There Are Two Problems With Trump's Tweet About Record Corporate Profits

Tyler Durden's picture

Earlier today, in an attempt to deflect from the relentless scandals that plague his administration, Trump tried to pivot attention to either the stock market, highlighting the record high 22,000 print in the Dow Jones, while also pointing out that "Corporations have NEVER made as much money as they are making now."

There are two problems with this tweet.

First, it's wrong. While on a non-GAAP basis, which excludes the impact of "one-time, non-recurring" items, and pretty much anything else management does not want counted - with the explicit blessing of the biggest moneys in the room known as the FASB - which allows companies to ignore countless above the line expense and cost items, adjusted "profits" may indeed be at an all time high, but those "profits" are a monetary mirage, meant only to justify the record high level in the S&P ever applying (ever greater) P/E multiples.

Meanwhile, what is going on in the real economy - where companies are taxed on their real profits as disclosed to the IRS - is that real profits - which the BEA defines as "Corporate Profits After Tax with Inventory Valuation Adjustment (IVA) and Capital Consumption Adjustment (CCAdj)" - have not only stagnated for the past 5 years, as the latest NIPA GDP number reveal...

 

... but have contracted in recent quarters.

In other words, corporate profits may be all time high for non-GAAP purposes, but in the real world, corporate profits have barely budged in years. For those interested in the difference between NIPA corporate profits and reported earnings, read the following BEA note. This discussion ignores the question whether Trump should be pushing for higher corporate taxes if indeed, as he claims, corporate profits have never been higher.

There is a second problem. With corporate profits rising rapidly in recent years, this has been almost exclusively at the expense of wages and compensation. This is shown in the chart below, which shows that while the profit share of GDP has stabilized over the past quarter, labor Share of GDP is at an all time low, and has fallen further in recent periods. And while labor share of GDP may increase as wages (finally) grow rises, increased capex, especially into productive assets, will limit this growth.

The second chart is especially troubling for Trump because it was the collapse in the labor share of GDP that prompted the populist revulsion against the status quo, and got Trump elected in the first place. Should Trump wish to cheer the record divergence between the corporate and labor share of GDP, his days in the White House may be even more curtailed expected.

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order66's picture

Yeah, one of those problems is - it's a lie.

Mustafa Kemal's picture

"Yeah, one of those problems is - it's a lie."

Seems to be a small problem these days. Everybody is doing it.

BTW, isnt that suppose to be one of the signs of the end of times?

GusCorrina where are you? 

Looney's picture

 

I’d like to buy a MAGA-sombrero. Oh, and if we’re gonna have more wars than before, I need a MAGA-helmet, too.  ;-)

Looney

froze25's picture

Do you think we are actually going to have more wars then we do? It seams that the middle east is actually winding down, the end of funding the Obama/McCain ISIS army has happened and victory looks assured for Assad now. We have a lot of talk about North Korea but that has been going on since Bush Jr. I don't think we are, the Russian collusion story is pretty much dead now that we know they were colluding with the Dems. There will be violence with the Jihadis in the EU but I don't think direct military actions are actually on the horizon. I hope I am right, I know recent history isn't on my side but recent history would of predicted Hillary or Jeb Bush in the Whitehouse not Trump.

Snaffew's picture

yet the funding for the military (MIIC) has been increased another $60 billion so far this year.  Must be to feed all those troops better food who are lounging around under those desert camo nets.

Looney's picture

 

... Do you think we are actually going to have more wars then we do?

All 0bama’s wars are still there. All it takes to have “more wars” is just one conflict – North Korea, Venezuela, or THE Ukraine – take a pick.

With generals and bankers in charge of the most important shit, would you expect LESS wars?

But I’m as hopeful as you are!  ;-)

Looney

Manthong's picture

 

I think he f’d up trying to own the fake market.

It belongs to greenspoon, bush, Bernanke, Obama and ol’ yeller.

JRobby's picture

Accounting tricks

It's all a lie. All of it.

EnglishMajor's picture

Remind me again who the enemy is, these days.  Oceana, Eurasia or Eastasia?

JRobby's picture

Depends on how much MIC wants to make doesn't it?

These days it seems like they want to make a lot. Even with all the massive over billing for things some of which don't even work right.

