Why I Think the Stock Market Cannot Crash in 2018




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ORIGINAL POST

POSTED BY Ed (5 mths ago)
But the crash-insurance policy is a one-time deal. And then what?

The 85% of S&P 500 companies that have reported earnings so far disclosed they’d bought back $158 billion of their own shares in Q1, according to the Wall Street Journal. The quarterly record of $164 billion was set in Q1 2016. If the current rate applies to all S&P 500 companies, they repurchased over $180 billion of their own shares in Q1, thus setting a new record:

https://wolfstreet.com/wp-content/uploads/2018/05/US-share-buybacks-2018-Q1.png


At this trend, including a couple of slower quarters, S&P 500 companies are likely to buy back between $650 billion and $700 billion of their owns shares in 2018. This would handily beat the prior annual record of $572 billion in 2007.

Here are the top buyback spenders in Q1:

Apple: $22.8 billion
Amgen: $10.7 billion
Bank of America: $4.9 billion
JPMorgan Chase: $4.7 billion
Oracle: $4 billion
Microsoft: $3.8 billion
Phillips 66: $3.5 billion
Wells Fargo: $3.34 billion
Boeing: $3 billion
Citigroup: $2.9 billion


Buybacks pump up share prices in several ways. One is the pandemic hype and media razzmatazz around the announcements which cause investors and algos to pile into those shares and create buying pressure. Since May 1, when Apple announced mega-buybacks of $100 billion in the future, its shares have surged 11%. The magic words.


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