Corporate America has already funneled the GOP's tax cuts into a trillion dollars in stock buybacks and dividend payments, but we may see another around of buybacks in the near future.
Investors who spoke to Reuters say Trump's trade war will likely lead to a slowdown in corporate investment plans and, as a result, corporations may float the value of their stock with more buybacks.
NEW YORK (Reuters) - The escalating trade war between the United States and China may prompt U.S. companies to shift money they had earmarked for capital expenditures into stock buybacks instead, pushing record levels of corporate share repurchases even higher. [...]
Instead, fund managers say, the reality of tit-for-tat U.S. and Chinese tariffs on more than $34 billion worth of goods - and the U.S. threat to slap additional tariffs on more than $200 billion worth of Chinese products - may undermine business confidence, freezing corporate investment plans.
We've discussed the possibility that Wall Street and Corporate America will pretend things are normal for as long as they possibly can and this seems like a facet of that. Artificially boosting the value of the company to maintain appearances while Trump wrecks the world is not something they can do forever, but they can for a time.
What will happen when the music finally stops playing?