Tax cut sparks record-setting $178 billion buyback boom

1. It's raining buybacks: Corporate America is throwing a record-setting party for shareholders....

Posted: May 21, 2018 2:27 AM
Updated: May 21, 2018 2:27 AM

1. It's raining buybacks: Corporate America is throwing a record-setting party for shareholders.

S&P 500 companies showered Wall Street with at least $178 billion of stock buybacks during the first three months of 2018, according to Howard Silverblatt of S&P Dow Jones Indices.

That's a 34% bump from last year and tops the prior record of $172 billion set in 2007, just prior to the start of the Great Recession. Apple rewarded shareholders with $22.8 billion in buybacks -- the most of any company in any quarter ever.

Total S&P 500 shareholder payouts -- buybacks plus dividends -- for the past 12 months could top $1 trillion for the first time ever, Silverblatt said.

The buyback bonanza occurred during the first full quarter after President Donald Trump signed into law a massive corporate tax cut that was supposed to lift business spending on job-creating investments.

The tax law reduced the corporate tax rate to 21% from 35% and gave companies a break on taxes owed when returning foreign profits. That one-two punch allowed companies to reap huge profits, a sizable chunk of which have been returned to shareholders. Profits had already been on the rise thanks to the accelerating economy.

Buybacks are clearly booming, more than 5.5 million employees received a tax cut bonus, pay raises or 401(k) hikes, according to the White House. But business spending -- the stated goal of the tax law -- has not significantly accelerated, at least not yet.

Related: Tax cut will drive innovation, ex-Home Depot CEO says

One broad measure of business spending, real nonresidential fixed investment, rose by 6.1% during the first quarter. That's solid growth signaling a strong economy. However, it was roughly in-line with the past several quarters. It even marked a slight deceleration from the final three months of 2017.

That means companies have not significantly boosted spending on equipment, factories and other investments that create jobs and boost wages.

Some economists aren't surprised that the early windfall of the tax cuts is going to Wall Street, instead of Main Street. They note that companies have long had access to tons of cash.

"If they had plenty of cash, you shouldn't really expect having access to more would lead them to invest," said Alan Auerbach, director of Berkeley's Robert D. Burch Center for Tax Policy and Public Finance.

2. Mark Zuckerberg faces the European Union: Facebook's CEO will meet senior members of the European Parliament as soon as next week to discuss how Facebook uses personal data.

Antonio Tajani, the parliament's president, said he hopes Zuckerberg can restore the confidence of Facebook's European regulators and customers.

The parliament will also organize a series of committee hearings with Facebook representatives and other tech companies, though Zuckerberg is not expected to attend.

Facebook faces scrutiny around the world following the Cambridge Analytica data scandal. Zuckerberg testified before the US House of Representatives and the Senate in April, but he has refused to testify before the United Kingdom's parliament.

3. Rollback of Dodd-Frank: The House is set to vote next week on a Senate bill that would cut Obama-era regulations for thousands of community banks and regional lenders, including State Street, BB&T and SunTrust.

The bill would raise the threshold at which banks are considered "too big to fail." More than two dozen midsize US banks would be shielded from some Federal Reserve oversight.

They would no longer have to hold as much capital to cover losses on their balance sheets. They would not be required to have plans in place to be safely dismantled if they failed. And they would have to take the Fed's bank health test only periodically, not once a year.

4. Home sales: The economy is booming, inflation is picking up, interest rates are rising, and people are scrambling to buy the limited supply of homes available on the market.

On Wednesday, the Commerce Department will report the number of new homes sold in April. New home sales surged to a four-month high in March.

But existing home sales have only been inching higher. Homeowners are reluctant to sell as home prices and mortgage rates soar. They worry that their next homes will be more expensive than the ones they live in now - even if they can get a lot more money for their current homes. The National Association of Realtors will report Thursday how many homeowners sold their homes last month.

Mortgage rates hit a seven-year high this month. The average rate on a 30-year fixed mortgage has jumped to 4.61%, according to Freddie Mac.

5. Europe's new data protection law: On Friday, the European Union will start to enforce a sweeping new data protection law that will give consumers much more control over how their personal details are used.

