Today King World News is highlighting three incredibly important guest commentaries included in Art Cashin’s notes. Below are the three fascinating guest commentaries that Art Cashin, who is Director of floor operations at UBS, chose to highlight.
By Art Cashin Director of Floor Operations at UBS
July 8 (King World News) – “Earnings Season – Tonight, Alcoa reports, marking the “traditional” opening of “earnings season”. Our pal, Peter Boockvar over at the Lindsey Group, sent out a note on that topic to clients. Here’s a bit:
On to earnings. Current Bloomberg estimates has 3% y/o/y revenue growth and 5% earnings growth for the S&P 500. What will be key and sorry to repeat again but with profit margins at record highs, it is imperative that productivity growth starts to rise because the increase in hiring that we’re now seeing must be met with a gain in output per worker or else unit labor costs go higher and margins fall. Low labor costs have been a critical lift to corporate profits over the past few years in addition to historically low interest expenses. In 2013, wages and salaries combined with benefits (employer payments of medicare and social security contributions) totaled 52.7% of GDP, the lowest since 1948. Without stronger productivity as companies add to payrolls is called the 1970’s. For example, in 1977 monthly payrolls were 330k and improved to 355k in 1978. The average productivity growth over those 2 years was just 1.75% vs an average of over 2% in the two decades that followed. Inflation of course was the result and interest rates spiked. The S&P 500 fell 11.5% in 1977 and rose just 1.1% in 1978. The opposite, where productivity increased along with more money accruing to labor is called the 1980s/1990s and we know what happened then.READ MORE
Please share this article
No comments:
Post a Comment