Global equity supply has been negative for the last three years. Buybacks are taking shares off the market at a pace not seen over the last 25 years. $120Bn have been repurchased YTD, with an additional $40Bn last year. That is part of the reason why the stock market keeps going up, irrespective of monetary policy. As liquidity shrinks due to a hawkish Fed, stock supply is shrinking at a faster pace, creating an imbalance. At this rhythm, $500bn will be amortized on 2024 and Goldman Sachs predicts $1Tn of buybacks next year. What started as a way to reward investors in a more tax efficient way than traditional dividends, has become a price manipulation tool.
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