Regulators say the rules are necessary to protect consumers in an era of huge cyberattacks and data leaks, highlighted by Facebook's admission that the personal details of millions of its users were improperly harvested.

The EU General Data Protection Regulation applies to any organization that holds or uses data on people inside the European Union. Google, Facebook and other tech companies must comply. You've probably already seen emails from tech companies explaining their new privacy policies as businesses scramble to get up to code before the rules go into effect.

6. Coming this week:

Tuesday - Kohl's reports earnings

Wednesday - New home sales report; Lowe's, Tiffany and Target and L Brands report earnings

Thursday - Existing home sales report; Best Buy and Gap report earnings

Friday - EU General Data Protection Regulation goes into effect

Mississippi Coronavirus Cases

Data is updated nightly.

Confirmed Cases: 14372

Reported Deaths: 693
CountyConfirmedDeaths
Hinds92024
Lauderdale69957
Madison68721
Scott62310
Neshoba56534
Jones52519
Forrest51137
DeSoto4936
Leake39512
Rankin3736
Holmes37324
Jackson30013
Copiah2854
Attala27715
Monroe25324
Leflore25030
Lincoln25022
Newton2504
Harrison2457
Lamar2275
Yazoo2233
Pearl River20731
Pike20211
Adams19015
Lowndes1828
Noxubee1696
Washington1636
Warren1587
Oktibbeha15010
Bolivar14911
Wayne1480
Jasper1483
Covington1411
Clarke13517
Smith13311
Kemper13110
Chickasaw12812
Lafayette1254
Lee1175
Carroll11410
Coahoma1133
Marion1129
Winston1051
Clay1043
Lawrence991
Simpson930
Hancock8711
Yalobusha855
Wilkinson859
Itawamba857
Grenada823
Montgomery811
Sunflower783
Union785
Marshall763
Jefferson Davis752
Tippah7111
Tate691
Panola643
Claiborne642
Calhoun614
Webster591
Amite561
Humphreys537
Tunica523
Walthall510
Perry492
Prentiss413
Jefferson400
Choctaw352
Stone300
Pontotoc283
Franklin272
Tishomingo260
Quitman250
Tallahatchie251
George201
Benton140
Alcorn141
Greene111
Sharkey70
Unassigned00

Alabama Coronavirus Cases

Confirmed Cases: 16310

Reported Deaths: 590
CountyConfirmedDeaths
Mobile2085112
Jefferson167397
Montgomery144634
Marshall6609
Tuscaloosa63212
Lee52632
Franklin4986
Shelby47019
Tallapoosa41063
Butler39113
Chambers34024
Madison3154
Elmore3007
Baldwin2829
Walker2821
DeKalb2403
Etowah24011
Dallas2323
Coffee2191
Lowndes21610
Morgan2111
Sumter2106
Autauga1923
Houston1854
Bullock1763
Pike1730
Colbert1612
Calhoun1523
Marengo1506
Choctaw1487
Russell1480
Lauderdale1452
Hale1416
Wilcox1327
Barbour1301
Clarke1282
Randolph1247
Marion11711
St. Clair1081
Pickens964
Dale960
Talladega963
Chilton931
Greene914
Cullman880
Limestone860
Winston770
Covington751
Jackson742
Bibb711
Henry702
Macon672
Crenshaw662
Washington656
Blount531
Escambia483
Lawrence460
Geneva400
Perry360
Conecuh351
Coosa341
Monroe342
Cherokee332
Clay272
Lamar210
Cleburne131
Fayette130
Unassigned00
Tupelo
Clear
70° wxIcon
Hi: 84° Lo: 63°
Feels Like: 70°
Columbus
Few Clouds
74° wxIcon
Hi: 85° Lo: 64°
Feels Like: 74°
Oxford
Clear
66° wxIcon
Hi: 77° Lo: 61°
Feels Like: 66°
Starkville
Scattered Clouds
72° wxIcon
Hi: 83° Lo: 59°
Feels Like: 72°
WTVA Radar
WTVA Temperatures
WTVA Severe Weather