U.S. stocks have been able to hit fresh highs this year despitea dearth of demand from a key source of buying.
|Share repurchases by American companies this year are down 20%from this time a year ago, according to Andrew Lapthorne, SocieteGenerale's global head of quantitative strategy.
|Ultra-low borrowing costs had encouraged large firms to issuedebt to buy back their own stock, thereby providing a tailwind toearnings-per-share growth.
|“Perhaps overleveraged U.S. companies have finally reached alimit on being able to borrow simply to support their own shares,”Lapthorne wrote.
|Repurchase programs account for the lion's share of net inflowsinto U.S. equities during this bull market. Heading into 2017,equity strategists anticipated that the buyback bonanza wouldcontinue in earnest, fueled in part by an expected tax reform planthat would provide companies with repatriated cash to invest.
|Bloomberg News
|Copyright 2018 Bloomberg. All rightsreserved. This material may not be published, broadcast, rewritten,or redistributed.
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