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Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: The Ox who wrote (20015)	9/22/2017 12:30:31 PM
From: The Ox	3 Recommendations Recommended By John Pitera Joseph Silent sixty2nds Read Replies (1) \| Respond to of 33421

www-bloomberg-com.cdn.ampproject.org Excerpt: Take those high (and still rising) profit margins for U.S. companies. They have allowed the S&P 500 Index to post earnings growth of 10.2 percent in the second quarter on revenue growth of just 5.1 percent. Incremental margins are the unsung heroes of this year’s rally, creating upside earnings surprises even when markets accurately forecast revenues. That translates into increased confidence for further gains in future quarters. When you put the current levels of U.S. corporate profitability into historical context, the picture changes. Trailing four-quarter S&P 500 operating profit margins are 10.6 percent, and the second quarter was even better at 10.8 percent. Those compare with 9.0 percent at the prior peak in 2006, and just less than 8.0 percent in the late 1990s. What could cause margins to revert back to longer-run averages? The most obvious answer is a U.S. recession, but the menu is longer. Commodity inflation may not be an issue at present, but the CRB Index has not made a new cyclical low for more than a year. Wage inflation is slowly rising, with the Federal Reserve Bank of Atlanta’s national wage growth trackershowing steady growth in 2017 at 3.3 percent for July.