US Corporate Profits

Corporate profit data made for some really grim reading after the Easter break.

  • Post Tax non-Financial Corporate Sector Profits Down 19% y/y

2016.4.4.corporateprofits

Why? Employee compensation share in output rising very rapidly now and crushing margins.

2016.4.4.corporateprofits2

2016.4.4.corporateprofits3

  • So, margins and profit growth going exactly as the historical data set would imply:

3-year outlook

2016.4.4.corporateprofits4

5-year outlook

2016.4.4.corporateprofits5

  • Unit profit data confirm the story.

2016.4.4.corporateprofits6

All this from nose-bleed valuation – based upon valuation measures with a strong and consistent historical relationship with forward returns… and with the “China Crisis” still looming.

 

MONOGRAM CAPITAL MANAGEMENT