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Old 10-31-2013, 12:51 PM  
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For the Fed obsessed idiots (Teej and BEP in particular)

Corporate Profits After Tax

http://www.ritholtz.com/blog/2013/10...its-after-tax/

Billions of dollars, seasonally adjusted, after tax without inventory valuation (IVA) and capital consumption adjustments (CCAdj).

I have been trying to explain to some of my more Fed obsessed friends there are factors outside the central bank that matter also. One such factor is corporate profits.

As the chart from the Federal Reserve Bank of St. Louis shows, after tax Corporate Profits are at all time highs. And while the inclination is to say this is driven exclusively by programs like QE and ZIRP, the pre-crisis profit picture was also very rosy. (Rates were very low than also).

I am hard pressed to believe that corporate profits are due exclusively to ultra-low rates. There is no doubt that financing costs are lower, but that is offset by tightened credit. Demand for goods and services has been increasing only modestly. While private sector growth has been repsectable 3-4% the public sector continues to be a net negative drag on growth. State and municpality layoffs also have the effect of depressing demand.

The corporate sector is actually well positioned: Balance sheets are the cleanest in a long while. Companies are running very efficiently, with limited head count (we see evidence of this in stubbornly high unemployment rates). Productivity gains are hard to come by because productivity has risen so much over the past 20 years. Business Intelligence software is allowing firms to make changes on the fly it used to take several quarters before enough intel could be gathered to shift manufacturing or supply chain decisions. It now happens in real time.

~~~

Yes, the Fed is a factor in high corproate profits but its not the only factor.
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Old 10-31-2013, 01:40 PM   #2
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Truly amazing the poor voted heavily for Obama given how high corporate profits have gotten under his watch.
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Old 10-31-2013, 01:42 PM   #3
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Quote:
Originally Posted by Prison Bitch View Post
Truly amazing the poor voted heavily for Obama given how high corporate profits have gotten under his watch.
The President does not control the economic cycle or business profitability.
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Old 10-31-2013, 01:45 PM   #4
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Yes, but he is the Pres. Couldn't he just rob the rich and help the poor?
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Old 10-31-2013, 01:49 PM   #5
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Quote:
Originally Posted by Race Card native View Post
Corporate Profits After Tax

I have been trying to explain to some of my more Fed obsessed friends there are factors outside the central bank that matter also. One such factor is corporate profits.

As the chart from the Federal Reserve Bank of St. Louis shows, after tax Corporate Profits are at all time highs. And while the inclination is to say this is driven exclusively by programs like QE and ZIRP, the pre-crisis profit picture was also very rosy. (Rates were very low than also).

I am hard pressed to believe that corporate profits are due exclusively to ultra-low rates. There is no doubt that financing costs are lower, but that is offset by tightened credit. Demand for goods and services has been increasing only modestly. While private sector growth has been repsectable 3-4% the public sector continues to be a net negative drag on growth. State and municpality layoffs also have the effect of depressing demand.

The corporate sector is actually well positioned: Balance sheets are the cleanest in a long while. Companies are running very efficiently, with limited head count (we see evidence of this in stubbornly high unemployment rates). Productivity gains are hard to come by because productivity has risen so much over the past 20 years. Business Intelligence software is allowing firms to make changes on the fly it used to take several quarters before enough intel could be gathered to shift manufacturing or supply chain decisions. It now happens in real time.

~~~

Yes, the Fed is a factor in high corproate profits but its not the only factor.
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Old 10-31-2013, 01:51 PM   #6
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Quote:
Originally Posted by Race Card native View Post
The President does not control the economic cycle or business profitability.
So then all the liberals who blamed Bush for the economic meltdown are stupid?
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Old 10-31-2013, 02:03 PM   #7
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Quote:
Originally Posted by Nightfyre View Post
Notice the word "exclusively"

