BofA: "This Was One Of The Largest Weekly Buybacks In Our Data History"

One month after Goldman announced its buyback desk had its "busiest week ever", when corporate stock repurchases saved the market from crashing in the aftermath of the February 5 VIXplosion which sent the market into a 10%  correction in just days, companies remain one of, if not the biggest buyer of stock.

UBS explained this rather simply with two charts: US equity outflows and implicit outflows from derivatives net selling drove the selloff...

while corporations were the primary buyer, offsetting fund/futures selling.

UBS described this simply as "Record selling offset by corporate bid"

Fast forward to today, when according to Bank of America's flow desk, last week the bank's clients were big net buyers of US equities, purchasing $3.6bn in stock, following a week of selling. In terms of products, net buying was mostly via ETFs as single stocks saw net sales for the third week.  Broken down by investors type, hedge funds were the sole net buyers, while Institutional clients and private clients were net sellers. But nobody was a bigger buyer of stock than the original sellers of stocks themselves, as it was the amount of corporate buybacks that was once again truly remarkable.

As BofA notes, stock repurchases by corporate clients (i.e. corporations), not only remained elevated, above $1.5Bn for the third week, but also one of the "largest weekly buyback In our data history", led by Banks and Financials buying back their stock last week (just in case there is still confusion why Jamie Dimon was so confident to buy JPM stock at the "Dimon Bottom").

In total, YTD buybacks purchased via BofA's desk totaled nearly $11 billion (up +53% YoY), and the strongest start to a year since 2014.

And, if JPM is right in its forecast that a record $842 billion in stock will be repurchased this year, $842BN will be repurchased this year, or just shy of $3 billion every single trading day...

.... this is just the beginning as companies do everything in their power, and issue as much debt as they can (using the proceeds to fund buybacks) to prevent their stock from dropping.

Comments

Team_Huli thegreatsleuth Wed, 03/14/2018 - 18:51 Permalink

This just goes to show that company executives are NOT worth the compensation they are paid. What a colossal waste of the firm's cash!! The share price is going to fall -- just look at today's (intra-day) chart of CSCO. It's obvious where the company walked their price up, only to give it up.

I would rather each company negotiate to repurchase their stock that the Federal Reserve has added to their balance sheet...

In reply to by thegreatsleuth

JoJo Kracko Wed, 03/14/2018 - 18:44 Permalink

Just so I'm clear on this, in the first 11 weeks of the year we've only cracked $3B in corporate buybacks once.  We couldn't even do it when the market sold off 10%.   And these guys are still predicting that we will do $3B/day on average for every single week for the rest of the year?

 

GTFO with that mindless pumping.

Roger Ramjet Wed, 03/14/2018 - 18:54 Permalink

Corporate debt, much of it used to fund share buybacks, has now swelled to 75% of GDP . . . and not a word out of the credit rating agencies???  No downgrades, no credit watches.  Moody's and S&P, they're still in business, right?

MrNoItAll Wed, 03/14/2018 - 22:12 Permalink

Buybacks are what "saved us" from the recent 10% correction. The buyback desks were in overdrive, pumping those indexes up globally. I read somewhere that 75% of stock market gains since 2008 are due to buybacks. Sounds about right.

Ink Pusher Thu, 03/15/2018 - 01:06 Permalink

BofA: "This Was One Of The Largest Weekly Buybacks In Our Data History"

BofA : Ain't the only ones that are wallowing up to their nostrils in buyback purgatory...

Buyback records will be set,broken and reset all the way to year end.

The pump and dump doesn't work if nobody is playing.