Buying/Selling of US Equities, % Market Cap

One of the criticisms of proposed tax breaks for businesses is that businesses probably won’t use the windfall for wage increases or hiring, but rather for continued stock buybacks – which only benefit shareholders (including, of course, the executives of the businesses).  To shed light on this behavior, Credit Suisse studied net stock share purchases since the financial crisis of 2008-2009 by businesses, US households, and US financial institutions (mutual funds, ETFs and the like).  The conclusion:  the corporate sector has been the only net buyer of stocks over this period.  In an independent but related study, Societe Generale concluded that virtually all the net debt issued this century has been used to fund stock buybacks.  It seems the critics of coming tax relief for corporations have a point!

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