Markets Plummet Further in Asian Trading: Live Updates
The announcement came after an unusual late-night conference call among members of the bank’s Governing Council, which followed signs that bond investors were losing faith in Italy’s ability to repay its enormous government debt. If Italy’s borrowing costs reach unsustainable levels, the future of the eurozone would be at stake.
The bank said it would buy even more assets if need be.
“The Governing Council is fully prepared to increase the size of its asset purchase programs and adjust their composition, by as much as necessary and for as long as needed,” the bank said in a statement. “It will explore all options and all contingencies to support the economy through this shock.”
First came the buyback boom. Now comes the bust.
Major American corporations spent roughly $1.4 trillion dollars buying back their own shares over the last three years, according to Goldman Sachs.
Now, after a stock market crash that has pushed prices back to where they were in early 2017, almost all that money is gone, at least for the moment.
The penchant of American corporations for buying back their own shares — it is largely an American phenomenon — became a political football in recent years. The Trump administration sold its vast overhaul of the American tax system, which was signed into law in December 2017, as a measure that would supercharge capital investment from companies, increasing productivity and wages for workers.
Economists can debate how well it worked. Wages have risen. Business investment has tumbled. No one can prove the tax change is the reason.
But the tax overhaul left major American companies flush with cash, and set off a record amount of share buybacks by SP 500 companies. Buybacks hit a record in 2018, with net buybacks accounting for roughly $600 billion in outlays from companies, according to Goldman Sachs. The full numbers for 2019 are still coming in but are estimated to be around $480 billion.
Article source: https://www.nytimes.com/2020/03/19/business/stock-markets-today-coronavirus.html