Daily Picks Tuesday: Share Buy-Backs Keeping Stock Market Afloat
July 3, 2018
4 Min Read Time
Companies buying back their own shares is the only thing keeping the stock market afloat right now
- Stocks right now are hanging by a thread, boosted by a bonanza of corporate buying unrivaled in market history and held back by a burst in investor selling that also has set a new record.
- Dow components Nike and Walgreen's Boots Alliance led the most recent surge in buybacks, with $15 billion and $10 billion, respectively, last week. In all, 31 companies announced buybacks in excess of $1 billion during June.
- Individual investors head to the sidelines amid fears that a global trade war could thwart the substantial momentum the U.S. economy has seen this year dumping $23.7 billion in stock market-focused funds in June, a new record.
- For the full quarter, the brutal June brought global net equity outflows to $20.2 billion, the worst performance since the third quarter of 2016, just before the presidential election.
- While companies are likely to continue to prop up the market by returning cash to shareholders, it comes against a backdrop of concern that there simply may be no better place to put money amid the trade uncertainty.
Theresa May warns her Cabinet there is now no chance of a bespoke Brexit deal
- Theresa May's chief Brexit negotiator has reportedly warned government ministers there is no possibility of agreeing a bespoke trade deal with the European Union.
- Brussels is not going to soften its strict negotiating position between now and the end of talks.
- One unnamed minister said that the Cabinet had been given a stark choice between a Norway-style Brexit, in which the UK would stay in the single market but accept EU rules it has less influence in shaping, or a limited, Canada-style free trade deal, which would please staunch Brexiteers but is strongly opposed by British business.
- EU figures have warned the UK that time is running out to strike a Brexit deal. On Friday, European Council President, Donald Tusk, said it was the "last call" for the UK put forward an acceptable offer.
- A source close to the EU's negotiating team told Business Insider that it would reject the model May has reportedly been considering, in which the UK would stay in the single market for goods alone.
- Prime Minister Theresa May under pressure to deliver a Brexit which both protects frictionless trade and the open Irish border but satisfies the demands of Brexiteers in the party for independence from the EU.
- May is widely-expected to soften her Brexit position in the coming weeks in order to break the current impasse in negotiations and avoid a potentially disastrous no-deal scenario.
- This is set to involve a watering down of her previous insistence that Brexit will mean no longer being under the jurisdiction of the European Court of Justice.
- The EU has been clear that the ECJ will have to play a significant role if the UK is to have a close relationship with Brussels after it has left the bloc.
Auto-Plant Magnet Starts Losing Pull Thanks to Trump's Trade Threats
- The state of Alabama is seeing delays in big manufacturing investments in light of President Donald Trump’s bellicose trade policies and is urging a more conciliatory approach.
- It has 57,000 autoworkers building about a million cars and light trucks a year. It’s the third-largest state for U.S. auto exports, and landed one of last year’s biggest industrial prizes: the $1.6 billion factory Toyota Motor Corp. and Mazda Motor Corp. chose to build in Huntsville.
- If Trump goes ahead with the substantial tariffs he’s threatened on imported cars and auto parts, it would raise the price of every U.S. vehicle, since they all contain components from overseas.
- The levies would act as a tax that would suppress demand and could expose Alabama exports to retaliatory tariffs implemented by other countries.
- It would also leave executives guessing about which trade rules would govern their automotive investments, he said.
- “Uncertainty equates to risk, and risk is a very chilling factor when it comes to investing your money. You either invest it somewhere else or you hold on to it until the situation becomes more certain,” Canfield, a Republican, said by phone last week.