For 9 years corporate profits have gone nowhere. The same cannot be said about the stock market or earnings.

It's a tale of two reporting methods.

Reported Earnings vs Taxes

For tax purposes, corporations want to look as bad as possible.

Income and profit shifting are massive. Many of the largest companies pay no income taxes.

Reported earnings are another matter. Companies throw away anything and everything as "one time expenses". Then we have analyst estimates that are purposely low just so corporations can "beat the street" no matter what they report.

S&P 500 Earnings

Image placeholder title

RECOMMENDED ARTICLES

If you are a bull, then the above S&P 500 Earnings Chart gives you an excuse.

However, its pro-forma look nonsense that artificially makes stocks look cheap despite the fact that earnings always revert to the mean.

Shiller CAPE PE

Image placeholder title

On a Shiller CAPE basis (Cyclically Adjusted PE) basis, this market is one of the most expensive in history, only exceeded by the stock market bubble in 2000.

Even then, there were huge bargains in some sectors, notably energy. Now there are just bubbles giving rise to the "everything bubble" meme.

Regardless, the charts are there and the analysts are cheering. It's easy to believe whatever story you want to hear.

For further discussion along these lines, please consider Where Will the Stock Market Be a Decade From Now?

Mike "Mish" Shedlock

Pre-Tax Corporate Profits Rise 0.2%, After-Tax Corporate Profits Rise 6.7%

The Trump Tax cuts strongly came into play in today's GDP update which includes corporate profits.

Corporate Profit Squeeze as Wages and Benefits Rise

Wages and salaries are rising at the fastest rate in 10 years. Even still, the rate is only about 3% on average.

Spending, Inflation, Income Expectations: Consumers Expect No Improvement

A Fed study of consumer expectations projects a rise in spending but no overall economic improvement a year from now.

In Praise of a Corporate Tax Cut

Bloomberg View columnist Tyler Cowen, a professor of economics at George Mason University and Marginal Revolution blogger says "Republicans have science on their side when it comes to corporate tax reduction." Is Cowen right? If so why?

Dow Erases All Gains Since Trump Took Office

The DOW broke through a level first reached as Trump Took office.

Would Another Corporate Repatriation Tax Holiday Create Jobs?

Donald Trump wants to lower the corporate tax rate on foreign profits from 35% to 10%.

Mortgage Prison: Sydney Home Prices Suffer Largest Annual Decline Since 2008

Home prices in Sydney and Melbourne are back to 2016 levels. That is a tiny down payment as to what is coming.

Peak Earnings: Companies Furiously Guide Earnings Estimates Lower

At what point does the profit bubble pop? Based on corporate guidance, perhaps it already has.

Musk Says Tesla Close to Profitability, Former SEC Official Calls Musk "Numbnut"

The SEC settled with Elon Musk on Saturday. Many questions remain. Profitability moves to the forefront.