 

https://www.youtube.com/watch?v=X2daGIT3KHY

Eddy Munz

 

NEOSERF's picture

$1T+ flushed down the Iraq toilet and not a drop of oil to show for it...glad Lockheed and Raytheon chiefs have 5 houses though..

El Oregonian's picture

It's "Musical Chairs" time! When the music stops we'll see who's fast enough to grab on of the remaining few chairs left! Are you ready, get set,. G-O-O-O=O!!!

giorgioorwell's picture

Trump get's his news/facts from fox and friends..LOL

TBT or not TBT's picture

More civil wars, both cold and warm and sometimes quite hot.   

ejmoosa's picture

https://bea.gov/iTable/iTable.cfm?ReqID=9&step=1#reqid=9&step=3&isuri=1&...

 

There's a link to the BEA data.  Who's telling Trump this BS?

Profits before and after taxes peaked in the fourth quarter of 2014.

froze25's picture

The same people that tell us the unemployment rate is ~4.7 percent. We all know that is bullshit.

ejmoosa's picture

A year ago Trump would have called bullshit on these numbers...

He definitely is becoming more like a swamp dweller every day.

Pollygotacracker's picture

Sin has always been a problem. In the last days it will become worse. We are seeing that now. God no longer blesses our country. We have moved too far from Him. This morning, on CSPAN, a transgender was discussing the military ban. Just think...how far we have gone downhill in the past twenty years. This man, Sasha, will NEVER BE A WOMAN. You can't just alter your exterior appearance. What is on the INSIDE? Our country is in rebellion against God on so many levels. Liars, greediness, immorality, covetousness, lovers of money. Rot everywhere you look. People with more tats that savages in the jungle. Obesity is a sin! Fat people everywhere, many claiming to be disabled and riding in a scooter! I am pessimistic today. I pray constantly that God will bring me home, soon. Isaiah 6:5 "Woe is me, for I am ruined! Because I am a man of unclean lips, and I live among a people of unclean lips".

 

itstippy's picture

Get thee to a nunnery (and out of the ZeroHedge comments section).

You pray constantly that God will bring you home?  Easy enough to take matters into your own hands.  "The Lord helps those who help themselves."  

Pollygotacracker's picture

Mustafa asked about the last days. Suicide is a sin. Just so you know. And, I am as free to post on ZeroHedge as you are. You are not compelled to read my comments. Have a nice day.

Winston Churchill's picture

The sheeple can't handle the truth and will never hear it until the empire of lies collapses.

HardAssets's picture

During the campaign Trump said the stock market is a bubble. He told the truth.

Now . . . b.s tweets.

Is it All, everything outta D.C., completely rotten to the core ?

HillaryOdor's picture

I keep trying to tell people but no one wants to listen because they can't break their programming.  They're stuck in a cult of authority.  It really is a religion, the most successful and powerful religion of all time.

There is no such thing as good government.  It is an oxymoron.  Nothing can be done "for the greater good" through the evil of coercion.  The evil always outweighs the good, if the good even exists at all.

Government is IMO an emergent phenomenon which is a reflection of culture, hence the degradation in government over time.  The culture itself is declining.  The worse people you have, the more government you get.  Whether it is officially recognized as a government or not is irrelevant.  This country was founded by great men.  There's no way we could have ever held onto it.  We would need each generation to be at least as good as they were, but they were not average men.  They were great men who fled European monarchies.   Their descendents reverted to the mean, along with all the immigrants. 

This is why the globalist psychopaths want to overrun America with third world trash and broadcast disgusting filth on TV all day every day and indoctrinate children and so on.  The more they destroy our culture, the worse the people become, and the more power they will get for themselves.

People tend to think governments are imposed on them.  No, you collectively decide what you put up with.  Government always wants everything because power attracts psychopaths.  They have no self-control.  You collectively decide how much they get, depending on what level of brainwashing you've fallen into.  In a sense every country is a democracy, even totalitarian dictatorships.  The difference is trivial and only a matter of time.

JRobby's picture

I recall during the campaign he said unemployment was 20% and low and negative interest rates were bad. Inflating stocks artificially. Good for the rich.

So yea, he needs to turn it around. Soon. Because he has no friends in DC and the people put him where he is.

giorgioorwell's picture

Yeah, keep using Fox and friends as your news source Donny.

rubiconsolutions's picture

"Corporations have NEVER had as much money printed for them as they have in the last decade."

