Excellent chartology from the US equity strategy team at Goldman Sachs today. Click on charts to enlarge, courtesy of Goldman Sachs.
While the hopes and dreams may be strong for cyclical cheer, only fools are asking where the growth comes from, if the average hourly earnings growth is so weak in the private sector, while corporate profit margins are only growing ever sweeter? Not in this report, but earlier in the week Goldman Sachs presented it clearly, see the chart below.
Strange neighbourhood does not matter in America, just because the cult of corporate profits (sweet spot of efficient frontiers dream?) has failed to lead any US recovery (see here and here) since World War II? Though, why not to spend money on such a bet?