Corporate America’s Buyback Binge Hits Record Highs as Deutsche Bank Issues Warning
Like Romeo pursued Juliet, corporate America can’t help but obsess over stock buybacks. In July, companies repurchased $165.63B in shares, crushing 2007’s peak by 88%. But as markets near fresh highs and Wall Street braces for a correction, Deutsche BankDB warns these buying binges typically happen “more at market tops than bottoms.”
- Financials, Tech, and Communication sectors are leading with $689B in combined repurchases — pushing the YTD total to $926.1B, already $108B ahead of 2022’s record.
- Specifically, JPMorganJPM, Bank of AmericaBAC, and Morgan StanleyMS authorized $50B, $40B, and $20B in respective buybacks this year — and even Uber just declared $20B.
Love triangle: This buyback love affair comes at dividends’ expense, as S&P 500 yields now sit close to the all-time lows last seen during the Y2K tech bubble (when investors only cared about growth). Worse yet, these buyback programs often artificially inflate EPS metrics to prioritize executive compensation and earnings guidance over genuine investments. Like Shakespeare’s tragic romance, this financial courtship may end badly, though we’re already losing our quarterly dividend Valentine.