Profit Margins to Head Lower, Equities to Suffer

Excerpt: “Profit margins in the US have hit modern-day record levels, and this has been used to help justify high equity valuations. Consensus estimates are for profit margins to remain steady, or even increase from current levels. We disagree for ironclad economic and accounting realities, and think margins will fall, taking equities down too. “

U.S. Corporate Profit Margins

Excerpt:

“Profit margins in the US have hit modern-day record levels, and this has been used to help justify high equity valuations. Consensus estimates are for profit margins to remain steady, or even increase from current levels. We disagree for ironclad economic and accounting realities, and think margins will fall, taking equities down too. “

U.S., Equity, Negative View-Variant Perception, May 22 2014

20.05.2014