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The pace at which companies are repurchasing their shares is gaining momentum. Companies in the Standard & Poor’s 500-stock index bought back a record $189.1 billion of their shares during the second quarter, up nearly 60 percent from a year ago, according to S.&P. Dow Jones Indices. The figure topped the previous high of $178 billion set during the first quarter. Through the first six months, corporate buybacks stand at $379.7 billion, a 50 percent increase from the same period in 2017. Technology companies were the busiest, accounting for nearly $37.5 percent of the activity.
Apple again led the way. The iPhone maker bought $21.9 billion of its shares back last quarter. Apple accounted for 11.5 percent of all buyback activity by S.& P. 500 companies.
Rates are rising, but that may not mean a bear market is around the corner. The Federal Reserve meets this week and is widely expected to raise rates for the third time this year. Among the biggest concerns of investors is whether the Fed would eventually push too far with its tightening and end the nearly decade-long bull market. Sam Stovall, chief investment strategist of CFRA, does not believe that a rise in interest rates in the near term will cause a bear market in stocks. In his analysis, he looked at the difference between the Fed funds rate and the yearly change in the Consumer Price Index. In the lead up to every bear markets since 1955, the Fed funds rate was, on average, 2.5 percentage points higher than the yearly change in inflation. Now, though, the target range for the Fed funds rate is below the change in inflation and will remain so even if the Fed raises rates this week, Mr. Stovall notes.
But can the Fed even slow the economy when the private sector is so strong? Ian Shepherdson, the chief economist at Pantheon Macroeconomics, explained that recessions in developed economies were caused by the unwinding of imbalances in the private sector — for instance, the level of debt held by households ahead of the financial crisis — set off by central bank tightening. Now, the level of debt held by households or corporations is not concerning. “The only domestic imbalance in the economy right now is in the public sector,” writes Mr. Shepherdson. That means the Fed does not need to take drastic actions. That could change by the middle of 2019, when continued strength in the labor market and growing wages, along with the effects of the tax cuts could force the Fed to move faster than expected.
The price Brent crude oil climbs above $80 a barrel, its highest level since 2014. The move follows the weekend decision by members of the Organization of the Petroleum Exporting Countries and other major producers like Russia to hold prices production steady. Brent is now up roughly 25 percent this year, and some forecasters expect it to rise to $90. But could oil prices surge and crash as they did in 2008? Analysts at Bank of America Merrill Lynch said that possibility had increased.
How long will it take Americans to forgive the financial crisis bailouts? Twenty-five years, according to Jamie Dimon, the chief executive of JPMorgan Chase. Speaking at an event sponsored by the World Affairs Council in Philadelphia, Mr. Dimon said the government did the right thing, Bloomberg reports.
