50% reported lower profit margins so far.....

in normal times this should be a vital reason to bring stocks down or at least to limit the upside. especially when the forecast from wall street was a further increase .........

normalerweise ein gewichtiger grund um aktien gen süden zu schicken oder aber zumindest das potential gen norden zu beschränken. besonders dann wenn wall street eine weitere expansion der margen erwartet hat.

i dissagree slightly that rising wagens are the main reason for the shortfall in margins. the obvious reason is that in a marketplace the comeptitors put preassure on the margins. when ever there is money to be made the competition will erode margins and drive profits down. (just watch intel vs amd, motorola vs nokia vs samsung vs sony ericsson, its for sure not only the labor cost....... ) and with excess capacity and this should be no surprise. but still wall street is expecting a further rise from already rekord levels...... what will happen if the economy slows down ........

i stimme nicht damit überein das gehälter der hauptgrumnd für die erosion der margen ist. ich denke das vor allem der beinharte wettbewerb dazu führt das die margen abschmelzen. (man beachte nur intel vs amd, nokia gegen den rest der handywelt, etc....hier liegt der druck sicher nicht an den gehaltskosten) und mit mehr als genug verfügbarer kapazität sollte das auch keine überraschung sein. was passiert wenn sich die wirtschaft abkühlt dürfte ebenfall klar sein.....


here is one of the best takes so far on margins, profits and stockperformance so far from hussman http://www.hussmanfunds.com/rsi/profitmargins.htm (very good)

Rising Wages Weigh on Profit Margins, May Curb U.S. Stock Rally

Feb. 1 (Bloomberg) -- Profitability at U.S. companies is shrinking as wages rise at the fastest pace in six years. That may make stock gains harder to come by, if history is any guide.

Profit margins, or earnings as a percentage of sales, reached a record in 2006 after rising in 18 straight quarters. That helped propel a four-year bull market and sent the Standard & Poor's 500 Index to a six-year high.

Now, almost half of the S&P 500 companies to report fourth- quarter earnings have said margins shrank or were unchanged, including Motorola Inc., the world's second-largest mobile-phone maker, and Citigroup Inc., the biggest U.S. bank.

Stock prices tend to follow the direction of margins, said Jack Ablin, who oversees $50 billion at Harris Private Bank in Chicago. ....

``This market isn't particularly attractive,'' said Michael Vogelzang, who oversees $2.4 billion as chief investment officer at Boston Advisors LLC. ``If things are as good as they get in corporate America, there's only one way for them to go.'' ...

Not Since Eisenhower
Since 1979, shares have declined on five of the six occasions when profit margins fell at least 0.5 percentage point from a peak, ..... All five times, the S&P 500, excluding financial shares, slid at least 16 percent in the next 12 months.

The current streak in margin increases for S&P 500 members, excluding financial companies, is the longest since a 19-quarter period ended in the third quarter of 1966, ..... The S&P 500 reached its lowest in almost three years in October 1966.

Margins at the end of 2006 were 7.6 percent, the highest since at least 1954, ..... The S&P 500 hasn't fallen by more than 15 percent during the share rally that began in October 2002. ...

.... ``We're already witnessing strains on profits.'' .....

Ian Scott, global equity strategist at Lehman Brothers Holdings Inc. in London, is more equivocal than Ablin about the link between profitability and share prices..... Stocks may actually get a boost when profits peak because investors will be more willing to pay up for stable earnings, shifting assets to the biggest companies from the smallest ( of course someone attempts to spin things......man muß ihn einfach mögen...den spin)

Slowing Productivity
``We doubt that the peak point for profitability will mark the peak for the market,'' ...

As wages have risen, productivity growth has slowed. Output per hour of work climbed at an annual rate of 0.2 percent in the third quarter of 2006, down from a 1.2 percent rise in the second quarter and 4.3 percent in the first three months of the year. From 2002 to 2005, productivity increased an average of 3 percent.

``The big swing issue right now is going to be wages,'' ...... ``If you see any sort of meaningful contraction in margins, it's going to put pressure on equities, because I don't think right now the market is discounting more than a modest pullback.''

Analysts still expect 73 percent of companies will report higher margins this year, from 60 percent that achieved increases last year, figures from Morgan Stanley show. Similar forecasts each of the past two years proved too high, ....( with profits also at a highs vs the gdp really courageous...nachdem auch die gewinne im verhätnis zum gdp auf dem top sind wirklich mutig....)

``We are more comfortable looking for flat to slightly down margins,'' ......

......``The last thing you want to do is put money in at the top,'' Vogelzang said.