👀 The US is watching China

What’s going on here?

Buybacks were up 16% on last year’s first quarter, as US companies spent like they meant it.

What does this mean?

Company share buybacks are popular with investors: they reduce the amount of shares out there, and low supply means higher prices for shareholders. And according to Birinyi Associates, S&P 500 companies – at least, the ones that have already reported quarterly earnings – bought back a combined $181.2 billion of their own shares last quarter. That’s an increase of 16% from the same period last year. Big Tech led the brigade: Meta scooped up $14.5 billion of its own shares – up about $5 billion from last year. Hot on its heels were Apple, Netflix, and Nvidia. The feeding frenzy follows last year’s 14% slump, when fears of high interest rates and a potential recession sparked the worst drop since the 2008 financial meltdown.

Why should I care?

Zooming out: It’s always sunny.

Buybacks are popular with businesses too: they’re a more flexible option than paying dividends, because companies can roll them out at their own discretion and adjust them in line with the state of the economy. And for investors, an increase in buybacks reflects that Corporate America is confident about its outlook and the future of its shares. This trend isn’t going anywhere, either, as Goldman Sachs predicted that S&P 500 buybacks will increase 13% this year and 16% in 2025.

The bigger picture: Eyes on the prize.

Wise investors know buybacks aren’t a golden ticket, though. They can suggest a company might not be growing, as those on the up invest cash into expansion. So if a company is doing buybacks, make sure it’s investing elsewhere too, and pushing revenue upward. Don’t sweat Big Tech firms though: they’re buying back stock, sure, but they’re also pouring cash into AI.

What’s going on here?

The US was reported to be extending its existing tariffs on Chinese goods.

What does this mean?

After a long review, the US seems likely to stick with existing import taxes on Chinese EVs, batteries, and solar panels. That follows its recent decision to hike taxes on Chinese steel and aluminum by 25%. Now, the move was mainly symbolic: China doesn’t export much metal to the US, and Chinese EV brands only have a small hold over stateside markets. The tariffs do make it clear, though, that the relationship between the two countries is as tense as ever – especially with new (unconfirmed) rumors of restrictions on semiconductors floating around. Remember, too, that the US election is coming up, and policies that promise to protect American jobs tend to win over more than a few voters.

Why should I care?

For markets: More doesn’t mean merrier.

The Chinese government’s support has bolstered the country’s EV industry, helping China churn out more vehicles for less and steal market share from pricier brands. In fact, the European Union is considering adding more tariffs to Chinese EVs for that very reason. But that’s not China’s only problem: hybrid cars have proved more popular lately, and the country is the biggest maker of fully electric vehicles. That doesn’t bode well for China’s famous EV makers, like Tesla-toppler BYD.

The bigger picture: Come on home.

This back and forth is a big risk: trade wars generally lead to inflation, as goods become more expensive across the board. But the US is playing with fire in a different way, too. The country has been bringing production sites back onto home soil, and the cost of setting up shop again can bleed into consumer prices. At least the effort is creating a ton of jobs for US workers.