The Gavekal analyst emphasized that the political pressure exerted on the Fed to relax monetary policy, combined with evidence of a softening economy, may further reduce borrowing costs and prompt more share buybacks.

Stepping back somewhat and contemplating the wider picture, he made the argument that Trump’s “America first” investment policy may limit the range of opportunities for companies to deploy capital overseas, and reduce incentives to invest in the economies of foreign competitors/ adversaries. This may also foster more share buybacks.

The Trump administration’s stricter immigration stance may also impinge upon companies’ appetite for buybacks. Net immigration is expected to fall sharply in 2025-2029, downgrading forecasts for population growth and labor force. Weaker long-term growth opportunities for American companies may deter them from domestic capital spending, and render share buybacks (or dividends) a more preferable way of deploying capital.

Tan Kai Xian reckons that unless the current AI investment boom generates major productivity gains, a worsening profit outlook may oblige companies to rationalize their balance sheets with yet more buybacks.