Shard Capital Podcast: Equities and Corporate Profit
In this week’s Shard Capital Lite-Bite Podcast, Neil Williams, Partner at Shard Capital and LeifBridge Investment Services, interviews Ernst Knacke, Head of Research at Shard Capital and LeifBridge.
We arrived into 2022 with revenues, corporate profit margins and valuations at all-time highs. As expected, valuations have corrected following rising interest rates and cost-of-capital as the Fed tightens.
Neil and Ernst discuss why the risks of a corporate profit recession lies on the horizon…
Listen in on the conversation below:
Chart 1: 12 to 18 months after a significant rise in oil, the economy tends to slow:
Chart 2: A strong US Dollar is a headwind for US corporates:
“Dollar strength has been a widely discussed earnings headwind. Morgan Stanley has pointed out that the 16% rally in the dollar over the last year translates into an 8% headwind for S&P 500 EPS growth, all else equal.”
Source: Factset, 20/07/2022
Chart 3: Tighter financial conditions, will lead to slowing economic growth, will result in a rising High Yield Spreads:
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