Boeing Set To Avoid Prosecution In Twin Fatal 737 Max Crashes

Boeing Set To Avoid Prosecution In Twin Fatal 737 Max Crashes

Boeing has tentatively reached a nonprosecution agreement with the U.S. Justice Department to avoid a June 23 trial over allegations it misled federal regulators about a flight control system tied to two fatal 737 MAX crashes that killed 346 people in 2018 and 2019, according to Reuters, citing people familiar with the matter. 

Sources said the deal requires a judge’s approval and would allow the Seattle-based planemaker to avoid entering a guilty plea in the case.

Here are more details from the report: 

Boeing has no longer agreed to plead guilty in the case, prosecutors told family members of crash victims during a Friday meeting, the sources said. The company’s posture changed after a judge rejected a previous plea agreement in December, prosecutors told the family members.

DOJ officials are still weighing whether to proceed with a nonprosecution agreement or take Boeing to trial, a DOJ official said during the meeting. No final decision has been made, and Boeing and DOJ officials have not yet exchanged papers to negotiate final details of any nonprosecution agreement, the official told family members.

In April, Boeing CEO Kelly Ortberg said the planemaker was negotiating with the DoJ to reach a revised plea deal in the criminal fraud case.

“I want this resolved as quickly as anyone,” Ortberg said at a U.S. Senate hearing, referring to the timeline for settling the case. He added, “Hopefully, we’ll have a new agreement here soon.”

Last month, Boeing reached settlements with the families of two victims killed in the March 2019 crash of an Ethiopian Airlines 737 MAX.

In 2021, Boeing accepted responsibility for compensatory damages to the families of the 157 victims of the Ethiopian Airlines crash.

Boeing apologized for both crashes last month, saying it “made an upfront commitment to fully and fairly compensate the families and accepted legal responsibility for the accidents. We will continue to work to fairly resolve the claims of the family members.”

Reuters notes that the planemaker has “settled more than 90% of claims from the two 737 MAX accidents and paid billions of dollars in compensation to the families through lawsuits, a deferred prosecution agreement, and other payments.”

Of course, the nonprosecution agreement still requires a judge’s approval and could force Boeing to pay additional fines, implement further internal reforms, or strengthen compliance measures, among other conditions. Those conditions have not yet been released. 

Tyler Durden
Fri, 05/16/2025 – 11:40

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Trump Torches GOP ‘Grandstanders’ As House Republicans Brawl Over ‘One Big Beautiful Bill’

Trump Torches GOP ‘Grandstanders’ As House Republicans Brawl Over ‘One Big Beautiful Bill’

A fiery intra-party fight exploded on Capitol Hill Friday as House Republicans clashed over President Donald Trump’s mammoth “One Big Beautiful Bill,” with Trump himself jumping into the fray to torch conservative holdouts as attention-hungry “grandstanders.”

Speaker Mike Johnson (L), President Donald Trump, Rep. Chip Roy (R-TX)

As the House Budget Committee met to advance the 1,116-plus-page megabill – packed with Trump’s signature proposals on taxes, Medicaid, and immigration – chaos broke out behind the scenes, and in front of the cameras, as hardline conservatives threatened to blow up the entire process.

“Republicans MUST UNITE behind ‘THE ONE, BIG BEAUTIFUL BILL!’” Trump posted on Truth Social. “We don’t need ‘GRANDSTANDERS’ in the Republican Party. STOP TALKING, AND GET IT DONE!”

The scorched-earth post came as the House Budget Committee met down to mark up the massive reconciliation bill, which bundles together much of Trump’s second-term policy wishlist: tax cuts, welfare reform, immigration crackdowns, and the death of Biden’s green energy subsidies.

But what was supposed to be a legislative victory lap turned into a high-stakes hostage crisis, with Speaker Mike Johnson (R-LA) caught between warring GOP factions, each demanding major changes and threatening to sink the bill if they don’t get their way.

Conservatives on the committee – Reps. Chip Roy, Ralph Norman, Andrew Clyde, and Josh Brecheen – signaled they were ready to vote against the bill unless major changes were made. Their demands include a faster phase-in of Medicaid work requirements, a ban on undocumented immigrants receiving federal benefits, and immediate termination of Inflation Reduction Act clean energy provisions.

“If they don’t [change it], I’m gonna vote no. We’ll kill it,” Norman warned Thursday. “I don’t want to. But I will.”

The vote is ongoing, with Roy and Norman both using their time during committee to voice their opposition, CNN‘s Sarah Farris reports.

The tension spilled into full view Friday morning when Norman, Roy, and Clyde abruptly left the committee room moments before the markup was scheduled to begin, prompting immediate speculation they were staging a walkout. All three returned shortly afterward, saying little, but still signaling deep frustration.

Norman told reporters the situation was “very disappointing,” adding “I hope they recess.”

Johnson, for his part, is trying to keep the circus moving. He has pledged to make some concessions – such as speeding up work requirement timelines and possibly harmonizing those across both Medicaid and SNAP – but every adjustment risks triggering a backlash from the other side of the GOP spectrum.

If you push too hard on one side, the other side bulges out,” opines Punchbowl News. “That’s exactly what’s happening here.”

