It’s not as if investors didn’t already have enough to worry about in the uneven aftermath of the financial crisis. Now, money pundits are crowing that record profit margins might soon pose a problem in markets.
Some of the worries coursing through the markets these days include:
- A dysfunctional Congress’s failure to address the long-term structural deficits in the entitlement programs as well as creating a threat of a default on Treasury debt
- Equity valuations are at high levels, with the Shiller CAPE 10 (cyclically adjusted price-to-earnings ratio) at about 25
- The risk of inflation caused by the explosion in the Federal Reserve’s balance sheet
- The tapering of the Fed’s program of quantitative easing and the uncertainty that creates for the bond market
- The economic uncertainties created by the problems with the Affordable Care Act
- And, not least, the threat of a nuclear Iran
Now corporate profit margins can be added to the list?
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