EDITOR NOTE: Here we go again. Stock buybacks. Big bank stocks are rising, not necessarily as a result of earnings but fueled by cheap debt buybacks. We saw this trick early on at the continuation of the current bull market in 2016 which marked the largest corporate buybacks in US history. Not bad for those who invested during this period, but what about value? Fortunately, the smart money has also been hedging their bets, buying gold and silver when both were at their lowest levels. As far as investors who might be tempted to buy into this new round--might they also be willing to invest in assets of real value, especially in light of the looming inflationary environment ahead, and, of course, the possibility that valuations may be way too high amid a third wave of pandemic infections promising more lockdowns and more economic pain ahead?
Greg posted the news on Friday US time of the Federal Reserve giving the green light (waving the white flag?) for US banks to begin buying back stock again.
Greg's post here:
The Fed passing approval for buybacks was expected, given the Fed has been satisfied banks were coping with the pandemic. JPMorgan, Goldman Sachs, Morgan Stanley, Citi, and others, have already confirmed they'll be doing so.
This might give bank equities some impetus (it already did late on Friday in the US), they been laggards, though of course price may well have work to do given the expected nature of the news.
Originally posted on Forex Live