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💸 We Got Here Fast
Issue #25 // Bulls Charge at 4,300 + Rate Hike?
Abbas Akhtar & Rahul Kannam
June 13, 2023
UPDATE
🌤️ Happy Tuesday
Good morning. Though it is (sadly) over, we hope you had a restful weekend.
It’s about the time of year when both summer vacations and jobs/internships are starting up. Looking forward, we hope you have a chance to do both. Remember: work hard, play hard 💪
Read time: 2 minutes
WEEK IN REVIEW
📈 Market Performance
Wall Street Sign
As of Monday’s market close, the S&P 500 had its highest close in 13 months (since an April 2022 high of just about 4,500 points). Since Tuesday’s market open last week to yesterday’s close, the index increased 1.6%. What’s more significant, however, is that the S&P is now above 4,300. (Source: CNBC)
After only one week of talking about holding the 4,200-point line in our issue Through a New Lens, the index (and overall market) seem to be going strong as we head into early summer.
While many publications seem to be calling the healthy growth a mini “bull market,” there is room for doubt. The FED is widely expected to announce an interest rate hike in its long-running quest to combat inflation. Traders, however, hope that a rate hike doesn’t occur so as not to artificially slow market growth.
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MARK IT. EXPLAINED
💵 Explaining Stock Buy Backs (Updated)
Gold Traders, via Blanchard Gold
A stock buyback is when a company buys back outstanding shares of its company from investors or the open market. This reduces the number of shares in circulation and gives a boost to the stock price of that company. This move allows the company to "invest in itself" or show investors that the company is capable of picking up shares with spare cash.
Stock buybacks reduce the number of shares circulating in markets and if demand is constant, the price rises due to the decrease in the supply of shares. They are usually seen as a positive event and a good indicator of what is to come in the economy, hence boosting investor confidence in the company as well as the outlook for the company's performance.
🪙 Buy Backs in Action
Most companies utilize stock buybacks when they have excess cash and management has no other use for the excess cash. Stock buybacks can occur in mass when the economy is booming. For example, the Tax Cuts and Job Act helped corporations shift overseas cash back to the U.S. Part of this excess cash initiated multiple stock buybacks that brought on market momentum in the following months.
Overall, stock buybacks are a way for companies and corporations to buy back their shares and signal to investors that they have excess cash and a positive outlook for the future. (Sources: Investopedia [taxes], Investopedia [terms])
ONE MORE THING
🤝 Keep in Touch
For general announcements or updates on what we're working on, follow Abbas on Twitter 👉 @RealAbbasAkhtar
Also, we want to hear your feedback! Send any comments or suggestions to [email protected]
Thanks again for reading!
