Fed policy helping rich get richer: BlackRock pro

Fed policy helping rich get richer: BlackRock pro

by Jeff Cox at CNBC

http://www.cnbc.com/id/

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"The global economy is witnessing a massive redistribution of wealth and income with borrowers, equity shareholders and short-term investors benefiting; and savers, bondholders and longer-term investors being placed at risk," wrote Rieder, chief investment officer of BlackRock's Fundamental Fixed Income division and co-head of Americas Fixed Income.

BlackRock is just the latest Wall Street voice to express concern over an environment in which companies are eschewing long-term investments in plants, infrastructure and jobs in favor of short-term moves like buybacks and dividend issuance aimed at pleasing deep-pocketed and vocal shareholders.

In a similar analysis a few days ago, Goldman Sachs strategists pointed out that companies have spent $2 trillion over the past five years on buybacks. Capital investment, meanwhile, has slumped from 29 percent of operating cash flow to 23 percent while dividends and buybacks surged to 36 percent.

Citigroup also has weighed in on the subject, pointing out in a note in April that companies in the S&P 500 have spent $4 trillion on buybacks over the past 10 years.


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