Very SALTy

Moderates are already howling over cuts to safety net programs and demanding changes of their own. Blue-state Republicans want the SALT deduction cap raised above the $30,000 ceiling currently in the bill. Rep. Don Bacon (R-NE) wants to remove language that would block legal refugees from getting food aid. And Florida Republicans are furious over a provision that clamps down on provider taxes – a method states use to draw more federal Medicaid dollars.

The markup itself became a theater of dysfunction – with Rep. Blake Moore (R-UT) joking about the fact that he went viral earlier this week for falling asleep during a late-night hearing. “I also appreciate that you schedule the markup during daylight hours,” he said. Chair Jodey Arrington (R-TX) fired back: “Some of the staff decided to chip in and equip your chair with an electric shocking mechanism… I hope that is also a bipartisan proposal.”

But behind the laughs, the reality is grim. With Rep. Brandon Gill (R-TX) absent for the birth of his child, Johnson can’t afford even a single Republican defection if he wants the bill to make it out of committee.

Majority Leader Steve Scalise (R-LA) tried to downplay the drama, telling reporters, “The goal is to get it out of the committee today… because failure is not an option.”

How did we get here? These speed bumps aren’t surprising. This is a gigantic legislative grab-bag with lots of disparate priorities. We get that. It reminds us a bit of Build Back Better – which failed and led to the IRA, for what it’s worth. -Punchbowl News

Indeed, Speaker Johnson has tried to do what many before him could not: push through a comprehensive, everything-at-once bill that pleases both fire-breathing conservatives and centrist pragmatists. But by skipping the usual slow walk through committee education and member negotiations, he may have created a legislative trap for himself.

And of course, after all of this – the bill still has to get through the Senate…

Stay tuned for updates…

Tyler Durden
Fri, 05/16/2025 – 11:20

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Rickards To Bannon: Petrodollar 2.0 Is Coming

Rickards To Bannon: Petrodollar 2.0 Is Coming

Authored by Adam Sharp via DailyReckoning.com,

Our friend and colleague Jim Rickards was on Steve Bannon’s War Room show Tuesday, and it may be the most important interview Jim has done this year.

In this fascinating discussion, Jim starts with the history of the original petrodollar system. And he knows the subject well, having helped create it.

The premise of the 1974 petrodollar agreement was that Saudi Arabia would only sell oil in dollars, which would stimulate demand for greenbacks as a reserve currency. 

Here’s Jim explaining the basics to Steve Bannon’s audience:

“We had a carrot and stick approach. Bill Simon, who was Secretary of the Treasury, went to the Saudis and said ‘everybody in the world needs oil, and if you price oil in dollars, then everybody needs dollars.’

And that basically underpins the role of the dollar today as the world’s reserve currency.

The stick was, if you don’t do it we’re going to invade Saudi Arabia and take over oil production.

The carrot was, if you price oil in dollars, we’ll give you a security umbrella.

It’s rare to hear such candor coming from someone who was directly involved in the formation of the petrodollar system.

Needless to say, the petrodollar system was successful and led to a resurgence in the American dollar as the world’s key reserve currency (despite Nixon ditching the gold standard just 3 years earlier).

At this point, Steve Bannon interrupted with an insightful question (paraphrased):

“Wait, you say the petrodollar system is still in place, but the Saudis are now selling oil to China for yuan. Aren’t cracks showing in the petrodollar system?”

Jim responded that yes, cracks are starting to show in the system, and that’s why Trump was in Saudi Arabia, to seal a “Petrodollar 2.0” agreement. Jim also points out that, at least for now, the amount of oil Saudi Arabia is selling for yuan and other currencies is miniscule compared to dollar-based sales.

Jim proceeds to lay out the purpose of Petrodollar 2.0:

“The U.S., by strengthening its relationship with Saudi Arabia, and creating Petrodollar 2.0, puts the pressure on China to reduce their tariffs and meet Trump’s requirements. Otherwise they don’t have a source of dollars.”

This time around, Trump is using a strictly carrot-based approach. He’s on a charm offensive and looking to build strong, lasting ties with Saudi Arabia and the broader Middle East. This is a smart approach and we expect it will bear fruit in the near future.

Had President Trump taken a threatening approach to Saudi Arabia, it almost certainly would have driven the country into China’s waiting arms. And America can’t afford to let that happen.

It’s an excellent interview, and you can watch the entire thing here (free) on Rumble. Jim also gets into Russia vs. Ukraine with Steve, and brings an insightful and unique perspective as always.

Also, be sure to follow Jim’s new account on X (formerly Twitter)!

Tyler Durden
Fri, 05/16/2025 – 11:00

via ZeroHedge News https://ift.tt/XcVTvQg Tyler Durden

You Get A Deal And YOU Get A Deal And YOU Get A Deal

You Get A Deal And YOU Get A Deal And YOU Get A Deal

By Maartie Wiiffelaars, Senior Economist At Rabobank

You get a deal and YOU get a deal and YOU get a deal. Trump seems to be making deals these days as Oprah once gave away cars. The UK, China, Qatar, Saudi Arabia, and the United Arab Emirates have all signed some kind of deal with the US in a week’s time – while Syria may be granted sanctions relief and Iran basically has to choose between a nuclear deal or stricter enforced sanctions on its oil exports. 

