In light of expectations that the Trump fiscal stimulus plan will unleash a new Golden Age for the US economy, driven in part by the repatriation of hundreds of billions in funds held offshore, yesterday we showed a disturbing analysis from Citigroup according to which the bank's share-shrinker portfolio has soared relative to the S&P following the US election. The implication was clear: as fas as the market is concerned, much if not all of the capital repatriated from overseas will be promptly returned to shareholders, and maybe much of the corporate tax cut as well. Citi's troubling conclusion: "This doesn't bode especially well for those who hope policy changes will encourage a significant pick-up in US company capex."

Where will the bulk of this buyback spending growth come from: Goldman, as Citi, predicts that tax reform legislation under the Trump administration will encourage firms to repatriate $200 billion of overseas cash next year and further forecast that a vast majority, or 75%, of the returning funds will be directed to buybacks based on the pattern of the tax holiday in 2004. Of the $200 billion to be repatriated in 2017, Goldman sees $150 billion being used toward repurchases, or 20% of total buybacks. Meanwhile, organic investment will grow far less: capex will grow by only 6%, R&D by 7%, and cash M&A by 5%.