Remember when the Fed and the administration were both raging against corporate buybacks, which especially in the case of airline and various service stocks, were the primary reason why so many companies found themselves without a cash buffer as the covid pandemic struck.
Well, it anyone hoped that companies would have learned their lesson - or any lesson - from the pandemic and instead of distributing capital to shareholders would save it for a rainy day, get ready to be disappointed. Because not only are buybacks back, they are back thanks to the Fed's approval of banks to generously return billions back to shareholders.
As Bank of America's Jill Carey Hall writes today, buybacks by BofA's corporate clients over the past three weeks have picked up to their highest levels since March. With Banks allowed to buy back stock again in 1Q, Financials buybacks increased back to March levels.
The number is modest as financials comprised just 7% of buybacks from 2Q-4Q last year after making up 40% of buybacks in 2019; we expect these numbers to ramp up aggressively in the coming months as financial engineering returns to normal and as companies across all sectors quietly resume issuing debt and using the proceeds to prop up their stock price.