Yet mutual benefit is not obvious in all of the above cases, and in any case skewed. The 10% universal tariff is still in place, with Chinese goods still being subject to a 20% to 30% import tariff hike – with the risk of much higher rates in 90 days if a conclusive deal cannot be reached in the meantime. Meanwhile, it has been rather silent recently on the front of Japan and Korean talks, while talks with India are still ongoing, and talks with South-East Asian countries and the EU off to a slow start. Although Scott Bessent recently said that talks with Japan had been “very productive”, conversations with Indonesia “very forthcoming” and the proposal from Taiwan to be “very good”. 

So, essentially, half-way the 90-day reciprocal tariff pause, lots and lots of work still needs to be done to prevent the reciprocal rate increasing back again from 10% to 20% for the EU, to 26% for India, to 46% for Vietnam – China’s regional gateway to the US – and, perhaps, 54% for China itself. That is absent an extension of the pause of course. 

With respect to US-India talks, India has so far lowered import tariffs on US Bourbon and motorcycles, among other things and Trump claimed India had “offered us a deal where basically they are willing to literally charge us no tariff”. To which India’s foreign minister replied by saying “nothing is decided till everything is” and that the deal would have to be mutually beneficial. One of the stumbling blocks highlighted in yesterday’s news was the US requests for India to open up its market for US ethanol – as the UK did. It will be difficult for India to accommodate, however, given its ambitions to reduce dependence on foreign energy and stimulate domestic ethanol production which would benefit domestic farmers – with farmers clearly being hurt if if doors for US ethanol and other agriculture products would open. Meanwhile, Trump made clear the US doesn’t want India to replace China as the hub for large-scale manufacturing production, telling iPhone’s Tim Cook to invest in US iPhone manufacturing rather than in India. 

So, while India will be very happy to work with the US to counter China – although China’s export curbs on equipment necessary to produce anything from electronics to electric vehicles shows how difficult it actually is to cut out China –, this doesn’t ensure easy dealmaking. 

Over to South-East Asia, where countries like Vietnam, Thailand and Indonesia are trying to discuss a deal at the APEC meeting in South Korea this week, where the US trade representative Greer is present and which concludes today. Apart from tariff reductions on US goods, the main issue will be the countries’ gateway for Chinese stuff to be re-exported through the countries to the US. There are multiple ways through which the region is supporting such flows. One is by means of ‘rules-of-origin washing’ at its ports, basically relabelling Chinese manufacturing without adding value. This is illegal, and hardly beneficial to any of the countries involved – though hard to track. Yet another route is through importing Chinese inputs and parts to be used in manufacturing, which is profitably and very difficult if not impossible to eliminate at all. 

Recent port data show that imports into the region surged over the past two months, as did exports out of it from some ports in the region, providing Trump with ammunition. As we underscored before, for these countries to secure a deal or not, it will come down very much to how tough the Trump administration’s stance will be.. Vietnam’s Prime Minister stressed this week that the US top priority is countering illegal transshipment, which bodes some hope for an agreement down the line. Although officials have expressed doubt to Reuters if the APEC meeting would actually be able to formulate a joint statement today. 

Finally, EU-US talks have been moving really slow so far. EU offers to buy more US LNG and weapons and to lower tariffs on US industrial goods, if the US does the same, have so far been rejected. Talks are arguably moving to the next phase, but we don’t expect anything soon, if at all.

Bessent earlier this week claimed the EU “suffers from a collective action problem”, with different countries wanting different things. Yesterday’s meeting of EU trade ministers confirmed the EU doesn’t want to settle for a deal keeping the 10% universal tariff in place, as is the case for the UK. This seems to be non-negotiable for the US and more sectoral tariffs are in the pipeline. Especially a tariff on pharmaceuticals would be very painful for the EU, as it comprises about 20% of trade with the US.

The EU has circulated a term sheet among its member states with possible offers to be made to the US to come to a deal. Yet at the same time it has created a list with additional US goods to be hit with rebalancing tariffs and export curbs absent a deal. Both the sheet and list are currently up for stakeholder review, which should be concluded in the first half of June. According to Bloomberg, among the offers on the sheet are investment in LNG and AI, EU-US cooperation in sectors like metals, cars, semiconductors, critical minerals and aviation. In general, the EU is still willing to look at tariffs on industrial goods, but agriculture is something really different. Furthermore, it wants to cooperate to tackle Chinese overcapacity and dumping, but doesn’t want to cut China loose. Finally, tax, environment and safety regulations seem non-negotiable. All in all, for the time being, we still expect more tariffs to hit the EU, be it the return of the country-specific add-on and/ or more sector-specific tariffs. If so, the EU will put into force a partial tariff rebalancing package. 

In other news we learned yesterday that the UK economy grew by 0.7% q/q in the first quarter of the year, outperforming expectations (0.6% q/q) and peers such as the US and Eurozone. UK growth was driven by increases in gross fixed capital formation, net trade, and household consumption. Net trade contributed 36 basis points to growth, largely due to a rise in manufactured goods exports, which was itself mainly the result of front-loading. However, both private and public spending also edged higher. In terms of output, industrial production grew by 1.1%, while the construction sector showed no growth. The services sector, however, expanded by 0.7% and was the largest contributor to overall output growth. 

This confirms that growth is not solely being driven by front-loading. And it suggests businesses and consumers held up well before Labour’s tax rises took effect and Trump’s trade war began to hit confidence. There are signs of underlying resilience in this report, but recent data such as PMIs and labour market surveys since the April tax and trade changes point to a sharp slowdown in Q2.

