At the end of January we first discussed [3] the rolling over of corporate margins and sure enough the consensus for 2012 margin compression has turned our way with only 42% of the S&P 1500 now expected to increase net margins YoY. What is simply 'incredible', in the words of Morgan Stanley, is the jump from 2012 to 2013 expectations of net margins as this chart so well indicates. In 2013, 89% of firms are expected to miraculously rediscover their pricing power and increase net margins. Our word for this is 'magic'.
[4]
Perhaps we need an Olympic Ice Hockey commentator to take over the programming on CNBC? Do you believe in miracles?
Chart: Morgan Stanley