He's not saying it isn't a factor.
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Quote:
Originally Posted by Iowanian View Post
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Old 10-31-2013, 02:04 PM   #8
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Quote:
Originally Posted by Prison Bitch View Post
So then all the liberals who blamed Bush for the economic meltdown are stupid?
Side stepping your loaded question, Bush played a role in the meltdown. He appointed people that made it much worse than it should have been *cough Chris Cox cough* but he wasn't the cause. Greenspan is much more culpable than Bush.
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Quote:
Originally Posted by Iowanian View Post
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KC native wants to die in a aids tree fire.KC native wants to die in a aids tree fire.KC native wants to die in a aids tree fire.KC native wants to die in a aids tree fire.KC native wants to die in a aids tree fire.KC native wants to die in a aids tree fire.KC native wants to die in a aids tree fire.KC native wants to die in a aids tree fire.KC native wants to die in a aids tree fire.KC native wants to die in a aids tree fire.KC native wants to die in a aids tree fire.
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Old 10-31-2013, 02:15 PM   #9
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Quote:
Originally Posted by Chris616 View Post
Meaning they all drank from the same wine barrel and consumed the same bread and particular leaven . Sounds like a conspiracy to me.
Everything is a conspiracy to you.
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Quote:
Originally Posted by Iowanian View Post
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KC native wants to die in a aids tree fire.KC native wants to die in a aids tree fire.KC native wants to die in a aids tree fire.KC native wants to die in a aids tree fire.KC native wants to die in a aids tree fire.KC native wants to die in a aids tree fire.KC native wants to die in a aids tree fire.KC native wants to die in a aids tree fire.KC native wants to die in a aids tree fire.KC native wants to die in a aids tree fire.KC native wants to die in a aids tree fire.
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Old 10-31-2013, 02:17 PM   #10
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Quote:
Originally Posted by Race Card native View Post
Notice the word "exclusively"

He's not saying it isn't a factor.
1.3 trillion is a lot of toxic assets pulled off of corporate balance sheets.
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Old 10-31-2013, 02:19 PM   #11
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Quote:
Originally Posted by Nightfyre View Post
1.3 trillion is a lot of toxic assets pulled off of corporate balance sheets.
You do realize that the vast majority of corporations are not financials right?
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Old 10-31-2013, 02:24 PM   #12
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Quote:
Originally Posted by Race Card native View Post
Side stepping your loaded question, Bush played a role in the meltdown. He appointed people that made it much worse than it should have been *cough Chris Cox cough* but he wasn't the cause. Greenspan is much more culpable than Bush.

You said Presidents don't control economic cycles. Now you're saying they "play a role". Taking both sides eh?
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Old 10-31-2013, 02:25 PM   #13
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Quote:
Originally Posted by Race Card native View Post
You do realize that the vast majority of corporations are not financials right?
You do realize that the vast majority of corporations are reliant on significant quantities of borrowings which would not be available via said financials if these toxic assets were still out and about. This is the average american shouldering the shitty assets because these financial firms hold the American economy hostage by being too big to fail and leveraging out of their minds to maximize profits. The biggest financial firms in the world have inadequate capital levels and they have basically been given permission to maintain the status quo by a group of people who are free of oversight.
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Old 10-31-2013, 02:28 PM   #14
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Quote:
Originally Posted by Prison Bitch View Post
You said Presidents don't control economic cycles. Now you're saying they "play a role". Taking both sides eh?
JFC you are stupid.
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Quote:
Originally Posted by Iowanian View Post
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KC native wants to die in a aids tree fire.KC native wants to die in a aids tree fire.KC native wants to die in a aids tree fire.KC native wants to die in a aids tree fire.KC native wants to die in a aids tree fire.KC native wants to die in a aids tree fire.KC native wants to die in a aids tree fire.KC native wants to die in a aids tree fire.KC native wants to die in a aids tree fire.KC native wants to die in a aids tree fire.KC native wants to die in a aids tree fire.
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Old 10-31-2013, 02:51 PM   #15
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Quote:
Originally Posted by Nightfyre View Post
You do realize that the vast majority of corporations are reliant on significant quantities of borrowings which would not be available via said financials if these toxic assets were still out and about. This is the average american shouldering the shitty assets because these financial firms hold the American economy hostage by being too big to fail and leveraging out of their minds to maximize profits. The biggest financial firms in the world have inadequate capital levels and they have basically been given permission to maintain the status quo by a group of people who are free of oversight.
I don't dispute that the financials are TBTF and they are a problem. I advocated a Swiss approach to the bail outs instead of what we did.

That being said, the financials have recapitalized as well as most of the private sector. Balance sheets are in the best position they've been in for a long time. Leverage is also considerably lower than prior to the crisis.
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