US economic recovery is clearly under way. But is it a
profitless recovery? Some bears say so. I don't agree. This year,
corporate profits will not rise as much as the consensus forecasts.
That's why I reckon that US Inc and the equity markets will recover
at a canter rather than a gallop. But they will still rise
sufficiently to support a 10% to 15% rise in equity prices by the
year-end.
Recently, there's been a lot of consternation about the accounting
standards used to measure US corporate profits. Enronitis has put
the wind up equity markets. But there is a way through the
smokescreen of reported corporate earnings results to see what is
really happening to business profits in the US.
There are two ways to measure US corporate profits. One is to
project company earnings results from the S&P500. But that is
fraught with the problems that are now...
