Over the past 13 weeks, Wall Street-listed companies have announced their willingness to buy back more than $383 billion worth of their own shares, the highest figure since 2018 and nearly 30% higher than during the telling period a year ago. It's worth mentioning that of the $383 billion, as much as nearly 29% ($110 billion) is accounted for by Apple's share buyback (AAPL.US), which was heavily reported last week.
Apple's corporate decision is not surprising in view of the fact that it is the company founded by Steve Jobs that is the perennial leader when it comes to the value of its share buybacks.
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Source: Bloomberg Financial LP
The value of share buybacks tends to increase in an environment of rising corporate profits (the fastest pace in almost two years). This, of course, has a direct bearing on the generation of free cash flow to enable buybacks. Importantly, however, making such corporate actions can tell us that in the eyes of business, the global economic situation is good and should support the generation of shareholder returns in the long term.
The exception to this rule, however, could be the materialization of a sharp recession in the economy. This is what investors feared, among others, in the drudgery of 2023.
Source: Bloomberg Financial LP via Yahoo Finance and Deutsche Bank
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