A Tale As Old As Time

| September 30, 2019
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We are seeing this in the GM worker strike. As companies make more in profits, labor wants their share of the pie. This dynamic has a ripple effect we see in the later part of the cycle.

As explained by Christian Drake:

“If nominal wage growth is rising faster than nominal GDP, then labor’s share of national income will generally be rising .. which is the same as saying that corporates share of national income is falling which is also the same as saying that margins are declining.”

CHART OF THE DAY: Labor Share of Income ↑ = Corporate Margins ↓ - CoD Labor vs Margins

In short, expect earnings to continue lower and don’t be surprised if we see an earnings recession.


Stay Tuned, Disciplined & Patient! {TJM}

The Investor & Character Equation (ICE) | S + R = O


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