Very strong Eurozone industrial production figures for March out yesterday were probably also driven by front-loading, but possibly also a reflection of a stabilization in the manufacturing sector after the industrial recession in 2024. More interesting in that respect is the 0.3% q/q gain in Eurozone employment, an acceleration from 0.1% q/q in Q4. Remarkable because it took place against the backdrop of geopolitical and tariff uncertainty and despite that, businesses increased employment. This could point at confidence effects being not as big as feared, or at least a contrast between what businesses fear/think and how they act. 

The second reading of the Q1 Eurozone GDP figure of 0.3% q/q was slightly lower than the first estimate of 0.4% q/q, but at first glance still looks solid. Yet while positive that consumption likely contributed positively, the largest driving force seems to have been inventory building, which is expected to turn negative again this quarter. Furthermore, export growth seems to have been weak, despite clear signs of frontloading. Going forward, consumption is likely to continue to support the economy, but trade war related weakness and uncertainty are likely to supress investment growth and export growth – although some frontloading could persist in sectors such as pharmaceuticals. From next year we should see the first material positive GDP impact from more defense spending – with Germany yesterday confirming it will increase military spending to 5% of GDP in the coming years, as Trump requests.

In the US producer prices fell in April by 0.5% m/m, not yet showing the impact of tariffs, which matches earlier CPI figures. Impact will come, though, with for example Walmart saying yesterday that it expects price hikes to become really visible this month. Retail sales by the control group showed weak personal growth in April, but that was also the case in January after which sales turned out ok in Q1 overall. So weakness is visible, but it’s not yet alarming. Finally, initial jobless claims were stable, so nothing shocking to see there by the 10th of May yet. 

Tyler Durden
Fri, 05/16/2025 – 10:30

via ZeroHedge News https://ift.tt/odOmf9i Tyler Durden

UMich Sentiment Collapses Near 45-Year (Record) Lows As Democrats’ Inflation Dissonance Hits ’11’

UMich Sentiment Collapses Near 45-Year (Record) Lows As Democrats’ Inflation Dissonance Hits ’11’

Having embarrassed themselves with their TDS-driven cognitive dissonance over the past few months, Democrat-voting UMich respondents in the preliminary May survey (a month after Liberation Day and also post-Pause and the massive meltup in stocks)

Consumer Expectations are now at their lowest since – drum roll please… May 1980…

Source: Bloomberg

Tariffs were spontaneously mentioned by nearly three-quarters of consumers, up from almost 60% in April; uncertainty over trade policy continues to dominate consumers’ thinking about the economy. 

Note that interviews for this release were conducted between April 22 and May 13, closing two days after the announcement of a pause on some tariffs on imports from China.

The percentage of UMich respondents making unsolicited negative comments about news they’ve heard on government economic policy has surged to a record high of 66%!

Source: Bloomberg

The share of consumers expecting unemployment to rise in the year ahead increased for the sixth consecutive month and is now more than double the November 2024 reading and the highest since 2009.

Source: Bloomberg

Year-ahead inflation expectations surged from 6.7% last month to 7.3% this month, the highest reading since 1981 and marking five consecutive months of unusually large increases of 0.5 percentage points or more.

Source: Bloomberg

This month’s rise was seen across all three political affiliations. Long-run inflation expectations climbed from 4.4% in April to 4.6% in May, reflecting a particularly large jump among Democrats to a ridiculous 9.6% over the next year!!

Source: Bloomberg

Republicans did forecast a rise in their view of 5Y inflation expectations (while Democrats were flat at 5.1%)…

Source: Bloomberg

Spot the odd one out – UMich Democrats, The NY Fed, or The Market…

Source: Bloomberg

One more for fun – comparing Democrats view of the inflationary outlook to the ‘hard’ inflationary data…

Source: Bloomberg

Finally, given their historic track record (completely refusing to acknowledge the surge in inflation under Biden), should we simply be ignoring the manic Democrats screaming about inflation now?

Source: Bloomberg

The Republicans seemed to get it? But then again, they’re all racist ignoramuses with no PhDs… so there’s that, right!?

So someone is lying: actual spending all time high while reported sentiment (based on 250 polled UMich respondents) is all time low.

Is the soft-data slump all driven by leftists imbibing mainstream media’s desperate propaganda-fueled terror of what Trump is doing?

Perhaps that explains why soft survey data has started to turn back up to hard data reality in the last week as it’s hard to hate and keep pushing out your depression-era forecasts when stocks are at record highs and jobless claims remain near record lows.

Tyler Durden
Fri, 05/16/2025 – 10:14

via ZeroHedge News https://ift.tt/GxwaJ39 Tyler Durden

Corporate Stock Buybacks – Do They Affect Markets?

Corporate Stock Buybacks – Do They Affect Markets?

Authored by Lance Roberts via RealInvestmentAdvice.com,

Fisher Investments recently wrote an interesting article asking whether corporate stock buybacks affect markets. Here is their conclusion:

“Yes and no? Stocks move on supply and demand. Stock buybacks, where a company buys and takes shares off the market, theoretically reduce supply. They can also raise earnings per share, thus rewarding shareholders. So, all else equal and on paper, stock buybacks are bullish. But reality, as always, is more complicated. Buybacks are just one factor affecting supply. There are others, and demand matters, too. They may not reduce supply if they merely offset secondary issuances, like employee stock awards. Often, buybacks merely ‘sterilize’ new issuance. Other negative (or less bullish) fundamental factors might matter more in pricing, lowering demand even as supply shrinks. So buybacks are a factor, but not the factor.

