Let’s start off with a chart you’ve seen a bunch of times on these pages: It shows the record-high levels of profit margins, and the expectations among analysts that they’ll go even higher.
Click to enlarge.
Photo: GMO LLC
The basic gist is that current bullish assumptions are based on a trend that at least taken at the simplest face value seems unrealistic.
Well, here’s another similarly jaw-dropping margins chart.
It shows the percentage of stocks that are assumed to be able to produce a margin expansion going into 2013.
Photo: Morgan Stanley
89% of companies are expected to expand their margins in 2013.
With fiscal and monetary tightening possible, is that remotely possible?