CHART OF THE DAY: Corporate Profit Margin Expectations Are Out Of Control

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There’s a raging debate going on about the historically high corporate profit margins.

Most experts think that current margins are unsustainable, especially given the sluggishness of the economy.

However, strategists like Deutsche Bank’s David Bianco and Schwab’s Liz Ann Sonders think current levels are totally reasonable given the long-term changes within U.S. corporations.  For instance, U.S. companies are increasingly getting business from abroad where operating costs and corporate taxes tend to be lower.

So who’s right?

According to the analysts covering those individual companies, profit margins are going to continue on their upward trajectory.

Here’s a chart from Goldman Sachs with the net profti margin expecations of analysts covering S&P 500 companies.  As you can see, the strategist at Goldman Sachs are a bit more sceptical than the rest of the street:

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