Conclusions
To us, the macro profits equation is a simple but powerful tool for understanding the drivers of profits, and helps us assess their sustainability. It is a useful organizing framework for thinking about the possibility of a structural break in profit margins. When we look at the drivers of today’s high profit margins, we find fiscal deficits behind the high profit margins of many countries. There is nothing “wrong” with this per se, but it does suggest that moves toward fiscal retrenchment will bring margins back toward more normal levels. It seems unlikely that “this time is different” when it comes to mean reversion in margins: what goes up must come down.
To us, the macro profits equation is a simple but powerful tool for understanding the drivers of profits, and helps us assess their sustainability. It is a useful organizing framework for thinking about the possibility of a structural break in profit margins. When we look at the drivers of today’s high profit margins, we find fiscal deficits behind the high profit margins of many countries. There is nothing “wrong” with this per se, but it does suggest that moves toward fiscal retrenchment will bring margins back toward more normal levels. It seems unlikely that “this time is different” when it comes to mean reversion in margins: what goes up must come down.
No hay comentarios:
Publicar un comentario