Corporate earnings have been as strong as Atlas. Like Atlas, they are bearing the load of financial performance worldwide on their shoulders. Many clients ask how long the path of continued all-time highs can persist. The short answer is, “as long as earnings support the rising share prices”. The more “nuanced” answer (as those who dislike the word “detailed” would say), is “not for too much longer”. Many of these terrific performances represent profits by corporations who enjoy true or near monopoly rents, meaning with virtually no competitors to their revenues. Think Facebook, Google, Amazon etc. We believe that the end of this period of permitted, indeed encouraged, industry consolidation and resulting monopoly profits is in sight. Facebook set aside $3b for what they believe will ultimately be a provision for a $5b fine for violating federal low on privacy and disclosure. Google continues to pay nearly yearly fines in excess of $1.5 to the EU for anti-competitive behavior. Maybe all of these fines and penalties are just a new way of taxing hugely successful corporations that are adept at dodging taxes. Maybe they are the opening salvos in an attempt to restrict the wholesale pandering of client personal data with no remuneration to the provider of the data. The end is in sight.
Elections season is upon us
Weekly Report - 29/04/2019