While the statement is mostly correct, I am unsure they looked at the actual impact that corporate stock buybacks have on the market. We have discussed this topic and the past misstatements of corporate stock buybacks. Here is a listing for more background.

  1. They are not a return of capital to shareholders; dividends are.
  2. Corporate stock buybacks are the worst use of cash.
  3. It is a benefit that almost entirely benefits corporate insiders.

But, without rehashing the many problems of corporate stock buybacks, let’s focus on these transactions’ impact on the overall market.

As of May 2025, corporate stock buyback authorizations are on track to eclipse $1.35 trillion this year, with more than $1 trillion executed. This will exceed any other year in the market since the turn of the century. Such should be unsurprising with Apple (AAPL) announcing an additional $100 billion and Google adding another $70 billion to their programs (those two programs will account for 12% of the total alone).

The data should lead one to question why corporate stock buybacks have grown steadily since the turn of the century. Such is particularly the case when the overreliance on buybacks at non-accretive valuations to boost stock prices has become commonplace. Such a statement undermines the fallacy that corporate stock buybacks are solely a return of capital to shareholders. For example, Apple’s $110 billion buyback plan in 2024 raised questions among some investors about whether the company focused too much on immediate stock price increases rather than on investments that could drive long-term value. That statement should not be overlooked, given that 5-year annualized revenue growth has been flat since 2018. (Chart courtesy of SimpleVisor.com)

If corporate stock buybacks are not a significant factor in increasing stock prices, why do companies engage in them so heavily? Why not just let market dynamics carry the load? The reason is simplistic to understand.

“Corporate executives give several reasons for stock buybacks but none of them has close to the explanatory power of this simple truth: Stock-based instruments make up the majority of their pay and in the short-term buybacks drive up stock prices.” – Financial Times.

So, how much of a factor are buybacks?

Are Buybacks An Important Factor

It is a pretty easy task to see whether or not corporate stock buybacks influence stock prices. As we penned last year, the impact of buybacks extends beyond individual companies. Since 2000, net corporate buybacks have accounted for 100% of the equity market’s net asset purchases—a reflection of the diminished participation from pensions, mutual funds, and individual investors:

  • Net Flow: +$5.2 trillion
  • Pensions & Mutual Funds: –$2.7 trillion
  • Households & Foreign Investors: +$2.4 trillion
  • Corporations (Buybacks): +$5.5 trillion

In other words, without corporate stock buybacks, the stock market would be roughly 30% lower today.

“The chart below via Pavilion Global Markets shows the impact stock buybacks have had on the market over the last decade. The decomposition of returns for the S&P 500 breaks down as follows:

  • 6.1% from multiple expansions (21% at Peak),
  • 57.3% from earnings (31.4% at Peak),
  • 9.1% from dividends (7.1% at Peak), and
  • 27% from share buybacks (40.5% at Peak)

Yes, buybacks are that important.

However, to Fisher’s question directly, there is more than just a minor correlation between corporate stock buybacks and the market. The chart below overlays the 4-week change in stock buybacks versus the 4-week change in the S&P 500 index. It is worth noting that before 1982, the SEC considered share buybacks an illegal form of market manipulation. (In 1982, the SEC adopted Rule 10b-18, which provided “safe harbor” from “liability of market manipulation. In other words, the SEC recognizes that buybacks manipulate the financial markets but provided a “shield” to corporations.)

The chart above is complex due to the large amount of data. The chart below is from 2021 to present, where changes to buybacks (increase or decrease) significantly impact changes to stock prices. It is worth noting that the nearly 20% decline in April was exacerbated by the sharp reversal in buyback activity and vice versa.

While Fisher suggests that buybacks have little to do with market movements, a high correlation exists between the 4-week percentage change in buybacks and the stock market. More importantly, since the act of share repurchases provides a buyer for those shares, the .85 correlation between the two suggests this is more than just a casual relationship.

But yes, Fisher is correct, other factors support higher asset prices.

Buybacks Affect More Than Just Prices

In 2023, Jason Zweig penned an article for the WSJ stating:

“Over the past five years, according to S&P Dow Jones Indices, big U.S. companies have spent $3.9 trillion repurchasing their own stock. Buybacks are neither bad nor good. They are simply a tool. Just as you can use a hammer either to build a house or knock one down, buybacks are useful in the right corporate hands and dangerous in the wrong ones. – Jason Zweig, WSJ

That is a fair statement. The impact of share buybacks is vital to manufacturing earnings growth since we measure earnings on a per-share basis. In other words, if you reduce the number of shares outstanding, corporate earnings “per share” improve, as shown below.

As discussed previously, the annual rate of change in earnings growth is one of the best predictors of forward stock market returns.

However, investors must be cautious about understanding the impact of buybacks on earnings when investing in companies. As Warren Buffett noted:

Finally, an important warning: Even the operating earnings figure we favor can easily be manipulated by managers who wish to do so. Such tampering is often considered sophisticated by CEOs, directors and their advisors. Reporters and analysts embrace its existence as well. Beating ‘expectations’ is heralded as a managerial triumph. That activity is disgusting. It requires no talent to manipulate numbers: Only a deep desire to deceive is required. ‘Bold, imaginative accounting,’ as a CEO once described his deception to me, has become one of the shames of capitalism.

