Earnings Discrepancy Reveals Economic Pressure

The current economic landscape suggests that a potential crisis may stem from private markets rather than public ones, as initial public offering (IPO) activities show signs of revival, indicating renewed confidence. The decline in these markets since 2022 correlates with rising interest rates and recession fears. A notable observation is the contrasting trends between US profit shares of GDP and the S&P's net income margins over the past decade. This divergence may be attributed to tax cuts favoring multinational corporations and an increased presence of high-margin tech companies in the S&P. However, there is a significant concern regarding manipulation of earnings among quoted companies, suggesting that inflated profits may contribute to apparent economic stability while masking underlying weaknesses.