{"id":7671,"date":"2015-04-29T05:45:55","date_gmt":"2015-04-29T10:45:55","guid":{"rendered":"http:\/\/olduvai.ca\/?p=7671"},"modified":"2015-04-29T05:45:55","modified_gmt":"2015-04-29T10:45:55","slug":"record-financial-engineering-will-goose-stocks-goldman","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=7671","title":{"rendered":"Record Financial Engineering Will Goose Stocks: Goldman"},"content":{"rendered":"<h3 class=\"entry-title\"><a href=\"http:\/\/wolfstreet.com\/2015\/04\/28\/goldman-forecasts-banner-year-for-financial-engineering\/\" target=\"_blank\">Record Financial Engineering Will Goose Stocks: Goldman<\/a><\/h3>\n<p>GE, in order to paper over a net loss of\u00a0$13.6 billion and declining revenues in the first quarter, said on April 10 that it would buy back $50 billion of its own shares. That\u2019s on top of the $10.8 billion in actual buybacks last year. The announcement was beat only by Apple\u2019s $90 billion announcement last year, to which it added another $50 billion on Monday.<\/p>\n<p>It\u2019s going to be a great year, not for revenues and earnings, but for share buybacks. Hence for share prices and executive bonuses,\u00a0<em>despite<\/em>\u00a0crummy revenues and earnings.\u00a0Goldman Sachs says so.<\/p>\n<p>In a\u00a0<a href=\"http:\/\/www.reuters.com\/article\/2015\/04\/28\/us-usa-markets-buybacks-idUSKBN0NJ29E20150428\"><u>note to clients<\/u><\/a>, Goldman predicted that companies would goose share buybacks by 18% over 2014 and dividends by 7%. That would be a $1-trillion banner year.<\/p>\n<p>The year has started out on the right foot. Repurchase plans, including GE\u2019s mega-dose, have already reached $337 billion through April 24, Reuters reported, based on data from Birinyi Associates. That\u2019s a 34% jump over the same period last year.<\/p>\n<p>The next party of actual repurchases will commence in a week or so, Goldman\u2019s chief U.S. equity strategist David Kostin wrote in the note. Turns out, that\u2019s when about 80% of the S&amp;P 500 companies will have exited their blackout period for share repurchases, which stretches from about five weeks before they report earnings to two days afterwards.<\/p>\n<p>So be it if actual earnings, as reported under GAAP, are in the doldrums. By reducing the number of shares outstanding, companies automatically increase their earnings per share. And EPS is the magic metric, particularly \u201cadjusted\u201d ex-bad items EPS. It performs outright miracles.<\/p>\n<p>&nbsp;<\/p>\n<p>&#8230;click on the above link to read the rest of the article&#8230;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Record Financial Engineering Will Goose Stocks: Goldman GE, in order to paper over a net loss of\u00a0$13.6 billion and declining revenues in the first quarter, said on April 10 that it would buy back $50 billion of its own shares. That\u2019s on top of the $10.8 billion in actual buybacks last year. The announcement was [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[5023,4803,4405,5021,5022,376,5025,3054,1138,5024],"class_list":["post-7671","post","type-post","status-publish","format-standard","hentry","category-economics","tag-eps","tag-financial-engineering","tag-gaap","tag-ge","tag-general-electric","tag-goldman-sachs","tag-share-price","tag-stock-buybacks","tag-stock-market","tag-us-equities"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/7671","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=7671"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/7671\/revisions"}],"predecessor-version":[{"id":7672,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/7671\/revisions\/7672"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=7671"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=7671"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=7671"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}