The Fed Put may be kaput, but the CFO Put is still going gut, as they say in German. Starting in September, the Fed intends to shrink its balance sheet by $95 billion per month. During the first half of 2022, the Fed has remained hawkish, and resisted caving in to the stock market's tightening tantrum.
However, Corporate America continues to pour some of its massive cash flow to investors through buybacks and dividends, which together totaled a record $1.51 trillion over the past four quarters through Q1-2022 (chart).
Over this period, some of the $984.6 billion in buybacks were aimed at avoiding dilution attributable to employee stock compensation plans. But as much as two-thirds might have boosted earnings per share by reducing the share count. We doubt that the new 1% federal tax will have any impact on buybacks.
