Boockvar and Tchir still expect buybacks to provide a positive impulse for U.S. equities, but warn that it may not be as big as investors expect, nor might it come from the usual suspects. Boockvar, for his part, also warned of other headwinds to corporate profitability such as rising labor costs and borrowing costs.
Strategists at Morgan Stanley led by Adam Richmond noted that all else being equal, repatriation would dent investment-grade corporate bond issuance. But they also caution that other aspects of tax reform could foster more supply, leaving an unclear effect on the broader credit market.
"It is reasonable to assume that when tax reform is no longer a point of uncertainty, and the rules of the game are known, supply for M&A, as one example, could actually rise, offsetting some of the repatriation-driven decline in issuance," they write.
This article was provided by Bloomberg News.