Companies have reported beating earnings by an average of 22.7%, according to Refinitiv, way above the historic beats of 3%-5% that were typical prior to 2020.
Stable margins: One major concern for corporate profits has been higher input costs, everything from packaging to transportation to fuel costs, which would adversely impact corporate margins.
While restoring the top individual income rate to 39.6% and taxing capital gains as ordinary income for households making over $1 million have caused some ripples among investors, most believe that any tax hikes will come in at far lower rates than those proposed.
In other words, higher taxes will likely be more than offset by stimulus and the reopening.
It might be a modest tapering, but we will be far enough along in the labor market recovery by the third quarter that some tapering is likely in the fourth quarter,” he said.
The reopening and continued economic growth: Just as stock pickers are paid to sniff out peak earnings growth, economists are paid to sniff out peak economic growth.
“Peak everything” is a common refrain among investors, the concern that economic growth is peaking this summer, along with the rate of change in earnings growth.