Profit from the gradual recovery
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.