Sam Ro writes:
Overall, Wall Street’s strategists are bullish on stocks for 2013 for various reasons.
One reason worth taking a second look at is expanding corporate profit margins, which are already at historic highs.
A slew of experts like GMO’s Jeremy Grantham, SocGen’s Albert Edwards, LPL Financial’s Jeff Kleintop, and John Hussman think these margins are unsustainable.
But the equity analysts and the companies they cover disagree……..
That is the medium-term outlook, but one has to question whether low effective tax rates and low interest rates are sustainable in the long-term. A weaker dollar has also boosted the conversion of offshore earnings but that is a one-off gain unless the dollar continues to weaken.
Read more at 2013 Profit Margin Expectations – Business Insider.