Goldman's Buyback Desk Has Busiest Week Ever, But "It's Not Going To Be Enough"

Despite soaring costs of funds, it appears US corporations are spending their 'hard-earned' tax-reform cash on buybacks (just as was suggested). In fact, as Bloomberg reports, the Goldman  unit that executes share buybacks for clients just had its busiest week ever, but even that couldn’t keep stocks from flopping into a correction.

Last week, the firm’s corporate-trading desk saw 4.5 times its average daily volume from 2017, according to data seen by Bloomberg.

That probably explains the 10% panic-spike in Apple shares...

However, while cash-heavy firms spent up for their own stocks, the market still ended notably lower - showing just how large the passive herd's exit really was...

AsMatt Maley, a strategist at Miller Tabak & Co, told Bloomberg,

“The corporate buying -- they were basically the only buyers last week,’’

And for now that is true, but

“Whenever we have forced selling take place, the buyers disappear and the sellers have to sell no matter what. And corporate buybacks are not going to be enough.”

The problem is - what happens next, as debt costs spike, it will become harder for C-level execs, no matter how desperate to juice their compensation-dependent stock prices, to justify the balance sheet leverage to buyback shares in a market whose Fed Put appears to have been removed...