Earnings season is just around the corner. But as investors prepare for the onslaught, it’s worth noting that there are two ways to measure corporate profitability.
“The record divergence between S&P 500 operating earnings and after-tax [National Income and Product Accounts] profits from the GDP accounts during the year 2000 was a critical harbinger for a broader earnings recession, corporate accounting shenanigans, and a nearly three-year bear market,” he notes. There also was a divergence, though less severe, before the 2007 to 2009 stock-market plunge.
Right now Fed officials are putting too much emphasis on service sector inflation, which actually is a component of the Conference Board’s index of lagging economic indicators. “That means there will be a long lag between the tightening of monetary conditions and the impact on slow-moving price level variables, especially those tied to contracts and leases.
The buzz On the economics front, it’s the lull before the storm — no data releases or Fed officials due to speak ahead of Thursday’s release of the consumer price index.The world’s richest man, Bernard Arnault, promoted his daughter Delphine to lead the Dior unit of LVMH Moët Hennessy Louis Vuitton. The chart Adi Mackic, senior client portfolio manager at Man AHL, posted this chart, comparing traditional 60/40 model drawdowns to those when investors allocated half toward 60/40, and another half toward trend strategies.