What's the Big Idea? This Is What Could Stop Stocks From Shrinking

The video discusses the trend of the shrinking US stock market, driven by share buybacks and M&A, often financed through debt. The cost of equity is higher than debt, making debt a more attractive option for companies. This financial engineering boosts earnings per share in low-growth environments. However, political pushback and potential bond investor actions could challenge this trend. The dwindling supply of equities has increased demand, but political factors may alter this dynamic.

In what ways have share buybacks and M&A been used by companies in a low growth environment?

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What political factors could potentially impact the trend of share buybacks?

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