Corporate Profits Inflation Adjusted has been falling as expected when I first published this chart.
But unlike the first chart I have inflation-adjusted it this time to get a more accurate reading. Something we have not needed to do for decades.
Before I continue can you chart corporate profits and like charts? Answer yes you can which is why I added the...
For the past two decades, corporate profits have grown at a faster rate due to excessive government deficits, Zero Interest Rate Policy (ZIRP), and Quantitative Easing ( QE ).
However, this prolonged growth has not been without its hiccups. There were two major corrections, one in 2008 to 2009 which resulted in a 63% drop in corporate profits and a severe...
Markets are indicating corporate profits will fall going forward. At 3.4% unemployment
massive deficits, 2.5% Fed Fund rate, huge net imports 9% inflation, an Inverted yield curve,
and all we have managed to grow the real economy since 2019 are a measly $500 billion
(inflation-adjusted.) If we can't grow the economy now when will we?
The start of pandemic Cooperate profits (CP) Dropped stock soared.
$8 Trillion is printed out of thin air, FED QE, Loans, ZIRP, and handouts like candy "for the people's economy" CP Soared!
Now what? Inflation soaring, less funnny money, tapper of QE, rate hikes, going into a slowing economy, what do you think will happen next?
Corporate Profits Explode to new all-time highs in the middle of a pandemic thx to
Excessive Deficits,
Helicopter money,
QE,
Endless Fed lending facilities,
Zero-interest rates
In short MMT everything
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Corporate profits falling and stocks are rising. In fact, corporate profits have not risen since 2012! yet the stock market has soared.
This is what multiple expansion looks like. Paying more and more for less and less profits. This is the pure definition of a bubble.
Tulipmania again. Extraordinary Popular Delusions and the Madness of Crowds. Price is what you...
As you can see we are experiencing Euphoria right now in the Stocks. Flat corporate profits with rising stock prices. History tells us correction is coming in stock prices. What history doe not tell us, is how long Euphoria will last. I would not dare contest anyone who argues that history is a bad data since we QE did not exist back then. In fact, I would applaud...
What will push the Markets Higher? Multiple Expansion where the market pays more for the same earnings? Earnings Expansion making stocks cheaper and cheaper thus pushing stocks higher and higher? At the end of the day it all comes down to answering this simple question.