Why would CEO’s want to manipulate earnings? Unsurprisingly, a WSJ survey of CFOs found that 93% pointed to “influence on stock price” and “outside pressure” as the reasons for manipulating earnings figures.

Of course, one misnomer is that corporate CEOs execute buybacks when they believe the stock is undervalued. However, the reality is quite the opposite, and they tend to execute share repurchases when their current optimism is elevated. When share prices decline, and buybacks could be done at accretive prices, there is little incentive to do so.

Conclusion

The evidence is clear: corporate stock buybacks are not a marginal force in markets—they are central to the mechanics of price inflation. When buybacks account for the entire net demand for equities over the last two decades, it’s hard to argue they’re simply “a” factor. They aren’t just reducing supply on paper—they are the demand. Without them, equity valuations would look very different.

But what’s more concerning is the why. Despite the popular narrative that buybacks return capital to shareholders, the data and behavior of corporate management tell a different story. Buybacks overwhelmingly inflate earnings per share and boost short-term stock prices, which are tied directly to executive compensation. That incentive skews the timing and intent of buyback programs away from long-term value creation and toward short-term financial engineering.

To Fisher’s credit, markets are complex. Demand, sentiment, interest rates, and macroeconomic factors all matter. However, dismissing buybacks as one variable among many overlooks just how much they dominate equity flows. Their influence is measurable, intentional, and reinforced by corporate leadership’s financial incentives.

The question for investors is not whether buybacks matter—they do. The question is whether they’re being used to create real value or mask its absence.

Tyler Durden
Fri, 05/16/2025 – 09:50

via ZeroHedge News https://ift.tt/py201Dr Tyler Durden

Russia-Ukraine Talks Wrap Up In Under 2-Hours: ‘Nothing Meaningful To End War’

Russia-Ukraine Talks Wrap Up In Under 2-Hours: ‘Nothing Meaningful To End War’

The Friday meeting between Ukrainian and Russian officials, the first direct engagement of its kind in some three years, has ended, according to Turkey’s foreign ministry, and lasted a little under two hours.

Each side will in the aftermath convey to the press its version of things, and Ukraine has been right out the gate telling CNN that there was nothing meaningful to come out of these first talks.

A Ukrainian source said the Russia delegation “did not have a mandate to make important decisions” and that “they are not ready to decide anything meaningful to end the war.”

Turkish Foreign Minister’s Press Office/EPA/Shutterstock

Many international headlines Thursday described the team of junior officials sent by the Kremlin as an ‘insult’ to the peace process; however, it’s also the case that no matter who President Putin sends, he is the one who will ultimately make the decisions.

Wall Street Journal has described that “The talks, in the Dolmabahçe Palace in Istanbul, came about as the result of President Trump’s pressure, so far mostly applied on Ukrainian President Volodymyr Zelensky, to find an end to the war.”

But, “Just as the negotiations started, Russia struck near the Ukrainian city of Dnipro with a salvo of ballistic missiles, according to local officials.”

And Reuters agrees in its assessment that there are “no apparent sign of progress so far in narrowing the gap between the sides, and a Ukrainian source called Moscow’s demands ‘non-starters’.

Ukrainian Foreign Ministry via AFP

Neither side has so far offered no major concessions, and issues like permanent control over Crimea and the four eastern territories remain sticking points for Moscow. 

During the Istanbul meeting, according to WSJ’s foreign correspondent Yaroslav Trofimov:

Russia demanded in Istanbul that Ukraine withdraw its troops from four regions — areas that Moscow has been trying to conquer but failed since 2022 — as a precondition for ceasefire. That’s an area twice the size of the country of Lebanon and home to more than a million Ukrainians. Not going to happen.

Donetsk, Luhansk, Zaporizhzhia, and Kherson were annexed in 2022, declared part of the Russian Federation, but Moscow forces still don’t have 100% control over them.

And it doesn’t look like there was any progress on achieving a Trump and Zelensky-backed 30-day ceasefire. Moscow sees this as a tactic for Ukraine forces to simply rearm and regroup, at a moment they are in dire need of more manpower and artillery. 

President Zelensky has meanwhile been making clear that Ukraine will not surrender its territory as “this is Ukraine’s land” – and he isn’t so much as ready to even offer Crimea. Zelensky and European leaders are reportedly holding a phone call with US President Trump in the wake of the Istanbul meeting.

They will likely try to convince the US leader that attempts to negotiate an end to the war with Putin are futile. This seems to have been Zelensky’s aim all along: getting Washington and Trump back on his side, and securing the unending flow of weapons, cash, and intelligence.

Tyler Durden
Fri, 05/16/2025 – 09:30

via ZeroHedge News https://ift.tt/2Acr0RL Tyler Durden

Charter-Cox $34.5 Billion Deal Leapfrogs Comcast As New Cable Giant

Charter-Cox $34.5 Billion Deal Leapfrogs Comcast As New Cable Giant

Charter Communications has agreed to acquire Cox Communications in a blockbuster merger that will create the largest cable TV and broadband provider in the U.S., surpassing Comcast.

The transaction values Cox Communications at $34.5 billion, including $21.9 billion in equity and $12.6 billion in net debt and other obligations. According to a press release, the valuation aligns with Charter’s enterprise value-to-2025 estimated Adjusted EBITDA multiple of 6.44x. 

