Japan's relatively
low corporate profit margins mean a given increase in revenues can have an outsized impact on earnings.
Not exact matches
The result would mean significantly less spending and borrowing and this, in turn, would lead to
lower GDP growth,
corporate profit margins and employee wages.
But as long as 1) inflation remains
low, 2)
profit margins remain wide (remember the $ 1.5 trillion tax cut package passed in December slashed the
corporate rate to 21 per cent from 35 per cent), and 3) GDP is also not expected to go backwards, stocks will probably remain supported.
Returns on equities are impossible to predict, but the McKinsey researchers point to several factors that have changed since the «golden era,» including
lower inflation,
lower interest rates, slower economic growth and slimmer
corporate profit margins due to greater competition.
Some astute investors (such as Hussman and GMO) have argued in essence that the combination of record government deficit spending and unemployment levels has propped up
corporate revenues while
lowering labor costs, thereby boosting
corporate profit margins by as much as 70 percent above historical averages.
The result would mean significantly less spending and borrowing and this, in turn, would lead to
lower GDP growth,
corporate profit margins and employee wages.
Here are just a few good reasons:
low inflation, zero interest rates, record
corporate profits and record
profit margins.