The chart below comes to us from Citi strategist Tobias Levkovich, it’s a look at how corporations plan to spend money this year. You’ll notice the evolution from previous periods. What jumps out at me is that M&A expectations are dropping but labor costs are rising. This is a constructive development for the economy, even if it’s not necessarily a positive for stock prices right away.
It fits perfectly in-line with the thesis that it’s time for the consumer / worker to start outperforming the investor / corporation. This has been happening, for the first time in the post-crisis recovery, over the last 18 months. The trend, ironically, began on the heels of the release of Piketty’s treatise on income inequality.
US Equity Strategy, June 2016
Citi Research – May 31st 2016