Fixed it.

Robert Trip's picture

Actually there are three problems with Trump's tweets.

The third one being he has turned out to be nothing more than a fucking clown.

Is that better than having a Black Widow leading the Nation?

It's your call.

Seasmoke's picture

I THINK SO....IN 8 YEARS BOTH BLACKS AND WHITES WILL REALIZED THEY WERE JUST DUPED THE PAST 16 YEARS

TBT or not TBT's picture

Stop giving a shit about race.   Face is somebody else's kind work.  The minority of interest to us is the individual.   Eventually extending the nuclear family unit, or business(pooling of individuals for reasons they choose).   Race is Marxist divisiveness

Triple A's picture

I'm not sure why zero hedge is finally waking up to these facts over the last few days. "I'm a globalist and a nationalist" Mr Trump. The guy speaks out of both sides of his mouth all day. It's a bubble now its great. The Clintons are good people, they need to be investigated. 

Snaffew's picture

blindfold and earmuffs on....brainwaves reduced to maintainig necessary organs functioning...TRUMP IS DEE GREATEST!

Disgruntled Goat's picture

If indeed corporate orofits are at record highs, why  is The Fed still paying interest on banks "excess reserves", why are interest rates srill close to Zero, why is there stealth QE? If thats true then its time to end all forms of corporate welfare.

insanelysane's picture

And why is my salary stagnant???

order66's picture

Desperate gasps of a dying presidency that has zero credibility and zero chance of getting any agenda approved. Total joke.

tangent's picture

"his days in the White House may be even more curtailed expected." What a joke. People gleefully voted for Obama with a collapsing economy. So, the idea that Trump has "curtailed days" sounds like the same BS we we were peddled shortly before his election. Are they going to replace Trump with someone who knows about how free-market capitalism works and socialism fails? No. So whoever continues to be in charge will have an economy in the shitter indefinitely so long as people think socialism is a cute fad they want to import from Venezuela.

Robert Trip's picture

"Gentlemen.

Start your fryers."

Mena Arkansas's picture

Corporations have NEVER made as much money as they are making now.

I guess that's why wages have been stagnant for years. The corporations just can't afford to pay more because they have NEVER made as much money as they are making now.

Or maybe the C-Suite and shareholders just decided to keep all the gains for themselves.

Because, well, fuck the workers.

NAV's picture

to deflect from the relentless scandals that plague his administration

Scandals?

Ben A Drill's picture

I just read that traders are betting against a gold miner rally. I expect a 30% increase by the end of this year. So who's going to be right?

JailBanksters's picture

I would have though, lack of sales ?!?

 

Highest Stock Values

Highest Backruptcies

High Unemployment

High Number in Food Poverty

Low Sales

Increasing Wages ??

 

None of these makes any sense at all, unless you only look one thing at a time.

 

 

 

rp2016's picture

ZH is correct.

Mr. President, you just endorsed the previous adminstrators. If this is your point of view then your election was a mistake.

slyhill's picture

If you lie about a lie, is that the truth?

ali-ali-al-qomfri's picture

no, there a many lies and only one truth.

 

slyhill's picture

Everything I post is a lie.

drreadski's picture

And hence the PARADOX .... well played you slyhill devil ... LOL

marcusfenix's picture

Has anyone ever told Trump that it's ok not to tweet every random, nonsensical thought that rattels around in his skull?

Cause this one is just pure laughable self agrandizing bullshit.

Funny how what he knew before the election has been completely orwelled post election.

Ben A Drill's picture

Blow off top in the DJIA. Just look at the yearly chart. Great Depression part 2 coming to a theater real soon.

slobbermut's picture

We all know that President Trump speaks in very broad and often innaccurate generalities...but he Isn't Hillary, and he gave us a stellar Supreme Court appointment which has safeguarded the 2nd Amendment and allowed for a win on the 'illegal immigration/Islamic curtailment' front; sadly he may simply lack the financial background to really understand the nuances of why his statemnt isn't exactly accurate.  STILL,  He ISN'T HILLARY!!!

Aristofani's picture

election is over. tRump won. Get over it and pull your head out of your arse.