MarketBeat has a Société Générale research note that expands on "Earnings:
Société Générale's Albert Edwards On Why "The Farce That Is US
Reporting Season" May Be Different This Time " from a couple months ago:
Brendan posted earlier about how Citigroup is getting worried about profit margins. They’re not alone — Soc Gen’s in-house Dr. Doom, Albert Edwards, has a note today with his own take on the subject.Earlier today:
Shockingly, Mr. Edwards’s take is downbeat!
While Citi focused on the impact of government spending on corporate profits, Mr. Edwards zeroes in on the recent collapse in productivity and surge in labor costs and what they say about margins:
Last week the BLS revised the unit labor cost rise in Q2 up from 2.2% to 3.3% quarter over quarter. US non-farm business unit labour costs are now rising by 2% year over year. That is very bad news for profits. Bad news for equities. And because the pace of ULC is a key driver of inflation (upwards in this instance), it is bad news for an increasingly criticised and divided Fed.
Since labour costs overwhelmingly dominate corporate costs, trends in productivity are crucial to the pace of growth of company profits....MORE
*****Alert***** Société Générale's Albert Edwards Bearish *****Alert***** (Sept. 6, 2011)