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U.S. companies are on pace to buy back more of their shares than they did during 2018's record binge, data shows, despite — or perhaps because of — mounting political opposition.

Why it matters: Companies are continuing to choose buying back their stock to reduce the number of shares outstanding and boost prices over investing in long-term capital and labor expenditures. Last year, companies spent more buying back their own stock than on capex for the first time since 2008, according to Citigroup.

Expand chart
Data: Catalyst Funds; Chart: Naema Ahmed/Axios

Through March 15, American companies had bought $253 billion worth of their own stock, according to data compiled by Michael Schoonover, COO of asset manager Catalyst Funds.

  • That total is about $18 billion more than at the same period last year, when company stock buybacks passed the previous record by hundreds of billions of dollars.
  • "There are many traditionally large buyback announcers that didn’t announce last year — some possibly because of trade war concerns or the buyback political backlash — that may show up this year. Home Depot was one of them. They announced a $15 billion program this February," Schoonover tells Axios.

The big picture: Massive buybacks are likely a major reason equity prices and bond prices are both moving higher, shedding their historically inverse relationship.

  • The money companies are saving from tax cuts are turning almost directly into share buybacks, driving stocks higher.
  • Bond prices are rising because investors are positioning for an economic slowdown, and U.S. government bonds still offer significantly higher yields than other developed economies. (Plus, the Fed is still buying.)

What's next: The impact of the Tax Cut and Jobs Act on the real economy is expected to recede this year, but Schoonover tells Axios he is expecting it to continue to boost stock buybacks for years to come, as companies have already shown that's how they will use the tax cut windfall.

  • Through the first quarter of 2019, a number of industries have already seen buybacks that are as much as 40% or more of their full year total for 2018. The energy sector has bought back shares that total 71% of last year's spend.
  • As of September 2018, only $143 billion of the more than $2.5 trillion held overseas by U.S. companies had been repatriated to the U.S., which was a major part of the tax bill.
  • "As this money comes back, we expect a lot of it to go into buybacks," Schoonover said.

The bottom line: Last year was a wake-up call for companies that didn't turn their tax cut savings into buybacks and saw their share prices fall, Schoonover adds. Many have already shown they won't be making that mistake this year.

Go deeper: Why stock buybacks will be a hot-button 2020 issue

Go deeper

Updated 13 mins ago - Politics & Policy

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Illustration: Eniola Odetunde/Axios

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  3. Vaccine: Florida requiring proof of residency to get vaccine — CDC extends interval between vaccine doses for exceptional cases.
  4. World: Hong Kong puts tens of thousands on lockdown as cases surge — Pfizer to supply 40 million vaccine doses to lower-income countries — Brazil begins distributing AstraZeneca vaccine.
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  6. 🎧 Podcast: Carbon Health's CEO on unsticking the vaccine bottleneck.

DOJ: Capitol rioter threatened to "assassinate" Alexandria Ocasio-Cortez

Supporters of former President Trump storm the U.S. Captiol on Jan. 6. Photo: Kent Nishimura / Los Angeles Times via Getty Images

A Texas man who has been charged with storming the U.S. Capitol in the deadly Jan. 6 siege posted death threats against Rep. Alexandria Ocasio-Cortez (D-N.Y.), the Department of Justice said.

The big picture: Garret Miller faces five charges in connection to the riot by supporters of former President Trump, including violent entry and disorderly conduct on Capitol grounds and making threats. According to court documents, Miller posted violent threats online the day of the siege, including tweeting “Assassinate AOC.”

Schumer calls for IG probe into alleged plan by Trump, DOJ lawyer to oust acting AG

Jeffrey Clark speaks next to Deputy US Attorney General Jeffrey Rosen at a news conference in October. Photo: Yuri Gripas/AFP via Getty Images.

Senate Majority Leader Chuck Schumer (D-N.Y.) on Saturday called for the Justice Department inspector general to investigate an alleged plan by former President Trump and a DOJ lawyer to remove the acting attorney general and replace him with someone more willing to investigate unfounded claims of election fraud.

Driving the news: The New York Times first reported Friday that the lawyer, Jeffrey Clark, allegedly devised "ways to cast doubt on the election results and to bolster Mr. Trump’s continuing legal battles and the pressure on Georgia politicians. Because Mr. [Jeffrey] Rosen had refused the president’s entreaties to carry out those plans, Mr. Trump was about to decide whether to fire Mr. Rosen and replace him with Mr. Clark."