J.P. Morgan notes:
“There is room for further upside to our buyback estimates if companies increase gross payout ratios to levels similar to late last cycle when companies returned >100% of profits to shareholders (vs. 83% now). Corporates tend to accelerate buyback programs during market selloffs.”
SP500 companies are expected to buyback $800 billion dollars this year due to strong earnings and the new tax law. This will add further upside pressure on stock prices.
