US Stocks Struggle Despite Earnings

According to the latest research from Goldman Sachs, American corporations have announced plans to return over a record $1 trillion to shareholders. However, the investment bank was quick to note that this type of exuberance was felt around the time of the last financial crisis and should be treated as a warning sign instead of applauded. It builds on the notion that corporations are quickly adding debt at an increasingly furious pace, heightening the risks as companies deploy nearly one-third of available cash to reward shareholders. Further to this point, in Apple’s earnings announcement yesterday, the company announced plans to boost buybacks from $90 billion to $140 billion, using debt markets to raise additional funds. Debt at the company which during Steve Job’s tenure carried no debt at all, has now seen total outstanding bonds issued at $43.9 billion.

Negotiations between Greece and creditors continue to surprise markets after the move by Greek Prime Minister Alexis Tsipras to restructure the Greek negotiating team, taking the limelight away from firebrand Finance Minister Yanis Varoufakis. The move was greeted with optimism as Germany and Euro Area leaders highlighted the eagerness to come to a deal after the announcement of the new arrangement. In a setback for Greek policymakers, local governments have balked at the move to park their excess cash in the Greek Central Bank just as the deadline for paying public workers and pensions nears. The good news is that Greek bond yields retreated slightly on the announcement with the 3-year yield falling almost 300 basis points on the announcement as renewed optimism sent the Euro higher against peers.