US Equities: Weak Fundamental Support

Jon Corporate, Economy, Fiscal Policies, Market Commentary

Despite a sketchy fundamental backdrop, an accommodative Fed is likely to support share prices for a while longer.
The US equity market capitalization is larger than total GDP, yet profits are steadily losing share relative to GDP. This is not a sustainable combination and a re-coupling is inevitable at some point. We doubt profits will close the gap. Profit margins are mean reverting and have already been well above average for a prolonged period of time.

This post was published at FinancialSense on 09/28/2016.