Charter, the second largest publicly traded cable company behind Comcast, was up 3% in premarket trading in New York from its Thursday close of $419.57. The Cox family privately holds Cox. 

Charter will acquire Cox’s commercial fiber, IT, and cloud businesses and contribute Cox’s residential cable assets to Charter Holdings. 

Cox Enterprises will become the largest shareholder of the combined entity’s fully diluted shares outstanding with a 23% stake and have seats on the board. 

“This combination will augment our ability to innovate and provide high-quality, competitively priced products, delivered with outstanding customer service, to millions of homes and businesses,” Chris Winfrey, President and CEO of Charter, said in a statement.

Winfrey said, “We will continue to deliver high-value products that save American families money, and we’ll onshore jobs from overseas to create new, good-paying careers for U.S. employees that come with great benefits, career training and advancement, and retirement and ownership opportunities.” 

The combined company will remain headquartered in Stamford, Connecticut, and keep a “significant presence on Cox’s Atlanta, GA campus following the closing,” according to the press release.

The merger with Cox follows Charter’s announcement of an all-stock acquisition of Liberty Broadband, with both transactions expected to close concurrently.

Charter expects $500 million in annualized cost synergies within three years of closing the deal. 

Bloomberg added context to the merger, describing it as part of an escalating “turf war” in the telecom industry:

Cable and phone companies have been engaged in an intense turf war, seeking to win over customers in areas that others have dominated. Cable providers have been selling their own mobile phone plans by leasing network access from major carriers. At the same time, phone carriers have been poaching home internet subscribers from cable companies.

The bet is that customers will in the future prefer to buy their internet and mobile phone services from the same provider — a trend referred to as convergence. A combination of Charter and Cox would position them to better compete in that environment by allowing them to bundle offerings and more efficiently invest in infrastructure.

Bloomberg Intelligence analysts noted:

“Charter is aggressively marketing its converged mobile fixed bundles at competitive rates to improve subscriber acquisition and retention.

“Regardless, the entire cable sector is being hurt by intensifying telecom competition from both fiber coverage and fixed wireless access.”

Axios pointed out:

Some layoffs are expected to result from the merger. Other Cox Enterprises businesses, including Axios and Autotrader, are not directly impacted.

Just like that, the combined entity is set to become America’s largest cable TV and broadband provider. 

Recall one of the heirs to the Cox empire is a far-left radical…  

Sigh. 

 

 

 

 

 

 

Tyler Durden
Fri, 05/16/2025 – 09:15

via ZeroHedge News https://ift.tt/QOIYBgs Tyler Durden

5 Takeaways From Supreme Court Hearing On Nationwide Injunctions, Birthright Citizenship

5 Takeaways From Supreme Court Hearing On Nationwide Injunctions, Birthright Citizenship

Authored by Sam Dorman and Matthew Vadum via The Epoch Times,

The Supreme Court on May 15 heard oral arguments in relation to the Trump administration’s request to lift nationwide injunctions placed on the president’s birthright citizenship order.

The decision could determine how judges can address presidential actions.

During the argument, the justices posed questions about how far lower court judges could go in issuing relief from particular policies.

Solicitor General D. John Sauer told the court that nationwide injunctions exceed judges’ authority under Article 3 of the Constitution.

While members of the Supreme Court have criticized nationwide injunctions in the past, they seemed skeptical that it was appropriate to remove the injunctions in this case.

President Donald Trump’s Executive Order 14160, signed on Jan. 20, states that “the Fourteenth Amendment has never been interpreted to extend citizenship universally to everyone born within the United States.”

The executive order has prompted debate over the meaning of the 14th Amendment’s citizenship clause, which states that “all persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside.”

Here are some takeaways from the arguments, as well as considerations surrounding the Supreme Court’s ruling.

1. No Final Ruling Expected on Constitutionality

The argument stemmed from an emergency request made by the Trump administration to limit three separate nationwide injunctions blocking the president’s birthright citizenship order.

At such an early stage in the litigation, the justices wrestled more with procedural considerations such as the scope of relief rather than the constitutionality of birthright citizenship for illegal immigrants.

However, judges can still consider the likelihood that each side will succeed with its arguments about the more substantive issues. The issue could also reach the Supreme Court again after further deliberation in lower courts, teeing up an opportunity for the justices to make a more definitive ruling on birthright citizenship.

Sauer could have asked the Supreme Court to delve deeper into the constitutional issues, but he did not. Justice Amy Coney Barrett pressed him on this point and asked why he wanted there to be more consideration by lower courts before the justices took on the issue.

“So this one isn’t clear-cut on the merits?” she asked.

Justice Ketanji Brown Jackson said that if Trump’s order is legally wrong, allowing the administration to continue implementing it would be inconsistent with the rule of law.

“It seems to me that your argument says we get to keep on doing it until everyone who is potentially harmed by it figures out how to file a lawsuit, hire a lawyer, etc.,” she said. “And I don’t understand how that is remotely consistent with the rule of law.”

Solicitor General nominee, D. John Sauer, prepares to testify during his confirmation hearing before the Senate Judiciary Committee on Capitol Hill on Feb. 26, 2025. Chip Somodevilla/Getty Images

2. Several Judges Critical of Trump’s Order

During the May 15 arguments, Justices Sonia Sotomayor and Elena Kagan seemed to think that the administration had misinterpreted the 14th Amendment when it ordered a halt to illegal immigrants’ children receiving birthright citizenship.

