Chart Of The Day: Record Stock Buybacks Hit Escape Velocity

Tyler Durden's picture

As regular readers are no doubt aware, the persistent bid under the US equity market during Q1 came courtesy of price insensitive corporate managment teams who, in a rush to take advantage of rock-bottom borrowing costs just in case the Fed decides to go crazy and actually raise rates later this year, have issued a record amount of debt and plowed the proceeds back into their own shares, artificially inflating the bottom line and boosting their own equity-linked compensation in the process.

As we noted earlier today, repurchase authorizations hit a record $141 billion last month, providing investors (and the SNB) with an excellent opportunity to frontrun corporate buybacks and giving the centrally-planned, 6-year rally one more excuse to continue for a few more months. 

With that said, we present the following chart from Deutsche Bank which explains just how it is that US stocks are near record levels even in the absence of a bid from households and institutions.

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Bonus chart:

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Cognitive Dissonance's picture

Actually considering US equities have been in a holding pattern for three months it appears the only thing holding up equities at this point are buybacks.

green sheen's picture

It's truly pathetic this website is still getting you to sell your stocks and buy their gold.

Will it ever occur to you the Fed is 100% owned by banks and it has never done anything like goverment intervention in the economy?

max2205's picture

new rule




Borrow low. Buy high 

neidermeyer's picture

Borrow Low

Buy High

Pay the Loan out of Offshore funds that would get taxed if repatriated.

Sell Higher or at least close to cost , avoid 40% haircut by Uncle Sam.

Lather , Rinse , Repeat.

CH1's picture

Since this can go on forever, I'll just ignore it.


aurum4040's picture

@ cognitive dissonance - you're exactly right my friend, look at the buy back period between September and October 2014, right around the time Bullard made a qe infinity stick save. And 'coincidentally' buy backs surge to record highs thereafter. Central planning at its best. 

Bossman1967's picture

Wtf are you talking about the fed has been interviening in this economy for over 100 years hell it is the economy at this point

smukster's picture
smukster (not verified) Bossman1967 May 10, 2015 5:37 PM

Yeah but it was never that plain to see for everyone. Fun fact: People stop taking all these markets and values (and money itself) seriously if this goes on. Could be interesting.

Clowns on Acid's picture

Yo green sheen...I told you before...STFU. You know nothing and you need to listen and not sullie and despoil these pages until your fingers are operating outside your nose.

All_Your_Base's picture

Green shoots is just trying to MDB us for lulz

Gypsy Ramono's picture

This is so funny! Nearly as funny as CNBC.

Dude, go surfing, smoke a joint, drop some acid and screw a chick. 

Dr Timothy Leary


Squid-puppets a-go-go's picture

Green sheen, you total sociopathic douche.

Assuming your posts arent disingenuous trolling and you actually feel what you say:

EVERYONE on this fucking website is 999% aware that the Fed is owned by a collection of merchant banks. E.v.e.r.y.o.n.e. Geddit? So shut the fuck up

CHX's picture

Buybacks, the SNB and other hedge funds, as well as some courageous retailers that joined the party (too) late. Oh, and some blackened bears with shorts on fire.

Yen Cross's picture

 Agree C/D. The equity markets appear to be bouncing off the "rev limiter". At some point more fuel( QE) will be required.

 I hope the central banksters are changing their oil regularly...  turbochargers require prudent maintenance.

Cognitive Dissonance's picture

Personally I think they want to blow the engine so they can replace it. But they don't want to be blamed.

Yen Cross's picture

 Or they want to install a "super charger"?  Perpetual QE, and lessen the load on the engine.

 Superchargers have their limitations. Low compression ratios, destroy cranks.

SweetDoug's picture




Can somebuddy with a way higher pay grade show me the future, a logic tree, that when the rates go up, and the market crashes, what are these companies going to do with all this stock on their balance sheets, that's worth 1/10 of what they paid for it?


Inquire minds, at least what's left of mind, would like to know.



Cheduba's picture

It won't be management's problem - they'll cash out their stock options with a golden parachute and leave taxpayers with the loss when the zombie corporations are bailed out.

kowalli's picture

you will work for food ONLY, i.e. slaves or civil war.

Ham-bone's picture

if bond markets can't be controlled by hook or by crook...they'll be closed before rates are allowed to rise.

This is a one way trip to nowhere...all they care is that the trip just keeps going a little longer

smukster's picture
smukster (not verified) SweetDoug May 10, 2015 5:34 PM

And what if it's worth 10x?

i_call_you_my_base's picture

The bigger concern is that if rates rise, they won't be able to roll their debt and they will go bankrupt.

jldpc's picture

When corps issue regulated stock, some is sold to outsiders (authorized and issued) and some is held as (authorized but not issued). The former generates cash for the corp, the later does not. The later is called Treasury stock; it is held with zero value on balance sheet. Repurchased shares are paid for with cash or credit; and then go into Treasury stock at no value. The balance sheet may thus show a drop in cash or an increase in the liability for the credit. Treasury shares may be resold for cash later on.

weburke's picture

when rates go up the market does not crash, after a while, it starts to go down. some think the end game in some stocks is for them to be taken private. It is much less expensive to be private then to have a company listed on the stock exchange. For some companies, they make good money borrowing low and buying stock they can push up in value. 

The market "crash" or correction, could be caused by any number of factors, good luck picking that moment. 

What may change is that all the products you now buy cheap to use living, may become way more expensive and hard to get because of stunts the elites do. You can easily buy some supplies you will use next month ahead of time, if you have storage, and watching expiration dates, you can manage the products you buy ahead of using. There is no cost to that, and it could be a real investment in effect, if/when the elites cause us all trouble, again. And they are planning it for sure. 

yogibear's picture

Use the cheap money to control all of your stock. 

Especially when you and the board of directors cash in the stock options.

DrData02's picture

MMMmm.  equity-linked compensation.

Yen Cross's picture

  When  you have traders like Gross and Gundlach shorting {European core}>debt, you have to take a long hard look at who's holding the majority of the ponzi debt, and from WHERE it originates... Bitchez

Nobody For President's picture

Those charts look like the charts of the number of Chinese opening new brokerage accounts.

This is going to end well.

orangegeek's picture

tick tock tick tock

holdbuysell's picture

Gravity vs. corporate balance sheets is the new title fight.

Which can hold out longer?

mt paul's picture

robbing Peter to pay Paul


i'll take my share

in fermented seal flippers...

Midnight Rider's picture

I find it interesting that buybacks peaked in both May 2013 and May 2014. Here we are at May 2015. So, are we going to hit another peak? Maybe the May 2015 peak is the "blow off peak" as it sure is massively higher than 2013 or 2014.

Monetas's picture
Monetas (not verified) May 10, 2015 8:08 PM

Dilution of stock is bad .... concentration of stock is bad, too ? WTF

BoPeople's picture
BoPeople (not verified) May 11, 2015 5:38 AM

It is the untold crony cycle:

1. Private connected investors borrow money to invest in new companies.

2. Banks take the company public on the backs of connected bank customers and funds to purchase the ownership from the connected private investors for a profit.

3. The banks ensure the price of the public company increases through control of stock price.

4. The crony management of public companies have their companies borrow money to buy back shares at the inflated price.

All along the way; the banks, crony managers and media profit and conspire to paint a completely false identity for what is really going on. Profits or a good product are not needed, only a good story to provide cover for increasing the money supply and directing it into the right hands. It is good to be a crony.