Apple likes buybacks. Sen. Elizabeth Warren not so much (video)

She dismissed buybacks as “market manipulation” with no purpose other than to pump up executive’s holdings. The blowback on CNBC was fierce.

Cue the video:

My take: I’ve never seen the Squawk hosts interrupt and talk over their guests as much as they did the junior Senator from Massachusetts yesterday.

23 Comments

  1. Jerry Doyle said:
    “…. that’s what’s dividends are for.” …. Senator Elizabeth Warren

    The good Senator’s objective, as is the party with whom she is associated, is to raise more taxes. By stopping companies’ buybacks and funneling that money instead into dividends the government collects higher taxes to run a socialistic form of government. It’s all about finding new sources for government income.

    8
    March 3, 2021
  2. Mark Visnic said:
    What was she referring to with the SEC in the 1980s?

    1
    March 3, 2021
    • From “A 1982 SEC rule under Reagan opened the stock buyback floodgates”

      Reagan appointed John Shad to head the SEC in 1981. A former vice chair of a major Wall Street securities firm, Shad was the first financial executive to head the agency in 50 years, and it showed. In 1982, the SEC adopted rule 10b-18, which provides a “safe harbor” for companies in stock buybacks. As long as companies stick to specific parameters — such as not buying more than 25 percent of the stock’s average daily trading volume in a single day — they won’t be dinged for stock manipulation.

      William Lazonick, an economics professor at the University of Massachusetts Lowell whose Harvard Business Review paper “Profits Without Prosperity” has influenced thinking on stock buybacks, said Shad’s appointment to the SEC and the accompanying changes, including rule 10b-18, brought about a shift at the agency that continues today.

      “Everything they did from that point forward … was turning the SEC from a regulator of the stock market to a promoter of the stock market,” he said.

      https://www.vox.com/2018/8/2/17639762/stock-buybacks-tax-cuts-trump-republicans

      11
      March 3, 2021
  3. Fred Stein said:
    Confirmation bias: Sen Warren see buybacks as manipulation and won’t accept any other ideas. When challenged, she just says “no” and repeats her thesis.

    That said, Squawk hosts were rude.

    4
    March 3, 2021
  4. Gregg Thurman said:
    top 0.05%

    Her target is too high. There is no such thing as trickle down. Money flows uphill. Those at the top wouldn’t be anywhere near as wealthy without deficit spending. Money gets half, therefore the government should get half of income above a threshold ($500,000?).

    Income of $1,000,000/year: tax $250,000, effective rate 25%. Left to live on: $750,000/year.

    Income of $2,000,000/year: tax $750,000, effective rate 37.5%. Left to live on: $1,250,000/year.

    Income of $10,000,000/year: tax $4,750,000, effective rate 47.50%. Left to live on: $5,250,000/year.

    Since Reagan’s tax bill the wealthiest have been getting wealthier, while the middle class has been shrinking. Trump’s tax bill has been speeding up the process.

    In a healthy economy money recycles with some accumulation at the top. If the accumulation goes unfettered you end up with two economic classes: haves and have nots.

    A balanced budget is a myth. Deficit spending is a necessity. Because of accumulation at the top the economy would suffocate without it. It’s akin to recharging your EV or putting gas in your ICE.

    9
    March 3, 2021
  5. Hans Oh said:
    I appreciate Senator Warren trying to protect the small retail investor/”normal” person against the institutional powers that be (in principle), but, she comes across as being dogmatic, absolutist, and too simplistic.

    Saying “stock buybacks” are only for stock manipulation is unfair at best and untrue at worst. Saying “dividends” are the answer because “buy backs are manipulation” might make for a good soundbite but doesn’t make any meaningful contribution or address the issue.

    6
    March 3, 2021
  6. bas flik said:
    Apple should run and tax the world. only then people will be freed from slavery and tax abuse. irony: in former communist countries one pay less tax than in the capitalistic world.

    1
    March 3, 2021
  7. T R said:
    Apple should be held up as an example of share buybacks done properly.

    Maybe rules that must be met?:
    – need a threshold of profitability over a period of time,
    – pay some minimum level of corporate income tax,
    – and that executive compensation is not tied to stock price.

    Apple checks these boxes.

    The airlines that we’ve been bailing out, in my mind, did abuse share buybacks.

    3
    March 3, 2021
  8. bas flik said:
    issueing shares or buybacks are bonded together.
    if you forbid the one than you also should forbid the other.
    politicians often do not understand economics
    they think its always there as a gift from heaven.
    only people from Finland know otherwise
    after one devil from USA visited their heaven and wrecked heavoc.

    3
    March 3, 2021
    • Grady Campbell said:
      I support this point about issuing shares and buybacks being two sides of a coin. A reason (in my only somewhat informed opinion) that Amazon and Tesla have high stock prices is that they have issued so few shares (503 million and 960 million respectively) vs Apple (16.8 billion). Perhaps Amazon and Tesla should be required to issue more shares rather than preventing Apple from buying shares back. (or leave both alone if one prefers)

      0
      March 3, 2021

Leave a Reply