There are many reasons to suspect that the current equity rally is unsustainable – not least in the US, where zombie banks and massively overleveraged consumers still stumble round the landscape. Companies face lower returns on equity just as shareholders should be demanding a bigger return on their funds to compensate for higher risks. But there will be another factor weighing on stock markets: companies are going to have to issue increasing amounts of equity.

This is in marked contrast to recent years. From about 1980, when the payout ratio stood at about 40 per cent, US companies moved from being net issuers to net buyers of shares. That was partly thanks to a rise in profits, relative to economic output, but also because payout ratios had been steadily falling since the 1940s when they had been a heady 90 per cent. In addition, managers replaced equity with debt in corporate capital structures – the leveraged era was born. Thus payout ratios began to rise again, to about 70 per cent today.