The earnings so far are very good. But the macro economy is not performing at par. There are some reasons behind the earning surge.
1. The deep recession and tight credit have reduced the number of competitors and increased the barrier of new entries.
2. Cost cutting has made corporations lean and more profitable.
3. Many companies are more rationalized and they took out extra capacities. The margin is high. The best example is airline industry.
4. Overall inputs have stabilized and commodity prices did not jump.
Some of these factors are more permanent and some are temporary. Pay attention to the turn.
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