Unlike many analysts, Deutsche Bank’s David Bianco believes historically high corporate profit margins are sustainable.
“For the past 50 years margins have been very cyclical, but not mean reverting,” he argues.
Here’s a slide that he frequently shows to clients. His bottom line: effective tax rates are lower, interest costs are lower, foreign profit margins are higher, and foreign sales as a share of total sales is on the rise, Bianco’s argument for high profit margins is also part of his reminder that stocks and GDP are not the same thing.
Photo: Deustche Bank