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Profits, Policy And Priorities
One narrative says corporate profits have virtually never been healthier.
It's hard to argue the point on many (most) aggregate metrics.
Beneath the surface, there's quite a bit of nuance, though. A lot of it -- the nuance -- revolves around the all-too-familiar "haves" versus "have-nots" debate which, in the corporate context, is basically a blue-chips versus junk discussion or a large versus small juxtaposition.
All of that's well-worn territory by now, and I'll return to it below. But firs
In 1973, Russell Long is given the attribution for a quote in which he said: “Don’t tax you, don’t tax me, tax that fellow behind that tree.” Those who espouse stock buybacks, in spite of the fact that they have been conned, must believe in the spirit of Sen. Long’s quote. For a buyback to reward stockholders, the shareholders must retain their stock. Only those behind that tree who get rid of their stock get any immediate reward and for those who remain shareholders, there must be a one-to-one correspondence between the amount of the buyback and the immediate price of the stock, a fact that would seem to ignore systematic risk entirely. Dividends do, in fact, offer current income to those who retain their stock, along with the prospect of future rewards. Sellers lose all future returns. Those who espouse buybacks must, in fact, … “believe in magic …”