Observers of the US political scene complain about a dearth of leadership. The same is also true of the corporate world. Just as politicians are mesmerised by polls, chief executives are enslaved to the share price. Today’s US bull market is sustained by one key ingredient: the share buyback. Profit margins are falling. Investment opportunities are apparently lacking. All that remains is to shrink the number of shares. America’s buyback boom may not be a crisis of capitalism. But it is a warning sign. When companies put their chips on financial engineering they are betting against the future.

This year US buybacks are on course for the first time to exceed $1tn. It would be less worrisome were the binge confined to one or two sectors, say big oil and mature drugs companies. But that is far from the case. From Apple to Pepsi, chief executives in all sectors live in fear of the activist investor. Likewise, it would be less troubling if the trend were purely cyclical. But buybacks have been rising as a share of profits for more than 30 years. Last year, the S&P 500 companies spent 95 per cent of their operating margins on their own shares or in dividend payouts. To judge by the activity since January, buybacks are on course to exceed 100 per cent of profits in 2015.

In theory companies are meant to raise money from the stock market to invest in their future growth. Exactly the reverse is taking place. Last year, the volume of buybacks was $550bn, according to Bloomberg, while the amount of new money coming into the market, mostly into mutual and exchange traded funds, was just $85bn. During 2015 the trend has increased sharply. Not only have buybacks jumped: they hit a record $104bn in February. But investors have actually been withdrawing money from