Posted on 05/06/2018 7:22:59 AM PDT by mandaladon
On Friday’s “PBS NewsHour,” New York Times columnist David Brooks said that the GOP tax bill is working better than he thought it would and the evidence “seems to be that what the Trump people told us would happen is happening, that companies are reinvesting the money.”
Brooks stated, “I was against the Trump tax cuts. But the early evidence is that they’re working better than I thought. And so, in the first quarter, among S&P companies, capital expenditures are up 39 percent. That’s a seven-year high. That’s far higher than a lot of us thought. Stock buybacks, which is just giving people — to shareholders, that’s only 16 percent. So the evidence from just the first quarter seems to be that what the Trump people told us would happen is happening, that companies are reinvesting the money. … And so, it’s important to oppose what’s opposable and what’s reprehensible and offensive. And we’ve been doing that, as I say, for three years. But it’s also important to see reality. And the more serious opposition will, frankly, be on disastrous policies or not disastrous policies.”
(Excerpt) Read more at breitbart.com ...
I guess Brooks took the prozac afterall.
Just to keep you lurking sad sack leftist schlemiels up-to-date on the ol’ win-o-meter ... you’re always wrong and we are winning & grinning.
Stock buybacks are just a way to weight the books. Companies can “raise” earnings-per-share even when real earnings are down. The capital is not invested; it is removed from the table.
Just a few years ago, buybacks were illegal because they are too-often used to manipulate stock prices at the expense of small investors. It’s indicative of the short-term mindset that now permeates our culture. The Esau generation doesn’t believe in long-term, sustainable returns; they want their pottage now.
Paul Krugman and little Marco are on suicide watch. And a freeper or two.
companies are reinvesting the money.
Duh.
Our betters...all hail the genius.
Nah...it’s just companies giving their evil shareholders and rent seekers an unfair and totally undeserved chunk of the profits, denying the proletariat of what they are due.
Very, very,wrong. The capital is directly reflected in each share being worth more. A smaller number of liquid, public shares of the same value company makes each share worth more. The wealth is evenly distributed to shareholders.
This Brooks guy is almost wrong as often as Krugman.
Sound familiar?
I’ve never seen a study on this, but I would like to: do stock buy backs assist in a subsequent equity capital raise during the next growth cycle?
Stock buy backs are ultimately about capital/profit allocation, and should only be undertaken when no other more profitable alternatives are available. Ie, buy at or near a recent low. Too many companies hear Buffett utter the phrase and think geez we gotta do a buy back.
In my opinion, it’s most often a sign of “caretaker” management, more concerned about not screwing up than growing the business. Businesses today are run by people with way too much formal education and not enough on the ground experience spotting opportunities.
Just my opinion.
I have a lot of Apple stock and just finished remodeling our bathroom for15k. All citizen workers and was 60% labor.
What’s missing: I’ve decided to go the NY Times office, sit at my desk and commit sepuku with a letter opener, and as my aorta hemorrhages, go into the publisher’s office and bleed all over him.
OK, way to go.
And this is my point exactly.
Buybacks have never been illegal - never.
While not strictly illegal, most buybacks were assumed to be market manipulation until 1982:
“Rule 10b-18, which was adopted in 1982, provides a voluntary “safe harbor” from liability for manipulation under Sections 9(a)(2) and 10(b) of the Securities Exchange Act of 1934 (Exchange Act), and Rule 10b-5 under the Exchange Act, when an issuer or its affiliated purchaser bids for or purchases shares of the issuer’s common stock in accordance with the Rule 10b-18’s manner, timing, price, and volume conditions.[1]”
https://www.sec.gov/divisions/marketreg/r10b18faq0504.htm
While I believe companies should be able to do buybacks, they have become ubiquitous and do not provide value to the average shareholder. The immediate rise in stock price doesn’t always offset the loss of profit from capital reinvestment or acquisition.
I know it’s not popular with the current stock-price-is-god mentality, but those capital reserves are what allowed companies to operate through the lean times. Excessive buybacks to boost stock prices are literally spending your seed-money.
This guy’s career will probably be short now.
A lowly journalist admits that a multi-billionaire businessman understands the economics of business better than him?
Considering Brooks is the “conservative” in the NY Times, do you think he will write an article in support of the Tax bill? I suspect not.
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