Profit margins under pressure

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Macro perspectives

The deceleration in economic growth – and the entry of the US into the late stage of its expansion – casts a shadow on corporate profit margins. This year we could see a US-led earnings recession – typically defined as two straight quarters of annual declines in earnings. Some of the decline is explained by the unfavourable base effects from last year’s US corporate tax cuts. Yet other macro factors also suggest that US profit margins are likely to contract over the course of 2019