“As far as I see it, this order violates four Supreme Court precedents,” Sotomayor told Sauer.

Later, Kagan suggested to Sauer that the administration would continue to lose in defending its policy before lower courts. She was asking what incentive the government would have to appeal the case to the Supreme Court if another judge had not issued a nationwide injunction.

“If I were in your shoes, there is no way I’d approach the Supreme Court with this case, so you just keep on losing in the lower courts, and what’s supposed to happen to prevent that?” she asked.

3. Dispute Over Courts’ Historical Authority

Justice Clarence Thomas seemed the most sympathetic to Sauer’s position and suggested that nationwide injunctions do not have a solid historical basis.

Sauer had argued that the first nationwide injunction was issued in 1963 and that the court had consistently said relief should be limited to plaintiffs.

“So we survived until the 1960s without universal injunctions?” Thomas asked.

Sotomayor, meanwhile, asked New Jersey Solicitor General Jeremy Feigenbaum, “We’ve had universal injunctions in some form—correct?—since the founding.”

Both justices asked about the history of courts issuing orders known as “bills of peace,” which resolve a dispute for multiple parties. Sauer described the practice as similar to a modern class action and different from a nationwide injunction. Sotomayor disagreed with that comparison.

4. Alternatives to Nationwide Injunctions?

Justice Brett Kavanaugh suggested that class actions, or lawsuits in which multiple plaintiffs sue on behalf of a larger group of plaintiffs, could take the place of nationwide injunctions.

If nationwide injunctions were not available in this case, people could file class actions, which could “solve a large part of the problem in a way that complies with the rules,” the justice said.

Supreme Court Justices Samuel Alito, Clarence Thomas, Brett Kavanaugh, and Chief Justice John Roberts attend inauguration ceremonies in the Rotunda of the U.S. Capitol on Jan. 20, 2025. Chip Somodevilla/Getty Images

Kelsi Corkran, an attorney for immigration advocacy groups, disagreed, saying such an approach is “just channeling the problems through a different mechanism.”

Kagan said the state of New Jersey, a litigant in the case, is arguing that without the availability of nationwide injunctions, it could face “administrative costs and … workability problems” as a result of possibly inconsistent court rulings being issued in different states on the citizenship question.

This could also lead to a “magnet problem” as “everybody moves to the state where the more favorable rule exists,” Kagan said.

5. Difficulties Involved in Suing Over Birthright Citizenship

Jackson said the government’s proposal to curtail nationwide injunctions would make it more difficult for people to sue to vindicate their rights.

“Your argument seems to turn our justice system … into a ‘catch me if you can’ kind of regime … where everybody has to have a lawyer and file a lawsuit in order for the government to stop violating people’s rights,” she said.

Sauer disagreed, saying that given the status quo, “the ‘catch me if you can’ problem operates in the opposite direction where we have the government racing from jurisdiction to jurisdiction, having to sort of clear the table in order to implement a new policy.”

“Many of us have expressed frustration at the way district courts are doing their business,” Kagan said.

The current system encourages forum-shopping, she said, referring to plaintiffs choosing to file a case in a jurisdiction where they think that the judge will be sympathetic to their case.

During the first Trump administration, litigants sought favorable rulings by filing in courts perceived to be friendly in San Francisco, but in the succeeding Biden administration, litigants filed in Texas, Kagan said.

“There is a big problem that is created by that mechanism,” she said.

Tyler Durden
Fri, 05/16/2025 – 08:55

via ZeroHedge News https://ift.tt/CWTpHt0 Tyler Durden

Single-Family Home Permits Plunged In April, But ‘Renter Nation’ Returns

Single-Family Home Permits Plunged In April, But ‘Renter Nation’ Returns

A day after homeBUILDER sentiment finally cracked (though still dramatically more ‘confident’ than homeBUYERS)…

Source: Bloomberg

…and mortgage rates are rebounding higher, Housing Starts and Building Permits expectations were mixed ahead of this morning’s print.

The actual data was indeed mixed but both were disappointly below expectations as Starts rebounded just 1.6% MoM (below the +4.0% exp) from the 10.1% MoM collapse last month (small revision higher) while Permits (more forward looking) plunged 4.7% MoM (vs -1.2% MoM)

Source: Bloomberg

That is the biggest MoM drop in Permits since March 2024, dragging the SAAR down tits lowest since July 2024…

Source: Bloomberg

The drop in Permits was largely driven by a huge 5.1% MoM drop in Single-Family apps (multi-family fell 4.4% MoM) – the biggest drop since Dec 2022…

Source: Bloomberg

Housing starts were dominated by multi-family unit increases (for the third month in a row) as Renter Nation returns…

  • Single-Family down 2.1% to 927K, lowest since July 2024

  • Multi-family up 11.1% to 420K, highest since Dec 2023

Interstingly Starts picked up modestly despite the plunge in Homebuilder future sales expectations.,..

Source: Bloomberg

Perhaps the most shocking chart – that explains why builders are not building single-family homes is that inventories of unsold NEW homes is surging

Source: Bloomberg

Rate-cut expectations are not helping…

Source: Bloomberg

So, don’t bank on The Fed to save the day.

Tyler Durden
Fri, 05/16/2025 – 08:44

via ZeroHedge News https://ift.tt/R3MaWBz Tyler Durden