Saturday, March 26, 2016

Today's Links

1--Can Stocks Cope With a Profits Pinch?   ....Profits fell sharply in the fourth quarter, but it is the developing margin squeeze that investors should worry about

The squeeze is on for corporate profit margins, and it doesn’t look as if it is going to end soon. That doesn’t bode well for stocks.

The Commerce Department on Friday released fourth-quarter U.S. corporate profits figures. They didn’t look good.

Overall, after-tax profits were 15% below year-earlier levels. That was a lot worse than what investors have been hearing from companies. Over the same period, S&P 500 pro forma earnings per share, which excludes items such as restructuring charges and stock-based compensation, were down 3.6%, according to FactSet....

But after-tax profits as a share of gross domestic income, a proxy for economywide profit margins, came to 7.5% in the fourth quarter. This continued a decline that began in the second quarter of 2013, when the profit share peaked at 10%....

Meanwhile, workers are beginning to gain ground. Employee compensation came to 53.6% of gross domestic income in the fourth quarter, up from 52.8% a year earlier. That is still below the 50-year average of 55.8%, but there may be more to come....

So even if the punk global environment improves, the margin squeeze can still get worse. That doesn’t leave much hope for a profits revival.

2--U.S. Fourth-Quarter GDP Revised Up to 1.4% Growth but Corporate Profits Fall

The fourth quarter’s slowdown was less severe than previously estimated but corporate profits fell, showing the economy entered 2016 on uneven footing.

Gross domestic product, the broadest measure of goods and services produced across the economy, advanced at a 1.4% seasonally adjusted annual rate in the fourth quarter, the Commerce Department said Friday. That was an upward revision from last month’s estimate of 1% growth.

The output revision mainly reflects better consumer spending on services, and reinforces that the domestic economy is stable and growing. At the same time, declining profits and weak business investment show overseas uncertainty has stung manufacturers, energy firms and financial markets....

The balance sheets of U.S. companies weakened during the quarter. Corporate profits after tax, without inventory valuation and capital consumption adjustments, fell at an 8.1% pace last quarter from the third. That was the largest quarterly decline since the first quarter of 2011. Profits fell 3.3% in third quarter from the second. On a year-over-year basis, corporate profits declined 3.6% in the fourth quarter.

Still, for all of 2015, profits were up 3.3% from 2014

The after-tax adjusted profit reading, which more closely reflects profits on production during the quarter, fell 15% in the fourth quarter from a year earlier. That was the steepest year-over-year drop in a quarter since 2008, when the U.S. was mired in a recession. Adjusted figures showed the largest profit decline came in manufacturing, especially in production of petroleum and coal products.

Profit data isn’t adjusted for inflation.

“The strengthening dollar, the sharp decline in energy costs, and increasing wage pressures all played a role in falling profit margins and corporate income,” said Jim Baird, chief investment officer for Plante Moran Financial Advisors. “Against that backdrop, it’s no surprise that businesses trimmed capital expenditures.”

Friday’s report confirmed business investment slumped during the quarter. Nonresidential fixed investment fell at a 2.1% pace, worse than the prior reading of down 1.9%

3---Contract Workforce Outpaces Growth in Silicon-Valley Style ‘Gig’ Jobs ....New research shows labor shift affects health care, education and other industries that have traditionally offered stable employment

Since 2005, the number of workers in alternative arrangements has climbed by more than half, rising to nearly 16% of the workforce from 10% a decade ago, according to forthcoming research by Alan Krueger of Princeton University and Lawrence Katz of Harvard University. Meanwhile, the on-demand workforce or gig economy employs only about 600,000 people, or less than 0.5% of the workforce, the research finds.....

Workers in these alternative arrangements often find themselves with erratic schedules, spotty earnings and few benefits such as health insurance, Social Security or a retirement plan. Some arrangements, like subcontracting or independent contract work, raise questions about worker safety, employer liability and consumer protections...

The steep jump in workers in alternative employment complicates the rosy picture of the labor market highlighted by officials at the Federal Reserve and in the Obama administration. While the economy has added nearly 14 million jobs since 2010, more than recovering the number of jobs lost during the recession, the new data suggests a growing slice of the workforce has only tentative ties to a main employer....

opponents like Rebecca Smith of the National Employment Law Project, which advocates for low-wage workers, see the practice as a “pattern where companies that call the shots distance themselves from the people doing the work at the bottom.”

4--Leaked Memo Reveals Erdogan’s 'Radical Solution' to Mideast Crises

5--The Murder of Chávez. The CIA and DEA Cover Their Tracks?

6--I Personally Believe That Hugo Chávez Was Murdered By The United States, Bill Blum

7--Untold Story of Syrian Coup: Who is Really Behind the Plot to Topple Assad?

8--The Murder of Chávez. The CIA and DEA Cover Their Tracks

9--The Big Lie About Hillary’s War In Libya

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