• Apple was founded in 1976 and it took the company 44 years to hit a market cap of $1 trillion (in 2018). Two years later the company was worth $2 trillion (in 2020), and now a mere 15 months later the stock is 5% away from reaching a $3 trillion valuation. Microsoft is currently the only other company with a market cap above $2 trillion.
• S&P500 companies have increased the amount of share buybacks from just $89 billion during the pandemic to a record $234.5 billion in the third quarter this year. These buybacks have supported stock prices by reducing the amount of shares outstanding, which lets them report higher per share profits each quarter. Additionally, companies may be accelerating their buyback plans as Congress is considering a bill that would put a 1% tax on the net value of buybacks.
• Since bottoming out in March 2020 the stock market has added $30 trillion in value. Volatility has been returning to the stock market, however, with drops of more than 1% occurring 19 times this year. Yet 68% of these stock market dips have been immediately followed by a strong rebound the following day.
• Since the start of 2020 when the pandemic began corporate debt has increased by $1.3 trillion. More worrisome though is the fact that there are currently 621 companies within the Russell 3000 that do not generate enough cashflow to meet their debt payments. If the Fed raises rates next year we could see more companies struggle to pay the roughly $2.5 trillion in corporate debt that will come due over the next five years.