Corporate profits are at or near an all-time high
January’s Fundamentals, written by Chris Brightman, head of investment management of Research Affiliates, is titled “The Profits Bubble.”
Key points:
1. Corporate profits are at or near an all-time high relative to both GDP and wages and salaries.
2. Globalization facilitated by a corporatist economic policy is the cause of the upward surge in profits. The resulting degree of income inequality seems socially intolerable.
3. Rising populism will likely lead to changes in government policy. Expect real earnings per share to grow much more slowly, or even decline, over the next couple of decades.
