Corporate profits are slowing down and will continue to slow down (see above chart; click on the chart to enlarge).
Why? Productivity is slowing down and wages are growing faster. The outcome is higher labor costs squeezing margins as discussed in the blogs below.
Profits will improve again when productivity rises and wages stabilize. It will take some time for this to happen.
Bottom line: business will keep cutting costs (employment, production, and borrowing) to improve margins. This process will slow down the economy.
This is the kind of environment favorable to bonds.
More on https://www.peterdag.com/
George Dagnino, PhD
Editor, The Peter Dag Portfolio on https://wwww.peterdag.com/
Since 1977
1 comment:
Excellent end of month review at your service. I am in total agreement. This is not a low risk entry point for stocks, nor were the recent lows in my opinion.
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