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Sun Feb 11, 2018, 10:29 AM

Beware the $500 Billion Bond Exodus

Farewell, Ireland: It looks like corporate America will finally bring that cash home.

For years, the likes of Apple Inc. and Microsoft Corp. have stashed billions of dollars offshore to slash their U.S. tax bills. Now, the tax-code rewrite could throw that into reverse.

The implications for the financial markets are huge. The great on-shoring could prompt multinationals -- which have parked much of their overseas profits in Treasuries and U.S. investment-grade corporate debt -- to lighten up on bonds and use the money to goose their stock prices. Think buybacks and dividends.

It’s hard to say how much money the companies might repatriate, but the size of their overseas stash is staggering. An estimated $3.1 trillion of corporate cash is now held offshore. Led by the tech giants, a handful of the biggest companies sit on over a half-trillion dollars in U.S. securities. In other words, they dwarf most mutual funds and hedge funds.

“There is going to be a significant unloading,” particularly of Treasuries, said Reuven Avi-Yonah, a professor who specializes in corporate and international taxation at the University of Michigan Law School. “The general consensus is that the best use of the funds is to distribute it out to shareholders.”


Just a reminder that December led tax scam by the republicans, is still a tax scam

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Reply Beware the $500 Billion Bond Exodus (Original post)
turbinetree Feb 2018 OP
Wounded Bear Feb 2018 #1
yallerdawg Feb 2018 #2
dixiegrrrrl Feb 2018 #3

Response to turbinetree (Original post)

Sun Feb 11, 2018, 10:31 AM

1. Yep...gonna start another bubble...

and all tax free.

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Response to turbinetree (Original post)

Sun Feb 11, 2018, 11:01 AM

2. Another thing to consider going forward.

When the Big Casino (stock market) gets 'sketchy' the "whales" like to hold on to more "chips" to hedge against losses.

Reporting repatriated cash, taxing profits when they still don't have to, giving vast sums to "investors" who are also only happy when the stock market goes up, and voluntarily ncreasing labor costs with bonuses and raises, - which is inflationary and triggers higher interest rates, which makes the stock market "nervous" - all this is counter-productive to their one guiding principle - "make more money."

The one thing WE can bet on? The "rich get richer" - and I wouldn't bet against that.

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Response to yallerdawg (Reply #2)

Sun Feb 11, 2018, 05:08 PM

3. Yeah, but look on the bright side:

All that inflation makes their dollars worth a lot less.

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