Dougie on Corporate Profit Margins

Something helpful as we deign to determine whether or not stocks are cheap based on earnings here from my pal Doug Kass…

  • The two most important factors affecting stock market valuations are interest rates and corporate profits.

For now, interest rates are anchored at low rates, near zero, and, as such, are supportive of market valuations. As I mentioned on The Kudlow Report Tuesday night, risk premiums (earnings yield less the risk-free cost of capital) are back up to 1974 levels. And following that ramp up, the S&P 500 rose by 32% in 1975 and by 19% in 1976.

Profit Margins Are Now Vulnerable

With regard to corporate profits, though the markets paid little attention, Wednesday’s unit-labor cost report was an important variable that could dent corporate profitability in the months ahead.

Remember that corporate profit margins are among the most mean-reverting economic series extant.

Source:

TheStreet

What's been said:

Discussions found on the web
  1. w88 commented on Sep 20

    … [Trackback]

    […] Find More to that Topic: thereformedbroker.com/2012/03/08/dougie-on-corporate-profit-margins/ […]

  2. Eat Verts commented on Sep 21

    … [Trackback]

    […] Read More Information here on that Topic: thereformedbroker.com/2012/03/08/dougie-on-corporate-profit-margins/ […]

  3. mail order THC concentrates online commented on Sep 23

    … [Trackback]

    […] Find More Information here to that Topic: thereformedbroker.com/2012/03/08/dougie-on-corporate-profit-margins/ […]

  4. DevOps commented on Nov 19

    … [Trackback]

    […] Read More on to that Topic: thereformedbroker.com/2012/03/08/dougie-on-corporate-profit-margins/ […]

  5. Equation of Quality commented on Nov 24

    … [Trackback]

    […] Read More Info here on that Topic: thereformedbroker.com/2012/03/08/dougie-on-corporate-profit-margins/ […]

  6. regression testing meaning commented on Nov 25

    … [Trackback]

    […] Find More Info here to that Topic: thereformedbroker.com/2012/03/08/dougie-on-corporate-profit-margins/ […]

  7. intelligent automation commented on Nov 28

    … [Trackback]

    […] Read More Information here on that Topic: thereformedbroker.com/2012/03/08/dougie-on-corporate-profit-margins/ […]