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/news\/\" target=\"_blank\" rel=\"noopener\">News category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"http:\/\/www.marketwatch.com\/news\/story.asp?guid=%7B21005575-02D4-D4B5-4572-D392975FF0EE%7D&#038;siteid=rss&#038;rss=1\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8220;# Get ready for stock buybacks to roar back &#8221; Stock buybacks expected to jump 30% in 2021 Households aren\u2019t the only ones sitting on a pile of cash. U.S. corporations ranging from financial powerhouses to technology titans also have been stockpiling cash as a ballast against the COVID-19 storm. Investment-grade companies ended 2020 with&#8230;<\/p>\n","protected":false},"author":1,"featured_media":229052,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"","fifu_image_alt":"","footnotes":""},"categories":[70897],"tags":[],"class_list":["post-229051","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/229051","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=229051"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/229051\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/229052"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=229051"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=229051"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=229051"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}