Listen, if Scott Bessent can’t find anyone to buy America’s debt, he can just cajole the Fed into giving banks the regulatory relief they so desperately want in exchange for a promise to buy all the bonds he can’t sell. Easy-peasy!
And look, if all those bonds are classified as HTM, losses don’t matter. Unless there’s a run on the banks and they have to be reclassified as HFS. But when has that ever happened, right?
What about the stocks? Who’s going to buy those if foreign investors don’t want them anymore due to… well, just pick a reason? There are plenty all of a sudden — reasons not to want US assets — in case you haven’t noticed.
One answer is just companies themselves. When all other forms of “plunge protection” fail, there’s always buybacks. 2025’s no exception. The figure on the left, below from Nomura’s Charlie McElligott, shows YTD authorizations. They’re running at a breakneck pace.
Buybacks, McElligott remarked, are a “perpetually under-appreciated component of equities’ ‘shock absorption’ capacity.”
The figure on the right suggests US equities might need that shock absorption. PMs are trimming their Overweights in US shares steadily and meaningfully.
As McElligott put it, “the global equities rebalancing continues from the US exceptionalism overshoot of last year and into this year’s” trade, which finds market participants grappling with the Trump administration’s attempt to reset various and sundry status quos.
Of course, that reset process means braving “a little disturbance.” “But we’re ok with that. It won’t be much.”
” When all other forms of “plunge protection” fail, there’s always buybacks. 2025’s no exception. The figure on the left, below from Nomura’s Charlie McElligott, shows YTD authorizations. They’re running at a breakneck pace.”
One can interpret this in two ways. The happy one is that is an indication of strong corporate profits and cash flows. The other grouchy one is that it indicates that CEOs can find NO other potentially profitable expansion and capex opportunities to spend their “excess” cash flows on.
For short or medium horizon investors the second matters little. Share counts are falling which naturally supports share prices. Longer-term investors might focus more on number two.
Also grouchy, (3) Buybacks benefit the major shareholders and C-suite’s compensation the most.
BOJ owns about 7% of Japanese equities via ETFs that were purchased between 2012 and 2021. This ETF asset now appears to be a “permanent” holding for BOJ, as any discussion by BOJ that even hints at selling any portion of the ETFs sends the Japanese stock market into an immediate decline.
I am never saying never on this one.